Reading
Completing an “opening day balance sheet” is a crucial step in outlining your business’s financial status at the outset. A balance sheet is essentially a snapshot of your business’s financial position at a given moment, specifically focusing on the opening day in this case. It is designed to calculate “net worth,” which is the value of your business determined by the assets (like cash and equipment) you own. In the opening day balance sheet, you’ll list assets, including cash and property, as well as liabilities, which encompass debts and expenses. The key purpose of this balance sheet is to determine how much the business is worth by subtracting liabilities from assets, thereby revealing the “net worth” or “owner’s equity.” To construct your balance sheet, you’ll need to set up your spreadsheet, add both assets and liabilities, and then employ spreadsheet functions to calculate the net worth. Begin by creating a copy of the starter project and renaming it, then proceed to add your business name. Next, list “current assets” such as cash, inventory, and prepaid expenses, and classify additional assets under the “other” category. You’ll use the SUM function to review your “total current assets.”
Then, move on to detailing “fixed assets” like machinery, equipment, furniture, and real estate, remembering that these assets don’t often change in value, although equipment might depreciate over time. Also, list “other assets,” which could include lease and utility deposits, patents, trademarks, and special certifications. Most new businesses typically list only deposits here. After that, take a moment to review the total of your current, fixed, and other assets. The next step is to add liabilities, which are divided into current liabilities (accounts, taxes, and debts due within one year) and long-term liabilities (debts owed for more than a year, such as bank loans and payments to investors). The totals for current, long-term, and total liabilities will be automatically calculated. The final step is to total your assets and liabilities, which automatically calculates your net worth or owner equity, essentially showing the value of your business after liabilities are subtracted from assets. It’s important to remember that a low initial net worth is not uncommon and simply represents a starting point. Finally, integrate this vital information into your business plan by adding a link to your worksheet under the financing information section. This step is particularly beneficial when engaging with lenders or investors. Now it’s your turn to take action: Make a copy of the opening day balance sheet and rename it, list your assets and liabilities, review the total assets, total liabilities, and net worth, and then add a link to your spreadsheet in your business plan.