In Part 3 of this four part series on developing your financial plan, we discuss break-even analysis and developing a balance sheet forecast.
Please note: The information in the article is for informative purposes only and is not financial advice. You should seek appropriate independent professional advice before making any decisions based on material found on this website or any linked sites.
One important aspect of the financial plan is the assessment of the break-even point indicating the minimum number of photo shoot bookings the business will have to receive to pay off the expenses. It can also be used to estimate the earnings impact of a new marketing strategy.
Creating a balance sheet forecast will enable you to see a snapshot of your business after its first year of operation by estimating its net assets based on the projected assets and liabilities.
The purpose of generating a balance sheet is to highlight the business’ assets and liabilities at a certain point in time to assist with analyzing its capital structure and financial health. It is made up of three parts:
What your business owns (i.e. equipment, cash, property).
Money that your business owes (i.e. loans/debt).
3. Owner’s equity:
The investment made by the business owner which is calculated by subtracting total liabilities from total assets.
If you haven’t already done so in the part one of this series, download The Financial Plan Template.
Note: This article is an extract from the resources on the Education page on this website.
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