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How to use your Balance Sheet Forecast Template
- Hit file, then “save as” for Excel or “make a copy” for Google Sheets
- Fill out each section by adding your forecasted figures in the white cells
- Remove or add figures that are applicable to your business
- Formulae will calculate totals automatically
- Duplicate the sheet and add different figures into the white cells to test different “what-if” scenarios
- You can quickly get a summary of your sheet in the key “info” section, this is also useful for error-checking
- View the area chart at the top of the spreadsheet to see total assets, liabilities and equity
Simple as that!
Pro-tip: if you’re not sure what each section means, hover over the cells to get a brief description of what you should enter there.
Why looking at the balance sheet is crucial
The balance sheet shows the value of the business in terms of:
- What the business owns
- What the business owes
It provides a complete picture of the business in a specific time frame (especially when compared to the cash flow and profit and loss forecasts) allowing you to visualise the businesses full value.
Understanding the value of your business is incredibly powerful for making decisions and forecasting the balance sheet gives further signals to investors as to whether they should invest.
The balance sheet can often be a confusing report to look at, especially for beginners. One of the major issues comes from the structure and understand what each of the report lines means.
This is why in our template we’ve structure the report out in an easy to understand way with added descriptions to each line.
We’ve also got a beginners guide to the balance sheet forecast report which explains the report line by line. If you’re completely new to the report you may want to reference this as you build your forecast.
If you haven’t already, pop your email in the box at the top of this article to get your free template.
Why the balance sheet is so important to forecast
Forecasting any of the 3 key financial statements allows you to make important business decisions based on current and past data.
So imagine how much of an “asset” it would be to forecast what your company could own and owe in the future. It’ll allow you to see if and when you can expand and grow your business and how you’ll fund this expansion.
This is valuable for all businesses but for small businesses and startups, it’s even more so.
Why? Because the balance sheet forecast is one of the main reports that investors look at when they assess your business.
It’s the closest report to a complete picture of the business of any of the three key financial reports.
The balance sheet forecast can identify risks in a business. These risks can be created by various factors; such as having too many outstanding invoices sitting in accounts receivable, having the majority of your assets fixed (not easily transferable into cash) or having too much bad debt etc.
- You’re making lots of sales
- Each buyer has a 30 day payment window after receiving their goods/service
- You’re still making sales and your accounts receivable account keeps growing.
- Very little of these supposed sales are translating into real cash
This illustrates a very real problem that many businesses have. Carrying on like this could see you running out of cash very quickly. This problem might indicate that somewhere along the line payments are not being received. Perhaps this is down to not chasing up orders or maybe you don’t have anyone assigned to do this. Perhaps people aren’t satisfied with the goods and services they are receiving. Either way, it’s a warning sign for investors.
The action you might take to solve this problem is to hire someone to chase these, or hire a firm to do so on your behalf.
Risks like these can be spotted on your balance sheet. Forecasting your balance sheet gives you the opportunity to explore how you’ll fix these issues. You can demonstrate how the impact of your actions will reduce this risk over time.
Whilst your balance sheet gives you a powerful overview of your business you’ll likely want to be looking at this in combination with your profit and loss and cash flow reports.
If this is something you think you’ll need to do, read on…
Introducing Brixx – financial forecasting for forward-looking business owners
Brixx is a financial modelling tool created for business owners to effectively map out their financial future.
Using simple inputs, you can forecast the 3 key financial statements up to 10 years into the future. All the reports and charts generate simultaneously which is a serious time saver.
When you save that much time generating reports, you can spend more time on the interesting stuff like modelling scenarios.
And modelling scenarios is really where Brixx shines.
You can model the impact of today’s decisions on tomorrows financials to make sure you make the right moves for your business.
If you find yourself needing a bit more than just a simple spreadsheet to plan the future, try our free trial.