Making sure your small business is ready for opportunities that come up is essential. Preparing your financial statements and business plan today can set your business up for success in the long-term.
Lendistry’s CEO, Everett K. Sands, shares a hard truth with business owners that larger banks don’t tell them:
Your Financial Statements are a Deal Maker or Breaker
Let’s say you applied for financing. You’re a top candidate for funding, except for one factor: your financial statements aren’t in order. Despite your business’s potential, your application is declined. You’re missing out on valuable opportunities because you haven’t taken this simple step to make your business stand out.
Basic financial statements include:
- Balance sheets – Show the details of your business’s assets, liabilities, and shareholders’ equity
- Income statements – How much revenue your business earned over a period of time and the costs and expenses it accrued to earn that revenue
- Cash flow statements – Your business’s inflows and outflows of cash
- Tax returns for two or more years
It’s understandable that financial statements aren’t your top priority on day one of operating your small business. But if you don’t eventually make the effort to get them done, lenders are less likely to consider you a viable borrower.
Developing a solid, detailed financial plan and keeping it updated gives you a dynamic understanding of your business and convinces banks and investors that you’re a good investment. Consider hiring a certified public accountant to help you prepare and maintain your financial statements.
Business Plans Show You Mean Business
If you present a possible lender or investor with a business plan that you’ve invested time and care into preparing, you’re more likely to get approved. Your business plan includes your financial statements, but it also shows your history, your future goals, and the data your plans are based on.
Core elements of a business plan include:
- Executive summary – An overview of your business and what is outlined in the business plan
- Description of your business
- Key players and their roles in your business
- Your business’s products and services
- Your business’s financial standing – Shown through your financial statements
- Your business budget
- Your business’s market standing – Analyzes your business’s industry and position within that industry
- Marketing strategy and analysis – How your business plans to reach its target audience
We recommend keeping a detailed, in-depth version of your business plan and a shorter, high-level version. It’s standard practice to update your business plan every two years, but you should do so sooner if your business has a faster growth model or after any major changes. The last thing you want to do is update it in a hurry to meet an unexpected deadline.
Get started on a business plan using a template. This will save you from the stress of making it visually appealing if design isn’t your strength.
Get Help with Your Business Plan & Financial Statements
Lendistry’s nonprofit partner, The Center, offers online business classes, webinars, and one-on-one business advising for small business owners who need help boosting their businesses and navigating the process of applying for funding. Their trainings take business owners through financial statements line-by-line and can help you get started with these crucial steps for your business.