Financial Plans

1
Financial Plans
Entrepreneurs must understand the relationship
between

• Balance Sheet
• Income Statement
• Cash Flow Statement

2
Financial Plans
Pro Forma Income Statement
Revenue

• Develop a Sales Forecast and Work Down
• Set a Profit Target and Work up

3
Financial Plans
Pro Forma Income Statement
Expenses

• Fixed vs Variable
• Startup vs Ongoing
• Direct vs Overhead
• Owner Compensation

4
Financial Plans

• Break Even Point
• What-If Analysis

5
Financial Plans
Ratios and Metrics

• Liquidity Ratio
• Debt Ratio
• Average Collection Period Ratio (DSO)
• Net Profit on Sales

6
Financial Plans
Time Periods

• Daily
• Weekly
• Monthly
• Quarterly
• Yearly

• Trailing 12 months
• Same period last year
• Period over Period
• Annualized
• To-Date plus Projection

7
Financial Plans
Projecting Cash Flow

• Revenue Timing
• Expense Timing

8
Group Exercise

• Brainstorm expenses related to a business for the
  purpose of developing a financial plan
• distinguish between fixed and variable
• distinguish between direct and overhead
• distinguish between start-up and on-going

9
Group Exercise
Small Biz Masters -- e-commerce only
retailer The Executives --
Brick-and-Mortar retailer
Ramrod -- Hair Salon The Cash Flow Killers --
Technology Consulting
CEOs -- Franchised Restaurant _________________
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Cyclones -- Magazine
Publisher Money Makers -- Niche
Restaurant Prestige --
Manufacturer