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How to Create Financial Projections for Your Startup

“But I Don’t Know What My Sales Will Be,” You Say

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Structuring Your Financial Plan

Three Key Financial Statements
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Along with your financial statements and break-even analysis, include any other documents that explain the assumptions behind your financial projections. The challenge for any startup entrepreneur is how to create financial projections when your business is not actually up and running. By gathering information about similar businesses, however, you will actually have a lot of data to work with. Investors are more willing to take risks, as long as you can prove your risk-taking is backed with hard data.

Lenders are more cautious. This article currently has 44 ratings with an average of 4. Home Articles Guides Tools Videos. Learn why you need them and how to create high To get started, create: Project your sales out for at least three years, including monthly sales for the first year, then quarterly for the following years. How many customers can you expect? How many units will be sold? What is the cost of goods sold? How will you price your products?

Include both fixed costs e. This projects how much money the business will generate by projecting income and expenses, such as sales, cost of goods sold, expenses and capital. For the second year, quarterly statements will suffice.

At the end of each period e. Typically you will create an annual balance sheet for your financial projections.

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Now let's look at putting some financial statements for your business plan together, starting with the Income Statement. The Income Statement. The Income Statement is one of the three financial statements that you need to include in the Financial Plan section of the business plan.

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If you are using your business plan to attract investment or get a loan, you may also include a business financial history as part of the financial section. This is a summary of .

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Your business plan financial statement will cover three general items: an income statement, a balance sheet and a cash flow statement, each with numerous subsets. The following is a general outline for creating business plan financials and is not meant to be a . The financial part of a business plan includes various financial statements that show where your company currently stands and where it expects to be in the near future. This information helps you determine how much financing your business needs and helps outsiders determine whether lending you money or investing in your business is a wise use of their funds.

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Example of the Financial Section of a Business Plan Example of the Financial Section of a Business Plan | Business Plan Hut. With LivePlan, you don't have to worry about help complex spreadsheets or breaking formulas in Excel. Financial data is always at the back of the business plan, but that doesn’t mean it’s any less important than such up-front material as the description of the business concept and the management team. Astute investors look carefully at the charts, tables, formulas and spreadsheets in the financial section because they know this information is like the pulse, respiration rate and blood pressure in a human being—it .