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.