entrepreneurship 110 business plan – financial section “it’s all about making money”making...
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Entrepreneurship 110
Business Plan – Financial Section
“It’s All About Making Money”
Financial Section – Components
Setting My Financial Goals Cash Flow Forecast Sources of Funding Start-Up Costs Balance Sheet Income Statement
Cash Flow Forecast and Notes
This is a projection of ALL money coming into and going out of a business.
For a year round business, show all 12 months of operation.
YOU ALWAYS START THE CASHFLOW A MONTH BEFORE THE BUSINESS OPENS.
Components of a Cashflow Forecast
Cash Receipts (Money In) This is the money being received by
the business monthly. This may include: loans,
investments, sales, etc.
Cash Disbursements: (Money Out) This is the money going out of the
business on a monthly basis. This may include: rent, utilities,
insurance, wages (what you pay employees), owners drawings (what you pay yourself), business registration, materials, supplies, advertising, loan repayment, etc.
Components of a Cashflow Forecast
Net Cash (profits or losses) This section is where you calculate
monthly totals. Your monthly totals will either show
a surplus (profit) or deficit (debt).
Components of a Cashflow Forecast
Totals You should always calculate totals for
each category AND each month; you should always add down and across.
There are totals columns on the right hand side of the Cashflow and at the bottom of the Cash Receipts and Cash Disbursements sections.
Components of a Cashflow Forecast
June July Aug Sept TOTAL
Cash Receipts
Total (A)
Cash Disbursement
Total (B)
Net Cash (A – B)
Surplus (+)
Deficit (-)
Cumulative
CASH FLOW FORECAST
Assignment
Read the business profile you have been given titled “Surreal Sweaters.”
Using the financial information found in the handout, create a Cashflow Forecast for the company.
Cashflow Notes Cashflow Notes accompany the Cashflow
forecast in your Business Plan. Cashflow Notes offer an explanation of how
numbers/amounts found in the Cash Receipts and Cash Disbursements sections of the Cashflow Forecast were arrived at.
For example, if in the Cash Disbursements section you had Wages being $1200 for the month of September, in your Cashflow Notes section you would explain or show how this number was arrived at.
Start Up Costs/Sources of Funding Start Up Costs
Here, you: List all of the purchases that you will need to make in
order to start the business and their associated costs. Remember, most of these costs will be incurred
during the month BEFORE the business opens. This list includes, but is not limited to:
Equipment Inventory Office Supplies Furniture Promotion Wages/Owner’s Drawings Rent Business Registration
Sample Start-Up Costs
Item Cost
Furniture $95 ($75 for office desk, $20 for office chair).
Business Registration $120
Promotion $150 ($100 on printing of flyers, $50 on paper for flyers)
TOTAL $365
Sources of Funding
Here, you explain where the money will come from to cover your start-up costs.
Ideally, some of this money should come from the Entrepreneur (savings, bank account, investors, etc.)
Sources of Funding also typically include government or other loans. For this course, you may reference one of the following loans: ACOA Loan - $20,000 (full year and other business) TED Seed Loan - $3,000 (summer business only)
Sample – Sources of FundingSource Amount
Personal Loan $1,000
ACOA Loan/Grant $20,000
Investor Capital $3,000
TOTAL $24,000
Income Statement An income statement, otherwise known as a
profit and loss statement, is a summary of a company’s profit or loss during any one given period of time, typically a year or season.
The income statement records totals for all revenues (Cash Receipts) and expenses (Cash Disbursements) categories for the business for its duration (year or season).
Income statements are one of the most basic elements required by potential lenders, such as banks, investors, etc.
Income Statement
Revenue (money In)____________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ ______________
Total: $ ______________
Expenses (money out)____________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ __________________________ $ ______________
Total: $ ______________
Total Income: $ ______________
The Balance Sheet
A Balance Sheet calculates the worth of the Entrepreneur.
A Balance Statement is a very simple document with two categories: assets and liabilities.
Assets Assets are sources of personal income
and may include: Savings accounts Checking accounts Stocks Property (Homes, estates, etc.) Land Art Jewelry
Liabilities
Liabilities are debts owed by the Entrepreneur and may include: Credit Cards Mortgages Student Loans Car Loans Personal Loans
Why Complete a Personal Balance Sheet?
Entrepreneurs complete a Personal Balance Sheet to prove to a lending institution that they have worth should the business experience financial trouble.
It is the items listed in the Personal Balance Sheet that may be seized in bankruptcy.
Assets
Total
Liabilities
Total
Owner’s Equity (total assets) – (total liabilities)
Sample Balance Sheet
Setting a Financial Goal
Typically, a Financial Goal for a business ,centers upon the Market Share that a company plans to capture.
In the Market Research section, you calculated the size of your market, here you determine how much of that market your company will “capture.”
Formula:Market Share = Total Sales/Market Size x 100
Sample Financial Goal
It is the goal of this organization that, by month’s end August 2013, the business has captured __% of our Target Market.