BLOG: Financing your Business Part IV- Financial Statements

Comments: 0

In order for you to gain the financing you need for your business, you must create your financial projections.  Your financial statement should tell the story of your business.  It will likely be the most time-consuming part of preparing your business for financing.  The following are some of the key documents or calculations that will help you get started:

1.  One-Time Startup Costs

2.  Balance Sheet

3.  Income Statements

4.  Cash Flow Projections

5.  Accounts Receivable and Payable Schedules

6.  Personal Financial Statements

One Time Startup Costs:

The initial startup costs that your particular business will incur will likely depend on the type of business that you start.  Here is a chart to get you started:

 ($) Expense Description
Acquisition of office space Cost required to build or purchase space or rental deposit  to be paid
Office equipment Computer equipment, printers, fax machines, telephones,   and telephone system, copier machines, and other equipment needed to operate   your business
Production equipment Machinery and other equipment required to produce your   product
Office furniture Desks, file cabinets, bookcases, chairs, tables, shelves,   counters, cabinets
Transportation and installation of equipment Shipping costs for furniture and equipment, IT,   specialists to install hardware or set up phone system
Decorating or renovating Any renovation or remodeling needed on the space before   opening
Signs Signs needed for outside office, on doors, walls, or   otherwise
Security Either a security system or hired security service if not   provided by building
Initial product inventory Costs required to stock initial inventory, including   material and production, costs, until revenues pay for additional inventory
Insurance Premium required to pay before opening business for   property and other insurance
Advertising Initial advertising done prior to business opening
Custom supplies Printed letterhead and business cards with company   name/logo
Utilities Security deposits or installation fees for utilities and   other services
Professional fees Up front fees to legal, financial, and other professionals
Business licenses and permits Fees determined by city/state for doing business
General office supplies Paper, pens, staplers, binders, paper clips, etc.
Service providers Fees for services such as cleaning
Other Additional costs not on this list
$ Total start up costs

 

Click the following link for an excel template of a startup expenses sheet.

Startup Expenses Excel Template: http://www.score.org/system/files/u519636/Start-up%20Expenses_1_0.xls

Balance Sheets

A company balance sheet has three parts:  assets, liabilities, and ownership equity. The main categories of assets are usually listed first and are followed by the liabilities. The difference between the assets and the liabilities is known as equity, net assets, the net worth, or the capital of the company. Capital equals assets minus liabilities. Stated in another way, Total Assets must always equal Total Liabilities and Capital combined. Most loan applications require balance sheets from the last three years. Click the following links for excel templates of a balance sheet:

Opening Day Balance Sheet:  http://www.score.org/sites/default/files/Opening_Day_Balance_Sheet_1.xls

Balance Sheet (Projected):  http://www.score.org/sites/default/files/Balance_Sheet_Projected_1.xls

Income Statements

The income statement is one of the major financial statements used by accountants and business owners and is sometimes referred to as the profit and loss statement (P&L), statement of operations, or statement of income. It is important because it shows the profitability of a company during the time interval specified in its heading.

Most loan applications require income statements from the last three years.  Click the following link for an excel template of an Income Statements:

Profit and Loss Projection (12 Months) http://www.score.org/system/files/u519636/Profit_and_Loss_Projection_1yr_0%20%282%29.xls

Profit and Loss Projection (3 Years) http://www.score.org/system/files/u519636/Profit_Projection_3Yr_0%20%281%29.xls

Cash Flow Projections

Cash flow projections indicate how much cash you expect to generate to repay the loan. Click the following link for an excel template of a Cash Flow Projection:

Cash Flow Statement (12 Months) http://www.score.org/sites/default/files/12_Month_Cash_Flow_0.xls

Cash Flow Statement (3 Years) http://www.score.org/sites/default/files/3-Year_Cash_Flow_Projections.xls

Personal Financial Statements

Personal financial statements for you and your business partners usually involves personal tax returns for each person. Most lenders want to see the tax returns for each partner for the last three years.  Clicke the following link for an excel template of a personal financial statement.

Personal Financial Statement http://www.score.org/sites/default/files/Personal_Financial_Statement_1_1.xls

References

http://www.score.org/resources/business-plans-financial-statements-template-gallery