1. New Venture Finance

2. First steps – how much $ does your new venture need? Must assemble pro forma financials to test assumptions (and convince investors of your logic) – Income statement – Statement of cash flows – Balance sheet These forecasts point out capital requirements and determine equity investments

3. Simplicity is a virtue Sample income statement Sales 1 $ Less COGS 2 Gross profit margin Less SGA expenses 3 Operating income or loss Less interest expense Income before taxes Less income taxes 4 Net income or loss$ 1. Sales forecasts are based on market research presented separately in this plan. 2. See separate cost accounting model for COGS assumptions 3. See Detailed pro forma (attached) 4. See Detailed pro forma (attached)

4. From previous sample income statement Show items in summary form – save details for separate schedules or footnotes attached to the financial statements Make sure statements conform to generally accepted format practices Forecast three estimates of sales for five years: most likely, most pessimistic, and most optimistic Monthly sales forecasts for first 2 – 3 years Express forecast in both terms of items sold and dollars to account for factors affecting price

5. The build-up method of pro forma forecasts Revenues worksheet Costs worksheet Income statement Statement of cash flows Balance sheet Amortization of loan (if applicable) Example