Develop Your Rolling Balance Sheet

A rolling balance sheet is a financial forecasting statement that shows the balance sheet position of the business for each month of the forecast – giving a short-, medium- and long-term view of the company’s financial health. This approach allows businesses to maintain a constant period of financial forecasting data (e.g., the next 60 months), providing a dynamic view of the company’s financial trends.

Unlike a traditional balance sheet that provides a snapshot of a company’s financial position at a specific point in time (showing assets, liabilities, and equity), a rolling balance sheet extends this concept by offering an ongoing, moving picture. This method is particularly useful for raising investment as it allows investors to see that a founder’s financial planning keeps the business solvent in the medium to long term.

Additionally, it enables investors and founders to better understand the assets and liabilities in a business at any given point in the future, providing a better picture of the company value, and valuable assets held that may offset investor risk.

When pitching for investment, presenting a rolling balance sheet can play a pivotal role in showcasing the financial health and operational stability of your business in a dynamic and comprehensive manner.

This approach offers several advantages in the context of attracting potential investors:

Continuous financial overview

A rolling balance sheet long-term view of the company’s financial position based on the future plans of the business, offering a more relevant snapshot than a traditional balance sheet might.

Trend analysis

By projecting a rolling balance sheet, businesses can highlight trends in their financial performance over time. This can be particularly persuasive for investors, as it allows them to see patterns of growth, stability, or improvement in financial health, which might not be as apparent from static financial statements. Identifying these trends can help investors feel more confident about the future prospects of the business.

Responsiveness to change

The dynamic nature of a rolling balance sheet illustrates a company’s ability to adapt to changes and manage its resources effectively. For investors, this responsiveness is a positive indicator of a company’s agility and its management’s competency, both of which are critical factors in the success of a startup or growing business.

Detailed financial insight

Investors are keen on understanding not just where a business stands today, but how it will evolve over time. A rolling balance sheet can provide this detailed insight, offering a deeper dive into how the company manages its cash flow, assets, and liabilities across different periods.

Risk assessment

A rolling balance sheet also aids in risk assessment by showing how the company’s financial position changes over time. Investors can use this information to gauge the volatility in assets and liabilities, assess liquidity risks, and understand how external factors may impact the business.

Our collaboration with businesses to develop their rolling balance sheets as part of their investment pitch assets is a surgical and strategic process, designed to ensure that these financial documents accurately reflect the business’s financial health and trends over time.

Here’s how we approach this critical task:

Step 1. Initial consultation and data gathering

We begin by engaging in a comprehensive strategic planning process with the company to understand its business model, financial history, and future projections. This initial step is essential for gathering all necessary financial data, including past and current assets, liabilities, equity, and cash flows. It sets the foundation for developing a rolling balance sheet projection that not only reflects historical data but also incorporates forward-looking financial projections.

Step 2. Financial analysis and trend identification

With the collected data, our team conducts a thorough financial analysis to identify key trends, patterns, and insights within the business’s financial activities. This involves analysing existing monthly financial statements to understand how the company’s financial position has evolved (if available) as well as analysis of its growth and scale-up plans. Our goal here is to pinpoint areas of strength, potential risks, and opportunities for improvement that can be highlighted in the rolling balance sheet.

Step 3. Custom rolling balance sheet creation

Leveraging the insights gained from our financial analysis, we will build your custom rolling balance sheet. We ensure that this rolling balance sheet is structured in a way that is both investor-friendly and compliant with standard financial reporting practices, making it an effective tool for investment pitches.

Step 4. Integration with financial assets

Once the rolling balance sheet is developed, we integrate it into your broader financial assets. This involves contextualising the financial data alongside the profit and loss statement, and cash flow statements, ensuring that it complements the narrative being presented to potential investors. We highlight key financial trends and insights from the rolling balance sheet in a visually engaging manner, using charts, graphs, and data visualisation to make complex financial information accessible and compelling.

Step 5. Coaching and support

Understanding and presenting financial data can be daunting for many growing businesses and startups. As part of our service, we provide coaching and support to help the business team effectively communicate their financial story to potential investors. This includes explaining how to interpret the rolling balance sheet, what key points to emphasise during pitches, and how to answer potential investor questions about the company’s financial health and projections.

A rolling balance sheet differs from a traditional balance sheet in several key ways, primarily in terms of its format, purpose, and the insights it provides. Understanding these differences is important for businesses and investors alike, as each type of balance sheet serves distinct functions and offers unique insights into a company’s financial health.

DOWNLOAD: Financial Forecast Template

Before you consider pitching your business to investors, you must first ensure that your business is indeed ready for investment – that it is ‘investment ready’.

Investment readiness refers to the state in which a startup or business has prepared itself to be an attractive prospect for investors. Being ‘investment ready’ means a founder has all the elements in place that investors look for when considering whether to commit funds to a business – including an accurate rolling balance sheet.

There are investor readiness agencies for startups that can help businesses get ready for investment. We at Robot Mascot are one such company.

If you are seeking investment for your business and need help developing your rolling balance sheet why not get in touch?