LibGuides: Business Planning Guide: Financial Projections

The Importance of Financial Projections and Statements

Business is about a lot more than the numbers, but all businesses need to eventually make enough money to cover their expenses and turn a profit to stay in business. Financial Statements usually consist of balance sheets, profit and loss statements, and cash flow statements and are meant to keep track of a company's financial well being. These statements can help companies determine whether they will have enough cash on hand to cover operating expenses, whether or not the company is on track to cover all of its expenses and turn a profit, and whether or not the company the company will need to make capital investments in things such as new equipment. All of these bits of information can help companies determine new pricing strategies or where too much money is being allocated. This information is necessary for seeking bank loans and other outside capital, and keeping good track of this information can also help you prevent your business from running into any tax or legal compliance issues.

Start ups that don't have any financial history also need to create financial projections by calculating its start up costs and using the same sheets that you would find in an established company's financial statements. In order to do this, a start up can project its future sales and use financial ratios compiled from other companies in the same industry or base their numbers on the financial statements of public companies. These numbers are especially important for start ups that are seeking outside capital through traditional lending sources or from private equity investors.

Video Courses on Understanding Business Finance

LinkedIn Learning This link opens in a new window
In LinkedIn Learning, there are series of video courses strung together called Learning Paths. One of the Learning Paths is "Become a Small Business Owner," and one of the courses in this path is Finance Essentials for Small Business. You can also click on the Accounting or Finance subject links to find additional video courses that can help you make sense of your financial records or projections. This resource is available remotely with your Brooklyn Public Library card and PIN.

"The Entrepreneur's Guide to Financial Statements" in GVRL

Gale eBooks This link opens in a new window
Gale eBooks, which is available remotely with your library card and PIN, has several ebooks that can be downloaded, printed, or viewed online without having to check them out. One of the titles in the Business Collection is "The Entrepreneur's Guide to Financial Statements." There are also business planning titles in here that also probably have chapters on business planning. This resource is available remotely with your Brooklyn Public Library card and PIN.

Books and eBooks

There are also several books and eBooks in the Library Catalog that can help you better understand the finances of your business. Click the subject headings below to find titles on financial statements, balancing your books, pricing, cash flow, and more.

Financial Statements

Corporations -- Finance

Cash Flow

Pricing

Financial Templates and Calculators

SCORE's Business Planning & Financial Statements Template Gallery
This template gallery has a number of useful templates for businesses working on their financial statements or financial projections. In addition to cash, flow, startup expenses, and profit and loss templates there are also pricing templates and templates for loan amortization.
SBA's "Build Your Business Plan" Tool
The U.S. Small Business Administration, or SBA, has created a step-by-step tool for building, editing, and downloading your business plan. This tool includes profit and loss statements, balance sheets, and cash flow statements. Once you register with the SBA, you can edit all of the sections of your plan, save them, update them, and export them to PDF files.

Learning Resources with Financial Ratios

Gale Business: Plan Builder This link opens in a new window
A step-by-step online planning tool for starting, managing and optimizing a business or nonprofit; the Gale Business: Plan Builder dashboard walks users through five areas of exploration to develop a business plan focused on long-term success
Mergent Intellect This link opens in a new window
Mergent Intellect has multiple sections, and the "Key Business Ratios" section contains the financial statement ratios. These ratios can be searched by SIC or NAICS code, and they can also be grouped by asset class or region. Some of these financial statement ratios can also be found in Mergent Intellect's industry reports in the "First Research" section. This resource is available remotely with your Brooklyn Public Library card and PIN.

Reference Books with Financial Ratios

RMA Annual Statement Studies
The Risk Management Association publishes a yearly list of annual statement benchmarks. These statement benchmarks or organized by NAICS code and makes it possible to compare your company's performance relative to other companies in the same line of business in similar asset class. This book is held behind the reference desk at the Business and Career Center.
Almanac of Business and Industrial Financial Ratios
This reference book also provides financial ratios for companies in various asset ranges by NAICS code. Data reported are based on aggregate numbers from IRS records. This reference book is held at the Business & Career Center.

Free Websites with Financial Ratios

BizStats
This is a free website that gives businesses free statistics and financial ratios for multiple broad industry classifications. In addition to the financial ratios, which are broken down by asset class and incorporation status, this site also has profitability risks, rules of thumb for valuation, and estimations on target rent costs for the listed business categories.

Financial Statements from Public Companies

Edgar Company Filings
All companies with that are publicly traded or have public debt must file reports and financial information to the U.S. Securities and Exchange Commission which can be searched using the EDGAR company filings. The annual report, or 10k, contains a companies financials which includes balance sheets, profit and loss statements, and cash flow statements. You can look at the 10k reports of big companies in your industry to compare your expense and asset percentages, and you can also look at company's 10k reports over time to see how these changed as they scaled up or came across hard times.