The income statement is one of the three financial statements that you need to include in the financial plan section of the business plan.
It shows your revenues, expenses, and profit for a particular period - a snapshot of your business that shows whether or not your business is profitable. While established businesses normally produce an income statement each fiscal quarter, or even once each fiscal year, for the purposes of the business plan, an income statement should be generated more frequently - monthly for the first year.
The third part of the cash flow projection is the reconciliation of cash revenues to cash disbursements.
As the word "reconciliation" suggests, this section shows an opening balance, which is the carryover from the previous month's operations.
The current month's revenues are added to this balance; the current month's disbursements are subtracted, and the adjusted cash flow balance is carried over to the next month.
When building your cash flow projection, a common pitfall is being over-optimistic about your projected sales.These expenses may include: Once again, this is just a partial list.Once you have listed all of your operating expenses, the total will reflect the monthly cost of operating your business.Do not confuse the cash flow projection with the cash flow statement.The cash flow statement shows the flow of cash in and out of your business.This article will guide you in the preparation of each of these three financial statements.Before you begin, however, you must gather the financial data you will need including all of your expenses.The financial section of your business plan determines whether or not your business idea is viable and will be the focus of any investors who may be attracted to your business idea.The financial section is composed of three financial statements: the income statement, the cash flow projection and the balance sheet and a brief explanation/analysis of these three statements.A business typically prepares a balance sheet once a year.Once again, this template is an example of the different categories of assets and liabilities that may apply to your business.