financial projections for startup business plan excel template

How To Create Startup Financial Projections [+Template]

Businesses run on revenue, and accurate startup financial projections are a vital tool that allows you to make major business decisions with confidence. Financial projections break down your estimated sales, expenses, profit, and cash flow to create a vision of your potential future.

In addition to decision-making, projections are huge for validating your business to investors or partners who can aid your growth. If you haven’t already created a financial statement, the metrics in this template can help you craft one to secure lenders.

Whether your startup is in the seed stage or you want to go public in the next few years, this financial projection template for startups can show you the best new opportunities for your business’s development.

In this article:

• What is a startup financial projection?
• How to write a financial projection
• Startup expenses
• Sales forecasts
• Operating expenses
• Income statements
• Balance sheet
• Break-even analysiFinancial ratios Startup financial
• rojections template

What is a financial projection for startups?

A financial projection uses existing revenue and expense data to estimate future cash flow in and out of the business with a month-to-month breakdown.

These financial forecasts allow businesses to establish internal goals and processes considering seasonality, industry trends, and financial history. These projections cover three to five years of cash flow and are valuable for making and supporting financial decisions.

Financial projections can also be used to validate the business’s expected growth and returns to entice investors. Though a financial statement is a better fit for most lenders, many actuals used to validate your forecast are applied to both documents.

Projections are great for determining how financially stable your business will be in the coming years, but they’re not 100% accurate. There are several variables that can impact your revenue performance, while financial projections identify these specific considerations:

• Internal sales trends
• Identifiable risks
• Opportunities for growth
• Core operation questions

To help manage unforeseeable risks and variables that could impact financial projections, you should review and update your report regularly — not just once a year. 

How do you write a financial projection for a startup?

Financial projections consider a range of internal revenue and expense data to estimate sales volumes, profit, costs, and a variety of financial ratios. All of this information is typically broken into two sections:

• Sales forecasts : includes units sold, number of customers, and profit
• Expense budget : includes fixed and variable operating costs

Financial projections also use existing financial statements to support your estimated forecasts, including:

• Income stateme
• Cash flow document

Gathering your business’s financial data and statements is one of the first steps to preparing your complete financial projection. Next, you’ll import that information into your financial projection document or template.

This foundation will help you build the rest of your forecast, which includes:

• Cash flow statements
• Break-even analysis
• Financial ratios

Once all of your data is gathered, you can organize your insights via a top-down or bottom-up forecasting methods.

The top-down approach begins with an overview of your market, then works into the details of your specific revenue. This can be especially valuable if you have a lot of industry data, or you’re a startup that doesn’t have existing sales to build from. However, this relies on a lot of averages and trends will be generalized.

Bottom-up forecasting begins with the details of your business and assumptions like your estimated sales and unit prices. You then use that foundation to determine your projected revenue. This process focuses on your business’s details across departments for more accurate reporting. However, mistakes early in forecasting can compound as you “build up.”

1. Startup expenses

If your startup is still in the seed stage or expected to grow significantly in the next few quarters, you’ll need to account for these additional expenses that companies beyond the expansion phase may not have to consider.

Depending on your startup stage, typical costs may include:

• Advertising and marketing
• Lawyer fees
• Licenses and permits
• Market research
• Merchandise
• Office space
• Website development

Many of these costs also fall under operating expenses, though as a startup, items like your office space lease may have additional costs to consider, like a down payment or renovation labor and materials.

2. Sales forecasts

Sales forecasts can be created using a number of different forecasting methods designed to determine how much an individual, team, or company will sell in a given amount of time.

This data is similar to your financial projections in that it helps your organization set targets, make informed business decisions, and identify new opportunities. A sales forecast report is just much more niche, using industry knowledge and historical sales data to determine your future sales. Gather data to include:

• Customer acquisition cost (CAC)
• Cost of goods sold (COGS)
• Sales quotas and attainment
• Pipeline coverage
• Customer relationship management (CRM) score
• Average Revenue Per User (ARPU), typically used for SaaS companies

Sales forecasts should consider interdepartmental trends and data, too. In addition to your sales process and historical details, connect with other teams to apply insights from:

• Marketing strategies for the forecast period
• New product launches
• Financial considerations and targets
• Employee needs and resources from HR

Your sales strategy and forecasts are directly tied to your financial success, so an accurate sales forecast is essential to creating an effective financial projection.

3. Operating expenses

Whereas the costs of goods solds (aka Cost of Sales or COGS) account for variable costs associated with producing the products or services you produce, operating expenses are the additional costs of running your startup, including everything from payroll and office rent to sales and marketing expenses.

In addition to these fixed costs, you’ll need to anticipate one-time costs, like replacing broken machinery or holiday bonuses. If you’ve been in business for a few years, you can take a look at previous years’ expenses to see what one-time costs you ran into, or estimate a percentage of your total expenses that contributed to variable costs.

4. Cash flow statements

Cash flow statements (CFS) compare a business’s incoming cash totals, including investments and operating profit, to their expected expenses, including operational costs and debt payments.

Cash flow shows a company’s overall money management and is one of three major financial statements, next to balance sheets and income statements. It can be calculated using one of two methods:

• Direct Method : calculates actual cash flow in and out of the company
• Indirect Method : adjusts net income considering non-cash revenue and expenses

Businesses can use either method to determine cash flow, though presentation differs slightly. Typically, indirect cash flow methods are preferred by accountants who largely use accrual accounting methods .

5. Income statements

Your income statement projection utilizes your sales forecasts, estimated expenses, and existing income statements to calculate an expected net income for the future.

In addition to the hard numbers available, you should apply your industry expertise to consider new opportunities for your business to grow. If you’re entering Series C, you should anticipate the extra investments and big returns that you’re aiming to experience this round.

Once you’ve collected your insights, use your existing income statement to track your estimated revenue and expenses. Total each and subtract the expenses from the revenue projections to determine your projected income for the period.

 6. Balance sheet

Your balance sheet is the final of the big three financial documents needed to establish your company’s financial standing. The balance sheet makes a case for your company’s financial health and future net worth using these details:

• Company’s assets
• Business’s liabilities
• Shareholders’ equity

This document breaks down the company’s owned assets vs. debt items. It most directly tracks earnings and spendings, and it also doubles as an actual to establish profitability for prospective investors.

7. Break-even analysis

Launching a startup or new product line requires a significant amount of capital upfront. But at some point, your new endeavor will generate a profit. A break-even analysis identifies the moment that your profit equals the exact amount of your initial investment, meaning you’ve broken even on the launch and you haven’t lost or gained money.

A break-even point (BEP) should be identified before launching your business to determine its viability. The higher your BEP, the more seed money you’ll need or the longer it will be until operations are self-sufficient.

Of course, you can also increase prices or reduce your production costs to lower the BEP.

As your business matures, you can use the BEP to weigh risks with your product decisions, like implementing a new product or removing an existing item from the mix.

8. Financial ratios

Financial ratios are common metrics that lenders use to check financial health using data from your financial statements. There are five core groups of financial ratios used to evaluate businesses, as well as an example of each:

Efficiency ratios : Analyze a company’s assets and liabilities to determine how efficiently it manages resources and its current performance.

Formula : Asset turnover ratio = net sales / average total assets

Leverage ratios : Measure a company’s debt levels compared to other financial metrics, like total assets or equity.

Formula : Debt ratio = total liabilities / total assets

Liquidity ratios : Compare a company’s liquid assets and its liabilities to lenders to determine its ability to repay debt.

Formula : Current ratio = current assets / current liabilities

Market value ratios : Determine a public company’s current stock share price.

Formula : Book value per share (BVPS) = (shareholder’s equity - preferred equity) / total outstanding shares

Profitability ratios : Utilize revenue, operating costs, equity, and other other balance sheet metrics to asses a company’s ability to generate profits.

Formula : Gross profit margin = revenue / COGS

Graphs and charts can provide visual representations of financial ratios, as well as other insights like revenue growth and cash flow. These assets provide an overview of the financial projections in one place for easy comparison and analysis.

Startup Financial Projections Template

As a startup, you have some extra considerations to apply to your financial projections. Download and customize our financial projections template for startups to begin importing your financial data and build a road map for your investments and growth. 

Plan for future success with HubSpot for Startups

A sound financial forecast paves the way for your next moves and reassures investors (and yourself) that your business has a bright future ahead. Use our startup financial projections template to estimate your revenue, expenses, and net income for the next three to five years.

Ready to invest in a CRM to help you increase sales and connect with your customers? HubSpot for Startups offers sales, marketing, and service software solutions that scale with your startup. 

Get the template

Free Startup Plan, Budget & Cost Templates

By Kate Eby | September 12, 2017

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A business plan describes how a new business will meet its primary objectives over a given period of time. It is both a strategic document that can act as a roadmap and a tool for securing funding and communicating with stakeholders. For a startup business, planning is key to developing a thorough understanding of the target market, competition, market conditions, and financing opportunities.

Included on this page, you'll find a variety of helpful, free startup business planning templates , like a SWOT analysis template , a competitive analysis template , a business startup checklist template , and more.

Startup Business Planning Templates

Competitive analysis template - excel.

Download Competitive Analysis Template

Excel | Smartsheet

Analyze multiple competitors based on the categories you want to compare, and use the results to identify your top rivals. This template contains several sheets to provide a comprehensive look at how your startup stacks up to the competition, the strengths of each company, and potential partnerships or opportunities.

SWOT Analysis Template - Excel

Download SWOT Analysis Template

While researching your business plan, both risks and opportunities are likely to arise. This critical information gives you the chance to plan for how you will take advantage of or address them as needed. A SWOT analysis helps you identify and gain a clear understanding of internal strengths and weaknesses as well as external opportunities and threats. The results of the analysis will inform your business goals and strategies for reaching them. Once completed, you can add this SWOT template to a startup business plan or use it as a planning tool. If this template doesn’t have the details you require, you can find more of our  free SWOT Analysis Templates .

Marketing Plan Template - Excel

Download Marketing Plan Template

Easily create a detailed marketing plan for different campaigns, including projected and actual costs. It also doubles as a marketing calendar template, showing a weekly, monthly, and quarterly breakdown of your timeline and initiatives. A marketing plan is typically part of a business plan, but you can use this dedicated template for developing a thorough plan and schedule.

Business Startup Checklist Template - Excel

Download Business Startup Checklist Template

This template offers a simple checklist to help you organize all of the tasks that need to be accomplished, from initial research and planning to establishing professional partnerships and acquiring necessary permits. Edit the list to include relevant actions for a particular business. This is an easy way to ensure that important items are not overlooked and prioritize steps.

Business Planning Schedule - Excel

Download Business Planning Schedule

This template allows you to create a schedule for tasks with a visual calendar for planning. This layout can help you organize your planning process and provide a timeline for reaching certain milestones. The template is structured around planning stages, allowing you to separate tasks hierarchically. To use this template for another planning process, simply edit the tasks included and add your dates to the schedule.

Target Market Comparison Template - Excel

‌ Download Target Market Comparison Template - Excel

Utilize this worksheet to compare target markets in order to understand which are ideal for your product or service. Understanding your customers is vital not only for developing effective strategies, but also for showing investors that you’ve done the necessary research and understand how to reach potential customers.

Startup Business Plan Template - Word

Download Startup Business Plan Template

Word  | Smartsheet

This template offers a traditional outline for creating a business plan document. You’ll find sections for an executive summary, company description, marketing plan, product and operational information, financial data, and room for appendices. You can refine the plan to suit different industries and business types. For example, if you want to create a technology startup business plan template, you will want to show how the startup will deal with rapidly changing markets, and provide product and market research that shows how your business will be on the cutting edge. You may also need to provide longer-term financial projections since high-tech startups often operate for an extended time without profits. 

