Financial Plan and Conclusion Essay

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Financial Plan and Conclusion

1. Financial Plan

A total of 39,500 will be committed in startup costs. The specific startup items have been described in table 1. Essentially, the flagship startup components are: lighting and studio/sound equipment, opening inventory, operating capital, fees and permits, and FFE. Lighting and studio/sound equipment are inclusive of 8 speakers, 2 amplifiers, 2 cd decks, 2 microphones, 2 switchers, 3 wash moving head lights, 1 LED DJ light, 5 DJ fog machines, 3 laser machines, 1 centerpiece effect DJ light, and other assorted lighting items. The opening inventory, on the other hand, is inclusive of all wine, beer, liquor, and other consumables (non-alcoholic drinks and beverages). The fees and permits component is inclusive of all fees we shall incur such as attorney, consultant, and accountant fees. Lastly, FFEs include, but they are not limited to, foldable chairs and tables, coolers, liquor racks, wine glasses, beer cups, etc.

In essence, while a total of $17,000 will be needed to settle salaries for 8 employees, space rent will take a maximum of $19,000 within the three month period. These figures, in addition to the initial capital outlay, bring the total amount of cash that will be needed for the first three months to $75,500.

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The startup will be financed through use of equity financing. Equity financing has been selected because it is relatively safer than debt financing. It is important to note that unlike equity financing, Longnecker, Petty, and Palich (2016) are of the opinion that debt financing carries with it some significant risk, In the words of the authors, “if the firm fails to earn profits, creditors still insist on being repaid, regardless of the firm’s actual performance” (Longnecker, Petty, and Palich, 2016, p. 322). This is unlike is the case with equity financing which is provided by shareholders and, thus, may not have to be repaid back if the business posts dismal returns. This being a startup, and with no track record, equity financing will be the most viable financing during the first three months of the business.

The business plan will be implemented within a span of one year. Continuous assessments will be done every three months to ensure that the medium-term plan remains on course. Towards this end, corrective action will be instituted if deviations are identified. This is especially important given that according to Coyle (2000), most….....

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References

Coyle, B. (2000). Capital Structuring. Chicago: Glenlake Publishing.

Longnecker, J.G., Petty, J.W., & Palich, L.E. (2016). Small Business Management: Launching & Growing Entrepreneurial Ventures (18th ed.). Mason, OH: Cengage Learning.

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