Financial Plan

Startup Funding

Ensure that your requested capital is enough to handle your start-up costs and reserves to ensure business vi ability. Minimum of $300K startup capital (with $100K from the team and $200K from outside investors) is required.

Up to $600K should be cleared with the instructor. You can request a loan or private equity investment (one or the other) but the plan must be written with the proper audience stated and in mind.

Use of funds

Describe how you plan to use the startup requirements in detail providing a start-up budget which includes all initial capital expenditures, build-out and start-up expenses.

The details must be realistic and well researched. Data that does not make sense will cost you points. In other words, if you are starting a restaurant and your remodeling startup costs are $5,000, you would be penalized, since that amount is unrealistic.

Sales forecast

Your worksheet work here will be the underpinning of how you create your forecast. Units, dollars and assumptions are critical. All other statements build on these numbers. Create the sales forecast in a narrative based on what your worksheets show you after you have completed them.

(Remember, you don't submit the spreadsheet created using our course financial software, so restate important numbers in the form of charts, tables or excerpts from the Sales Proj. tab in your spreadsheet.)

Your forecast is the description of the units you plan to sell, the services (amount of them) you plan to provide, and your growth projections of these numbers. Document all assumptions, and provide external source information for all assertions.

Cash flow

Because cash is critical in the first year, a monthly cash flow for year 1 is required (place in the appendix.) Remember that cash flow is your solvency check and balance. Summarize your projections by including a yearly cashflow table. Explain how your cashflow will impact the ability of your business to expand, succeed, grow, and support your growth.

Provide an annual summary of the cashflow (receipts and disbursements) here. Document all assumptions, and provide source information for all assertions.

Balance sheet

Provide the end of year 5 balance sheet to show your company's net worth and financial position at the end of the 5-year plan.

Income statement

Your income statement is a narrative explanation of your projected pro-formas. Include the detailed statements in your Appendix, and then list the annual estimates in a table format in your plan. Explain how your income and expenses will contribute to your P&L and your net income.

Your growth factor should be shown and explained (justified) as well. Document all assumptions, and provide source information for all assertions.

Break-even analysis

Include a graphical representation that shows when your company will start making a profit.

Valuation after 5 years

Calculated at the end of year 5 using one of the models described in the lecture or some other generally accepted valuation method, explained and provided in the plan.

Exit strategy

Address your early termination plans as well as your vision for the business at the end of year 5. The exit strategy takes into account business Return on Investment (ROI.)

It will also look at the rate of return you are offering your investors, if you have them. Private equity, or venture capital projects, should include both in the exit strategy. Lender-based projects do not require a rate of return but should include the ROI.

You need to review the lecture in the Financial Plan for various methods of exiting the business.

Financial Plan Totals

You will prepare 5 years of proforma financial statements to support the business viability of your concepts.

You need to test your idea for logic and reasonableness in your market. You must demonstrate how you determined your figures. Your narrative should explain key assumptions and statements. Backup schedules should go in the appendix.