Monday, March 03, 2008

Starting A Small Business Series: Financial Statements

So what is the next section of your business plan?

It is your financial statements. We have already discussed the different business financial statements but to recap you have the Profit and Loss Statement, Balance Sheet and the all important Cash Flow.

If your business has been in operation you will want to include previous financial statements going back 3 to 5 years.

Now if you are just starting your business you will want to have estimates for the first five years. You will want to insure that the financial statements match what you are requesting from your investors because they will be going over these numbers with a fine tooth comb.

Next we have the appendix then we go back to the first section of the business plan but the last done and that is the executive summary.

2 comments:

Robin Abayan said...

Nice and informative post. I want to run my own business soon, so I'll keep this in mind. There are so many options to running a business that lately I've been thinking about buying a business instead of starting one from scratch. I'm not sure what kind of format though. Franchise? Non-franchise? Home-based? I don't know. Do you have any suggestions or advice? Thanks.

Marissa Pratt said...

@ Robin - Yeah, there are a lot of options, which can be good and bad. It's best to do as much research and due diligence before you make a final decision. If you really want to buy a business, then I suggest searching the Internet to what is available in your area. There are sites, like BizTrader.com, which are online global marketplaces where you can buy and sell businesses. They can also provide you with additional resources like finding a lender, broker, etc.
I also suggest checking out current books and magazines for help and advice. Local small business groups can also be very helpful, and it doesn't hurt to network.
Good luck!