[Skip to content](https://www.hubspot.com#main-content) [](https://www.hubspot.com/startups) - [Resources](https://www.hubspot.com/startups/resources) Show submenu for Resources - [Fundraising](https://www.hubspot.com/startups/fundraising) - [Sales & Marketing](https://www.hubspot.com/startups/sales-and-marketing) - [AI Tech & Tips](https://www.hubspot.com/startups/ai) - [Tech Stack Guide](https://www.hubspot.com/startups/tech-stacks) - [Founder & VC Insights](https://www.hubspot.com/startups/scaling-smarter) - [Podcast](https://www.hubspot.com/startups/podcast) - [Stories](https://www.hubspot.com/startups/stories) Show submenu for Stories - [Digital Magazine](https://www.hubspot.com/startups/magazine) - [DocuSeries](https://www.hubspot.com/startups/docuseries) - [Case Studies](https://www.hubspot.com/startups/stories/customers) - [Community](https://www.hubspot.com/startups/community) - [Partner](https://www.hubspot.com/startups/partners) - [Apply Now](https://app.hubspot.com/signup-hubspot/hubspot-for-startups) - [Resources](https://www.hubspot.com/startups/resources) Show submenu for Resources - [Fundraising](https://www.hubspot.com/startups/fundraising) - [Sales & Marketing](https://www.hubspot.com/startups/sales-and-marketing) - [AI Tech & Tips](https://www.hubspot.com/startups/ai) - [Tech Stack Guide](https://www.hubspot.com/startups/tech-stacks) - [Founder & VC Insights](https://www.hubspot.com/startups/scaling-smarter) - [Podcast](https://www.hubspot.com/startups/podcast) - [Stories](https://www.hubspot.com/startups/stories) Show submenu for Stories - [Digital Magazine](https://www.hubspot.com/startups/magazine) - [DocuSeries](https://www.hubspot.com/startups/docuseries) - [Case Studies](https://www.hubspot.com/startups/stories/customers) - [Community](https://www.hubspot.com/startups/community) - [Partner](https://www.hubspot.com/startups/partners) - [Apply Now](https://app.hubspot.com/signup-hubspot/hubspot-for-startups) # How To Create a Startup Financial Statement \[Free Template] A startup financial statement helps startups secure funds from lenders. It includes a balance sheet, income statement, cash flow statement, and break-even analysis. Get the template for startup financial statement template  A startup financial statement contains financial documents you’ll need to put together when you’re trying to secure funds from lenders. Its purpose is to clearly spell out your startup’s financial health so a lender or investor can assess any possible risk and decide whether or not to offer you a loan. Typically, traditional lenders such as banks will request documentation like this, but it’s good to have a startup financial statement handy when you’re looking into other types of startup capital, too. In this post, we’ll go over how to put together a startup financial statement so you can apply for a loan and secure the proper [resources for a successful startup](https://www.hubspot.com/startups/resources). In this article: - What is a financial statement for startups? - Balance sheet - Income statement - Cash flow statement - Break-even analysis - Startup financial statement examples - Startup financial statement template - Prepare for launch with HubSpot for Startups ## What is a financial statement for startups? *Tip: Make your startup financial statement a living document so you’re always up to date about your startup’s financial health.* A financial statement for startups is a collection of key documents that enables you, your lenders, and your investors to better understand the financial health of your company. Financial statements highlight things like revenue, income, profit, financial obligations, and the flow of cash through a business and are typically issued on a quarterly, semiannual, or annual timeline. A financial statement is broken into four parts: - __Balance sheet__: A broad overview of your company’s assets, liabilities, and equity - __Income statement__: A breakdown of your company’s revenue and expenses - __Cash flow statement__: An analysis of cash and cash equivalents flowing in and out of your business - __Break-even analysis__: An overview of total costs compared to income For pre-seed or seed startups, a financial statement will likely have more projections than concrete data. For more mature startups, especially post-launch, you can use internal data for your financial statement. These statements are vital when building a financial plan for startup businesses. * * * ## 1. Balance Sheet  A [balance sheet](https://blog.hubspot.com/sales/balance-sheet) is an overview of what the company owns, owes, and the total amount of shareholder equity. There are three primary components of a balance sheet: assets, liabilities, and owner’s equity. Assets include: - The company’s cash reserves, or how much cash the company has on hand - Inventory of goods, property, and patents. - Prepaid expenses like rent, taxes, and insurance. - Investments, which can include stocks, bonds, real estate, or other long- or short-term investments the company may have made. Liabilities include: - Accounts payable, including fuel and energy costs, transportation, services, leases, or other logistical obligations. - Interest owed, which represents the total amount of interest the company owes to lenders. - Term debt, which is similar to interest owed, but represents the amount of debt owed to shareholders. Owner’s equity includes: - Owner’s equity, or shareholder’s equity, represents the leftover assets after all liabilities have been accounted for. Here is what an example of a balance sheet might look like:  The balance sheet for startups is used to calculate your debt-to-equity ratio. The debt-to-equity ratio compares the amount of debt a startup owes to its shareholder equity. Balance sheets are important because they can help you have a clear view of what you own and what you owe. This can help you determine whether you’ve borrowed too much money, if your assets are liquid enough, or if you have enough runway to keep the lights on. Balance sheets are also key in securing startup funding. They help potential investors and lenders ensure that their bet on your company is a safe one. By analyzing your company’s debt-to-equity ratio, they can gain an essential overview of your company’s financial health and creditworthiness. * * * ## 2. Profit and Loss Statement  The profit & loss (P&L) statement section of your startup financial statement breaks down into three primary sections: Revenue: - Sales from your primary product or service, also known as operating revenue - Passive