Create Your Proforma Template for Planning Effortlessly

Proforma template for Planning

hi there my name is Mike English I wanted to walk you through how you can create financials for your business plan most students don't necessarily enjoy writing a business plan but it can be exciting and thinking about a business idea can get you through some of the harder parts of the plan but when you get to the financials a lot of students have some trouble in the financial section it's one of the most intensive and intimidating parts of the business plan but it could be the place where you learn the most about your business importantly it can be the difference between success and failure you may feel like your business is doing well but unless you have the bottom line to prove it you could be in trouble so I wanted to show you two quick financial statements that you can include in your business plan one is a profit and loss projection and the other is a cash flow statement so first let me just pull up the business plan I've been working on this is a business plan for a school photography business in this business what this company would do is they would provide photography services to elementary school you know those class photos at the end of the year well this would be a company that would take those photos and get paid for them and this plan is being created by two uh teenagers who are entering their senior year of high school and looking to make some extra money and while putting together this plan they realized that maybe they could make this into business that could actually fund their college education so I'm going to just kind of drag you through some of the business plan and get down to the financials so here's the mission statement for this company it's the mission is to capture Elementary School Memories by delivering first class service and highquality pictures to school administrators teachers parents and students so we go through their goals we do some market analysis a company description an overview of the organization and management a marketing and sales strategy and then we get down to the financials and what you'll see here is a pretty what looks like a pretty complicated uh spreadsheet that I've pulled in but really when you look at it it's not as complicated as it it may seem and once you've written the rest of your business plan you should really know what most of this is so first you think about what the revenue for the business will be for this company we're looking at school events school picture P packages and album CDs so this is where they're going to make all their money and you can see after doing their U mark their analysis and their plans they've determined that this is the amount of money they can plan to bring in over the years and since it's a photography company there are some significant fixed costs and so the fixed costs are those upfront costs that you really need to spend to get the business started but they may not last in other words once you buy your camera you may not need to buy a new camera every year maybe this camera will actually last you for 5 years and that's a the similar case for many of these fixed costs but they do have variable costs that they're counting in here too such as legal in accounting fees flashes picture Prints shipping their website advertising travel and they've even included some funding for professional development classes so they can get better what they're doing and so the bottom line for this company is that their net income in the first year is going to be negative and this shouldn't scare you because this is the case for most new businesses and the the way they have budgeted for their second year is somewhat aggressive and they actually plan pulling a profit for their second year and that would be this column here and as you can see they're they're planning their business to bring in a set amount of income roughly $177,000 per year and at this point these two would be in college and so this would be essentially bringing in a good bit of their their tuition money and room and board for college and so now I wanted to bring you down to the cash flow statement and the cash flow statement shows the beginning balance and so this is number right here this $5,000 is essentially a loan that they've obtained from their parents or from a bank and then we have the cash inflow Cash Out flow and the loan repayment so they're planning to P pay off that whole loan by the end of the second year and as you see they have an ending cash balance that is positive after the first year and and so on until the last year where they've really accured quite a bit of uh Revenue so where did this spreadsheet come from I didn't create this spreadsheet in a Microsoft Word document rather I put it together in a Microsoft Excel uh spreadsheet and so what we have here is a spreadsheet where the uh revenue and the expenses are entered and down at the bottom this number as you can see it subtracts the EXP the expenses from the income and so so if you make a change to one of your um say one of your assumptions or you find out that you're not going to need to spend quite as much on legal and accounting fees you can make the change here and down at the bottom the number will automatically adjust it's very important to include in some assumptions and so by sitting down and for each line item writing out the ass assumptions you'll really get better at predicting what those expenses and revenue will be and more importantly if you're giving a presentation or seeking a loan the potential funer will know that you've really done your homework and you really know how much this is going to cost so that's a quick overview of how you can start to create your financials for your business plan and like I said once you start walking through the other elements of the plan once you get to the financials you probably know a lot more than you thought you did about creating your financial statements and projections