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Business Planning - Financials
Transcript of Business Planning - Financials
The main components are:
what will the money be used for.
monthly sales predictions and the assumptions to support them.
month-by-month details for 24 months on where the money is coming and going.
This crash course focuses on start-up costs. Check out our crash course
“Financials: tackling your cash flow” for information on cash flow and sales forecasting.
Calculate how much money you need for initial capital expenditures.
This is when two or more people jointly own and are liable for the business.
Beyond the sections we’ve gone through there is one more item you may consider including in Financials,
a break even analysis
. If you're selling a product this will help to determine when you're profitable.
Be realistic. Ask yourself what essential costs are necessary to start the business.
Use the Business Plan Writer as a guide for writing your plan. It comes complete with examples!
"It's not about ideas. It's about making ideas happen."
Take our survey and help us get better:
What do you absolutely need to have to implement your operations?
How much opening inventory do you require?
Are there any major equipment purchases that are required?
Are there legal or insurance fees you can’t forego?
List the company’s assets.
What do you currently have?
Start-up costs are integral to the initial success of your company. They should provide a tangible benefit.
1. Purchasing inventory
3. Purchasing equipment
4. Paying first and last months' rent for space
5. Business insurance
6. Website (but not development of a new technology)
1. Paying your own salary
2. Research and development of an idea
3. Paying rent
4. Salaries of sales people
SOURCES ARE AVAILABLE?
WHAT DO YOU NEED TO CONSIDER
WHEN ASKING FOR MONEY?
Yourself – owner contributed:
this is necessary for most lenders to provide financing
applying start-up financing, mentoring, and business plan expertise. For more information:
applying for a personal loan or small business financing
Government Grants & Loans:
there are limited grants available across Canada and they have specific criteria. For more information:
Angel investor/Venture Capitalist:
are usually looking to invest large amounts of capital and aren’t interested in the small/medium start-up. They are harder to entice to loan you money than traditional sources.
Family and Friends:
make sure to have an agreement in place
WHAT POTENTIAL SOURCES ARE
Establish a rationale for the potential source(s) you will be pursuing.
Understand the terms and conditions for each source.
What will you need to pay back?
What is the interest rate?
WHAT DO YOU NEED TO CONSIDER WHEN ASKING FOR
How well you manage money. Yes, even your personal finances.
Amount of debt and if you’re making timely payments to reduce it
Money management – what are your spending habits?
WHEN DO YOU START
WHAT IS A
BREAK EVEN ANALYSIS?
It helps you calculate how much you need to sell to break even.
It allows you to estimate how long it will take to close enough sales to cover ALL your expenses:
Identify the average cost
of the product. Subtract the cost from the price
(P – C)
Calculate your operating expenses or overhead
. Divide OH by the difference above to figure out HOW many products you’ll need to sell to break even.
BREAK EVEN ANALYSIS