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
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
Concepts
Module 1
Financial Planning
Personal Budgets
Startup Costs
One time costs
Operating costs
Opening Funds
Requirement
Module 2
Balance Sheets
Income Statement
Module 3
Pricing
Breakeven Point
Cash Flow Forecasts
Course Materials
PowerPoint Presentations
Excel File: “WEL Key Financial
Worksheets”
Student Reference Guide
Glossary of Terms
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.
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.
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.
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….
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?
Exercise 1 - List of personal expenses
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
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
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
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
1
One-Time
Expenses
2
Operating
Expenses
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….
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?
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?
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.
Assignment 3: Total Opening Funds Requirement
Opening Funds Requirement
Complete this
table to determine
your Opening
Funds
Requirements.
A. Personal Expenses:
Reference:
WEL Key Financials Excel Sheet-A
$________
B. One-Time Startup Expenses:
Reference:
WEL Key Financials Excel Sheet-B
$________
C. Operating Funds: First 90 Days:
Reference:
WEL Key Financials Excel Sheet-C1
$________
Total Opening Funds (A+B+C):
Personal, One-time Start-up and Operations (90 days)
Reference:
WEL Key Financials Excel Sheet-C2
$________
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