For additional resources, visit " Free Startup Business Plan Templates and Examples ."

One-page Business Plan Template - Word

Download One-page Business Plan Template

Excel  |  Word  |  PDF  | Smartsheet

Create a streamlined business plan document on a single page with this Word template. A simplified plan can be helpful for summarizing information into a brief report. This format gives readers a quick overview of your startup business plan while emphasizing key points. 

For additional resources, visit " One-Page Business Plan Templates with a Quick How-To Guide ."

Startup Financial Templates

Small-business budget template - excel.

Download Small-Business Budget Template

This basic budget is ideal for small businesses that want an easy, blank template to customize. To create a business budget, include both fixed and variable expenses along with revenue and funding sources. Use this template to track expenditures and revenue, maintain a balanced budget, and to help grow your business.

Sales Forecast Template - Excel

Download Sales Forecast Template

With this template, you get a 12-month sales forecast as well as sales data from prior years. You can organize the spreadsheet based on product names, target customers, or other categories, and then enter forecasted monthly sales, including adjustments for seasonal changes or other factors that might impact sales. The template also calculates monthly and yearly totals.

Business Startup Costs Template - Excel

Download Business Startup Costs Template

Startup costs begin to accrue before operations begin, so it’s important to determine expenses early on to avoid being underfunded or overspending. This startup costs template shows a summary of both funding and expenses at the top, with itemized details below. You can use this worksheet to outline expenses, create a tentative budget, and compare actual costs as they accrue. Similar to a start up budget template, this version helps you focus on expenditures.

Startup Budget Template - Excel

Download Startup Budget Template

A startup budget is an important tool for identifying what financial resources are available, determining how much revenue is needed to meet business goals, and pinpointing areas where you can save money. A budget works as a planning tool as well as a method for tracking actual expenditures. As part of a business plan, it supports the process of pitching to investors and completing loan applications. This budget template is geared toward startup companies and includes a section for projected monthly costs.

Startup Financial Projections Template - Excel

Download Startup Financial Projections Template

Similar to a pro forma template for startups, this version includes a 12-month profit and loss projection, a balance sheet, and a cash flow statement. Use the template to analyze the current financial standing and run a future forecast for a business. The spreadsheet includes pre-populated fields with expenses and income sources, which you can easily edit to accommodate your business.

Personal Financial Statement - Excel

Download Personal Financial Statement

Some lenders may require a personal financial statement in addition to relevant business data. This template lists assets and liabilities in order to calculate net worth. You’ll also find space for adding a signature so you can certify that the information is correct.

Balance Sheet Template - Excel

Download Balance Sheet Template

This template can be modified to either show an opening day balance for a startup or to create a projected balance sheet. Choose a given time period, enter your numbers for assets, liabilities, and equity, and the template will provide automatic calculations.

First-Year Budget Calculator - Excel

Download First-Year Budget Calculator

Combining business and personal budget information into a single template can be useful for small business owners who are just getting started. This template focuses on first-year budget calculations including startup costs, operating expenses, estimated income, personal expenses, and more. You can identify fixed and recurring costs for a full view of expenses for the first year.

12-Month Cash Flow Forecast - Excel

Download 12-Month Cash Flow Forecast

This template shows all 12 months of the year for a monthly and annual cash flow forecast. In addition to creating a forecast, you can compare actual cash flow totals for each month. The template is divided into categories for cash on-hand, cash receipts, and cash paid-out, with an alternating color scheme for easy viewing.

Annual Business Budget Template - Excel

Download Annual Business Budget Template

As a startup becomes established, this template can be used to create a budget showing totals on a monthly, quarterly, and annual basis. You can create a projected 12-month budget as well as compare financial data to the previous year’s performance. The template provides detailed income and expense categories for thorough planning and tracking.

Financial Dashboard Template - Excel

Download Financial Dashboard Template - Excel

Create a visual financial report with this dashboard template, which tracks statistics over time using graphs and charts. Compare sales rep performance, product revenue, regional data, or other financial KPIs. A graphical report provides a quick overview of financial information in a format that is easy to understand and share with stakeholders.

Marketing Budget Plan - Excel

Download Marketing Budget Plan

Create a dedicated marketing budget with results displayed in both a spreadsheet format and pie chart. Calculate costs for various marketing campaigns in order to view fund allocation. The template includes space for comments and notes to aid in strategic business planning.

Website Budget Template - Excel

Download Website Budget Template

This startup website template provides sections for calculating initial development costs as well as creating a projected budget over three years. View a list of costs and benefits to see how the website will impact the business over time. This template can help you determine the value of your website investment and track actual annual performance.

Loan Amortization Schedule - Excel

Download Loan Amortization Schedule

Keep track of a loan balance, payments made, upcoming amounts due, and interest paid with this loan amortization template. Enter lender information and loan terms at the top of the template, and then use the schedule to track payment details. Startups owners will appreciate how easy it is to manage business loans and create repayment plans.

Why Write a Startup Business Plan?

The benefits of writing a startup business plan range from clarifying initial ideas to attracting potential investors. The process of business planning can help uncover weaknesses as well as opportunities you may have overlooked. Planning encourages entrepreneurs to examine each step required to start a business in order to avoid mistakes in the long run. Collecting data through market analysis can allow you to confidently make informed decisions and provide a dose of reality to your business idea by affirming or challenging initial assumptions about your product, business model, or strategies for achieving success. Once you clarify your startup vision, analyze financial and market data, and define goals, you can create a strategic action plan to use as a guide for reaching objectives and addressing potential challenges. 

After establishing a startup, continue business planning to identify ways to grow and improve the business as well as to plan for resource use and development. If you treat your business plan as a living document that you regularly review and update, you can also use it to measure progress over time. An effective plan communicates a company’s vision to team members and all stakeholders, and provides both a foundation and an adaptable model that can grow and change along with the business.

One key reason for startups to develop sound business plans is to convince investors and lenders to finance the endeavor. Most banks and investors will want to see detailed financial projections and a statement of your current personal and business financial standing. Investors may want to see market data and other proof that your plan has a high chance for success. Without adequate financing, no startup can succeed, so it’s essential to create an ironclad pitch for funders.

What to Include in a Business Plan

Business plans are tailored to fit a specific type of business and to serve a particular purpose, whether it’s to seek funding, influence a particular audience, or develop strategy for internal use. While you’ll need to continually revise plans need to fulfill a certain function, there are similar elements in all business plans. Here are some of the common sections included in a startup business plan:

• Summary and Objectives: This first section can provide background information, a detailed company description, general industry information, goals that you want to achieve, and long-term objectives. Depending on the size and type of business, this information may be divided into multiple sections or summarized in one pitch. 
• Marketing Plan: Providing market data and an outline for how you will market and sell products and services allows you to show a deep understanding of your target audience and your plans for branding and distribution. Be sure to conduct thorough research that you can use to back up your plans with supporting numbers and statistics. You may also include separate, detailed sections on competition, customer characteristics, product features, sales forecasts, and marketing strategy.
• Operational Plan: This section is concerned with the equipment, processes, and people involved in daily operations. You may want to include details on location requirements, production methods, legal issues (such as licenses or insurance requirements), staffing information, vendor needs, and other operational elements. 
• Management and Organization: A description of management positions and professional advisors provides an organized look at key roles, the experience individuals bring to the business, and important consultants or mentors. You can also include resumes for key employees and startup owners if the business plan is supporting a loan application or investor pitch.
• Startup Expenses and Financial Plan: Estimate expenses as accurately as possible and include contingencies for unforeseen costs. Creating estimates requires thorough research, and expenses should include even small items - while they are easy to overlook, they may add up to significant costs. A comprehensive financial plan can include profit and loss projections and other budget forecasts in order to provide a clear picture of a startup’s financial standing and future outlook. 

A business plan will, of course, look different for a restaurant, web-based business, technology service provider, or product manufacturer. Before getting started, consider what you want to accomplish with your business plan, and customize it accordingly.

Business Plan Tips

Taking the time for thorough research and planning can help you make informed decisions, avoid potential pitfalls, and craft an effective plan. Here are a few tips to consider as you create a business plan:

• Get Creative: Business plans can follow a simple outline, but turning your plan into a creative presentation can make a statement and grab investors’ attention. 
• Use Data Wisely: No matter what format or approach you take, a startup business plan should be concise and include compelling evidence and hard data to back up your claims. 
• Refine Your Plan: Consider your audience and review your plan to ensure the information presented is appropriate, sufficient, and clear. 
• Focus on Objectives: Connect every strategy to core objectives so that there is a clear path for attaining success. 

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Original text

Financial projections use existing or estimated financial data to forecast your business’s future income and expenses. They often include different scenarios to see how changes to one aspect of your finances (such as higher sales or lower operating expenses) might affect your profitability.

If you need to create financial projections for a startup or existing business, this free, downloadable template includes all the necessary tools.

What Are Financial Projections Used for?

Financial projections are an essential business planning tool for several reasons.

• If you’re starting a business, financial projections help you plan your startup budget, assess when you expect the business to become profitable, and set benchmarks for achieving financial goals.
• If you’re already in business, creating financial projections each year can help you set goals and stay on track.
• When seeking outside financing, startups and existing businesses need financial projections to convince lenders and investors of the business’s growth potential.

What’s Included in Financial Projections?

This financial projections template pulls together several different financial documents, including:

• Startup expenses
• Payroll costs
• Sales forecast
• Operating expenses for the first 3 years of business
• Cash flow statements for the first 3 years of business
• Income statements for the first 3 years of business
• Balance sheet
• Break-even analysis
• Financial ratios
• Cost of goods sold (COGS), and
• Amortization and depreciation for your business.

You can use this template to create the documents from scratch or pull in information from those you’ve already made. The template also includes diagnostic tools to test the numbers in your financial projections and ensure they are within reasonable ranges.

These areas are closely related, so as you work on your financial projections, you’ll find that changes to one element affect the others. You may want to include a best-case and worst-case scenario for all possibilities. Make sure you know the assumptions behind your financial projections and can explain them to others.

Startup business owners often wonder how to create financial projections for a business that doesn’t exist yet. Financial forecasts are continually educated guesses. To make yours as accurate as possible, do your homework and get help. Use the information you unearthed in researching your business plans, such as statistics from industry associations, data from government sources, and financials from similar businesses. An accountant with experience in your industry can help fine-tune your financial projections. So can business advisors such as SCORE mentors.

Once you complete your financial projections, don’t put them away and forget about them. Compare your projections to your financial statements regularly to see how well your business meets your expectations. If your projections turn out to be too optimistic or too pessimistic, make the necessary adjustments to make them more accurate.

*NOTE: The cells with formulas in this workbook are locked. If changes are needed, the unlock code is "1234." Please use caution when unlocking the spreadsheets. If you want to change a formula, we strongly recommend saving a copy of this spreadsheet under a different name before doing so. 

We recommend downloading the  Financial Projections Template Guide in English  or  Espanol .

Do you need help creating your financial projections? Take SCORE’s online course on-demand on financial projections or connect with a SCORE mentor  online or in your community today.

Simple Steps for Starting Your Business: Financial Projections In this online module, you'll learn the importance of financial planning, how to build your financial model, how to understand financial statements and more.

Business Planning & Financial Statements Template Gallery Download SCORE’s templates to help you plan for a new business startup or grow your existing business.

Why Projected Financial Statements Are Essential to the Future Success of Startups Financial statements are vital to the success of any company but particularly start-ups. SCORE mentor Sarah Hadjhamou shares why they are a big part of growing your start-up.

Copyright © 2024 SCORE Association, SCORE.org

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

Startup Q&A

How do I create financial projections for a startup?

Table of contents

Creating financial projections for your startup will depend on your industry, where you are in your financing, and where you plan to take the business. You also need to take into account the purpose of the financial projections - are the going to be used to raise capital, manage your cash flow or napkin-test the assumptions you have for an idea? 

