The financial statements are the backbone of your business plan.
They show how profitable your business will be in the short andlong term, and should include the following:
- The income statement details the business'scash-generating ability. It projects such items as revenue,expenses, capital (in the form of depreciation) and cost ofgoods.
- Cash flow statement details the amount of money cominginto and going out of the business-monthly for the first year andquarterly for each year thereafter. The result is a profit or lossat the end of the period represented by each column.
- The Balance sheet paints a picture of the business'sfinancial strength in terms of assets, liabilities and equity overa set period. You should generate a balance sheet for each yearprofiled in the development of your business.
Excerpted from Start Your Own Business: The Only Start-Up GuideYou'll Ever Need