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Writing the Business Plan: Section 8

Part 4: The Balance Sheet


Business Plan

Business Plan

Image (c) Susan Ward

The Balance Sheet is the last of the financial statements that you need to include in the Financial Plan section of the business plan. The Balance Sheet presents a picture of your business' net worth at a particular point in time. It summarizes all the financial data about your business, breaking that data into 3 categories; assets, liabilities, and equity.

Some definitions first:

Assets are tangible objects of financial value that are owned by the company.

A liability is a debt owed to a creditor of the company.

Equity is the net difference when the total liabilities are subtracted from the total assets.

All accounts in your General Ledger are categorized as an asset, a liability or equity. The relationship between them is expressed in this equation: Assets = Liabilities + Equity.

For the purposes of your business plan, you'll be creating a pro forma Balance Sheet intended to summarize the information in the Income Statement and Cash Flow Projections. Normally a business prepares a Balance Sheet once a year.

Here is a template for a Balance Sheet that you can use for your business plan (or later on when your business is up and running):


BALANCE SHEET As At __________ (Date)

Current Assets:   Current Liabilities:  
  Cash in Bank     Accounts Payable  
  Petty Cash     Vacation Payable  
  Net Cash     EI Payable  
  Inventory     CPP Payable  
  Accounts Receivable     Federal Income Tax Payable  
  Prepaid Insurance     Total Canada Customs & Revenue  
Total Current Assets     WCB Payable  
      Pension Payable  
Fixed Assets:     Union Dues Payable  
  Land     Medical Payable  
  Buildings     PST Payable  
  Less Depreciation     GST Charged on Sales  
Net Land & Buildings     GST Paid on Purchases  
      GST Owing  
Equipment   Total Current Liabilities  
Less Depreciation      
Net Equipment   Long-Term Liabilities  
    Long-Term Loans  
TOTAL ASSETS   Mortgage  
    Total Long-Term Liabilities  
    Owner's Equity - Capital  
    Owner - Draws  
    Retained Earnings  
    Current Earnings  
    Total Earnings  


Once again, this template is an example of the different categories of assets and liabilities that may apply to your business. The Balance Sheet will reproduce the accounts you have set up in your General Ledger. You may need to modify the categories in the Balance Sheet template above to suit your own business.

Once you have your Balance Sheet completed, you're ready to write a brief analysis of each of the three financial statements. When you're writing these analysis paragraphs, you want to keep them short and cover the highlights, rather than writing an in-depth analysis. The two Financial Plan samples in the sidebar (under "Elsewhere On The Web") will show you what these analyses will look like. The financial statements themselves (the Income Statement, Cash Flow Projections, and Balance Sheet) will be placed in your business plan's Appendices.

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