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Financial Statements

The financial statements are the backbone of your business plan.

They show how profitable your business will be in the short and long term, and should include the following:

  • The income statement details the business's cash-generating ability. It projects such items as revenue, expenses, capital (in the form of depreciation) and cost of goods.
  • Cash flow statement details the amount of money coming into and going out of the business-monthly for the first year and quarterly for each year thereafter. The result is a profit or loss at the end of the period represented by each column.
  • The Balance sheet paints a picture of the business's financial strength in terms of assets, liabilities and equity over a set period. You should generate a balance sheet for each year profiled in the development of your business.

Excerpted from Start Your Own Business: The Only Start-Up Guide You'll Ever Need

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