I need to prepare a financial/cashflow/budget plan for my startup. Can anyone offer suggestions about what items I should include or exclude? Are there any 'templates' available for preparing this type of material? Any "rules of thumb" I should follow?
There are actually a lot of templates out there you can use. I recommend that you look at a few of those templates that are related to your business and try to make your own. Turn that plan into something you know you can use/implement.
I recommend that you look at some of the financials and financial notes for publicly traded companies in your space. For example, Facebook's and Angie's List SEC IPO filing information is available online for free and has some great information regarding the key drivers of their financials such as paid subscriptions and such. This will help you understand what a typical internet company looks like from a financial perspective as well as the drivers that should be included in your business model to drive the financial statements.
Hope this helps.
I'm guessing that you're preparing financials for investors. If you're looking for a rule of thumb here's one to follow: show that you can build a sustainable business.
Life expectancy is usually money raised / monthly burn rate. So if you raise 500K and plan to operate with a 40K monthly budget for 12 months then the question any sophisticated investor will ask is where do you think you'll be at the beginning of month 13?
Keeping on with the 500K raise and 40K monthly budget, you need to show that you can build a business that generates 40K of monthly revenue in 12 months. Of course, you can be more aggressive (say monthly burn rate of 60K with projected revenue of 60K in less than 9 months) or more conservative (burn rate of 20K to give yourself 2 years of sustainability). Your choice.
Focus on showing that you can build a self-sustainable business by showing that you've thought through the steps and budget it will take to get there.
My experience is that templates don't work very well.
I've written an article titled "Ten Myths of Business Start-Ups" which I would be happy to send to you.
Essentially, a start-up budget should start with a realistic monthly projection of the P&L for the business, going out one year on a monthly basis, followed by annual projections for Years 2-5. Simply stated, sales, COGS, gross-profit, all expenses, etc. The Balance Sheet should also be projected, but the P&L is key.
Typically, start-up projections will show losses for a period of time, hopefully followed by profitability at some point. A cash-flow projection will help to anticipate the amount of funding that will be required to cover the "ramp-up" period.
One of the most common misunderstandings of entrepreneurs starting a business is the amount of initial cash required to cover minimum expectations. A conservative estimate of cash requirements is based on sales, cost & profit projections in addition to inventory considerations (if applicable).
You need P&L, Balance Sheet and, importantly, also Cash-flow Statement projections. Many businesses make the fundamental mistake of forgetting to manage and consider cash flow and so, if not for any other reason, you need to demonstrate to potential investors that you have thought about cash flow as well as P&L and BS.
Aside from the P&L and BS, which I'm assuming you will be able model without much further instruction; when considering the Cash-flow Statement, you must consider and model ratios such as DSO, DPO, DII and related financial ratios. Get a copy of this book and understand it properly before you start modelling these numbers.
This will give your plan an edge against plans that consider BS & P&L to be enough. The key point that you should remember is that cash is king and thus, if you don't manage your cash position, an otherwise healthy, profitable business can simply keel over and die.
Your investors will know this, so you must make sure you can allay their concerns in this respect.