Our clients have raised billions in venture capital funding, and our team has helped companies create all levels of startup financial projections. Let’s dive into how we suggest most founders produce projections. And we have many free, downloadable models that you are free to use . 

The Steps to Create Startup Financial Projections

• Determine the goal of the projections
• Determine the KPIs for your company that will drive, and be outputs, of the spreadsheet
• Get a startup financial projections template
• Drop your historical financial results into the template, if you have them
• Start by projecting revenue
• Project headcount needs
• Estimate other expenses
• Model working capital
• Review your work

1. What is the goal of the exercise? If you are raising capital or back-of-the-enveloping a startup idea. more extrapolated with less detail is better. But if you are carefully trying to manage the cash in an existing business, detail matters. 

2. Your KPIs will vary by industry. You won’t need to start from scratch if you’re working with a professional (whether that be your VC firm, your CFO , or a seasoned angel investor/advisor in your industry): they’ll know the important metrics and average costs. Ask!

3. Even if you really know Excel or Google Sheets, why waste time building from scratch? Get one of our free Excel templates here . 

4. If your business is already running, add in the results first. This gives you a basis from which to develop your startup’s financial projections. 

5. What are the key drivers in your startup’s revenue? (We understand that many biotech/hardware companies won’t have revenue for while, so skip that step if that’s you.) Investors really care about revenue drivers, so nail down the assumptions, and be sure to cleanly add in existing, historical drivers if you are already generating revenue.

6. Headcount is most likely going to be the largest expense for your startup. This is where you need to get the numbers right, or at least directionally close. Back into how many employees you’ll need to achieve your goals. 

7. For starters on creating the projected expenses, begin outlining what your key expenses will be. For example: payroll, rent, COGS in some cases, M&E, etc. While you may have a good idea of what these categories will cost, ask around to your network to make sure that you’re in the ballpark. Rents and salaries can vary widely depending on your metro. Understanding the common startup statistics for your industry will help you make reasonable assumptions. 

8. If your company has working capital, you’ll want to model it in. However, many startups don’t have this level of complexity, at least in the early days. If you don’t know what working capital is, read this description  to figure out if your startup’s projections will need them.

9. Review your projections! Are they telling the story that you want to? Do they match up with your business model and ultimate market size? Are you burning a reasonable amount of cash to achieve your end objectives?

Here are some common points that you’ll want to include in your startup financial projections:

3 Years of Projections.  Occasionally, investors will ask for more/less, but start with 3 years. Some companies, like hardware companies, will want to go further out, as the revenue opportunity doesn’t become obvious until the later years. 

3 Statement Model. Include a Profit & Loss Statement, Balance Sheet, and Statement of Cash Flows. Each should balance and tie back to each other (this gets tricky).

Your KPI’s should be your Drivers. Every company has a dashboard of metrics that they track growth and success by. A few examples include number of users, customers, margin, customer acquisition cost, Twitter followers, website traffic, etc. Look to the past and show that there is a correlation between X (could be # of Sales Reps) and Y (could be your revenue), then use this as a driver towards the future projections.

Churn. Customers will leave. Account for this.

Waterfalls. Your financial model should be dynamic. Waterfalls show how you actually performed against your projection and then resets the future accordingly.

Startup Financial Projections Tips

Solid startup financial projections that convey the assumptions and that builds excitement in the business is a key to getting VCs to engage in your fund raise. Here are some tips to help you make solid startup financial projections that resonate with venture investors.

Startup Financial Projection Tips

• Align the projections to the actual business drivers
• Identify KPIs that drive revenue
• Explain your gross margin
• Identify and understand your operating expenses
• Project your balance sheet
• Match the startup projections to your actual results
• Understand the forecast’s trendlines

Tip #1: Match the numbers to the actual business drivers

The most important piece of advice that you can takeaway is that you want to align your financial model with your actual business. That means the business goals, or the key performance indicators, otherwise known as KPIs, are what you want to use to drive your projections. There are the assumptions, drivers or metrics that will communicate your core business assumptions to the investors. 

Tip #2: Identify KPIs that drive revenue

The most important drivers are usually for revenue. Many times that can be average selling price per customer, or deal, customer acquisition cost, churn rate, things like that, that all feed into lifetime value of the customer. Those are the big variables that are going to drive your business. Start with your KPIs, write them down, even before you start working in Excel or Google Sheets. Start by writing down your key performance indicators, isolate four or five of them. Don’t do too many, because then it gets too complicated to explain. 

Tip #3: Explain your gross margin 

Work downwards from revenue to the gross margin. What costs are required to provide the service? A lot of times Amazon web services, or hosting, things like that, or software that’s built into your product that you always have to pay and subscribe to every month. Investors tend to really focus on your gross margin. Everyone wants to invest in companies that have a higher gross margin because high gross margins allow you to spend more money on operating expenses, like marketing, advertising, headcount, things like that. 

Tip #4: Identify and understand your operating expenses

Then you’re going to work through your operating expenses. This is where you capture all your personnel spend, all your marketing, all your advertising, all what is called G&A or SG&A. (G&A = General and Administrative expenses; SG&A = Sales, General and Administrative expenses). like rent, healthcare benefits, all that stuff. You’re going to have line items for all that in your financial model so it’s very obvious to you. One of the best parts about doing this on a line-by-line basis, is you really start to understand the costs inherent in the business. We’ve had companies paying way too much in rent and they didn’t realize that was going to material impact their ability to be profitable. It’s always better for your business to identify these before you start talking to investors.

Bonus modeling tip: Early stage startups need to pay special attention to payroll costs. It is not uncommon for a startup to invest too much in headcount, too early, and all of a sudden their burn will go crazy. Some CEOs don’t realize that, until they actually look at the line items and how many people they’re employing, what those salaries were and what the impact is on cash burn. It’s a great exercise to review payroll on a line-by-line basis. 

Tip #5: Project your balance sheet

Now, once you get your income statement done, you’re going to want to feed that into the balance sheet. Cash is really the most important item that you are forecasting in your startup financial projections. There’s going to be some working capital changes, which is part of the company’s cash flow that may require special attention. For example, when you invoice a customer you’re probably not going to get paid for 30 days or 60 days. That is a working capital cost and that’s going to be reflected on your balance sheet and cash flow statement. Just be aware of all the changes to working capital, all the prepaid expenses that you have to do, all the accrued expenses. Those are going to all get flushed out on the balance sheet and cash flow statement. 

Tip #6: Match the financial projections to your actual results

Now, once you’ve got your three statement model, the incomes statement, balance sheet, cash flow statement, you’ll need to layer in actuals. You’re going to want to show what you budgeted and what you’re actually doing, and do so in a way that explains how the company’s projections will grow over time. This is tremendously valuable to the CEO, because they can see if they’re underperforming financially, if they’re spending too much money, and this is very, very important to see if your runway is getting shortened, if you are materially outperforming your projections. Having the budget actuals is really important. 

Tip #7: Understand the trendlines

Finally, you’re going to want to analyze some of your basic trendlines. You’re going to want to analyze your expenses. You’re going to want to analyze your revenue ramp. You’re going to want to look at how much you’re spending on headcount every month. Some nice charts are really valuable. Those are charts you can show in your board meeting and say, “Look at our revenue ramp. Look at how we’re keeping costs very manageable. Look at how we haven’t ramped headcount too much.” Pay attention to the ramps, make sure they are either smooth, or that you can explain where massive changes happen. For example, if revenue growth is projected to jump, can you explain why that jump will occur? 

These are all tips that you can use as you create your startup’s financial projections. Using these tips can help you make your financial forecast a lot more informative for the company, for your board, and also just help you manage the business better. 

VC Funding - How to think about funding and your future numbers

VCs, at least the experienced ones, are always thinking ahead to the next fundraising round. They’ll want to know that you’ve got the right metrics to raise the next round of financing. For example, if you are raising a Series A, they will look ahead to the KPIs that you show at the Series B to back-check to make sure you’ll have the numbers that the market wants to see to write that next check. Do your model based on the metrics that you need to achieve to get that next round of financing. Then you can modify your hiring and other burn based on how closely you hit your spending. VCs will want to see:

• How much money you need to get to your next round (so how much you are raising NOW)
• What your run rate will be at the next round - so that you’ll have the metrics to raise the next round
• How much money you’ll raise in the next round (so they can make sure they’ll have the capital to support you + confirm you are rightsizing the capital needs of the company with the opportunity)

Another critical point that many founders miss when discussing their numbers with VCs is that the investors are likely to remember the metrics that were presenter earlier in the process. For example, if you meet with an investor and share a set of projections that show that you’ll have 150 live, paying customers in 3 months, and then meet with that investors in 3 months, they will want to know if you’ve hit that 150 customer count. 

That’s why it’s important to keep your numbers updated with recent historical results, and that’s why you’ll want to do budget-vs-actuals, especially during your fundraising process. The basic process is that you compare the major line items in your budget vs. what you actually achieved, and debug why there are differences - and figure out what’s working. Professionals call these “BVAs,” and the benefits of doing them are:

• Brings accountability to your forecasted numbers
• Qualitatively shows how you’re performing vs. expectations
• Provides visibility to where you are over budget, so you can course correct
• Displays where spend is not that effective
• Ensures you’re hiring according to plan

Don’t show an investor a financial model that shows smooth growth “up and to the right.” No company’s growth is without bumps. These models take a lot of time to build and are highly personalized, so it really is best to consult with a professional. If you’re planning on raising $3M+ you should come prepared with well thought out financial projections.

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Plan Projections

ideas to numbers .. simple financial projections

Business Plan Financial Projections

Plan Projections provides a template you can use to create simple 5 year business plan financial projections for a start-up or established business. The Plan Projections template is free, easy to set up and customize, and loaded with great features.

We have built the core template using Excel, and when you’re ready for more there are lots of industry specific templates and calculators available to help build your financial projections from the bottom up for any business or industry sector.

Ready to build your financial projections?

Financial projections industry specific templates.

Select Templates from the menu above or choose one of the popular templates below.

Popular Industry Specific Templates

• Restaurant Business Revenue Projection
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• Other Industry Templates …

Financial Projection Calculators

Our calculators, are available to help you calculate revenue, weighted average gross margin, and activity ratios such as accounts receivable, inventory and accounts payable days, for use in the financial projections template.

Select Calculators from the menu above or choose one of the popular calculators below.

Popular Calculators

• Days Payable Outstanding Calculator
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Financial Projection Online Calculator

Financial projections popular posts.

• Hotel Revenue Projection Excel Template
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Notes and major health warnings Users use this business plan financial projection template at their own risk when deciding how to make financial projections. Consequently we make no warranty or representation as to financial modelling template accuracy. Additionally we are covered by our Terms and Conditions , which you are deemed to have read. This is an example of a five year financial projection template format that you might use when considering how to do a financial business plan and carry out a startup financial analysis. It is purely illustrative. Furthermore this is not intended to reflect general standards or targets for any particular company or sector. If you do spot a mistake in the startup business model template, please let us know and we will try to fix it.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. Furthermore he has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from a UK University.

Free Business Plan Excel Template [Excel Download]

Written by Dave Lavinsky

A business plan is a roadmap for growing your business. Not only does it help you plan out your venture, but it is required by funding sources like banks, venture capitalists and angel investors.

Download our Ultimate Business Plan Template here >

The body of your business plan describes your company and your strategies for growing it. The financial portion of your plan details the financial implications of your business: how much money you need, what you project your future sales and earnings to be, etc.

Below you will be able to download our free business plan excel template to help with the financial portion of your business plan. You will also learn about the importance of the financial model in your business plan.

Download the template here: Financial Plan Excel Template  

How to Finish Your Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less! It includes a simple, plug-and-play financial model and a fill-in-the-blanks template for completing the body of your plan.

