Compiling a Financial Projection is the Best Way to Plan Ahead


Compiling a Financial Projection is the Best Way to Plan Ahead

By Smith & Smith & Ruiz CPA's

Your startup has the potential to be successful, but you need to plan ahead your business strategies so you can always stay a step ahead of the fluctuations in the market. If you have your route planned out, and have a financial projection for the year ahead created by a CPA, you can make informed decisions on what you need for your startup to grow into a success.

Aspects of your annual financial projection

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There are several steps that a CPA takes in order to ensure that the annual financial projection that you get is as accurate as possible. There are always unforeseen expenses and these are taken into account as well. Having a rainy day fund can help your startup if it gets into trouble in the financial year ahead.

The projection will have a sales forecast for the year ahead as well as for the coming three years. The forecast is compiled monthly for the first year and quarterly for the rest, and will contain an estimate of the number of customers you can expect. It will help you make informed decisions on how you will price your products and an estimate of how many will be sold.

It will also give you a comprehensive overview of how many units you can expect to be sold in that year and the coming years ahead. It also provides a detailed analysis of the expenses you can expect for your business like on rent, office supplies, employee wages, etc.

Analyzing your progress

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Your financial projection is presented in three primary statements that will provide you with a detailed analysis of your upcoming financial year.

  • The income statement gives you an insight into the amount of money you can expect from your business. This will also include the expenses you can expect as well as a projection of the sales for the upcoming year and will be divided monthly.
  • The cash flow statement will help you keep track of all your transactions. You can tally all your income and expenses at the end of the period to determine the profit your startup has made.
  • The balance sheet is drawn up to effectively keep track of your assets. This will help you make your tax preparations for the financial year more efficient.

Projecting for three years can help you see the break-even point for your startup. You can make better decisions for your business if you have a better idea of how you can progress and fine tune your strategies. This is bound to help your startup be a recipe for success.

Vision for success

Vision for success

Every startup has the potential to be a success if you have strategized efficiently and a CPA can help you make the right decisions by compiling a proper financial projection for the year ahead. They can help you create a vision for your startup that is bound to grow into a successful enterprise. Contact Smith & Smith CPA’s to have a CPA draw up a financial projection for your startup in Arlington.