4. Project Profit and Loss for Your First Year
In this video, you will project profits and losses for your business’s first year.
This enables you to plan for your business’s future and ensure that you have enough startup investment to stay open until you’re profitable.
To do this, you will complete the “twelve-month profit and loss projection” spreadsheet.
To begin, click on the “twelve-month profit and loss projection” starter spreadsheet, and make a copy of it.
This is the name it will be stored under in your Google Drive.
Read the “notes on preparation” to familiarize yourself with the terms used in the spreadsheet.
If you need to do more research before moving forward, pause the video and do so now.
Then, enter your company information and when your fiscal year begins.
Your fiscal year starts on a specific date based on your business accounting practices.
It often starts the same month you open your business.
Your fiscal year start date automatically updates the months in your table.
Format the title row, your business name, and the fiscal year so they stand out to readers.
Then, format header rows and rows for total amounts.
After you format a row or cell, use paint format to apply its formatting to another area.
When formatting many different parts of a spreadsheet, this is faster than changing elements one at a time.
Change the angle of the dates at the top of the table so they are easier to read.
Next, list the categories, or groups of products or services, your business earns money from.
For example, a pet care business might sell in categories like daycare, grooming, pet supplies, and pet food.
Add a row for each category and format it so that it’s consistent with the rows around it.
Then, type the category name in the first cell of the row.
Then, estimate your first month’s sales in each category.
Next, add your first “cost of sales” category.
“Cost of sales” is how much it costs your business to produce a good or service.
This includes direct costs like materials, supplies, and labor.
Add a row for the sales cost of each revenue category.
Type the category name in the first cell of the row.
For each category, enter the estimated cost of sales for the first month.
Next, insert a row for each current or future operating expense and list the expense category.
Then, estimate each expense for the first month.
Consult the “start-up expenses” spreadsheet from the last video or any expense worksheets that you completed.
Next, estimate monthly taxes.
These rates depend on your business’s legal structure as a sole proprietorship, L-L-C, or other business type.
For each section of the spreadsheet, apply your first month’s estimate to the entire row.
To do this, click, hold, and drag the cell handle from your first-month column to your last-month column.
For now, fill the row with a starting amount so you can calculate total amounts in the next video.
If these figures vary month-to-month, you can update them later.
Finally, repeat for each “cost of sales,” “expenses,” and “taxes” row.
Now, it’s your turn: Format your spreadsheet, Add rows for revenue, sales, and expense categories, Enter first-month estimates for each category, And drag estimates across rows to complete each category.
- Format your spreadsheet.
- Add rows for revenue, sales, and expense categories.
- Enter first-month estimates for each category.
- Drag estimates across rows to complete each category.