When starting a company you need a financial plan – the numbers side of your business plan. It will look in detail at your balance sheet and income statement, allowing you to make projections and giving you a clear idea of your financial capacities and needs.

Assets and liabilities

A balance sheet projected over several years shows how your company’s financial position is likely to change over time. What your company owns (i.e., its assets) and how they are financed (i.e. liabilities) must logically balance each other out.

Earnings outlook

The projected income statement shows how you expect your company's revenues and expenses – and thus its overall performance – to change over time. As this is a forward-looking exercise, the byword should be caution. Do not underestimate future charges and do not overestimate future revenues. This analysis will help you determine your company’s earnings capacity.

Example of a projected income statement

Download: Projected income statement (In French only)

Liquidity management

The cash-flow projection – how your company’s cash position will change over time – will help you anticipate any cash-flow problems. By projecting future changes in your company’s cash position based on incoming cash (i.e., bills paid) and outgoing payments, you can calculate your projected cash position. Don’t underestimate the importance of cash flows: most young companies that go bankrupt can trace their woes to a momentary cash crunch.

Monthly breakdown

To quantify your cash flows, prepare a table in which you record projected cash inflows and outflows over a year, broken down by month. In order to plan incoming cash flows as accurately as possible, take into account the average amount of time it will take your customers to pay. Likewise, for outgoing cash flows, take into account your suppliers’ payment deadlines.

Anticipating needs and opportunities

Based on your cash position, you can think ahead about:

• investment options, based on the recommendations of your financial advisor;
• whether you need to draw on your existing credit limits; and
• whether you will need to negotiate a further credit line in order to avoid an overrun – before it's too late.

Example of a cash-flow projection

Download: Cash-flow projection (In French only)

Your financing plan is your roadmap for funding your start-up business, through capital or credit. In drawing up a three-year plan, you may see that you will have to reconsider the timing and/or amount of planned investments. Together with your cash-flow projection, it offers an overall view so you can plan the right moment to make your intended investments.

Example of a financing plan

Download: Financing plan (In French only)

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