Dec 8

Preparing a Business Plan Part 4

Financing your Business/Start up & Day to Day Costs 

Now you are getting close to opening you business.  Remember, you have $150,000 but you will probably need to obtain more money through financing.  This is the last part of your business plan and then you will be ready to put it together. 

Task One:  Start Up Costs

In task 3, you made a list of supplies that you will need.  You need to create a Start up cost sheet.  This should ONLY include ONE TIME Start up costs, not monthly payments. 

There is a good example on page 157 in your textbook.  HOWEVER, you MUST include REAL prices.  That means you will have to go on-line to find out what a cash register actually costs.  Since the Canadian and U.S. dollars are so close, you can use both Canadian and American sites.  You must include a list of sites where your information has come from. 

Helpful Hints:  You may choose to work with a partner to find some of the information. For example, if you both need cash registers and desks, you can divide and conquer to find the costs. 

www.costco.ca will be a good starting place for most small businesses. 

Task Two: Operating Expenses

Now you must create an Operating Expenses Report, similar to the one on the top of page 158.  For your rent/lease/mortgage, you have already calculated the value in Preparing a Business Plan part 3.  You have also figured out how many people you are going to hire and roughly how much you are going to pay them in Preparing a Business Plan Part 2.  Use this information to calculate how much you will spend on salaries. Be sure to include INSURANCE costs.  The other operating expenses will vary with each business, please see the teacher for help. 

Task Three: Pro Forma Income Statements (Best and Worst Case Scenarios)

Now it is time to calculate PROFIT!!!  How much money are you going to make.  You must make TWO income statements; a best case scenario and a worst case scenario.  To find out how much money you will realistically make, find the financial statements from a similar company to yours on line.  If you can find a publicly traded company, the information is usually available.  It may be called “Share Holder Information”.  Use the example on page 159 to help you.  Please do not hesitate to ask for help. 

Task Four:  Financing your Business

Now that you have an idea of your Start-up costs, Your Operating costs, and what your income will be.  How much money will you need to start you business?  Write a short report explaining the following..

• How much money do you need to start your business and keep it going?
• Where will you get the money?  Include all sources, you own money, friends, mortgages, loans, investors, partners etc..