The balance sheet is a snapshot of your company’s financial position at the time it’s prepared, comparing what you own with what you owe.
Cash flow statements show all the cash you have coming in and out of the company, whether as a direct result of your business activities or from any outside investments you’ve made.
The International Finance Corporation has a primer as part of its Small Business Toolkit that offers great tips on putting all of these statements together.
Funders may also want to see an analysis of how your results would change if some of the variables changed, so consider including a section on that, as well.
If you’re a startup, you obviously won’t have any previous financial information for the company, so many lenders will want to see your financial information in lieu of, or in addition to, your business financials.
Spell out how much money you’re investing in the business, along with specifics about the assets you plan to use.
If you’re looking for financing, you’ll probably have to show personal income tax returns for the last few years.
Be prepared with documentation for the last three to five years, depending on how long you’ve been in business.
Now, everyone knows you don’t have a crystal ball and can’t actually predict what will happen over the next five years, but there’s a point to putting the projections together.
Lenders and investors really want to see that you have thought things through and considered the possible outcomes as your business progresses.