A large part of your business plan includes your financial statements. Financial statements are formal records of your business’s financial activities; they provide a summary (short and long term) of your financial condition. The four basic financial statements are

  • Income statement: Your bottom line ¯ subtracting costs from revenue to come up with net profit

  • Balance sheet: A financial snapshot that shows what you own, what you owe, and what your company is worth

  • Cash flow statement: A cash monitor that follows the flow of cash in and out of your company

  • Budget: Your financial forecast that indicates where you plan to make and spend money