It is calculated after you have finished conducting market research; described your products, services and marketing strategy; and set your organization's operating principles in place.
Any other items that pertain to your business as an expense should be defined before you set out to create your business financial plan.
Take the monthly average of the last three years of expenses when projecting for your balance sheet, cash flow and income statements.
Also take into account the previous year's expenses more than the others, since this year may reflect new expenses based on modifications due to business growth.
Don’t assume sales will convert to cash right away.
Enter them as cash only when you expect to get paid based on prior experience.
If you own an existing business, gather up your balance sheets for the last three years.
Website links to automated templates for the balance sheet, income statement, and cash flow statement are available online.
If you are investing in equipment to run the business, the current market value will become a part of your assets listed on your balance sheet.
If you own an existing business, start-up costs will not apply; go to the next step. If you are starting a new business, project your balances per month, forward to one year.