1. Entrepreneurship 110 Business Plan – Financial Section “It’s All About Making Money”Making Money

2. Financial Section – Components  Setting My Financial Goals  Cash Flow Forecast  Sources of Funding  Start-Up Costs  Balance Sheet  Income Statement

3. 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.

4. 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.

5. 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

6. 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

7. 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

8. JuneJulyAugSeptTOTAL Cash Receipts Total (A) Cash Disbursement Total (B) Net Cash (A – B) Surplus (+) Deficit (-) Cumulative CASH FLOW FORECAST

9. 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.

10. 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.

11. 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

12. Sample Start-Up Costs ItemCost 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

13. 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)

14. Sample – Sources of Funding SourceAmount Personal Loan$1,000 ACOA Loan/Grant$20,000 Investor Capital$3,000 TOTAL$24,000

15. 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.

16. Income Statement Revenue (money In) ____________$ ______________ Total:$ ______________ Expenses (money out) ____________$ ______________ Total:$ ______________ Total Income: $ ______________

17. 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.

18. Assets  Assets are sources of personal income and may include: Savings accounts Checking accounts Stocks Property (Homes, estates, etc.) Land Art Jewelry

19. Liabilities  Liabilities are debts owed by the Entrepreneur and may include: Credit Cards Mortgages Student Loans Car Loans Personal Loans

20. 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.

21. Assets Total Liabilities Total Owner’s Equity(total assets) – (total liabilities) Sample Balance Sheet

22. 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

23.  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.