Financial Planning Spreadsheet for startups

For ourselves (and probably many others too) the financial part of the business plan was the most daunting. One look at a set of financial spreadsheets awash with buzzwords and numbers is enough to make most people run back to their day job. They’re very necessary though, and if your looking to secure any funding or loans your going to need to produce them along with your business plan to show that your idea is a financially viable business.

We’ve talked about this before, and I’ll reiterate how important it can be to get help. Have a look in your local area for business support schemes or ask friends or family if they know anyone familiar with financials that can help you out. Having someone talk you through these for an hour or two makes things a heck of a lot clearer.

This is the spreadsheet we use for Happycry and we’ve tried to simplify it as much as possible. One thing we noticed with other templates is that they’re not very user–friendly. Obviously, many templates are produced by finance professionals, whose first priority is the numbers and not the design/layout, so I’ve tried to bridge this gap by making our template a little easier to digest. It hopefully makes the spreadsheets easier to understand.

You can download the financial plan in the formats:
• Google Docs template
• Excel template

I’ve included plenty of comments in the spreadsheet itself, so it’s worth diving in to have a look around and get accustomed. Nobody likes too much manual data entry, so a lot of the totals update automatically based on the figures you input. The different sheets are also linked (e.g. the sales row in the cash-flow sheet updates based on what you input in the sales forecasts sheet).

Here’s an overview of the different sheets included:

Startup Costs

A simple start to the plan for you to tally up your different startup costs (the expenses the business will need to get going). If your business is already trading then ignore this section, but we found it useful as simple table to determine how much funds we needed before we started.

Sales Forecast (Year 1 & 2)

There are Sales Forecasts included for years 1 & 2. Use these to show when you expect income from sales to occur. We found it useful to break these down into different types of projects, such as a small, medium or large web design projects. I’d suggest you do the same for your business as it makes the whole process of predicting sales a lot easier. You’ll need to do some market research to determine the types of client and prices you’ll be charging, but that’s something for the business plan.

Cash-flow Forecast (Year 1 & 2)

Again for year 1 & 2, your cash-flow shows a 12-month overview of what money is going in and out of your business. The sales income line should update automatically based on what you’ve inputted into the sales forecasts, but you’ll need to add figures for monthly overheads – There’s some common categories for overheads in there to start with, but you’ll probably need to add your own.

The bottom rows show the different balances (monthly, brought forward and cumulative).

A cash-flow demonstrates that you’re going to have enough monthly income to fund the business outgoings. It’s important to think about when you expect future expenses (Stock purchases, rent, drawings etc.) to occur and that you’re going to have the sales income to cover those costs.

The totals at the bottom should all update automatically based on what you enter in the income and expenditure tables.

Profit & Loss

The profit & loss is a simple table that shows your end of year prediction for your businesses profit, or loss. This is where you need to understand turnover, cost of sales, overheads, gross profit and net profit – Really, they’re just fancy words for something that’s much simpler:

• Turnover: This is your yearly sales total. e.g. If your business sells 10,000 pictures in the year for £10 a piece, then your turnover would be 10,000 * £10 = £100,000
• Cost of Sales: This is the direct cost incurred towards making sales. e.g. each picture that you sell at £10 costs you £3 to buy as stock, so your cost of sales is 10,000 * £3 = £30,000
• Gross Profit: This is the turnover minus cost of sales. e.g. £100,000 - £30,000 = £70,000
• Overheads: Your overheads are the expenses your business occurs to run. e.g. your rent, electricity, stationary, drawings etc. example figure: £55,000
• Net Profit: Your net profit is the gross profit minus your overheads. e.g. £70,000 (gross profit) - £55,000 (overheads) = £15,000 (net profit)

There’s a good article on The Times 100 website which explains all this in more detail: Profit and loss accounts and balance sheet.

To wrap it up

Hopefully these financial templates, along with the business plan template, should help get your business off the ground. I’m far from an expert on financials so, if possible, go and find someone who is to help you.

If you’re struggling with figures to put in, a little advice I got was to be realistic, but optimistic. So don’t aim to take over the world but be confident in yourself and your business – Don’t forget, this plan is not just for you… potential investors/bank managers want to be impressed by your ambition. If you still feel like you don’t know where to start, go back to the drawing board and do some more research into potential customers and your competitors.

As I said, I’m no expert at this so if anyone has ideas on how to improve the templates then let me know in the comments.

Posted on 08 January 2011

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