Finance your startup
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Transcript of Finance your startup
Day 1 Day 1
Presented by Mona Reda
9/29/2015 1
Agenda
• What is a startup?
• Why startups Fail?
• How much do i need to have startup up and running?
– Expenses
– Working Capital
– Contingency reserve
9/29/2015 2
What is a startup?
9/29/2015 3
9/29/2015 4
Why Startups Fail?
9/29/2015 6
Tell us about your startup?
9/29/2015 7
Coffee Break
9/29/2015 8
Cost of your Product/Service
Direct Cost
• They are always variable because they are related to production Ex :Labor cost, Raw Material
In-direct Cost
• Overhead costs not related to production of the Ex: Rent, Utilities, Advertising, interest on loans
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Pricing your Product/Service
Prime Cost
•Direct Labor
•Raw Material
Overhead Expenses
•Advertising
•Administrative cost
Profit Margin
Selling price
9/29/2015 10
How much do i need to have startup up
and running?
Expenses
Working Capital
Contingency reserve
9/29/2015 11
Startup Expenses
• The Expenses that you should have before open the doors of your startup
– Assets needed to start
– Legal requirements
– Marketing
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How much do I need to start my startup?
9/29/2015 13
Working Capital
• The Cash reserve you need to have on your opening day in order to meet your expenses while your business gets going.
• Examples : – Utilities
– Salaries
– Renting fees
For at least 3 months
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How much money do I need to keep my startup up and running?
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Contingency reserve
• It’s a money that put away for uncertainties that has negative economic impact for your financial plan
Risk Probability(P) Cost (C) Contingency Reserve (PxC)
Total Contingency Reserve
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Expenses Working Capital
Contingency Reserve
Total capital required
9/29/2015 17
Sources of Funding
Startup Cost Calculators
http://www.wsj.com/public/page/news-small-business-startupCalculator.html 9/29/2015 icealexandria 18
Day 1 Day 2
Presented by Mona Reda
9/29/2015 19
Agenda
• Funding Sources
• Who should i ask for money?
• Financial Projections
9/29/2015 icealexandria 20
Where your startup capital
could come from?
9/29/2015 icealexandria 21
Sources of Funding
Source of Funding Total %Startup Capital
Personal/Partner funds
Outside investors
Asset Related loans
Credit card debt
Bank Debt
Other
Total 100%
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What the investors need from you?
• What the investors need from you when they give you their money ???
– Make a return
– Safeguard the money
9/29/2015 icealexandria 23
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Who should I ask?
Business Partners
9/29/2015 icealexandria 25
Family and Friends
9/29/2015 icealexandria 26
Crowd Funding
• In crowd funding you pitch your project on a platform that connects project creators to individuals from the public whose their money and decide the amount of funds they which to contribute
9/29/2015 icealexandria 27
Angel Investors
• Entrepreneurs who have already succeeded and made their fortune, may look to invest their funds in promising startups
Benefits :
– Experience
– Connections
– Understanding of Market opportunities
9/29/2015 icealexandria 28
https://youtu.be/keWxX62tC-0
9/29/2015 icealexandria 29
Business Incubators
• Provide support to startups, often from idea stage through early stages of development.
• They provide startups with
– Skills Training
– Business Advice
– Working Spaces
– Networking opportunities and connections
– Funding
9/29/2015 icealexandria 30
Business Incubators
9/29/2015 icealexandria 31
https://vimeo.com/57540852
Bank Financing
• When you seek a bank loan be prepared to demonstrate fully how you intend to spend the money they give you, and the potential of your business to repay the loan.
9/29/2015 icealexandria 33
Credit Cards
9/29/2015 icealexandria 34
Financial Projections
• Estimates of the future financial performance of a business .
• The Benefits of it :
– the financial plan translates your company's goals into specific targets.
– the plan provides you with a vital feedback-and-control tool.
9/29/2015 icealexandria 35
Starting Balance sheet
Working Capitals
Expenses
Funding Sources
9/29/2015 icealexandria 36
Payroll Projections
9/29/2015 icealexandria 37
Employee
M 1
M 2
M 3 M4 M5 M6 M7 M8 M9 M10 M11 M12 Total
Owner
Part time
Full Time
Total Salaries
Sales Forecast Product M
1 M 2
M 3 M4 M5 M6 M7 M8 M9 M10 M11 M12 Total
Product
Unit Sold
Sales
Total cost of goods
Profit
9/29/2015 icealexandria 38
Operating Expenses
9/29/2015 icealexandria 39
M 1
M 2
M 3 M4 M5 M6 M7 M8 M9 M10 M11 M12 Total
Advertising
Commissions and Fees
Licenses
Travel
Total Operating Expenses
Cash Flow
• Lists the flow of cash in and out of your business
9/29/2015 icealexandria 40
Cash M 1
M 2
M 3 M4 M5 M6 M7 M8 M9 M10 M11 M12 Total
Beginning balance
Cash inflow
Sales
Cash outflow
Income Statement
9/29/2015 icealexandria 41
M 1
M 2
M 3 M4 M5 M6 M7 M8 M9 M10 M11 M12 Total
Total Revenue
Total Cost of good sold
Gross Profit
Total Payroll
Total Operating expenses
Net Income
Financial Projections Applications
9/29/2015 icealexandria 42
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