income from investments, short-term non-product sales, interest earned, or rentals, also known as non-operating revenue Cost of Sales (aka Cost of Goods Sold): - Expenses directly related to the production of the products or services you create - Total revenue minus cost of sales yields net revenue Operating Expenses are all other expenses required for operating the business, including but not necessarily limited to: - Administrative costs - Sales and marketing - Office space - Utility bills including electricity, gas, and internet access - Interest paid toward debt owed - Travel and entertainment - Research and development - Payroll and payroll taxes - Royalties - Business and legal Net revenue less total operating expenses gives you net income or losses. Here is an example of a profit & loss statement:  This data is used for accounting and can help businesses or their investors determine whether certain aspects of the business can be improved or made more efficient. For example, if administrative costs are growing out of control compared to previous years, your business might consider slowing the hiring process or reducing its salary obligations. Similarly, if a revenue stream or product is outperforming others consistently, you may choose to dedicate more resources to that product. As most businesses will use an [accrual basis of accounting](https://quickbooks.intuit.com/r/bookkeeping/cash-vs-accrual-accounting-whats-best-small-business/) (vs. cash basis), your net income or loss will not be a reflection of your cash flow. And that is where the next section of your financials comes in. * * * ## 3. Cash Flow Statement  A startup cash flow statement is a financial statement that highlights exactly where cash and cash equivalents enter and leave your venture. Cash flow statements are essential to your business because they can help you identify opportunities for improvement in the short and medium term, create crisis management budgets, and gain a better general understanding of your business’s finances. Cash flow statements are broken down into three primary categories: operating activities, investing activities, and financing. Here are some examples of what to include in these categories: Operating activities: - Net income - Adjustments to net income (including interest paid, interest received, and taxes paid) - Depreciation and amortization - Changes in operating assets and liabilities (including accounts receivable, accounts payable, and inventories) Investing activities: - Purchases or sales of securities - Purchases or sales of other assets - Payments for acquisitions - Proceeds from maturities on bonds or securities Financing Activities: - Loans or funding - Loan payment - Share buybacks - Dividend payments Here is what a cash flow statement might look like:  When all of these categories are put together, you will have the total of your cash and cash equivalents. Keep in mind that this number is not always positive, but that isn’t necessarily a bad thing. Sometimes cash flow can go negative for a period of time as you scale your business or through a particularly rough economic patch; but understanding where and why your cash flow is negative is essential in getting your startup back on track. * * * ## 4. Break-even analysis  A break-even analysis is a graph that shows total costs compared to total earnings for each product a startup sells. These graphs are relatively simple to put together and very easy to read. When the line representing earnings is above costs, that’s when the product or service earns enough revenue to cover operating expenses. Break-even analyses aren’t always required for startup financial statements, but they’re helpful for potential investors, lenders, and the startup’s leadership team alike. Here is an example of a break-even analysis:  Break-even expectations differ from company to company and product to product. For example, if your startup is in the business of selling a physical product, investors' and lenders’ expectations will be vastly different than if you were selling software or services. Some startups have high upfront costs like research and development or production, meaning these startups may take longer to break even. On the other hand, companies with low startup costs or a large untapped market may find themselves in the green much faster. Tesla is a great example of a company that took well over a decade to break even. The automaker was founded in 2003 but didn’t reach its break-even point until 2018. The length of time it took for Tesla to break even was largely due to its high overhead costs and limited market. Apple, however, was profitable within just two years. Launching with just one product, the company was able to keep costs low. By the time it launched its second product, the Apple II, an all-in-one, first-of-its-kind personal computer, sales exploded. The next year, Apple was in the green.   * * * ## Financial statement examples Now that we’ve covered everything a startup financial statement contains, let’s take a look at financial statement examples from three pre-IPO stage startups. Here are a few links to financial statement examples that may be helpful: - [Here](https://www.wsj.com/market-data/quotes/CMGR/financials/annual/balance-sheet) is a balance sheet example for social media startup Clubhouse Media Group - [Here](https://www.wsj.com/market-data/quotes/BIAF/financials/annual/income-statement) you can find the income statement for Texas-based biotech startup bioAffinity Technologies - [Here](https://www.wsj.com/market-data/quotes/VN/XSTC/VIC/financials/annual/cash-flow) you can see a cash flow statement example from the Vietnamese automaker startup VinGroup Keep in mind that these startups are already preparing to go public, so their reports may look different than a pre-seed or seed stage startup. ## Startup financial statement template Ready to get started with your startup’s financial statement? Make a copy of our template to put your best foot forward with potential investors. Get template ## Prepare for launch with HubSpot for Startups Any entrepreneur knows you need to spend money to make money. That’s why it’s so important to have your startup financial statement properly prepared for the best chance of securing a loan. Once you’ve got your funding, [HubSpot for Startups](https://www.hubspot.com/startups) helps you take care of the rest. From software integrations to educational resources, we have everything you need to get your startup off the ground. 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