How to Prepare Pro Forma Financial Statements for a Business Plan

When writing a business plan, properly prepared pro forma financial statements must be included. This financial information provides potential investors a hypothetical snapshot of the future financial health of your business. Investors will not look at a business plan that does not include pro forma financial statements. Follow these steps to create a pro forma financial statement for your business plan.

Things You'll Need

  • Educated financial assumptions
  • Business plan software
  • Certified public accountant

Instructions

    • 1

      Make educated assumptions of future cash flows, fixed and current assets, and liabilities. This can be done by researching standards for the industry in which your business will operate.

    • 2

      Prepare a Pro Forma Balance Sheet. Include all current and fixed assets, liabilities and shareholders' equity. To compute shareholders' equity, subtract total liabilities from total assets.

    • 3

      Get the Pro Forma Income Statement in order. Include all sales revenues, cost of goods sold, losses, operating expenses, taxes and depreciation of property, plant and equipment, if applicable.

    • 4

      Organize the Statement of Cash Flows. In this document, include net income, any sales or purchases of assets (non-current) and any stock issues, repayments of bonds or dividend payouts, if applicable.

    • 5

      Create a Pro Forma Financial Statement for monthly periods for the first year; quarterly for the second year; and annually for years three through five.

Tips & Warnings

  • If numbers are not your strong suit, consider hiring a certified public accountant to generate these forms for you.
  • Be conservative and realistic with your financial assumptions.
  • Prepare three different financial scenarios. Best case (optimistic), the expected financial outcomes and worst case (pessimistic).
  • Don't forget to include notes about your financial statements. Investors will want to know the reasoning behind how you arrived at the numbers.
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