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24. Financial Information.
All the above must now be quantified into real
financial information to show how the idea can
turn into reality, into profit particularly
if outside finance is involved. This still matters
even if you are funding the business yourself,
will you ever get your money back. Remember
businesses swallow money very rapidly if not
controlled , there must be payback or why do
it.
25. The following financial
information would be expected:
Year 1 Monthly profit and loss together with
cash flow projections.
Year 2 Quarterly figures as above
Year 3 Annual Figures projected forward from
an assumption base.
26. The overall capital requirement
should be mapped out. This would include the
following:
Purchase price or set up costs
Fixed assets purchase or lease. I.e. plant &
machinery, tools, motor vehicles etc.
Purchase of Stocks
Working capital – bear in mind how long
it will be before you receive any cash in from
sales, But you will still have rent, wages etc.
to pay. Could be a few days to a full months/quarters
expenses to fund as well
27. Assumptions underlying.
By carefully detailing these and building your
projections in that way, you then can identify
correct assumptions as well as badly judged
ones against actual trading.
An example of assumptions may be:
Assume cash received in 30 days from date of
sale.
Inflation factors.
Stock turnover is 60 days
Gross margin is 50%
Once trading has begun
monitor the business performance against these.
What is correct, were is it wrong, so what happens
to the plan if the assumptions are changed.
As you can see having well thought out assumptions
will make a difference taking your business
forward. <<
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