If you ask any KCARD employee where they turn to first in a business plan they receive, there’s a good chance that – after reading the summary of what the business is wanting to do – the profit/loss statement will be the first page reviewed.  We will start looking at how revenue was calculated and whether the expense lines show everything that we expect to see in that particular business. 

Then we might turn to the cash flow statement.  Is it on a monthly or yearly basis?  For new businesses that are seasonal, we would want to make sure that enough profit is made in the good months before you need that money to make up for the lean ones. 

We will look at the balance sheet to see what assets the business has to make the profits indicated and what liabilities they will have to pay with the profits they make. 

All of this goes into our analysis of the financial projections.  That is also the way we approach developing projections for new business ventures as well. 

The numbers must make sense to us because if they do not make sense to us, they are unlikely to meet the requirements of funders and lenders.  More important though, if they do not make sense to us, they are not going to help the business owner make good decisions, and that is the most important role they play.

We are going to be going into more detail on how to develop financial projections in the next few weeks.  If you have questions, shoot us a message and we will try to answer it.  Email us at kcard@kcard.info or give us a call at 859-550-3972.