What’s Included in our Business Plan Excel Template

Our business plan excel template includes the following sections:

Income Statement : A projection of your business’ revenues, costs, and expenses over a specific period of time. Includes sections for sales revenue, cost of goods sold (COGS), operating expenses, and net profit or loss.

Example 5 Year Annual Income Statement

Cash Flow Statement : A projection of your business’ cash inflows and outflows over a specific period of time. Includes sections for cash inflows (such as sales receipts, loans, and investments), cash outflows (such as expenses, salaries, and loan repayments), and net cash flow.

Example 5 Year Annual Cash Flow Statement

Balance Sheet : A snapshot of your business’ financial position at a specific point in time. Includes sections for assets (such as cash, inventory, equipment, and property), liabilities (such as loans, accounts payable, and salaries payable), and owner’s equity (such as retained earnings and capital contributions).

Example 5 Year Annual Balance Sheet

Download the template here: Business Plan Excel Template 

The template is easy to customize according to your specific business needs. Simply input your own financial data and projections, and use it as a guide to create a comprehensive financial plan for your business. Remember to review and update your financial plan regularly to track your progress and make informed financial decisions.

Finish Your Business Plan Today!

The importance of the financial model in your business plan.

A solid financial model is a critical component of any well-prepared business plan. It provides a comprehensive and detailed projection of your business’ financial performance, including revenue, expenses, cash flow, and profitability. The financial model is not just a mere set of numbers, but a strategic tool that helps you understand the financial health of your business, make informed decisions, and communicate your business’ financial viability to potential investors, lenders, and other stakeholders. In this article, we will delve into the importance of the financial model in your business plan.

• Provides a roadmap for financial success : A well-structured financial model serves as a roadmap for your business’ financial success. It outlines your revenue streams, cost structure, and cash flow projections, helping you understand the financial implications of your business strategies and decisions. It allows you to forecast your future financial performance, set financial goals, and measure your progress over time. A comprehensive financial model helps you identify potential risks, opportunities, and areas that may require adjustments to achieve your financial objectives.
• Demonstrates financial viability to stakeholders : Investors, lenders, and other stakeholders want to see that your business is financially viable and has a plan to generate revenue, manage expenses, and generate profits. A robust financial model in your business plan demonstrates that you have a solid understanding of your business’ financials and have a plan to achieve profitability. It provides evidence of the market opportunity, pricing strategy, sales projections, and financial sustainability. A well-prepared financial model increases your credibility and instills confidence in your business among potential investors and lenders.
• Helps with financial decision-making : Your financial model is a valuable tool for making informed financial decisions. It helps you analyze different scenarios, evaluate the financial impact of your decisions, and choose the best course of action for your business. For example, you can use your financial model to assess the feasibility of a new product launch, determine the optimal pricing strategy, or evaluate the impact of changing market conditions on your cash flow. A well-structured financial model helps you make data-driven decisions that are aligned with your business goals and financial objectives.
• Assists in securing funding : If you are seeking funding from investors or lenders, a robust financial model is essential. It provides a clear picture of your business’ financials and shows how the funds will be used to generate revenue and profits. It includes projections for revenue, expenses, cash flow, and profitability, along with a breakdown of assumptions and methodology used. It also provides a realistic assessment of the risks and challenges associated with your business and outlines the strategies to mitigate them. A well-prepared financial model in your business plan can significantly increase your chances of securing funding as it demonstrates your business’ financial viability and growth potential.
• Facilitates financial management and monitoring : A financial model is not just for external stakeholders; it is also a valuable tool for internal financial management and monitoring. It helps you track your actual financial performance against your projections, identify any deviations, and take corrective actions if needed. It provides a clear overview of your business’ cash flow, profitability, and financial health, allowing you to proactively manage your finances and make informed decisions to achieve your financial goals. A well-structured financial model helps you stay on top of your business’ financials and enables you to take timely actions to ensure your business’ financial success.
• Enhances business valuation : If you are planning to sell your business or seek investors for an exit strategy, a robust financial model is crucial. It provides a solid foundation for business valuation as it outlines your historical financial performance, future projections, and the assumptions behind them. It helps potential buyers or investors understand the financial potential of your business and assess its value. A well-prepared financial model can significantly impact the valuation of your business, and a higher valuation can lead to better negotiation terms and higher returns on your investment.
• Supports strategic planning : Your financial model is an integral part of your strategic planning process. It helps you align your financial goals with your overall business strategy and provides insights into the financial feasibility of your strategic initiatives. For example, if you are planning to expand your business, enter new markets, or invest in new technologies, your financial model can help you assess the financial impact of these initiatives, including the investment required, the expected return on investment, and the timeline for achieving profitability. It enables you to make informed decisions about the strategic direction of your business and ensures that your financial goals are aligned with your overall business objectives.
• Enhances accountability and transparency : A robust financial model promotes accountability and transparency in your business. It provides a clear framework for setting financial targets, measuring performance, and holding yourself and your team accountable for achieving financial results. It helps you monitor your progress towards your financial goals and enables you to take corrective actions if needed. A well-structured financial model also enhances transparency by providing a clear overview of your business’ financials, assumptions, and methodologies used in your projections. It ensures that all stakeholders, including investors, lenders, employees, and partners, have a clear understanding of your business’ financial performance and prospects.

In conclusion, a well-prepared financial model is a crucial component of your business plan. It provides a roadmap for financial success, demonstrates financial viability to stakeholders, helps with financial decision-making, assists in securing funding, facilitates financial management and monitoring, enhances business valuation, supports strategic planning, and enhances accountability and transparency in your business. It is not just a set of numbers, but a strategic tool that helps you understand, analyze, and optimize your business’ financial performance. Investing time and effort in creating a comprehensive and robust financial model in your business plan is vital for the success of your business and can significantly increase your chances of achieving your financial goals.

Free 1-year Financial Projection Template

Complete the form to get your copy of this free resource!

Free excel template to create financial projections for any business startup and first year. Forecast revenue, expenses, employee costs and generate an income statement, balance sheet, and cash flow pro forma automatically

Join 15,000+ founders and consultants who have used our free resources and tools

Free 1 Year Pro Forma Template

Download our 12 months financial projection template for free.  This tool will allow you to:

• Forecast startup costs
• Project your first 12 months of product or service revenue
• Forecast your operating expenses
• Add Salary Forecasts for your employees

Once you have input all of your own assumptions, you will be able to generate:

• 12 month pro forma income statement
• 12 month cash flow forecast
• 12 month balance sheet projection
• Basic graphs and charts

This free financial model is industry agnostic.  If you need an industry specific financial model you can check out ProjectionHub’s premium pro forma templates .  

Below you will be able to see some examples of the input and outputs of the projection spreadsheet. 

Financial Model Input Examples

Below you will be able to see examples of the input tabs for startup costs, fixed assets, revenue, operating expenses and salaries. 

Example of Startup Cost Forecast

The financial model input assumptions tab will include general assumptions and startup costs like your fixed assets like buildings, equipment, leasehold improvements and vehicles.  On the input assumptions tab you will also be able to include startup cost assumptions like initial inventory. 

12 Month Revenue Forecast Example

Our revenue assumptions tab will allow you to forecast your number of customers, the products or services they purchase, the purchase price and the percentage of total units sold represented by each product. You can see a quick example of our revenue model below:

Startup Operating Expense Projections Example

You can enter in your operating expense projections for your startup in the table below.  It will allow you to add expenses as a fixed monthly expense or a percentage of revenue. 

Startup Salary Forecasting Example

The last input tab is our salary forecast assumptions.  You can set a salary, employer taxes, benefits, the month the employee starts and ends, and the number of the particular employee.  

Projection Template Output Examples

Our free financial model spreadsheet will produce 12 months of income statement, cash flow and balance sheet projections.  You can see examples of each of these outputs below along with some of the basic charts and graphs that will be included. 

Example of a 12 Month Pro Forma P&L

Below you will see an example of our income statement pro forma output. 

Cash Flow Forecast 12 Month Example

Next you will see an example of our cash flow forecast output with cash from operating activities, financing and investing activities. 

Balance Sheet Forecast Example for 12 Months

The balance sheet forecast output will include 12 months of forecasted assets and liabilities as seen below:

Pro Forma Graphs

Finally, our free template includes a profit and loss at a glance, a monthly sales forecast and graph to display monthly sales, gross profit and net income.  

If you are needing a more tailored template to your industry as well as 5 years of projections, we have 100+ different industry templates to choose from as well:

Examples: Restaurant, Trucking, SaaS, Airbnb, Brewery, Dentist, etc.

Check out our Highly Rated Financial Projection Templates

Simplifying Your Office Tasks

Ready-To-Use Startup Financial Model Excel Template

Download the Startup Financial Model Template in Microsoft Excel, OpenOffice Calc, and Google Sheets to prepare financial projections for 3 years for your startup.

Just insert data for the first year. The template will automatically prepare the remaining 2 years of Income Projections, Sales Projections, Cash Flow Statements, Balance Sheets, and Break-even Analysis for your startup.

This template can be useful if you plan to get a business loan from banks or raise capital for your startup from private investors.

Table of Contents

Download Startup Financial Model Template (Microsoft Excel, Google Sheets & OpenOffice Calc)

We have created a ready-to-use 3-year Financial Projection Model For Startups to help you easily prepare Income Projections, Sales Projections, Cash Flow Statements, Balance Sheets, and Break-even Analysis for your startup.

This extremely useful Startup Financial Model Excel Template was voluntarily contributed by Kirti Tiwari, MBA Finance, Gold Medalist .

She has prepared this Startup Financial Model and also provided related explanations. Highly Appreciated.

Click on the link below to download your desired format.

Microsoft Excel   OpenOffice Calc   Google Sheet

Additionally, you can download the Income Statement Projection Template , Balance Sheet Template With Analysis , Cash Flow Statement Template , and Break-even Analysis Template depending on your requirements.

In case, you want to customize any of the above templates feel free to contact us. You can hire us for our services on Fiverr or contact us at [email protected].

How To Use Startup Financial Model Excel Template?

INTRO Sheet: Enter the preparer name, Company name, Starting Month, and Starting year. The Company name will be reflected in all the sheets ahead.

Startup Expenses

Startup Expenses (Year 1): Insert applicable data in the white cells. Orange cells contain formulas, hence do not enter or delete the cells.

Payroll Expenses

Payroll Expenses (Year 1): Insert applicable data in the white cells. Orange cells contain formulas, hence do not enter or delete the cells.

Payroll Expenses (Year 2 and Year 3): Insert the growth rate percentage to populate the cells automatically.

Sales Forecast

Sales Forecast (Year 1): Insert product names, Units, Sales Price per unit for each product, and COGS per unit. It calculates the Margin per unit for each product automatically.

Additionally, insert sales of units for each product in each month and it will calculate the rest.

Sales Forecast (Year 2 and Year 3): Insert Sales Growth Rate at the top for year 2 and year 3 and it auto-populates the sheet for you.

Other Expenses

Additional Information: Insert other startup-related costs such as schedules for Accounts Payable, Accounts Receivable, Amortization, Income Tax, and Depreciation.

Operational Expenses

Operational Expenses (OPEX Year 1): Insert applicable data in the white cells. Orange cells contain formulas, hence do not enter or delete the cells.

Operational Expenses (OPEX Year 2 and Year 3): Insert the growth rate percentage to populate the cells automatically.

Cashflow Forecast

Cash Flow (Year 1): Based on the entries in the previous sheets, the sheet auto-populates the data. Insert data in white cells if applicable to your business.

Cash Flow (Year 2 and Year 3): No need to enter any data in this sheet because it auto-populates the data based on previous entries.

