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Financial Data for Business Plan

Financial Data for Business Plan

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Financial Data for Business Plan

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  1. Financial Data for Business Plan Start-Up Expenses Balance Sheet Income Statements Cash Flow Statements Break-Even Analysis Financial Write-Up

  2. If a Start-Up Company: • Detail specific assumptions and expenditures associated with start-up costs • Example: 2 months of office expenses, 2 months of inventory, etc. • Website Template: www.score.org • Complete Loan Application in Backoffice • Include Loan papers in Appendix of Business Plan

  3. Balance Sheet Summary of company’s financial condition at a specific time or pre start-up • Existing Company: • Use Balance Sheet information from 2005-06 Annual Report: April 30, 2006 balances • May also include projections for future years • New Company: • Develop Proposed Balance Sheet for this current year • May also include projections for future years

  4. Balance Sheet Contents • Assets: Current (cash, AR, inventory) and Fixed (plant, fixtures, furniture, equipment) • Liabilities: Current (AP, taxes) and Long-term Debt (bank loans, notes payable to stockholders) • Owner’s Equity/Net Worth: Retained earnings (beginning & current), Invested capital NOTE: Liabilities + Owner’s Equity/Net Worth = Assets Website Templates:www.startupepa.org/bus/fin_plan.html , www.score.org VE website: www.virtualenterprise.org Curriculum-Accounting: End of Period Financial Statements and Lessons-Accounting: Basic Accounting Principles

  5. Income Statement Accounting of Sales, Expenses, and Net Profit for a given period • 3-year Projected Summary (could be Pro-Forma) • Detail by month for 1st year: Most companies only operate for 6-7 months (Oct/Nov-April) • Detail by quarters for 2nd & 3rd years • Assumptions upon which projections based

  6. Income Statement Contents • Revenue/Income • Sales • Cost of Goods Sold, Commissions, etc. • Gross Profit = Sales – Cost of Goods Sold • Operating Expenses – All associated with running a business • Examples: Payroll (net), Payroll taxes (federal & state), Rent, Utilities, Insurance (business, liability, workman’s comp, etc.), Office supplies, Car expenses, etc. • Operating Income= Gross Profit – Operating Expenses • Income Before Taxes = Operating Income + Interest Earned • Taxes • Corporate: Federal ~30% of Operating Income; State ~8% of Operating Income • Sales Tax, if applicable: State ~7.25% • Net Income (Loss) = Income Before Taxes – All Applicable Taxes Website Templates: www.score.org, www.startupepa.org/bus/fin_plan.html VE Website: www.virtualenterprise.org Curriculum – Accounting: End of Period Financial Statements

  7. Cash Flow Statements Measure of company’s financial health over a given period of time • Equals Cash Receipts – Cash Payments • Refer back to Income (P&L) Statement as a guide • 3-year Projected Summary (Pro Forma) • Detail by month for 1st year: Most companies only operate for 6-7 months (Oct/Nov-April) • Detail by quarters for 2nd & 3rd years • Assumptions upon which projections based

  8. Cash Flow Contents • Cash On Hand at beginning of month: Carry over from previous month • Cash Receipts • Cash Sales • AR Collections • Loan Receipt • Total Cash Available: Same as total Cash Receipts • Cash Paid Out: All expenses paid out from Income Statement and Merchandise (Inventory) • Subtotal: Same as total Cash Paid Out • Other Cash Out • Loan Principle Payment • Capital Purchases • Other Start-up Costs • Total Cash Paid Out = Subtotal + Other Cash Out • Cash Position (end of month) = Total Cash Available – Total Cash Out Website Templates: www.score.org , www.startupepa.org/bus/fin_plan.html

  9. Break-Even Analysis Tool used to determine when company will cover all expenses & begin to make profit • Use Start-Up costs & assumptions • Use expenses from Income Statement • Fixed Costs - same month to month, like rent • Variable Costs - change as volume of business changes, like inventory; expressed as % of sales • Provide information needed to generate revenue to pay expenses to run company • Reached when revenue = all fixed and variable expenses Website Templates: www.startupepa.org/bus/fin_plan.html, www.score.org

  10. Financial Write-Up • Explain the financial documents • Interpret/Analyze the financial documents • Justify all necessary figures as they apply to your business and plan • Explain and/or justify any projections that support your plan, if necessary • Investment • Risks Identified • Risks Addressed • Solutions Proposed