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In other cases friends and family members either invest the necessary cash or make a loan to the entrepreneur.Regardless of the source, seed capital is essential to starting the business.Likewise, lenders will take the resources of these individuals into consideration when making the determination of whether to extend credit.
For example, when presenting the business plan to equity investors, it may be advisable to remove the portion regarding the financial status of the founders.
Likewise, as the business develops the financial condition of the owners may be less relevant than the corporate fiscal health.
You will need to itemize your expenses in a readily usable and modifiable format.
I recommend using excel in the beginning and later moving to a customized accounting system (like intuit or quickbooks).
Below we go through multiple sections of the business plan that meet the above purposes.
Note: Depending on the use of the business plan, it may be advisable to remove certain sections for a specific purpose.It depends upon the intended use of the business plan.The financials portion of the business plan may be surprisingly unique depending on the business.Disclose the personal net worth, assets, obligations, outside investments, and sources of income of each individual.This information can be rather personal, but it serves multiple purposes.Every business begins with a combination of effort and assets.The initial funds to obtain the assets or services necessary to start a business are known as seed funds.Demonstrating the financial status of the founders, owners, or major stockholders gives an indication of the ability of these individuals to supply necessary capital to the business.The partners, members, shareholders, etc., will have more confidence if the other owners have the financial ability to meet the capital needs of the business.This initial amount of capital generally comes from personal assets of the owner(s), family members, or friends.It may be the case that the owners use person debt, such as credit cards, home loans, etc., to fund the startup.