Finance Plan

Where are you going to source your finance?

Two types of finance◦ Internal ◦ External

Sources of finance

Own resources – savings, redundancy money

Borrowing from friends and/or family◦ Think about whether or not they may want a part

of the business in return◦ Retained Profits once the business is up and

running and successful

Internal

Start-up loans or grants - Usually don’t have to pay back the grants but are specifically meant to initiate the business

Bank loans – repayable with interest sometimes set and sometimes negotiable

Bank overdrafts – not free money but in the short term can be the cheapest option, but the amount of overdraft will be down to negotiation with the bank.

Budgeting – describe Start up budgets and working capital, describe the different types of budgeting, from the master budget (looks at the business overall) to the operational budget (looks at the performance of different departments).

External

Break-even formula – discuss and explain◦ Fixed costs/(selling price-variable costs)

Margin of safety (MOS=actual sales in units – BEP in units)

Explain the limitations of Break-Even

Break-even forecasts

Balance Sheet

Project a balance sheet

Project a profit and loss account