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GMBF

GMBF. Start-up strategy Budgeting and raising finance July 2012. Budgeting & Business Planning. “ Why” rather than “how” Forces you to think about all aspects Brings organizational discipline critical in early stages Essential for equity financing

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GMBF

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  1. GMBF Start-up strategy Budgeting and raising finance July 2012

  2. Budgeting & Business Planning • “Why” rather than “how” • Forces you to think about all aspects • Brings organizational discipline critical in early stages • Essential for equity financing • Foundation for subsequent bank financing

  3. Business planning: a thought process • Like planning a journey: where do you want to go? How best can you reach there? • What does our business stand for? • What are the serious challenges facing us and how do we respond to these? • How will we stay different from competition? • Do we have what it takes to get to our destination – what exactly do we need and when? • How will the plan be financed? • but………

  4. Business Planning: some pointers • Must address the short term (operating plan) and the medium term (growth plan) • Long term, strategic plan may not be not too meaningful for start-ups, but required for equity raising • Plans are meant to be flexible and proactive • Alignment with personal objectives • Are numbers are derived from plans or vice versa?

  5. Bootstrapping for start-ups A different perspective on budgeting • Keep it lean and mean -- low-cost passionate staff, innovative compensation -- “use” technology • Minimize capital -- only to cover expenses -- retain control -- brings efficiency and economy culture • Get the cash flowing -- get the product out, even at break-even -- reduce liquidity pressures

  6. Financing start-ups: Debt • Bank finance is almost impossible, universally • More so in this region • Private financing available, but short term and very expensive • Market for convertible/hybrid financing virtually non-existent • Friends and family often relied upon Prepare for bank debt from Day 1

  7. Financing start-ups: Equity • Equity is the more common financing method. Typical equity financing stages are: Personal savings Friends and family Angel investors Venture capital Private equity funds

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