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Here are the steps to create your financial projections for your start-up.As you develop your business plan, list the key expenditures you will need to make to get your company off the ground and your subsequent costs to operate.If you do have an accountant prepare your financials for your company, make sure you completely understand the process and what the terms and figures mean.
They also help you identify financing needs, optimize your pricing, plan production, time major expenditures and monitor your cash flow.
It’s normal for some of your initial numbers to be rough guesses since sales will usually be hard to predict.
Before you throw numbers and spread sheets at your readers, summarize your financial needs.
If you are seeking investors, this is where you will indicate how much cash you need to begin operations. How much will have to be spent on computer equipment, office furniture, etc?
Since this is a very critical part of your business plan, make sure you follow Generally Accepted Accounting Standards, and that your financial statements are all prepared correctly.
It may be well worth the expense to enlist the help of an accountant to prepare them, or at the very least to review them.Be sure to include recurring expenses—salaries, rent, gas, insurance, marketing, raw materials, maintenance and the like—and one-time purchases, such as machinery, website design and vehicles.Research industry spending to get a better idea of the numbers.A business plan is a written description of your business's future, a document that tells what you plan to do and how you plan to do it.If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of one. You start here, today, with certain resources and abilities.And the type of funding you need will dictate how your plan (especially the financial section) is written.In other words, investors will want to know how they are going to profit from this investment down the road, while lenders will want to see how you will be repaying their loan.Related: 7 Steps to a Perfectly Written Business Plan You can visit our small business encyclopedia to learn more about business plans or our Form Net area to get the necessary forms to get started.Video: What Investors Really Think About Your Business Plan.If you're writing this for an existing business, then these statements will reflect your past business history and current financial situation.Break your financials down into monthly projections for the first two years and then move to annual projections.