New Venture Financing Plan



New Venture Financing Plan

Introduction

A good finance is the foundation for the successful establishment of a company. The accurate determination of capital requirements and the necessary financial sources is therefore one of the essential functions of each founder's existence. Any properly prepared business plan should have a financial plan that shows basic information about the financial side of the planned activities. There are certain important elements of the financial plan, which are necessary for its implementation (Alberta, 1995). A financial plan should indicate what are and will be the cost of business, what are the sources of its funding, what will be the planned income and expenditure of company and what the company plans to make a profit. The financial plan includes the investment plan, revenue plan, planning of cost, Profit and loss account and planning for cash flows. By its very definition, says a financial plan for the road as your business creation and why it may exist. The financial plan also explains what products and services to address the audience how it intends to develop these products and services and to deliver and will proceed (Long, 2000).

Discussion

The financial plan is a part of the business plan. The financial plan is the exact representation of the financial resources of a business idea or project financing. The financial plan of an enterprise is one of its most important documents. It can be used by managers and project managers for internal planning. It can be used as a basis for loan applications by banks and other lending institutions (Friend & Zehle, 2009). The financial plan can be used to convince investors and lenders that your business is a good investment. Potential investors and even the ideas themselves need a profit and loss account.

Thus, financial plan ensure that the business idea will be profitable. For several years in advance, in tabular form all revenues and expenses are compared. The difference between the bills is the yield or a possible effort that would operate the business founders (Sahlman & Stevenson, 1992). The budget also provides for a break-even analysis. This pretends to be when the proceeds exceed the expenses. Liquidity planning is to provide information of all deposits and withdrawals. This results in the need for capital planning (Alberta, 1995).

Importance

For start-ups is the process of creating a business plan's as a roadmap for the future of your business by directing Entrepreneur their strategies. The business plan evaluates their basic business concepts, recognize limitations of their activities and try to avoid a proliferation of errors (Friend & Zehle, 2009). Virtually every business needs a financial plan. Lack of proper planning is one of the most frequently cited reasons for entrepreneurial failures. Financial plan helpers identify their goals and objectives and provide them with tactics and strategies to achieve those goals. You may have historical documents; rather they represent a summary of your business decisions about the necessary steps, so that the business achieves its objectives and carry out in accordance with ...