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Will My Business Make Money?
The following are additional financial projections that should also be part of your business plan, to round out your business's financial picture.
- A profit-and-loss forecast. This is a month-by-month projection of your business's net profit from operations.
- A cash flow projection. This shows you how much actual cash you'll have, month by month, to meet your expenses.
- A start-up cost estimate. This is the total of all the expenses you'll incur before your business opens.
For instructions on how to create a profit-and-loss forecast and a cash flow projection, see How to Write a Business Plan, by Mike McKeever (Nolo).
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Although creating a break-even forecast might sound complicated, you owe it to yourself to prepare one as one of the first steps in your business planning process. Now is the time to get used to using cost estimates and profit margins, if you're going to succeed in business. And as you can see, a realistically prepared break-even forecast will tell you whether your idea is a sure winner, a sure loser or, like most ideas, needs modifications to make it work. Plus, you'll have a big headstart on your business plan! FAQs
- I have an idea for a business. What is the first thing I should do?
- What does market research involve?
- How do I develop a business plan?
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