Financial Templates for Your Business Plan
Income Statement, Balance Sheet, Cash Flow, and More
Use the financial statements template to prepare what you need for your business plan.
The financial statements template for each of the major financials will help you create exactly what you need for your business plan. The links in the left column will help you find exactly which financial statements template you need.
The financial projections of your business plan are very important to investors, lenders, and to you too of course! Yet, many new business owners struggle to understand how to create a pro-forma or projected income statement, statement of cash flow and balance sheet. That’s okay! In this section, you’ll learn what each of these financial statements is about, how they are different, and what they include. If you have some background in accounting or finance, the sections below will give you great guidance on what to include in your business plan and how to present it.
If you are a future business owner without any accounting background, you’ll learn the basics of each type of financial statement so that when you reach for outside help, you won’t be in the dark. Better still, by reading the information below, you’ll gain the confidence to discuss your financial statements with a lender, banker or investor. When making a loan or investment, bankers will want to know that you understand the basics of financial statements. The information, guidelines, examples and templates in the sections below will make sure that you do.
Click any section title in the left column for a detailed description and complete overview of what should be included, mistakes to avoid, and important considerations.
Your business plan needs to include a pro-forma balance sheet, income statement, and cash flow statement. The term “pro-forma” means projected or forecast. Most future business owners who do not have experience with financial statements seek outside help to complete this part of their plan. Whether you plan to prepare your own financials or get outside help, this section is intended to make sure that you know what to include and that you will be well prepared to discuss your financial statements with a banker or investor.
When working on how to prepare a balance sheet, income statement and statement of cash flow, plan to prepare quarterly projections for year 1, and yearly projections for years 2-3. Some investors or bankers will expect 5 year projections but that is not as common for startup businesses. If you’re new to financial statements, here is a brief definition of each type:
Income Statement: Also known as a profit and loss statement. Shows the company’s revenue, expenses, and profit or loss. Key formula: Total Revenue – Total Expenses = Profit or Loss. This is an important financial statement that you should learn to work with very carefully–it tells you how your business is doing each month. Our financial statements template for profit and loss will help you learn the key concepts.
Balance Sheet: This financial statement template will help you show the value of the company’s assets, liabilities and owner’s equity. Key equation: Assets = Liabilities + Owner’s Equity. Additionally, when creating your sample balance sheet, understand that this is the only financial statement that applies to a single point in time. It is a “snapshot” at a given point in time, unlike the other financial statements that show activity throughout a period of time. A small business balance sheet should include assets such as: cash, accounts receivable, and inventory.
Statement of Cash Flow: The statement of cash flow financial statement template maps inflows and outflows of cash. Sales and profit alone don’t tell the whole story. It’s important to know when money will come in and when money will be going out.
There are several key questions to be answered by this section of the plan. Lenders will want to know if the business will be able to repay the loan they are seeking. Investors will want to see if the longer-term growth trends represent a good investment for them. Both lenders and investors will want to see that the business is sufficiently capitalized so that it doesn’t run out of money, and how fast the business can reach break-even and become profitable.
Business Plan Outline for Financials:
- 3-Year Pro-Forma Income Statement
- Balance Sheet at the end of Years 1, 2 and 3
- 3-Year Pro-Forma Statement of Cash Flow
- Capitalization (Sources and Uses of Funds)
Historical financial statements are different from those presented in a business plan. Historical financial statements report on a business’s actual financial performance and are used, in part, to prepare income taxes. They must take into account tax laws regarding depreciation, revenue recognition and other matters. While the financial statements for a business plan must be thorough, they are used for different purposes and require a different level of detail.
The pro-forma financial statements in a business plan are meant to show how the execution of your business plan is expected to play out financially. Rather than reporting on how each and every dollar was accounted for during prior periods, these statements are meant to be a forecast. As such, pro-forma business plan financials generally do not address depreciation schedules for different classes of assets, revenue recognition issues and other tax-related matters. Each financial statements template provided on this site was created specifically for a business plan.
There are two overarching considerations for your pro-forma financial statements: First, they must match what you say in your business plan. Everything referenced in the text of the business plan must be included in the financial statements. For example, if the business plan says that there will be 15 people on the payroll at the end of the first year, the payroll section of the income statement must show the payroll expense for 15 people at month 12. If your marketing section says there will be an advertising blitz just prior to the holidays, then the marketing expense line of your income statement must reflect that. Everything must match up.
The second overarching consideration for your financial projections is, “How reasonable are your expectations?” Since nobody knows if your forecasts are accurate, you will need to emphasize how reasonable they are. Here are three examples of trouble signs from financial statements from business plans we have reviewed (critiques are shown in italics):
- A company was applying for a business loan from a bank. The income statement forecasted that the business would still be losing money in three years. It was not reasonable to expect a bank to lend money to this business when the financial statements projected they would not be able to repay the loan.
- A start-up was forecasting that their revenue would go from $0 to over $1 billion in 3 years, with an investment of just $250,000. This revenue forecast was not realistic. Not even Google grew that fast in its first three years.
- A business plan showed profit margins of 50% when the industry average for their type of business was 15%. The profit margins are not reasonable. An experienced lender or investor would recognize that this person either did not have a good handle on operations costs or pricing, or both.
For more information or the specific financial statements template you need, see the specific sections on the Balance Sheet, Income Statement or Cash Flow Statement. Or, for a different perspective, see the Wikipedia page on the financial statements template which you can find here.
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