Lastly, our pro forma statement predicts healthy cash flow throughout the three-year period. Our pro forma balance sheet shows that we will have a strong financial position, with increasing equity and minimal debt. Our pro forma income statement shows that we are expected to have positive net income each year of the forecast period. We also estimated our funding requirements and outlined our plans for growth. In this pro forma business plan, we forecasted our company’s sales, expenses, and capital expenditures over the next three years. The following is an example of a pro forma business plan: Executive Summary However, budgets are more focused on short-term planning, while pro forma statements are more concerned with long-term financial planning.īusiness Plan Pro Forma Template and Example It shows your expected revenue and expenses and can be used to assess the viability of your business.īoth pro forma statements and budgets can be useful tools for businesses. It shows your expected income and expenses and can help you to stay on track financially.Ī pro forma statement estimates your company’s future financial performance. However, there are key differences between them.Ī budget is a plan for how you will use your resources to achieve specific goals. Pro forma statements and budgets are both financial tools that can be used to track the progress of a business. If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your business plan and financial model in hours. A cash flow statement can help you to manage your finances effectively, while a pro forma income statement can help you to assess the viability of your business. But, if you don’t receive payment for that sale for 90 days, that would be reflected in your cash flow statement. For example, if you make a sale today, it will be considered revenue in your income statement.
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The main difference between a cash flow statement and a pro forma income statement is that a cash flow statement shows your actual cash inflows and outflows, while a pro forma income statement shows your estimated future financial performance. Cash Flow Statements and Pro Forma Income Statements A pro forma statement that is included in a business plan template should also include financial projections and break-even analysis. Pro forma statements for a business plan can take many different forms, but they all typically include information on sales forecasts, expenses, capital expenditure plans, and funding requirements. Pro Forma Income Statements for a Business Plan It shows your expected cash inflows and outflows and can be used to assess your company’s financial health and ensure you never run out of money.Įxample 5 Year Annual Cash Flow Statement It shows your assets, liabilities, and equity, and can be used to assess your company’s financial health.Ī pro forma cash flow statement is an estimate of how your company’s cash flows over a period of time. It shows a company’s expected revenue and expenses over a period of time and can help you to identify potential problems early on.Ī pro forma balance sheet is an estimate of your company’s financial position at a specific point in time. The pro forma income statement is a crucial financial tool that can be used to assess the viability of your business. Importance of a Pro Forma Income Statement in Business Plans You should also include a pro forma income statement, balance sheet, and cash flow statement. When writing a pro forma business plan, you will need to include information such as your company’s sales forecasts, expenses, capital expenditure plans, and funding requirements. Your pro forma financial statements also help you to identify and track key financial indicators and metrics over time. Among other things, they consider the likelihood your company will achieve the financial results you forecast, and their expected return on investment (ROI). They use your pro forma statements in determining whether to invest in your company or not.
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Why include a Pro Forma Statement in your Business PlanĪ pro forma statement is important for your business plan because it gives investors and lenders an idea of your company’s potential financial health. They are often used by businesses to plan for upcoming periods or quarters, assess new opportunities, or track progress against goals. Pro forma financial statements are a type of statement that provides estimates or financial projections for a company. “Pro forma” most specifically refers to the financial projections included in your plan, as these are entirely based on future assumptions.
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That is, all business plans present a vision of the company’s future using assumptions and projections. The term “pro forma” specifically means “based on financial assumptions or projections” which all business plans are. A pro forma business plan is simply another name for a business plan.