Business Sense | The gift of business projections – Eureka Times-Standard

e-Edition
Sign up for email newsletters

Sign up for email newsletters
e-Edition
Trending:
“I’m going to let you in on a little secret. Everyday, once a day, give yourself a present. Don’t plan it, don’t wait for it. Just let it happen.” — Dale Cooper.
I try to take this advice daily, monthly, and yearly, although I confess I cheat and plan it out sometimes.
This year, I invite business owners and all folks currently managing the complexities of bill-paying adulthood to give themselves a special gift. It might sound boring, and it actually … is! But it is a wonderful present that you may find incredibly useful. This year, take a few hours and create your own personal pro forma income statement. It may point the way to savings that could, say, enable payroll increases for your employees, or add to personal savings for that vacation you’ve been hoping to take.
EEK! What is that!? A pro forma income statement is a magical bit of analysis that tells the future … or at least that’s what I tell myself to spice it up a bit. It is something I wish I knew more about in my years working with legal cannabis businesses. Pro formas (or “projections”) may not have saved companies from the inevitable hardships of the regulated cannabis marketplace, but the process certainly helps set a sustainable course. I now analyze projections almost every day in my role with AEDC Small Business Lender Center. It is quite possibly the most pivotal bit of information we use in deciding whether or not a business plan is viable.
Note: If this is daunting, please reach out to your closest Small Business Development Center for assistance. They are there to help — for free! The North Coast SBDC can be contacted at 707-445-9720.
An income statement, also known as a profit-and-loss statement, is a financial report that shows how much your business has spent and earned over a specified time. There are many free templates available to pilfer from the internet. Enter in your income and all of your expenses to come up with your net income for a specified year. Be as conservative as possible! You can use your tax returns to create your income statements for the last 3 years. Once you’ve done this, create an income statement for the next 2 years individually. Base these numbers off of your past 3 years and make sure to include any upcoming changes in your financial life. Is your fuel cost going to be higher next year? Will you be hiring an advertising professional?
Once you have your 3 years of history next to your 2 years of pro forma/projections, you’ll be able to compare categories and isolate the trends. You’d be surprised how helpful it is to see the numerical ups and downs. The result of this exercise isn’t always an epiphany, but the process forces you to understand your financial situation in a new way. And sometimes it can bring to light an area of possible savings, allowing for more capital for other needed items.
Your future self will thank you for the gift.
Hannah Joy is a Dale Cooper fan and the business development and loan officer with AEDC. Share your thoughts about your projections at humboldthannah@gmail.com
We invite you to use our commenting platform to engage in insightful conversations about issues in our community. We reserve the right at all times to remove any information or materials that are unlawful, threatening, abusive, libelous, defamatory, obscene, vulgar, pornographic, profane, indecent or otherwise objectionable to us, and to disclose any information necessary to satisfy the law, regulation, or government request. We might permanently block any user who abuses these conditions.
Sign up for email newsletters
Copyright © 2022 MediaNews Group

source

brucemeyernet

Learn More →

Leave a Reply

Your email address will not be published. Required fields are marked *