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MODULE 1 START-UP FINANCIAL CONSIDERATIONS

WEL Financial Intelligence. MODULE 1 START-UP FINANCIAL CONSIDERATIONS. Objectives. To broaden your knowledge of the financial planning process through the following activities:. Establish your personal financial needs Assess the costs involved to start a business

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MODULE 1 START-UP FINANCIAL CONSIDERATIONS

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  1. WEL Financial Intelligence MODULE 1 START-UP FINANCIAL CONSIDERATIONS

  2. Objectives To broaden your knowledge of the financial planning process through the following activities: • Establish your personal financial needs • Assess the costs involved to start a business • One time start-up expenses • Ongoing operating expenses • Prepare an Opening Balance Sheet (financial picture of the business on opening day) • Prepare a Proforma Income Statement

  3. Concepts Module 1 Module 2 • Financial Planning • Personal Budgets • Startup Costs • One time costs • Operating costs • Opening Funds Requirement • Balance Sheets • Income Statement Module 3 • Pricing • Breakeven Point • Cash Flow Forecasts

  4. Course Materials • PowerPoint Presentations • Excel File: “WEL Key Financial Worksheets” • Student Reference Guide • Glossary of Terms

  5. Module 1 - Overview Introduction to financial planning Financial Planning is the preparation of Proforma Financial Statements, including Income Statements, Cash Flow Forecasts, Balance Sheets and other analysis.

  6. Module 1 - Overview Why is Financial Planning necessary ? • Avoid surprises. • Determines investment required for start-up. • Improves ability to obtain financing. • Clarifies how investments are spent. • Identifies areas of concern up front.

  7. Personal Financial Needs Will the venture need to support you? • If “yes”: How much money will you need to take from the venture ? • Avoids surprises later on... • Exercise guide you through analysis.

  8. Exercise 1: Personal Budget Ex 1A. Instructions: • On your own or with a study partner; • Review personal expenses on the next page • What can you add to this list? 10 Minutes….

  9. Exercise 1 - List of personal expenses • Auto expenses • Auto payment • Beauty shop & barber • Satellite/ Cable TV • Internet services/Telephone • Groceries & outside meals • Health insurance • WHAT CAN YOU ADD?

  10. Exercise 1 - List of personal expenses • Groceries & outside meals • Health insurance • Home repairs • Homeowner’s insurance • Laundry and dry cleaning • Life insurance • Medical and dental • Miscellaneous • Mortgage/Rent payments • Other debt payments • Vacations • Other • Auto expenses • Auto payment • Beauty shop & barber • Satellite/ Cable TV/ • Internet services/Telephone • Charity • Child care • Clothing • Credit card payments • Dues and subscriptions • Utilities • Entertainment • Gifts

  11. Assignment 1: Preparing a personal budget Ex 1B Instructions: • This is an individual exercise. • See WEL Key Financials Excel: Tab A • Create a Personal Budget (monthly) • Use this figure in future financial planning documents

  12. One-Time Expenses Operating Expenses Business Start up - Analysis of costs • First challenge: determine funds required to open the venture • Start up costs are all costs required to get a business off the ground and operating. Start up Costs include Two Types of Expense 12

  13. Exercise 2 - One Time Expenses Ex. 2A Instructions: • On your own or with a study partner • Consider expenses needed BEFORE the business opens • Examine the first list to get started • What can your group add to this list? 5 Minutes….

  14. One Time Expenses • Down payment on property • Rent deposit • Down payment on fixtures and equipment • Vehicles • Decorating, remodelling • Installation of equipment/fixtures/ • Leasehold improvements • Starting inventory What is Missing?

  15. One Time Expenses • Utility set-up fees • Promotion for opening • Licences and permits • Incorporation costs (where applicable) • Professional fees • Product development costs or franchise fees where applicable • Unexpected expenses Do you think of these?

  16. Assignment 2 – Operating Expenses Operating expenses 2B Instructions: TYPE IN A SEPARATE DOCUMENT, PRINT AND BRING TO NEXT CLASS • On your own or with a study partner • Review WEL Key Financial Worksheets Sheet B: One-time Startup Expenses. • Investigate • Develop a list of one-time expenses for your new venture.

  17. Assignment 3: Total Opening Funds Requirement Complete this table to determine your Opening Funds Requirements.

  18. Module 1 Review You now have the financial knowledge and tools to plan your venture: • A personal budget • One-time Startup expenses for the venture • Operating Expenses (3 month projected) • Opening Funds Requirement

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