A free example of a 3-year balance sheet

You will find a 3-year balance sheet tailored to your project in our list of 200+ financial plans

All our financial plans do include a 3-year balance sheet.

How can you create a 3-year balance sheet without feeling overwhelmed?

In this article, we provide a free tool to do so. If you're looking for something more tailored to your specific project, feel free to browse our list of financial plans, customized for over 200 different project types here.

We'll also address the following questions:

How can future revenues for the next three years be estimated?
What are the main expense categories to include in a three-year financial statement?
How can seasonal variations be managed in financial forecasts?
What software tools can help create a three-year financial statement?
How can future investments be incorporated into a financial forecast?
What are the key financial indicators to monitor in a three-year financial statement?
How can the accuracy of financial forecasts be validated?

Here Are the Steps to Create a 3-Year Balance Sheet

To skip all these steps, you can simply download a financial forecast tailored to your industry.

• 1. Estimate Initial Capital Investment:

  Begin by determining the total amount of money you will need to start your business. This includes costs for research and development, manufacturing setup, marketing, and operational expenses. Break down these costs into specific categories to get a clear picture of your initial investment.

• 2. Project Revenue for the First Three Years:

  Estimate the number of units you plan to sell each year and the price per unit. Use these figures to calculate your projected revenue for each of the first three years. Consider factors such as market demand, competition, and pricing strategy.

• 3. Estimate Cost of Goods Sold (COGS):

  Determine the cost to produce each unit of your product. Multiply this cost by the number of units you plan to sell each year to calculate your COGS for each of the first three years.

• 4. Calculate Gross Profit:

  Subtract your COGS from your projected revenue for each year to determine your gross profit. This will give you an idea of how much money you will have left after covering the direct costs of producing your product.

• 5. Estimate Operating Expenses:

  Identify all other expenses required to run your business, such as salaries, rent, utilities, and marketing. Estimate these costs on an annual basis and subtract them from your gross profit to determine your operating profit.

• 6. Create Your Balance Sheet:

  List your assets, liabilities, and equity. Start with your initial capital as equity and add your annual profits to this equity. Include assets such as cash, inventory, and equipment, and liabilities such as loans or accounts payable. This will help you create a detailed and manageable 3-year balance sheet.

What Should Be Included in a 3-Year Balance Sheet?

Here are the key elements that should be included, all of which you will find in our financial forecasts tailored to 200+ different business projects.

Element	Description	Example	Notes
Assets	Resources owned by the company that have economic value.	Cash, Accounts Receivable, Inventory, Property, Plant, and Equipment	Divided into Current and Non-Current Assets
Liabilities	Obligations the company owes to outside parties.	Accounts Payable, Short-term Debt, Long-term Debt	Divided into Current and Non-Current Liabilities
Equity	The residual interest in the assets of the entity after deducting liabilities.	Common Stock, Retained Earnings	Also known as Shareholders' Equity
Current Assets	Assets expected to be converted into cash within one year.	Cash, Accounts Receivable, Inventory	Part of Total Assets
Non-Current Assets	Assets not expected to be converted into cash within one year.	Property, Plant, and Equipment, Intangible Assets	Part of Total Assets
Current Liabilities	Obligations expected to be settled within one year.	Accounts Payable, Short-term Debt	Part of Total Liabilities
Non-Current Liabilities	Obligations not expected to be settled within one year.	Long-term Debt, Deferred Tax Liabilities	Part of Total Liabilities
Shareholders' Equity	The owners' claim after all liabilities have been deducted from assets.	Common Stock, Retained Earnings	Part of Total Equity
Total Assets	Sum of Current and Non-Current Assets.	Current Assets + Non-Current Assets	Must equal Total Liabilities and Equity
Total Liabilities	Sum of Current and Non-Current Liabilities.	Current Liabilities + Non-Current Liabilities	Part of Total Liabilities and Equity
Total Equity	Sum of all equity accounts.	Common Stock + Retained Earnings	Part of Total Liabilities and Equity
Total Liabilities and Equity	Sum of Total Liabilities and Total Equity.	Total Liabilities + Total Equity	Must equal Total Assets

Our financial forecasts are comprehensive and will help you secure financing from the bank or investors.

Common Questions You May Have

Reading these articles might also interest you:
- How to build a financial projection for investors?
- How do you estimate startup costs for a new business?
- How to forecast how many customers will buy your product?

What are the key components to include in a 3-year balance sheet?

The key components of a 3-year balance sheet include assets, liabilities, and shareholders' equity.

Assets should be categorized into current and non-current, while liabilities should be divided into short-term and long-term.

Shareholders' equity typically includes common stock, retained earnings, and additional paid-in capital.

How do you project future revenues and expenses accurately?

To project future revenues and expenses, start by analyzing historical financial data and identifying trends.

Use industry benchmarks and market research to validate your assumptions and adjust for any anticipated changes.

It's crucial to remain conservative in your estimates to avoid overestimating revenues or underestimating expenses.

What is a reasonable growth rate to assume for a startup in its first three years?

A reasonable growth rate for a startup in its first three years can vary widely depending on the industry and market conditions.

However, many startups aim for a growth rate of 20% to 50% per year in their initial stages.

You should base your growth rate on realistic market analysis and not overly optimistic projections.

How much working capital should a business maintain?

Working capital requirements can differ based on the industry and business model.

Generally, businesses should aim to maintain working capital that covers 3 to 6 months of operating expenses.

This ensures that the business can manage short-term obligations and unexpected expenses.

What software tools can help in creating a 3-year balance sheet?

Several software tools can assist in creating a 3-year balance sheet, including QuickBooks, Xero, and FreshBooks.

These tools offer templates and automated features to simplify the process of financial forecasting and reporting.

Additionally, Excel can be a powerful tool for custom financial modeling and projections.

How do you account for inflation in a 3-year balance sheet projection?

To account for inflation, apply an inflation rate to your cost projections and revenue estimates.

Typically, an annual inflation rate of 2% to 3% is used, but this can vary based on economic conditions.

Adjusting for inflation ensures that your financial projections remain realistic and relevant over time.

What is the importance of sensitivity analysis in financial projections?

Sensitivity analysis helps you understand how changes in key assumptions impact your financial projections.

By testing different scenarios, you can identify potential risks and prepare contingency plans.

This analysis is crucial for making informed decisions and ensuring the robustness of your financial model.