Key Elements of your Financial Projection


As a successful online store owner on the mall’s platform, your financial projections should include three types of financial statements:

Income Statement: An Income Statement shows your revenues, expenses and profit for a particular period. If you are developing these projections prior to starting your business, this is where you will want to do the bulk of your forecasting. The key sections of an income statement are:
Revenue – This is the money you will earn from whatever products you sell on the mall.
Expenses – Be sure to account for all of the expenses you will encounter, including Direct Costs (i.e. materials, equipment rentals, your casual workers’ wages, your salary, etc.) and General and Administrative Costs(i.e. accounting and legal fees, bank charges, taxes, internet costs, insurance, phone bills, etc.).
Total Income – This is your revenue minus your expenses, before income taxes.
Income Taxes – This is a government levy (tax) imposed on individuals or businesses and which varies with the income or profits (taxable income) of the taxpayer.
Net Income – Your total income without the income taxes.
Cash Flow Projection:  A Cash Flow Projection will demonstrate to a loan officer or a prospective investor that you are a good credit risk and can pay back a loan if it’s granted. The three sections of a Cash Flow Projection are:

  • Cash Revenues – This is an overview of your estimated sales for a given time period. Be sure that you only account for cash sales you will collect and not credit.
  • Cash Disbursements – Look through your ledger and list all of the cash expenditures that you expect to pay that month.
  • Reconciliation of Cash Revenues to Cash Disbursements – This one is pretty easy: you just take the amount of cash disbursements and subtract it from your total cash revenue. If you have a balance from the previous month, you’ll want to carry this amount over and add it to your cash revenue total.

Balance Sheet: This overview will present a picture of your store business’ net worth at a particular time. It is a summary of all your business’ financial data in three categories: assets, liabilities and equity.

  • Assets – These are the tangible objects of financial value owned by your company.
  • Liabilities – These are any debts your business owes to a creditor.
  • Equity – The net difference between your organization’s total liabilities minus its total assets.

Note – You will want to be sure that the information contained in the balance sheet is a summary of the information you previously presented in the Income Statement and Cash Flow Projection. Also, note that while preparing your financial projections, it is extremely important to be as realistic as possible. You don’t want to overshoot or underestimate the revenue your business will generate. It’s a good idea to have a trusted friend or business partner review your financial projections.

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