Amortization & Depreciation Schedule

Amortization and Depreciation: This sheet consists of monthly amortization and depreciation schedules for 3 years for all the different heads. No need to enter any data in this sheet because it auto-populates the data based on previous entries.

COGS: Insert applicable data in the white cells. Orange cells contain formulas, hence do not enter or delete the cells.

Income Statement Projections

Projection Income Statement (Year 1): No need to enter any data in this sheet because it auto-populates the data based on previous entries.

Projection Income Statement (Year 2 and Year 3): No need to enter any data in this sheet because it auto-populates the data based on previous entries.

Balance Sheet

Balance Sheet: This sheet auto-populates the Balance Sheet for all three years. Hence, there is no need to enter any data.

Breakeven Analysis

Breakeven Analysis: This sheet auto-populates the Balance Sheet for all three years. Therefore, there is no need to enter any data in this sheet.

Financial Ratios

Financial Ratio: This sheet auto-populates the Balance Sheet for all three years. Therefore, there is no need to enter any data in this sheet.

That’s it and your Financial Projection for Startup is ready.

The template is self-explanatory. If you want more information on what things and figures you need to input in the sheet we have made a comprehensive guide for you below.

Startup Balance Sheet

A startup balance sheet is a snapshot of your company’s financial health at a specific point in time. It shows what you own (assets), what you owe (liabilities), and the value of your owners’ equity. It’s crucial for both internal decision-making and external communication, especially when seeking funding or partnerships.

In the whirlwind of building your dream startup, understanding your financial landscape is crucial. That’s where the startup balance sheet comes in, your financial snapshot at a specific time. Like a map guiding your next steps, it reveals what you own (assets), what you owe (liabilities), and the value of your ownership (equity).

Importance of Startup Balance Sheet

• Track your progress: Monitor your financial journey, celebrating milestones and identifying areas for improvement.
• Stay ahead of curves: Early detection of potential cash flow shortfalls or overly burdensome debt empowers you to make proactive decisions.
• Unlock new avenues: Investors heavily rely on balance sheets to evaluate the financial health of the business and make informed investment decisions.
• Guide your growth: These data-driven insights inform strategic choices about resource allocation, investments, and financing.

Fixed Assets

Fixed assets are the long-term, tangible property or equipment a company owns and uses to generate income or run its operations. They are expected to last for more than one year and are not easily converted into cash.

Key Characteristics of Fixed Assets

• Durability: They are expected to have a useful life of more than one year.
• Not for resale: They are not intended to be sold in the ordinary course of business.
• Used for production or operations: They are used to generate revenue or support business activities.
• Depreciated over time: To reflect their wear and tear and loss of value, fixed assets are depreciated over their useful lives, except for land.

Importance of Fixed Assets

Essential for operations: Fixed assets are often crucial for a company’s ability to produce goods, provide services, and generate revenue.

Significant investment: They can represent a significant portion of a company’s total assets and investment.

Impact on financial statements: Their value and depreciation affect a company’s financial statements, including its balance sheet, income statement, and cash flow statement.

Startup Operating Capital

Operating capital, the lifeblood of your startup, is the short-term financial resources needed to keep your business humming day-to-day. Think of it as the oil that lubricates your gears, ensuring smooth sailing through daily operations.

Components of Operating Capital

Operating capital covers a range of essential expenses, including:

Inventory: Raw materials, finished goods, and anything awaiting sale.

Payroll: Salaries and benefits for your amazing team.

Marketing and Sales: Reaching your target audience and converting leads.

Rent and Utilities: Keeping the lights on and doors open.

Administrative Costs: Paperclips, office supplies, and other essentials.

Importance Of Operating Capital

Sufficient operating capital ensures your startup can thrive in the fast-paced world of business.

It helps you:

Meet immediate obligations: Avoid late payments and maintain supplier relationships.

Seize opportunities: Grab limited-time deals or invest in quick-win marketing campaigns.

Weather unforeseen challenges: Handle unexpected expenses without breaking a sweat.

Maintain flexibility: Adapt to changing market conditions and pivot if needed.

How To Estimate Your Needs For Operating Captial?

Determining your operational capital needs takes careful planning. Consider factors like:

Industry standards: Research average operating capital requirements for your industry.

Business model: Analyze your projected sales and expenses to understand cash flow patterns.

Growth plans: Factor in upcoming milestones and potential scaling needs.

Securing operational capital can be achieved through various means:

Bootstrapping: Using personal savings or funds from friends and family.

Bank loans: Seeking traditional or short-term business loans.

Investor funding: Attracting venture capitalists or angel investors.

Line of credit: Accessing a flexible source of credit for ongoing needs.

Startup Funding Sources

Kickstarting your entrepreneurial journey requires securing initial capital which fuels your venture dream into reality. Funding sources are the sources from where your capital needs are met.

Thankfully, a diverse landscape of funding sources awaits, each with its advantages and considerations.

Key Funding Sources

Bootstrapping: A true test of grit and self-reliance, bootstrapping involves leveraging personal savings, family loans, or even credit cards to fund your initial operations. This approach offers autonomy and avoids external pressures, but comes with limited capital and potential personal financial strain.

Angel Investors: These wealthy individuals with a penchant for promising ventures can inject crucial capital in exchange for equity or convertible debt. The process often involves pitching your vision and demonstrating traction, making it crucial to have a well-honed narrative and compelling business plan.

Venture Capitalists (VCs): Geared towards high-growth potential startups, VCs invest larger sums for significant equity stakes. Expect rigorous due diligence and intense scrutiny, but also gain access to expertise, mentorship, and valuable networks.

Business Loans: Traditional bank loans or lines of credit offer secured funding based on business potential and personal creditworthiness. While less dilutive than equity options, they come with stricter repayment terms and interest rates.

Government Grants and Programs: Specific initiatives supporting innovation and entrepreneurship may offer grants or subsidized loans, often focused on sectors like technology or social impact. Research relevant programs and tailor your application to their criteria.

Crowdfunding: Platforms like “ ZestMoney ”, “ Fueladream ”, “Crowdfund India” etc. allow you to raise capital from a large pool of individual investors in exchange for rewards or pre-orders. This approach can be effective for building community and generating early buzz but requires a compelling campaign and marketing strategy.

Startup Payroll Expenses

Payroll, in essence, is the lifeblood of your startup. It’s the system for calculating and distributing compensation to your team – the talented individuals who breathe life into your vision. It encompasses wages, salaries, bonuses, taxes, deductions, and all the intricate details that ensure your people get paid correctly and on time.

Why You Need to Get This Right from the Start?

Attract and Retain Top Talent: Competitive and accurate payroll sets the tone for your company culture. It demonstrates respect for your team’s contributions and fosters trust, attracting and retaining the best minds who can accelerate your growth.

Compliance is Key: Navigating the intricacies of labor laws, tax regulations, and social security contributions can be tricky, especially for early-stage businesses. Proper payroll management mitigates risks, avoiding legal woes and fines that can derail your trajectory.

Efficiency Matters: Manual payroll calculations are time-consuming and prone to errors. Investing in reliable payroll software or outsourcing to a skilled payroll provider frees up your valuable time and resources for more strategic endeavors.

Transparency Builds Trust: Clear and transparent pay structures with accurate paystubs go a long way in fostering trust and motivation within your team. It empowers your employees to track their earnings and understand their compensation package.

Data-Driven Insights: Properly structured payroll data becomes a valuable asset. You can analyze trends, identify cost-saving opportunities, and make informed decisions about employee compensation and benefits to optimize your workforce investments.

Startup Sales Forecast

A sales forecast is an estimate of how much revenue a company expects to generate from its products or services during a specific period, typically a quarter, a year, or several years.

It’s a crucial tool for business planning, as it helps companies:

Understand future demand: Forecasting future sales helps businesses allocate resources efficiently, plan production schedules, and set realistic sales targets.

Make informed decisions: Sales forecasts inform budget decisions, marketing campaigns, inventory management, and even hiring plans.

Monitor performance: Comparing actual sales to the forecast helps track progress and identify areas for improvement.

Techniques for Sales Forecasting

There are several methods for forecasting sales, each with its strengths and weaknesses. Some common techniques include:

Historical data analysis: Analyzing past sales trends and seasonality can provide valuable insights for future projections.

Causal models: These models consider external factors like competitor activity, economic conditions, and marketing campaigns to estimate their impact on sales.

Expert judgment: Consulting with experienced salespeople or industry experts can provide valuable qualitative insights.

Statistical methods: Advanced statistical techniques like regression analysis can identify complex relationships between various factors and sales.

Benefits of Accurate Sales Forecasts

Having accurate sales forecasts offers several benefits, including:

Improved financial planning: Businesses can allocate resources more effectively, manage cash flow, and secure funding with greater confidence.

Enhanced decision-making: Accurate forecasts help companies make informed decisions about production, pricing, inventory, and marketing strategies.

Boosting operational efficiency: Businesses can optimize production schedules, workforce planning, and logistics to meet future demand efficiently.

Increased profitability: By anticipating market trends and customer needs, companies can make strategic decisions that maximize revenue and profitability.

Formula for Sales Forecast

While there’s no single formula universally applicable to all sales forecasts, a common starting point is:

Projected Sales = (Average Unit Price) x (Estimated Units Sold)

This formula requires estimates for both the average price per unit and the number of units to be sold. The accuracy of the forecast depends on the reliability of these estimates, which can be derived from historical data, market research, and expert judgment.

Additional factors to consider Sales Forecasting

Besides the techniques and formula mentioned above, several other factors can impact the accuracy of your sales forecast:

Market size and trends: Understanding the overall market size and growth potential for your product or service is crucial.

Competitor activity: Analyzing your competitors’ strategies and offerings can help you anticipate their impact on your sales.

Marketing and sales efforts: Planned marketing campaigns and sales initiatives can significantly influence sales volume.

Unforeseen events: Be prepared to adjust your forecast based on unexpected events like economic downturns, natural disasters, or technological disruptions.

Sales forecasts are not crystal balls; they are based on estimates and assumptions. Use multiple forecasting methods to gain a more comprehensive view.

Accounts Receivable (A/R) Days Sales Outstanding (DSO)

The average number of days it takes a company to collect cash from its customers after goods or services are sold on credit.

It’s calculated as DSO = (Average Accounts Receivable / Credit Sales) × Number of Days in Period .

Interpretation:

• A lower DSO (e.g., 30 days) indicates efficient collection practices and strong cash flow.
• A higher DSO (e.g., 60 days) suggests potential cash flow concerns, slower collections, or lenient credit terms.

Impact on Financial Performance:

• A high DSO can tie up funds, limit growth opportunities, and increase financing costs.
• Strategies to improve DSO include offering early payment discounts, tightening credit policies, and implementing efficient collection processes.

Accounts Payable (A/P)

The amount a company owes to its suppliers for goods or services purchased on credit. It’s listed as a current liability on the balance sheet.

• A higher A/P balance can indicate strong purchasing power and good relationships with suppliers.
• A lower A/P balance might suggest limited supplier relationships or missed potential discounts.
• Managing A/P effectively can optimize cash flow and leverage supplier relationships.
• Stretching payables too long can damage supplier relationships and harm creditworthiness.

Line of Credit Assumptions

A pre-approved borrowing limit that allows a company to draw funds as needed, up to a certain maximum, usually with interest charged on the used amount.

• Lines of credit provide flexibility for unexpected expenses or short-term funding needs.
• Assumptions about interest rates, borrowing limits, and repayment terms are crucial for financial modeling and planning.
• Access to a line of credit can enhance financial resilience and support growth.
• Overreliance on lines of credit can lead to excessive debt and interest costs.

Income Tax Assumptions for 1 to 3 Years

Estimates of the income taxes a company will pay based on projected earnings, tax rates, and deductions.

