Step 1 – do your homework to develop realistic projections
As a new business, it’s a bit of a guessing game since you don’t have any historical data to use as a benchmark. There are a few ways you can obtain similar businesses sales and industry averages data:
Capture market research
Do your research and learn more about your industry and target audience including spending habits, household income as some examples. You can access statistical data provided by the Government of Canada through the census program Opens in a new window..
Leverage a support network
There are many resources and services that can provide guidance and tools to help you build projections offered through organizations such as the Canadian Chamber of Commerce Opens in a new window..
Ask an expert
An accountant who works closely with the industry, a mentor or a business owner running a similar business can provide you with their expert opinion based on their experience.
Step 2 – create your sales and spending projections
The building blocks of financial statements are your company’s sales and spending projections.
Provide a forecast of your revenue by capturing how much in sales your company expects to generate monthly and annually.
List the key expenses you’ll need to get your business off the ground and to maintain ongoing operations. This includes both fixed and variable expenses including rent, payroll, utilities, taxes, professional fees (legal, accounting, insurance), marketing, supplies and other operational costs.
Step 3 – develop your financial statement forecasts
Use the data you collected in step 1 and the sales and spending projections from step 2 to build your financial statement forecasts.
To help you create an income statement and balance sheet, use their templates or leverage a variety of tools that can be found online.
A cash flow statement can then be derived from items within your balance sheet and income statement. The cash flow statement is one of the most important elements of your business plan and can also be one of the more difficult documents to prepare, so consider engaging the help of a professional accountant. If you’re a CIBC client, you can create your cash flow projections if you sign up for Quickbooks Online .