Management, Startup Expenses and Capitalization


Management and Organization

Who will be in charge of managing the business on a day-to-day basis? What is the experience of the person managing the business? What special or distinctive skills? What would happen if this person left or became incapacitated? Is there a plan in place?

If you’ll plan to employ more than 10 employees, add an organizational chart showing the management hierarchy and who is responsible for key functions.

Include the position description for each key employee. If you are plan to get a loan or find an investor, include resumes of owners and key employees.

Professional and Advisory Support
List the following:

  • Board of directors
  • Management advisory board
  • Attorney
  • Accountant
  • Insurance agent
  • Banker
  • Consultant or consultants
  • Mentors and key advisors

Personal Financial Statement
Each owner and/or major stockholder has a financial interest in the business. Include their personal financial statements, showing assets and liabilities held outside the business and their personal net worth. It’s common for owners to draw on their own personal assets to finance the business, and these statements will show what is available to sustain the business. Bankers and investors will want to see this information as well.

 

Startup Expenses and Capitalization
Starting a business always requires a variety of expenses to get the business of the ground. You need to carefully estimate these expenses and then to indicate where you will get sufficient capital to finance. This is part of the research phase and your research efforts must be thorough. If your research is complete, there is less chance that you may inadvertently leave out important expenses or underestimate them.

Careful planning and research can’t always anticipate the costs of starting a business. However, you can make allowances for unexpected expenses. One approach is to “pad” each item in the budget. If you use this approach, however, it destroys the accuracy of your plan. The other option is to add a separate line item, called contingencies. This line accounts for the unforeseeable. The second option is a better approach.

Talk to others business owners with similar businesses. You can ask them what to expect in terms of contingencies. If you cannot find a business owner that is willing to share information, another recommendation is to add 20 percent of the total budget to account for any contingencies.

Your business plan should include an explanation of your research and how you gathered your forecasts of expenses. Give sources, amounts, and any terms of proposed loans. Include detailed explanations of how much each investor will contribute what percentage of ownership each will have.

Categories Business Plan Template

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