FINANCIAL STATEMENTS AND CASH FLOW PROJECTIONS--Why You Need Them, How to Create Them, and How to Use Them

In this 10-page eReport by Barbara Brabec, America's Home Business Maven(TM), you get a clear explanation of the the importance of the financial reports every business needs, along with sample worksheets you can use as models to create your own impressive financial documents (especially helpful if you have no accounting software program that creates such reports for you). These samples can be adapted to fit the needs of any business (homebased or otherwise), whether it offers products, services, or a combination of both.

If you have a homebased business, you may think it's too small for you to take the time to create financial statements, but if you're serious about what you're doing, you should have these reports for your own information. Even if you never plan to ask a banker for a business loan, your financial statements will provide a fascinating picture of how your business is doing and enable you to monitor cost-of-goods and inventory figures, overhead costs, and net profits each year. Sometimes when you're not sure if you're just treading water or actually making gains, financial statements can offer surprising and comforting evidence that you're on the right track.

Bankers have always been impressed with my Income Statement, so I've included in this report a sample of the worksheet I have always used to prepare it, along with sample worksheets for a Balance Sheet and Profit and Loss (P&L) Statement. Adapted from the financial statements used by a book publishing company I once managed, these forms have served me well over the years. They'll knock the socks off any banker or lender you deal with in the future.

The report also includes a cash flow projections worksheet. Even if you never apply for a loan, you will find it helpful to occasionally make cash flow statements for your business, particularly when you find yourself coming into a period where you're worried about whether you will have sufficient income to meet anticipated expenses. By creating a cash flow projection in advance of an anticipated situation, you can identify if and when a financial problem is likely to occur and get a handle on what you might need to do to solve it. You might find you have to do something to generate extra income or apply for a short-term loan. Sometimes a cash flow projection proves that you aren't going to have a problem at all.

Barbara Brabec is the author of Homemade Money, Creative Cash, and several trade books on how to start, manage and market a business at home. Visit her BarbaraBrabec.com website to find a wealth of free articles for home business owners, computer newbies, writers and self-publishers.