Create a Robust Financial Plan - Financial Statements

The income statement, or P&L, is the financial report investors will scrutinize the most – and with good reason: it's where all your projections and calculations are summarized to tell the story, in numbers, of how your business will make money. This course will help you bring everything together to develop a P&L that's accurate and convincing. 

Given that 8 in 10 business failures can be attributed to poor cash management, tracking how much cash is coming in and going out is crucial to startup success. The cash flow statement provides an ongoing record of income, investments, and expenses so you can adjust activities and stay on target. You can also predict how much you need to invest in the business before your business achieves positive cash flow – more money coming in than going out. 

In addition to addressing these crucial calculations, this course delves into strategies for managing cash flow and establishing a realistic basis for cash flow projections. Using the accompanying spreadsheet in tandem with on-demand expertise, you’ll develop a sound cash flow strategy that sets your company on a path toward growth.

You will learn:

• Why do investors care about the P&L?
• What red flags are investors looking for when they scrutinize the numbers?
• What adjustments should I include to arrive at a realistic net revenue?
• Why is gross margin so important?
• How can I identify an appropriate gross margin target for my business?
• What should I include as operating expenses?
• What is the difference between gross margin and operating margin?
• Why is it important to track cash flow?
• What are the elements of the cash flow statement?
• What is a burn rate?
• What does cash flow positive mean, and how can I predict when I’ll get there?
• Why could a quick positive cash flow give investors pause?
• What inputs can I adjust to impact the cash flow model?
• How should I define aggressive and conservative cash flow estimates?

This course is part of a larger series on creating a robust financial plan.  To learn more, you can watch the following courses in this series.  

• Create a Robust Financial Plan - The Fundamentals
• Create a Robust Financial Plan - Revenue Model
• Create a Robust Financial Plan -Staffing and Expense Model