Having completed 11.
Financial Projections, you may have identified a significant
funding need that cannot be bridged from your own resources (and
those of your relatives, friends, colleagues, credit cards, local
bank manager and so on) or generated by the business.
If seeking equity, loans or equity/loan combination, use this section
to present your needs and proposals. Keep it factual and avoid any "over-the-top" hyping
of your business as the greatest investment ever!
If planning to raise equity from venture capital or "angel" sources,
allow adequate time to raise it. Depending on the amount needed and
track record of the promoters/business, this will take several months
and tie up significant management resources throughout - brace yourself
for several re-drafts of the business plan and revisions to the financials.
Suggested Length & Structure:
This
entire section need not exceed a page or so.
The subsections
below are for general guidance only. You may prefer to:
Use less obtrusive sub-headings like
Funding
Requirements:
or even delete all them and cover all relevant
matters in a series of short paragraphs within this
section.
For help with financial projections and determining funding requirements,
see the white paper
on Raising
Finance and Exl-Plan, our financial modeling tool.
Indicate planned uses, possible sources and forms (equity, loans,
grants, credit etc.) and time scales.
12.2. Funding Proposals
Mention any conditional or firm funding commitments already secured.
For each element of funding, describe the preferred form of funding,
amounts required, likely timing, security offered and desired terms,
repayment schedules and exit options. Bear in mind the golden
rule - he who has the gold makes all the rules.
For the benefit of prospective investors, indicate the likely equity
funding required; range of the equity stakes on offer; exit routes
(IPO, trade sale, buy-back etc.); board representation; and, optionally,
make a stab at the projected returns on their investment. If presenting
comprehensive funding proposals, be realistic when valuing your business
and use more than one method of valuation e.g. net asset value, price/earnings
ratio, capitalization/revenue ratio, industry yardsticks and so on.
Take account of market sentiment/conditions, "going rates",
maturity of the business and degree of risk associated with its plans.
Of course, you may wish to withhold all specific funding proposals
until you have met possible investors or lenders face-to-face and
heard their initial reactions. In this case, this subsection would
be confined to a description of funding needs and possible sources
and forms.
Additional Help
If planning
to raise venture capital, business angel finance or bank loans, check
the paper on Raising Finance. The Excel-based financial planner,
Exl-Plan, contains extensive
facilities for doing sensitivity analyses. The best way to establish the
funding needs of a business under different scenarios is to run Exl-Plan
without any assumptions about future funding and, for each scenario, take note
of the timing and value of the projected peak cash deficits.
Get Help with Financial
Projections
Exl-Plan - Integrated Multi- Year Financial
Planner
Requires: Excel 5, 7, 8, 95, 97, 2000, XP, 2003,
2007, 2010, 2013, 2016 with Windows 95/98/
Me/NT/
2000/XP/Vista/Win7,8,10.
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