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3 Takeaways From 3-Statement Financial Forecasting With Kong Basile Consulting


On Tuesday, August 25, Black Girl Ventures hosted a virtual educational event in partnership with Kong Basile Consulting (KBC). The Bay Area-based boutique financial and accounting firm shared an information-packed presentation providing tips and tools on how to gather business insights and forecasts using the 3-statement financial model. Stanley Kong, Principal at KBC, prefaced the presentation by sharing that, “Developing a forecast is one of the most important financial skills for managing your business.” Kong then introduced his expert colleagues, Sunita Kumar and Matt Tyler. Collectively they have over 30 years of experience in the finance field. Below are our top three takeaways from the session.


1. The 3-Statement Model Provides a Detailed Picture


The three-statement financial forecast model enables business operators to better anticipate and illustrate the impact of any changes in their company. It provides a detailed look into the business by combining the following three reports into one consolidated forecast.


  1. Profit and Loss (P&L): reports business’ ability to generate operating profit by tracking gross expenses, revenue and cost of revenue (CoGs)

  2. Balance Sheet: reports assets (earnings) and liabilities (payouts) at a fixed period in time

  3. Cash Flow: reports cash inflows and outflows (short-term/long-term)


Additionally, the forecast helps manage risks, drive results and accountability, “Producing a forecast model sharing goals and plans with employees help employees and team leaders think through how their operational activities will impact the business,” Kumar explained. The combination of these reports offers valuable insights for both the internal team and external partners as stakeholders often reference this tool to measure the performance of their investment in the company.


2. Information is Power


Budgets and forecasts are detailed looks at the near term (12-18 months) while long-range plans focus more on viability and strategic goals. Since some of the models are more difficult to build, Tyler recommends starting with the short-term cash flow, “This is very similar to what we do as individuals in our households,” Tyler said, “You should always know how much time you have before your cash could run out.” To do this, you average the amount of cash you spent over the last 3 months or so, then look at total cash available. For instance, if you have $1,000 available and spend $200/month, your cash runway is 5 months.


Keep in mind that this quick model does not take into account actuals or any changes you might see in your business activities. A more accurate cash flow report will model your average expenses as well as, affording the opportunity to be proactive in securing profit before your cash runway runs out.


3. All Business Have Different Goals


Your model set up depends on your company's unique needs. As such, each forecast’s use and purpose vary and should be determined before you begin. Are you looking to manage cash flow or preparing to provide a progress report to your first pool of investors? The answers to these questions can help determine how you proceed.


No matter the case, the presenters encouraged all to empower themselves by building models firsthand and using the applicable online tools. Outside of general searches, Quickbooks was recommended as a good beginner’s resource for those with funds to allocate. For larger operations, hiring a financial professional that understands your business, goals, and needs would prove beneficial in building the best models.


Sign up for BGV Connect to watch the full presentation. Partners at KBG welcomed feedback/questions and can be reached at ask.us@kongbasile.com. Don't forget to Subscribe to the Digital Orange Juice for juicy ideas and the people who fund them. You can find out about our next pitch competitions here.


Genesha is an evolving freelancer based in D.C. with a background in journalism and fundraising. She supports mission-driven organizations and entrepreneurs with communication needs, covering areas from education to technology. She also publishes content on self-help and sustainability. Connect on LinkedIn and follow her on Instagram @geneshamichelle to learn more. 


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