Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

What's expected from financial statements?

My early stage venture has only been operating for a few months. An accelerator program we're in the final round for will apparently be reviewing our financials. I'm told it's not an audit. What will they be expecting? A financial statement I can cobble together on my on in Excel? Access to my backend to verify sales? Certified bank statements? I can't tell if this is to assist me in identifying potential weaknesses, or if it's more of a 'let's make sure you're not lying' kind of thing. My biggest concern is that as an early stage company, we've mixed personal and business expenses fairly frequently so it's a bit of a mess (it's a self-funded venture btw, so we're not blowing investors' money shadily or anything).

17 Replies

John Seiffer
1
0
John Seiffer Advisor
Business Advisor to growing companies
They will want to know your projections - what you expect revenue and expenses to be going forward. More important than the numbers are the assumptions you make to arrive at those numbers.

I'm a big fan of self-funded companies (aka bootstrapping) as every company I've ever had was done that way. However you MUST MUST MUST separate business and personal expenses accurately. Otherwise you'll never really no how the company is doing. It's not a problem to keep putting personal money INTO the company when it needs it or to take company money OUT for personal use when that's appropriate. But you should account for it properly in some accounting software like Quickbooks or Xero. You should learn how to use these tools properly if you're going to be serious in business.
Martin Omansky
3
0
Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
Requests for financial statements from accelerator mentors are usually solicited to evaluate the soundness of your project and to give you further guidance. They will not require audited statements. They will try to determine from your numbers what mixture of personal and corporate expenses exist, and how that can be sorted out, especially for tax and valuation purposes. Please see this as a helpful exercise. BYW, they will want both historical financials and 3-5 years of projected financial statements. I recommend you find an experienced CPA to help you prepare them. The results might be enlightening. On another subject altogether, are you related to Dr. Bogdan Lipinski? Sent from my iPhone
Steve Simitzis
0
0
Steve Simitzis Advisor
Founder and CEO at Treat
Typically a balance sheet or operating model (or both). I've never been asked for bank statements.
Kevin Smith
0
0
Kevin Smith Advisor
Advisor at SmartEar, Inc.
Greg, Two points and 1 question: 1. You must separate business and personal accounts immediately. First, it can get extremely messy and expensive if you do this later and second, you lose the ability to protect personal assets once you mix them with business accounts. Question: Have you incorporated? (You should have formed a new entity, separate from your personal matters, and almost certainly it should have been a Delaware c-corp.) 2. Most likely the accelerator will want to see financial statements, including historical financials and 3 year projections, that you can compile on excel. It's not very likely that they will require bank statements or access to a CRM. Cheers, Kevin
Hoofar Pourzand
0
0
Hoofar Pourzand Entrepreneur
Owner, Lotus Industries and Consulting Group
1- If you can't open a business account, it takes two to three weeks to establish everything you need for it, some states even less, create a separate spending/checking account under your own personal account to track spendings. Costs add up pretty quickly.
2- The last time I was asked for a financial statement was when I was looking for an office space, the place I have now. A well known CPA in my area for that job costs about $100 to $200 an hour. I sent them all my financial printed- they had their own CPA and it all worked out eventually.

Mark L. Rosenberg
0
0
Mark L. Rosenberg Entrepreneur
Tax, securities and commercial litigation
Greg--they will be expecting a financial statement, with P & L and Balance Sheet. I do generally recommend that you separate your business expenses from your personal, with separate bank accounts. If you are set up as an LLC or S corporation, you may be able to take the losses, and separate accounts will help on tracking. Let me know if I can help at all in this venture.
Don Ross
1
0
Don Ross Entrepreneur
Managing Partner Digital Health at Life Science Angels
I do not know what accelerators are looking for. I can give you an investor's perspective.

First, as stated above. Going forward, separate your business and personal expenses. Temporarily, simply set up a second personal checking account. Separation is more important than the type of checking account. Prior to investment you will need a formal business structure (usually Delaware C corp) and business accounts.

Second, financial statements and financial projections are two different things. I will address financial statements. Financial statements are a "three-legged stool" made up of a balance sheet, P&L, and a cash flow statement.

Balance Sheet. Simple is fine. I look for unpaid bills and other liabilities. Does it look like everything was included? I once received a balance sheet that showed a $1 million debt to the entrepreneurs. Believe me, I make investments to fuel the company going forward NOT to have entrepreneurs peel off $1M for themselves personally. Needless to say, I passed on this deal.

P&L (historical not projected). Early company won't have much. As the company matures, one can look at margins, how money is spent, and where revenue is being produced (among other things).

Cash flow. The balance sheet, P&L, and cash flow are a "three-legged stool." You need all three to ensure that your financials balance. In financial projections, cash flow projects the most critical date for the company--when it runs out of cash.

Financial statements show that the entrepreneur knows basic business practices and practices good business hygiene (get those personal and business expenses separated ASAP!).

Hope this helps.
Irwin Stein
1
0
Irwin Stein Advisor
Very experienced (40 years) corporate,securities and real estate attorney.
Generally, they want to see that you are operating your business like a business. That you have to ask this question is an indication that you are not. At the very least, you should be on Quickbooks or something similar. You should reconcile your bank statement every month. They want to see your cash flow. They want to know if your sales come all at once, are seasonal or spread out. They want to know that your sales are growing. They want to know that you pay your bills promptly. They want to see your bank balance and know that you have a reserve. If you have mixed your business and personal expenses, you are an amateur, not a professional. If you are going to run a business you should have a knowledge of basic accounting. Buy a book. Do not "cobble together" a finanacil statement. Do it right and make a professional presentation.
Mark L. Rosenberg
0
0
Mark L. Rosenberg Entrepreneur
Tax, securities and commercial litigation
Greg--they will be expecting a financial statement, with P & L and Balance Sheet. I do generally recommend that you separate your business expenses from your personal, with separate bank accounts. If you are set up as an LLC or S corporation, you may be able to take the losses, and separate accounts will help on tracking. Let me know if I can help at all in this venture.
Don Holtz
0
0
Don Holtz Entrepreneur
Group President at Phoenix Marketing International
From the start of each company we had a cpa firm do a compilation and a payroll service issue checks even when there was just two of us. When we were acquired, there was one minor adjustment
Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?