• Accurate tax assumptions are crucial for financial modeling, budgeting, and planning.
• Factors to consider include current tax legislation, industry norms, and potential changes in tax laws.
• Taxes directly affect available cash and profitability.
• Overly optimistic tax assumptions can lead to inaccurate financial projections and potential misrepresentation of earnings.

Amortization of start-up costs

Amortization of start-up costs refers to the process of gradually writing off the cost of certain start-up expenses over a set period, instead of expensing them all in the year they are incurred. This is done for accounting and tax purposes, as it provides a more accurate picture of the company’s financial performance over time.

Startup Operating Expenses

Operating expenses (OpEx) are the lifeblood of any business, representing the costs directly associated with running your core operations and generating revenue. They are crucial for understanding your efficiency and profitability.

Calculating OpEx

There are two main ways to calculate OpEx:

• Using the Income Statement(mainly for existing business): Locate the “Operating Expenses” section on your income statement. This section often lists subcategories, allowing you to analyze specific expense areas. Add up all listed expenses to get the total OpEx.
• Using a Formula: 

Formula 1: OpEx = Revenue – Operating Income – Cost of Goods Sold (COGS) Formula 2: OpEx = SG&A Expenses + COGS + Depreciation + Amortization

These formulas might vary depending on your accounting practices and industry standards. OpEx excludes non-operating expenses like interest, taxes, and gains/losses from investments.

Analyzing OpEx alone isn’t enough. Consider metrics like the OpEx ratio (OpEx / Net Sales) and EBITDA margin (EBITDA / Net Sales) * 100% to assess how efficiently you convert sales into profit.

Importance of Forecasting Startup Operation Expenses For 3 years

There are several compelling reasons why calculating operating expenses (OpEx) for 3 years is crucial for projection calculations in a startup:

Accurate Financial Planning and Forecasting

A 3-year projection allows you to anticipate future expenses associated with growth, hiring, marketing, and other vital business functions. This helps in:

Securing funding: Investors heavily rely on realistic projections to assess financial viability and potential return on investment.

Making informed decisions: A clear understanding of future expenses enables strategic planning for resource allocation, budgeting, and potential cost-saving measures.

Identifying potential risks: Proactive insights into rising costs or operational inefficiencies allow you to mitigate risks and adapt your business model.

Demonstrating Business Maturity and Credibility

Projecting OpEx for 3 years shows investors and stakeholders a long-term perspective and commitment to sustainable growth. This commitment translates to:

Increased confidence: A well-defined plan instills confidence in your ability to manage future expenses and achieve profitability.

Competitive edge: It differentiates you from startups lacking long-term planning, potentially attracting better funding opportunities.

Adapting to Market Dynamics and Growth

The business landscape is ever-changing, and a 3-year projection allows you to:

Factor in potential cost changes: This could include fluctuations in raw materials, labor costs, or regulatory shifts.

Plan for scaling: As your business grows, operational needs and expenses will evolve. Having a 3-year plan helps you anticipate and prepare for these changes.

Remain agile: The projection serves as a flexible framework, allowing you to adjust based on actual performance and emerging trends.

Assessing Financial Sustainability

By projecting OpEx over 3 years, you can:

Identify potential cash flow issues: You can assess if your projected revenue will adequately cover operational costs, highlighting potential financing needs.

Optimize pricing strategies: Understanding future expense trends allows you to set sustainable pricing that covers costs and ensures profitability.

Monitor profitability: Projecting how OpEx impacts gross and net margins over time helps you optimize operations for long-term financial health.

Startup Cashflow Projections

Cash flow refers to the net movement of cash into and out of a business during a specific period. It reflects the company’s ability to generate cash from its operations and meet its financial obligations.

Analyzing cash flow is crucial for understanding a business’s financial health, making informed decisions, and ensuring long-term success.

Cash Flow Components

1. Cash Inflow:

Money received by the business.

• Sales revenue
• Loan proceeds
• Investment Income
• Grant funding

Example: A customer paying for a product or service.

2. Cash Outflow:

Money paid by the business.

• Operating expenses (rent, salaries, supplies)
• Loan repayments
• Capital expenditures (equipment, property)
• Dividend payments

Example: Paying rent for office space.

Calculating Net Cash Flow:

You can’t directly apply a single formula to calculate cash flow.

However, the basic principle is:

Net Cash Flow = Cash Inflow – Cash Outflow

3. Operating cash balance (OCB)

Operating cash balance (OCB) is the amount of cash a company has on hand after accounting for all its operating expenses. It represents the cash readily available to fund day-to-day operations, pay bills, and seize short-term opportunities.

OCB = Beginning Cash Balance + Net Cash Flow from Operating Activities – Ending Cash Balance

Analysts and investors often use OCB to assess a company’s financial health and short-term liquidity. A high OCB indicates that a company is generating sufficient cash from its operations to meet its obligations and potentially invest in growth. Conversely, a low or negative OCB could signal potential financial difficulties.

4. Line of Credit Drawdown

A line of credit drawdown is the act of borrowing money from a pre-approved and revolving credit line established with a financial institution (e.g., a bank, or credit union).

Similar to a credit card, you only pay interest on the amount you borrow, offering flexibility and avoiding unnecessary interest charges on unused funds.

Startup Income Statement Projections

The income statement shows the flow of income and expenses during a specific period. It starts with the total revenue earned from selling goods or services and then subtracts all the expenses incurred to generate that revenue.

The resulting figure is the net income (profit) or net loss, indicating the company’s overall financial performance for the period.

While the income statement doesn’t have a single formula, it follows a specific structure:

Net Income = Revenue – Expenses

Revenue: All the income generated from the company’s core operations, such as sales of goods or services.

Expenses: All the costs incurred to generate that revenue, categorized into:

Cost of Goods Sold (COGS): Direct costs associated with producing or acquiring the goods or services sold.

Operating Expenses: Indirect costs related to running the business, such as rent, salaries, marketing, and depreciation.

Other Expenses: Non-operating expenses like interest and taxes.

Analysis of the Income Statement

Gross Profit: Revenue minus COGS measures the profit earned after direct production costs.

Operating Profit: Gross profit minus operating expenses indicates the profit from core business operations before financing activities.

Net Income: Operating profit minus other expenses and taxes reflects the company’s overall profitability for the period.

Ratios: Various ratios like gross profit margin, operating profit margin, and net profit margin can be calculated to compare profitability across companies or over time.

Startup Projected Balance Sheet

The balance sheet, also known as the statement of financial position, is another fundamental financial statement alongside the income statement. It provides a snapshot of a company’s financial health at a specific point in time, typically the end of a reporting period like a quarter or year.

The balance sheet presents a company’s assets, liabilities, and shareholders’ equity at a specific date. It adheres to the fundamental accounting equation:

Assets = Liabilities + Shareholders’ Equity

This equation ensures every dollar on the company’s books is accounted for, representing a financial equilibrium.

Components Of Balance Sheet

Assets: Resources owned by the company that have future economic value, categorized as:

Current Assets: Cash, inventory, accounts receivable, etc., readily convertible to cash within a year.

Non-current Assets: Long-term assets like property, plant, and equipment, are not readily convertible to cash within a year.

Liabilities: Debts and obligations the company owes to others, categorized as:

Current Liabilities: Short-term debts due within a year, such as accounts payable and accrued expenses.

Non-current Liabilities: Long-term debts like loans and mortgages, due beyond a year.

Shareholders’ Equity: The company’s net worth, representing the claims of owners (shareholders) on the company’s assets after accounting for liabilities.

Breakeven Analysis of Startups

Break-even analysis is a financial tool used to determine the point at which a company’s total revenue equals its total cost, resulting in neither profit nor loss. It helps businesses understand how much they need to sell to cover their expenses and start making a profit.

FORMULA: = TOTAL FIXED EXPENSES/(GROSS MARGIN/SALES*100)

Financial Ratios for Startups

Financial ratios are powerful tools used to analyze a company’s financial health, performance, and efficiency.

Here’s a list of commonly used ratios, categorized by their purpose, along with their formulas.

Liquidity Ratios

These ratios measure a company’s ability to meet its short-term obligations.

Current Ratio: Current Assets / Current Liabilities

Quick Ratio: (Current Assets – Inventory) / Current Liabilities

Safety Ratios

Assess a company’s ability to meet its long-term debt obligations.

Debt-to-Equity Ratio: Total Liabilities / Shareholders’ Equity

DSCR = Net Operating Income / Debt Service

Profitability Ratios

Evaluate a company’s ability to generate profits.

Sales Growth: ((Current Period Sales – Previous Period Sales) / Previous Period Sales) * 100%

COGS to Sales: Cost of Goods Sold (COGS) / Sales

Gross Profit Margin: (Sales – COGS) / Sales * 100%

SG&A to Sales: Sales General & Administrative Expenses (SG&A) / Sales

Net Profit Margin: Net Income / Sales * 100%

Return on Equity (ROE): Net Income / Average Shareholders’ Equity

Return on Assets (ROA): Net Income / Average Total Assets

Owner’s Compensation to Sales: Owner’s Compensation / Sales

Efficiency Ratios: Analyze how effectively a company uses its resources.

Days in Receivables: (Average Accounts Receivable / Revenue) * Number of Days in Period

Accounts Receivable Turnover: Revenue / Average Accounts Receivable

Days Inventory: (Average Inventory / Cost of Goods Sold (COGS)) * Number of Days in Period

Inventory Turnover: Cost of Goods Sold (COGS) / Average Inventory

Sales to Total Assets: Net Sales / Average Total Assets

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How to Prepare a Financial Plan for Startup Business (w/ example)

Free Financial Statements Template

Ajay Jagtap

• December 7, 2023

13 Min Read

If someone were to ask you about your business financials, could you give them a detailed answer?

Let’s say they ask—how do you allocate your operating expenses? What is your cash flow situation like? What is your exit strategy? And a series of similar other questions.

Instead of mumbling what to answer or shooting in the dark, as a founder, you must prepare yourself to answer this line of questioning—and creating a financial plan for your startup is the best way to do it.

A business plan’s financial plan section is no easy task—we get that.

But, you know what—this in-depth guide and financial plan example can make forecasting as simple as counting on your fingertips.

Ready to get started? Let’s begin by discussing startup financial planning.

What is Startup Financial Planning?

Startup financial planning, in simple terms, is a process of planning the financial aspects of a new business. It’s an integral part of a business plan and comprises its three major components: balance sheet, income statement, and cash-flow statement.

Apart from these statements, your financial section may also include revenue and sales forecasts, assets & liabilities, break-even analysis , and more. Your first financial plan may not be very detailed, but you can tweak and update it as your company grows.

Key Takeaways

• Realistic assumptions, thorough research, and a clear understanding of the market are the key to reliable financial projections.
• Cash flow projection, balance sheet, and income statement are three major components of a financial plan.
• Preparing a financial plan is easier and faster when you use a financial planning tool.
• Exploring “what-if” scenarios is an ideal method to understand the potential risks and opportunities involved in the business operations.

Why is Financial Planning Important to Your Startup?

Poor financial planning is one of the biggest reasons why most startups fail. In fact, a recent CNBC study reported that running out of cash was the reason behind 44% of startup failures in 2022.

A well-prepared financial plan provides a clear financial direction for your business, helps you set realistic financial objectives, create accurate forecasts, and shows your business is committed to its financial objectives.

It’s a key element of your business plan for winning potential investors. In fact, YC considered recent financial statements and projections to be critical elements of their Series A due diligence checklist .

Your financial plan demonstrates how your business manages expenses and generates revenue and helps them understand where your business stands today and in 5 years.

Makes sense why financial planning is important to your startup, doesn’t it? Let’s cut to the chase and discuss the key components of a startup’s financial plan.

