Financial Planning for Startup Business in Dubai

Also known as the profit and loss (P&L) statement, it elaborates the profit or loss the business is expected to generate over a given period of time.

In a nutshell, the Income Statement shows your expenses, revenues, and profits for a particular period. Basically, it is a snapshot of your business that shows the feasibility of the business idea.

The Income statement can be generated keeping into consideration three scenarios: worst, expected, and best.

Revenue - Expenses = Profit/Loss.

While established businesses are required to produce Income Statements annually, startups and small businesses should provide monthly reports while writing a business plan.

This section provides details on the cash position of the business and its ability to meet monetary commitments on a timely basis.

A startup business should show monthly projections for the first year of business, along with quarterly information for the next two years.

When writing a business plan, you'll be required to show Cash Flow Projections for each month over a period of one year as part of the Financial Plan of your startup. The Cash Flow Projections consists of three parts:

Cash Revenue Projection -  Here you have to enter the estimated or expected sales figures for each month.

Cash Disbursements -  This will take into account various expenses across categories. List out expenditures that you expect to pay in cash for each month over a period of one year.

Reconciliation of Cash Revenues to Cash Disbursements - Reconciliation here signifies adding the current month's revenues and subtracting the current month's disbursements. The result is then adjusted to the cash flow balance that is carried over to the next month.  

A balance sheet is a snapshot of what you’re worth. A balance sheet adds up everything your business owns, subtracts all debts, and the difference that you get shows the net worth of the business, also referred to as equity. This statement consists of three parts: assets, liabilities, and the balance calculated by the difference between the first two. The final numbers on this sheet reflect the business owners’ equity or value.

Assets = Liabilities + Equity.
Check = Total Liabilities & Equity - Assets 

The term "balance" we are using for this sheet because it is representing the balance between Assets and Total Liabilities & Equity. 

The purpose of the balance sheet:

• It indicates the capital need of the business
• It helps to identify the allocation of resources
• It calculates the requirement of seed money you put up, and
• How much finance is required?

The investor wants to see your balance sheet to understand the condition of your business on a given date, which is usually the end of the fiscal year.

While writing a business plan for a new venture, you will have to work on creating projections for Balance sheets. These will serve as the benchmarks to compare against actual results at the end of the fiscal year. Hence, it is important to look ahead to see how your balance sheet will appear given your marketing, sales, and inventory forecast -  the three components of the business that can have a major impact on your projections.