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Financial Plan

Financial Plan. Ms. Alexander Entrepreneurship. Financial Statements. A list of start-up costs, one time expenses paid to establish a business. Common start-up costs Equipment and supplies Furniture and fixtures Vehicles Remodeling expenses Legal and accounting fees Licensing fees.

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Financial Plan

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  1. Financial Plan Ms. Alexander Entrepreneurship

  2. Financial Statements • A list of start-up costs, one time expenses paid to establish a business • Common start-up costs • Equipment and supplies • Furniture and fixtures • Vehicles • Remodeling expenses • Legal and accounting fees • Licensing fees

  3. Cash Flow Statement • A cash flow statement describes how much cash comes in and goes out of a business • Revenue – the amount of cash coming in • Expenses – the amount of cash going out • Operating expenses – monthly expenses incurred by a business

  4. Income Statement • An income statement indicates how much money a business earns or loses in a particular period • An income statement is also known as a profit and loss statement • An income statement shows revenues not yet collected and expenses not yet paid

  5. Balance Sheet • Balance Sheet -Shows what a business owns, owes, and how much it’s worth at a point in time • Based on the accounting equation • Assets = Liabilities + Owner’s Equity • Assets are items of value owned by the business such as • Cash • Equipment • Inventory

  6. Balance Sheet • Liabilities are items that the business owes to others, such as • Loans • Outstanding invoices • Owner’s equity is the value of all assets less all liabilities

  7. Accounting Equation The balance sheet is base on an equation called the accounting equation Assets = Liabilities + Owner’s Equity

  8. Supply & Demand • Supply • Is how much of a good or service a producer is willing to produce at different prices. • Demand • Is an individual’s need or desire for a product or service at a given price

  9. Equilibrium Price & Quantity • Equilibrium price and quantity is the price at which supply equals demand

  10. Fixed Costs • Fixed costs are costs that must be paid regardless of how much of a good or service is produced. • Examples of fixed costs include: • Rent • Insurance fees • Interest on loans

  11. Variable Costs • Variable costs are costs that go up and down depending on the quantity of the good or service produced. • Examples of variable costs include: • Raw materials • Labor • Overhead directly related to producing goods or services.

  12. Financing For Your Business • Bank Loans • Secured—guaranteed with collateral • Unsecured—no collateral needed • Equity Capital • Personal financing • Friends and family • Venture capitalists

  13. Financing For Your Business • SBA Loans • Other Loan Sources • Small Business Investment Companies • Minority Enterprise Small Business Investment Companies • Department of Housing and Urban Development (HUD) • The Economic Development Administration • State Governments • Local and Municipal Goverments

  14. Types of Insurance • Property Insurance • Insures all business property against normal risks, including fire, robbery, and storm damage. • Casualty Insurance • Protects a business against lawsuits • Life Insurance • Pays out in the event that the holder of the policy dies

  15. Types of Insurance • Workers’ Compensation • Consists of payments to workers who are injured on the job • Other Insurance • Includes coverage for floods, business interruption, crime and renter’s needs

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