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Key Components of a Startup Financial Plan

Whether creating a financial plan from scratch for a business venture or just modifying it for an existing one, here are the key components to consider including in your startup’s financial planning process.

Income Statement

An Income statement , also known as a profit-and-loss statement(P&L), shows your company’s income and expenditures. It also demonstrates how your business experienced any profit or loss over a given time.

Consider it as a snapshot of your business that shows the feasibility of your business idea. An income statement can be generated considering three scenarios: worst, expected, and best.

Your income or P&L statement must list the following:

• Cost of goods or cost of sale
• Gross margin
• Operating expenses
• Revenue streams
• EBITDA (Earnings before interest, tax, depreciation , & amortization )

Established businesses can prepare annual income statements, whereas new businesses and startups should consider preparing monthly statements.

Cash flow Statement

A cash flow statement is one of the most critical financial statements for startups that summarize your business’s cash in-and-out flows over a given time.

This section provides details on the cash position of your business and its ability to meet monetary commitments on a timely basis.

Your cash flow projection consists of the following three components:

✅ Cash revenue projection: Here, you must enter each month’s estimated or expected sales figures.

✅ Cash disbursements: List expenditures that you expect to pay in cash for each month over one year.

✅ Cash flow reconciliation: Cash flow reconciliation is a process used to ensure the accuracy of cash flow projections. The adjusted amount is the cash flow balance carried over to the next month.

Furthermore, a company’s cash flow projections can be crucial while assessing liquidity, its ability to generate positive cash flows and pay off debts, and invest in growth initiatives.

Balance Sheet

Your balance sheet is a financial statement that reports your company’s assets, liabilities, and shareholder equity at a given time.

Consider it as a snapshot of what your business owns and owes, as well as the amount invested by the shareholders.

This statement consists of three parts: assets , liabilities, and the balance calculated by the difference between the first two. The final numbers on this sheet reflect the business owner’s equity or value.

Balance sheets follow the following accounting equation with assets on one side and liabilities plus Owner’s equity on the other:

Here is what’s the core purpose of having a balance-sheet:

• Indicates the capital need of the business
• It helps to identify the allocation of resources
• It calculates the requirement of seed money you put up, and
• How much finance is required?

Since it helps investors understand the condition of your business on a given date, it’s a financial statement you can’t miss out on.

Break-even Analysis

Break-even analysis is a startup or small business accounting practice used to determine when a company, product, or service will become profitable.

For instance, a break-even analysis could help you understand how many candles you need to sell to cover your warehousing and manufacturing costs and start making profits.

Remember, anything you sell beyond the break-even point will result in profit.

You must be aware of your fixed and variable costs to accurately determine your startup’s break-even point.

• Fixed costs: fixed expenses that stay the same no matter what.
• Variable costs: expenses that fluctuate over time depending on production or sales.

A break-even point helps you smartly price your goods or services, cover fixed costs, catch missing expenses, and set sales targets while helping investors gain confidence in your business. No brainer—why it’s a key component of your startup’s financial plan.

Having covered all the key elements of a financial plan, let’s discuss how you can create a financial plan for your startup.

How to Create a Financial Section of a Startup Business Plan?

1. determine your financial needs.

You can’t start financial planning without understanding your financial requirements, can you? Get your notepad or simply open a notion doc; it’s time for some critical thinking.

Start by assessing your current situation by—calculating your income, expenses , assets, and liabilities, what the startup costs are, how much you have against them, and how much financing you need.

Assessing your current financial situation and health will help determine how much capital you need for your startup and help plan fundraising activities and outreach.

Furthermore, determining financial needs helps prioritize operational activities and expenses, effectively allocate resources, and increase the viability and sustainability of a business in the long run.

Having learned to determine financial needs, let’s head straight to setting financial goals.

2. Define Your Financial Goals

Setting realistic financial goals is fundamental in preparing an effective financial plan. So, it would help to outline your long-term strategies and goals at the beginning of your financial planning process.

Let’s understand it this way—if you are a SaaS startup pursuing VC financing rounds, you may ask investors about what matters to them the most and prepare your financial plan accordingly.

However, a coffee shop owner seeking a business loan may need to create a plan that appeals to banks, not investors. At the same time, an internal financial plan designed to offer financial direction and resource allocation may not be the same as previous examples, seeing its different use case.

Feeling overwhelmed? Just define your financial goals—you’ll be fine.

You can start by identifying your business KPIs (key performance indicators); it would be an ideal starting point.

3. Choose the Right Financial Planning Tool

Let’s face it—preparing a financial plan using Excel is no joke. One would only use this method if they had all the time in the world.

Having the right financial planning software will simplify and speed up the process and guide you through creating accurate financial forecasts.

Many financial planning software and tools claim to be the ideal solution, but it’s you who will identify and choose a tool that is best for your financial planning needs.

Create a Financial Plan with Upmetrics in no time

Enter your Financial Assumptions, and we’ll calculate your monthly/quarterly and yearly financial projections.

Start Forecasting

4. Make Assumptions Before Projecting Financials

Once you have a financial planning tool, you can move forward to the next step— making financial assumptions for your plan based on your company’s current performance and past financial records.

You’re just making predictions about your company’s financial future, so there’s no need to overthink or complicate the process.

You can gather your business’ historical financial data, market trends, and other relevant documents to help create a base for accurate financial projections.

After you have developed rough assumptions and a good understanding of your business finances, you can move forward to the next step—projecting financials.

5. Prepare Realistic Financial Projections

It’s a no-brainer—financial forecasting is the most critical yet challenging aspect of financial planning. However, it’s effortless if you’re using a financial planning software.

Upmetrics’ forecasting feature can help you project financials for up to 7 years. However, new startups usually consider planning for the next five years. Although it can be contradictory considering your financial goals and investor specifications.

Following are the two key aspects of your financial projections:

Revenue Projections

In simple terms, revenue projections help investors determine how much revenue your business plans to generate in years to come.

It generally involves conducting market research, determining pricing strategy , and cash flow analysis—which we’ve already discussed in the previous steps.

The following are the key components of an accurate revenue projection report:

• Market analysis
• Sales forecast
• Pricing strategy
• Growth assumptions
• Seasonal variations

This is a critical section for pre-revenue startups, so ensure your projections accurately align with your startup’s financial model and revenue goals.

Expense Projections

Both revenue and expense projections are correlated to each other. As revenue forecasts projected revenue assumptions, expense projections will estimate expenses associated with operating your business.

Accurately estimating your expenses will help in effective cash flow analysis and proper resource allocation.

These are the most common costs to consider while projecting expenses:

• Fixed costs
• Variable costs
• Employee costs or payroll expenses
• Operational expenses
• Marketing and advertising expenses
• Emergency fund

Remember, realistic assumptions, thorough research, and a clear understanding of your market are the key to reliable financial projections.

6. Consider “What if” Scenarios

After you project your financials, it’s time to test your assumptions with what-if analysis, also known as sensitivity analysis.

Using what-if analysis with different scenarios while projecting your financials will increase transparency and help investors better understand your startup’s future with its best, expected, and worst-case scenarios.

Exploring “what-if” scenarios is the best way to better understand the potential risks and opportunities involved in business operations. This proactive exercise will help you make strategic decisions and necessary adjustments to your financial plan.

7. Build a Visual Report

If you’ve closely followed the steps leading to this, you know how to research for financial projections, create a financial plan, and test assumptions using “what-if” scenarios.

Now, we’ll prepare visual reports to present your numbers in a visually appealing and easily digestible format.

Don’t worry—it’s no extra effort. You’ve already made a visual report while creating your financial plan and forecasting financials.

Check the dashboard to see the visual presentation of your projections and reports, and use the necessary financial data, diagrams, and graphs in the final draft of your financial plan.

Here’s what Upmetrics’ dashboard looks like:

8. Monitor and Adjust Your Financial Plan

Even though it’s not a primary step in creating a good financial plan, it’s quite essential to regularly monitor and adjust your financial plan to ensure the assumptions you made are still relevant, and you are heading in the right direction.

There are multiple ways to monitor your financial plan.

For instance, you can compare your assumptions with actual results to ensure accurate projections based on metrics like new customers acquired and acquisition costs, net profit, and gross margin.

Consider making necessary adjustments if your assumptions are not resonating with actual numbers.

Also, keep an eye on whether the changes you’ve identified are having the desired effect by monitoring their implementation.

And that was the last step in our financial planning guide. However, it’s not the end. Have a look at this financial plan example.

Startup Financial Plan Example

Having learned about financial planning, let’s quickly discuss a coffee shop startup financial plan example prepared using Upmetrics.

Important Assumptions

• The sales forecast is conservative and assumes a 5% increase in Year 2 and a 10% in Year 3.
• The analysis accounts for economic seasonality – wherein some months revenues peak (such as holidays ) and wanes in slower months.
• The analysis assumes the owner will not withdraw any salary till the 3rd year; at any time it is assumed that the owner’s withdrawal is available at his discretion.
• Sales are cash basis – nonaccrual accounting
• Moderate ramp- up in staff over the 5 years forecast
• Barista salary in the forecast is $36,000 in 2023.
• In general, most cafes have an 85% gross profit margin
• In general, most cafes have a 3% net profit margin

Projected Balance Sheet

Projected Cash-Flow Statement

Projected Profit & Loss Statement

Break Even Analysis

Start Preparing Your Financial Plan

We covered everything about financial planning in this guide, didn’t we? Although it doesn’t fulfill our objective to the fullest—we want you to finish your financial plan.

Sounds like a tough job? We have an easy way out for you—Upmetrics’ financial forecasting feature. Simply enter your financial assumptions, and let it do the rest.

So what are you waiting for? Try Upmetrics and create your financial plan in a snap.

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

How often should i update my financial projections.

Well, there is no particular rule about it. However, reviewing and updating your financial plan once a year is considered an ideal practice as it ensures that the financial aspirations you started and the projections you made are still relevant.

How do I estimate startup costs accurately?

You can estimate your startup costs by identifying and factoring various one-time, recurring, and hidden expenses. However, using a financial forecasting tool like Upmetrics will ensure accurate costs while speeding up the process.

What financial ratios should startups pay attention to?

Here’s a list of financial ratios every startup owner should keep an eye on:

• Net profit margin
• Current ratio
• Quick ratio
• Working capital
• Return on equity
• Debt-to-equity ratio
• Return on assets
• Debt-to-asset ratio

What are the 3 different scenarios in scenario analysis?

As discussed earlier, Scenario analysis is the process of ascertaining and analyzing possible events that can occur in the future. Startups or businesses often consider analyzing these three scenarios:

• base-case (expected) scenario
• Worst-case scenario
• best case scenario.

About the Author

Ajay is a SaaS writer and personal finance blogger who has been active in the space for over three years, writing about startups, business planning, budgeting, credit cards, and other topics related to personal finance. If not writing, he’s probably having a power nap. Read more

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Home » Business management » Financial Plan Projections Template for Startups

Download Financial Plan Projections Template for Startups Template In Excel

Business management.

This financial plan projections template comes as set of pro forma templates designed to help startups. Thus, The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business.

How do you write a financial projection for a startup?

• Project your spending and sales.
• Create financial projection.
• Determine the financial needs.
• Use the projections for planning.
• Plan for contingencies.

Therefore, To produce effective and accurate financial projections for startups, you will need three key reports: a Balance Sheet, a Cash Flow Statement, and a Profit and Loss Statement (sometimes called an Income Statement). So, From these, you will be able to put together the five main components of your financial projection and use them effectively within your business plan.

Our two articles on how to write a business plan and how to go to market have covered topics that include key topics.

• Formatting your business plan
• Market research
• Competitor analysis
• Pricing strategy
• Marketing plans
• Operations plans.

On this post, however, we will be focusing on the 9th section of your business plan, your financials. Namely, on financial projections.

