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The Successful Business Plan:Secrets & Strategies

by Rhonda Abrams

Fourth Edition

Published byThe Planning Shop

Palo Alto, California

The Financials

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Numbers are merelythe reflection of

decisions you make

Key Financial Documents

• Income statement (also called P&L)• Cash-flow projection• Balance sheet

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Other Financial Forms

• Sources and use of funds• Break-even analysis• Start-up costs• Assumption sheet

Some Key Terms:• Gross sales – total sales before any costs• Net sales – sales after commissions and returns• Cost of goods (COG) – cost of inventory,

materials• Gross profit -- income before operating

expenses• G & A – operating & administrative expenses• Net Income/Net Profit – income/profit after all

expenses/costs

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$25,000NET PROFIT($5,000)(Provision for Taxes)

$30,000Net Income Before Taxes($35,000)(Expenses)

$65,000GROSS PROFIT($23,000)(Cost of Goods)

$88,000Net Sales($12,000)(Commissions)

$100,000GROSS SALES

Guidelines for Preparing Financials

• Be conservative• Be honest• Don’t be creative• Get accountant’s advice• Follow industry practices• Choose appropriate accounting method• Be consistent

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Things take longer and cost more than planned

Prepare the Financial Worksheets

• Enter figures from earlier worksheets (e.g., marketing budget, staffing costs) into appropriate lines on each worksheet

• If using Electronic Financial Worksheets, all figures will automatically be entered from one worksheet to appropriate line(s) on Income Statement, Cash Flow, and Balance Sheet worksheets

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Prepare the Staffing and Professional Services Budgets

• Enter the actual or anticipated expenses for staff and consultants in each time period

• If using the Electronic Financial Worksheets, the “Benefits” line will automatically be calculated by the amount entered in the Setup worksheet

• If using the Electronic Financial Worksheets, costs will automatically be entered on your Income Statement and Cash Flow worksheets

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Prepare the Marketing Budget

• Complete worksheet using known or projected costs for each marketing activity

• Indicate costs in the time period they are anticipated to occur

• If using the Electronic Financial Worksheets, these numbers will automatically be added to the Income Statements and Cash Flow projections

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Prepare the Sales Projections• Enter the projected number of units in each

product line to be sold in each time period• Enter the unit cost of each product line• Enter commission and return rates• If using the Electronic Financial Worksheets,

commissions and returns will be calculated from the Setup worksheet, and all projections will automatically be added to Income Statements and Cash Flow projections

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Start-Up Costs

• Not included in Income Statement but affect the amount of money needed to be raised to start your business

• IRS treatment – some costs must be depreciated over a number of years rather than expensed in the first year of business

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Prepare the Start-Up Costs

• Enter the actual or projected costs to get your business underway

• If using the Electronic Financial Worksheets, some of these expenses will automatically get transferred to the Balance Sheet

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