1. 17 Summary The Financial Plan
Budgets are not merely affairs of arithmetic, but in a thousand ways go to the root of prosperity of individuals, the relation of classes, and the strength of kingdoms.
William E. Gladstone
Summary
How do entrepreneurs describe the financial elements of their new venture?
Entrepreneurs build a financial plan to determine the economic potential for their venture. This plan provides an estimate of the potential of the venture.
Chapter 17: Summary
Technology Ventures: From Idea to Enterprise

2. 17 The Financial Plan Four Steps to Build A Financial Plan
The Sales Forecast
Time Frame — Two or three years
Assumptions about sales per customer, number of customers and growth rate of sales
Calculation of the sales forecast
2. The Costs Forecast
Assumptions about the costs of doing business in the specified time frame
Calculation of the costs associated with the projected sales of Step 1.
3. The Income and Cash Flow Forecast
Assumptions about the timing of cash receivables and payables specified in the time frame.
Calculation of the income and cash flow associated with the projected sales and costs on a monthly basis over the time frame.
4. The Balance Sheet
Assumptions about the starting value of cash and assets.
Calculated based on the income and cash flows from Step 3.
Chapter 17:Table 17.1 – building a financial plan
Technology Ventures: From Idea to Enterprise

3. The Financial Plan 17
Assets
The Value of Items Owned
Income
Liabilities
The Value of Items Purchased, Borrowed, Owed, or Leased
Expenses
Net Income S + _
Assets generate income and liabilities lead to expenses. Net income is income minus expenses.
Chapter 17:Figure 17.1
Technology Ventures: From Idea to Enterprise

4. The Financial Plan 17
Cash Flow is the amount of cash flowing into or out a firm during a specific period.
TC(N+1) = (CF – Disbursements) + TC (N)
Where:
TC(N) = Cash on hand at the end of the Nth month
CF = Cash Flow into the firm in the Nth month
Chapter 17: Cash Flow
Technology Ventures: From Idea to Enterprise

5. 17 The Financial Plan Calculations of the Income Statement
Chapter 17: Figure 17.2 – Calculation of income statement
Technology Ventures: From Idea to Enterprise

6. 17 The Financial Plan The Cash Flow Process
Chapter 17: Figure 17.3 – Cash flow process
Technology Ventures: From Idea to Enterprise

7. The Financial Plan 17
Breakeven is defined as when the total sales equal the total costs.
R = Q x P
TC = FC + VC and VC = Qc
Then: Q x P = FC + Qc
Breakeven Q =
Where:
c = Cost Per Unit P = Price Per Unit
Chapter 17: Breakeven
Technology Ventures: From Idea to Enterprise

8. The Financial Plan 17
Accounting principles for entrepreneurs (Riggs, 2006)
Chapter 17: Table 17.8 – accounting principles for entrepreneurs
Technology Ventures: From Idea to Enterprise

9. The Financial Plan 17
A sound financial plan demonstrates the potential for growth and profitability for a new venture and is based on the most accurate and reliable assumptions available.
Chapter 17: Principle
Technology Ventures: From Idea to Enterprise

10. DVD Video 17 “Keeping a Financial Focus” Gajus Worthington (Fluidigm)
The Financial Plan 17
DVD Video
“Keeping a Financial Focus”
Gajus Worthington (Fluidigm)
Chapter 17: DVD Video
Technology Ventures: From Idea to Enterprise