Therefore, They are one of the most important elements of any business plan, so it’s important to get them right. Moreover you plan to use them to help you win over investors, obtain bank loans, or produce a long-term growth strategy for your business, financial forecasts can help your business in a number of ways.

Let’s talk about financial projections for startups

• Creating financial projections for startups
• What is the aim of financial projections for startups?
• Understanding cash flow in your startup’s financial projection reports
• An overview of profit and loss in your startup’s financial projections
• Getting a handle on your financial projection’s Balance Sheet section
• Use financial projections for more than just your startup’s business plan

Download this Financial Plan Projections Template for Startups template in Excel Format

Our easy to use editable Excel templates and save your significant amount of time and effort. Here’s how to download and use one of our templates:

Download this free Excel Template : Once you’ve browsed through our collection of templates and find the one that best fits your needs. Once you’ve found the template you want, click on the download button.

Replace sample data with your actual data: Once the template is downloaded, open it in Excel. You’ll see that it is already set up with sample data. To start analyzing your own data, simply replace the sample data with your actual data.

Customize the template: Our templates are completely editable, which means you can customize them to fit your specific needs. For example, you can change the formatting, add or remove columns, or create new charts and graphs.

Use the Excel template: Once you’ve fed in your data and customized the template, you’re ready to start using it for data analysis. Use the various tools and features of Excel to analyze and visualize your data, and make informed business decisions.

Save and share: Once you’ve finished working on the template, save it to your computer and share it with other members of your team or stakeholders as needed.

Click Download Button To Get Financial Plan Projections Template for Startups Excel Template

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5-Year Financial Plan Template

Whether you are already running a business, or making plans to start one up, financial planning is a vital part of ensuring your success. Not knowing your expected income and expenditure will make it difficult to plan, and hard to find investors.

This 5-Year Financial Plan spreadsheet will make it easy for you to calculate profit and loss, view your balance sheet and cash flow projections, as well as calculate any loan payments you may have. Whilst the wording on this spreadsheet is focussed around products, it can just as easily be used for businesses who largely provide services to their customers.

5-Year Financial Plan Projection

How to use Financial Plan

Model inputs.

Use the Model Inputs sheet to enter information about your business that will be used to model results seen on the other pages.

Forecasted Revenue

The forecasted revenue section allows you to estimate your revenue for 4 different products. Simply use the white boxes to enter the number of units you expect to sell, and the price you expect to sell them for, and the spreadsheet will calculate the total revenue for each product for the year. If you want to give your products names, simply type over the words "Product 1", "Product 2" etc. and these names will be carried through to the rest of the spreadsheet.

Cost of Goods Sold

Your margins are unlikely to be the same on all of your products, so the cost of goods sold allows you to enter your expected gross margin for each product into the white boxes in Column B. The spreadsheet will automatically calculate the annual cost of goods sold based on this information, along with your forecasted revenue.

Annual Maintenance, Repair and Overhaul

As the cost of annual maintenance, repair and overhaul is likely to increase each year, you will need to enter a percentage factor on your capital equipment in the white box in Column B. This will be used to calculate your operating expenses in the profit and loss sheet.

Asset Depreciation

Use the white box to enter the number of years you expect your assets to depreciate over. This may vary greatly from business to business, as assets in some sectors depreciate much more quickly than they do in others.

In most parts of the world, you will have to pay income on your earnings. Enter the annual tax rate that applies to your circumstances in the white box in Column B. If you have to pay any other taxes, these can be entered later on the Profit and Loss sheet.

Although you cannot be certain of the level of inflation, you will still need to try and plan for it when coming up with a 5-year financial plan. The International Monetary Fund provide forecasts for a number of countries, so is a good place to look if you are unsure what to enter here. Simply enter your inflation rate in the white box.

Product Price Increase

As a consumer, you are no doubt aware that the price of products goes up over time. Enter a number in the white box to show the expected annual price increase of your products to enable the spreadsheet to calculate income in future years. If you are unsure what to put here, increasing your product price in line with inflation is a good starting point. If your business is just starting out, you may be able to command higher prices for your products or services as the years go on, as you build up brand recognition and a good reputation.

The funding section allows you to enter information about your business loan. To use this section, simply fill in the three white boxes representing the amount of the loan, the annual interest rate and the term of the loan in months - for example, 12 for 1 year, 24 for 2 years, 36 for 3 years, 48 for 4 years, or 60 for a 5 year loan.

Profit and loss

This sheet calculates your profit and loss for each year over a 5 year period. The profit and loss assumptions, along with income, are automatically calculated using information entered in the model inputs sheet.

Non-Operation Income

You may have, or be expecting some income in addition to your operating income. These can be entered manually in the white cells in Column B for Year 1, Column C for Year 2 and so on. There are pre-entered categories for rental, lost income and loss (or gain) on the sale of assets, as well as an additional row where you can enter your own non-operation income.

Operating Expenses

Some parts of this are already filled in based on information you put on the Model Inputs, for example, depreciation, maintenance and interest on long-term debt. Years 2-5 are also filled in for you across all categories based on the inflation information entered in the Model Inputs sheet. You therefore only need to enter your Sales and Marketing, Insurance, Payroll and Payroll Tax, Property Taxes, Utilities, Administration Fees and any Other Expenses into the white cells in Column B for Year 1.

Non-recurring Expenses

This section is for entering any expenses that you will not be paying on an annual basis. The Unexpected Expenses row allows you to enter a contingency for unexpected expenses, whilst the Other Expenses row allows you to enter any other one off expenses you may be expecting to make, for example the purchase of new equipment part way into your 5 year plan.

Income Tax is filled in based on the information you enter into the model inputs. Depending on where your business is based, you may find yourself having to pay other taxes. These can be entered in the Other Tax row. You can rename this row by typing over the "Other Tax (specify)" text.

Balance Sheet

The annual balances for Years 1-5 are, in most cases, filled in for you, based on the information you have entered on the Model Inputs sheet and in the Initial Balance column of the Balance Sheet column itself. This makes it very easy to use.

Current Assets

This is where you can enter the value of any of your current assets, with spaces to enter information about Cash and Short-term Investments, Accounts Receivable, Inventory, Prepaid Expenses and Deferred Income Tax. At the bottom of this section is a space for you to enter any other current assets you may have that do not fall into any of these categories.

Property and Equipment

Depending on the nature of your business, you may have assets such as Buildings, Land, Capital Improvements and Machinery. Enter the value of these assets into Column B, and these values will be copied over to each of the 5 years of the plan. The depreciation information entered into the Model Inputs sheet will be used to calculate the depreciation expenses, which allows a total for property and equipment to be calculated automatically.

Other Assets

This section is for entering information on any assets that don't fit in the other sections. These could be Goodwill Payments, Deferred Income Tax, Long-term Investments, Deposits, or any Other long-term assets. Enter the information into Column B, and it will be carried across to the yearly columns automatically.

Current Liabilities

As well as assets, your business is likely to have liabilities. There are spaces to enter Accounts Payable, Accrued Expenses, Notes Payable and Short-term Debt, Capital Leases and Other current liabilities. Just leave blank any rows where you do not have any liabilities, and the totals will be calculated for you.

Your long-term debt/loan information will have already been entered in the Model Inputs sheet, so the only thing to do here is to enter any other long-term debt. Unlike much of the rest of the Balance Sheet, you can manually enter different amounts for each year, as you may, for example, be expecting to take on another loan to purchase some new equipment in Year 3 as your business expands.

Other Liabilities

Use this section to enter any liabilities not covered by the pre-defined labels. You can amend the text in Column A, in order to specify the liabilities, and then enter the cost of these liabilities in Column B.

Your business is likely to have some equity, and this can be entered into this section. You can fill out the Owner's Equity, Paid-in Capital and Preferred Equity in Column B. Your retained earnings are automatically calculated based on the Profit and Loss sheet.

Much of the information on the cash flow sheet is based on calculations in the Balance Sheet. It is important to plan your cash flow carefully, so that you know what funds you will have available to buy new stock and equipment.

Operating Activities

Much of this section is automatically filled in based on your balance sheet. There are only three rows to fill out, which are Amortization, Other Liabilities and Other Operating Cash Flow. You only need to fill out the white boxes in Column B for Year 1, as these values will automatically be carried over into subsequent years for you.

Investing Activities

Your capital expenditures and sale of fixed assets will be automatically populated if you have filled out the relevant sections of the Balance Sheet. They will be blank if they do not apply. As investing activities can vary year on year, you will need to fill out any investment activities for each of the 5 years in the appropriate columns for Acquisition of Business, and any Other Investing Cash Flow items.

Financing Activities

The long-term debt/financing row will be pre-filled based on the loan information previously entered. Use Column B to fill out your Preferred Stock, Total Cash Dividends Paid, Common Stock and Other Financing Cash Flow items for Year 1. This information will automatically carried over to Years 2-5.

Loan Payment Calculator

There is nothing to enter on this sheet, as it is for information only. Whether or not you already have a loan, or are using this spreadsheet as a part of a business plan to help you obtain one, it allows you to easily see how much you will be paying each month, showing how much you are paying off your loan, and how much you are paying in interest. This will allow you to get an idea of whether or not you can afford to borrow a bit extra, if you feel it would allow you to push your business into higher places, or whether you need to shop around for a better interest rate or adjust the loan term in order to afford the loan payments.

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Download this easy to use and free financial projection template in Microsoft Excel and Spreadsheet . This is useful for startups with Year 1 projections requirement . You can also customize and use this for your existing businesses. This financial model or projection template takes into account various accounting standards and assumptions.

Understanding financial projections in business

Financial projections  use existing or estimated financial data to forecast your business’s future income and expenses . They often include different scenarios so you can see how changes to one aspect of your finances (such as higher sales or lower operating expenses) might affect your profitability. (Source : SCORE )

Why financial projection template ?

A financial projections template uses estimated or existing financial information to forecast the future expenses and income of your business. These projections don’t just consider a single scenario but different ones so you can determine how the changes in one part of your finances might affect the profitability of your company .

A financial projections template is a tool that is an essential part of managing businesses as it serves as a guide for the various team to achieve the desired goals. The preparation of these projections seems like a difficult task, especially for small businesses. Financial projection and Financial Statements are similar jargons but have different purpose and methodology.

Inclusions of Financial Projections

A financial projections template usually includes a few financial statements that will help you achieve better financial performance for your business. Let us break down the components and understand each of these in detail –

a. Income Statement

Also called the Profit and Loss Statement , this focuses on your company’s expenses and revenues generated for a specific period of time. A typical income statement includes expenses, revenue, losses, and gains . The sum of all these is the net income, a measure of your company’s profitability.

b. Cash Flow Statement

Taking a look at a cash flow statement makes you understand how your company’s operations work. The statement explains in detail how much money goes in and out of your business in the form of either expense or income. This document includes the following:

Operating Activities

Investing activities, financing activities.

The cash flow statement gets connected to the income statement through net income . To make this document, it requires the reconciliation of the two documents . You can calculate net profitability or income in the income statement which you then use to start the cash flow from the operations category in your cash flow statement.

c. Balance Sheet

Balance Sheet is a statement of your business’ liabilities, assets, and capital at a specific point in time . It details the balance of expenditure and income over the preceding period. This document provides you with a general overview of your business’ financial health . Here is an overview of these components:

Liabilities

Owner’s equity.

This template tries to include all these components. You can use this template to project the financial performance, sales expectations, operating expenditures possible for upcoming years for your business or your client’s business.

Download and use startup financial projection excel Free template

To use this Startup financial projection template , you should have Microsoft Office/ Microsoft Excel installed in your system.

After installing Excel or Spreadsheet , download the zip file of this template , extract the template using WinRAR or 7Zip decompressing software. Once extracted, you can open the file using Excel and start entering data or customizing the template.

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