VII.
Instructions: Startup Expenses & Capitalization
In this section, detail the expenses involved in opening for business and how much capital you’ll need.
(Do not include ongoing expenses after your business opens; those are listed in the Financial Plan.)
Estimating startup expenses as accurately as possible helps you gather enough startup capital.
1. Start-Up Expenses
Download and complete the Start-Up Expenses template. In working on this Business Plan, you
should already have gathered most, if not all, of the information you need. In the body of this
section, be sure to explain all of the assumptions behind the figures. How did you come up with
these expenses? If you’ve secured or expect to secure loans, explain the source/s, amount/s and
terms. If you’ve secured or expect to secure investors, explain how much each investor will
contribute and what percentage of ownership each receives in return.
Be sure to include extra capital for unexpected expenses. Opening a new business almost always
ends up costing more than expected, and you need to be prepared. List this figure in the Start-
Up Expenses template under “Reserve for Contingencies.” How much should you set aside for
contingencies? You can talk to other business owners in your industry to get a ballpark figure. If
you can’t come up with a figure this way, a good rule of thumb is to set aside 20% to 25% of
your total startup costs for contingencies.
2. Opening Day Balance Sheet
Download and complete the Opening Day Balance Sheet. Use it to detail the expected state of
your business finances on opening day. As with the Start-Up Expenses sheet, be sure to explain
the assumptions behind the figures.
3. Personal Financial Statement
If you are using the business plan to seek financing, include personal financial statements for each
owner and each major stockholder. The personal financial statements should detail each
person’s assets and liabilities outside of the business and their personal net worth. Investors
and/or lenders typically expect business owners to use personal assets to finance a startup, and
they’ll want to see how much capital you have available from your personal finances.
After reading the Startup Expenses & Capitalization section, the reader should know how much money
is needed to start the business and how well capitalized you are.
VIII. Instructions: Financial Plan
6.1 Initial investment
Sl. No. Particulars Amount
1 Tools and Machinery 10,00,000
2 Pick-up Vans 24,00,000
3 Furniture & Fittings 2,00,000
4 Workshop Security Deposit 2,00,000
5 Computers 2,20,000
6 Centre setup 1,60,000
7 Legal Expenses 40,000
8 Stationary 20,000
Total 42,40,000
6.2 Sources of Funds
The firm has planned to arrange funds from multiple sources keeping in mind the risks and
benefits associated with each one of them.
Particulars Amount %
Priyanshi agrawal 21,20,000 50
sweety agrawal 21,20,000 50
6.3 Depreciation
The depreciation charged on various assets of the firm is in line with the guidelines of the
Income Tax Department. Straight line method will be used for the purpose of calculating
depreciation.
● Depreciation on Machinery
18% depreciation will be charged on machinery.
10,00,000 x 18/100 = 1,80,000
● Depreciation on Furniture & Fittings
10% depreciation will be charged on furniture & fittings.
2,00,000 x 10/100 = 20,000
● Depreciation on Computers
30% depreciation will be charged on computers.
2,20,000 x 30/100 = 66,000
● Depreciation on Vans
18% depreciation will be charged on machinery.
24,00,000 x 18/100 = 4,32,000
6.4 Revenue Model
This cost sheet accounts for the monthly expenses for 2 centres.
Sl. No. Particulars Details Amount (in thousands)
1. Transport Diesel for vans 12
Waste procurement
2.
(Example values)
a. Used tetra packs 50kg @ 50/kg 2.5
b. Used soda cans 20kg @ 100/kg 2
c. Used cement bags 30kg @ 33/kg 1
3. Rent 400 sq. feet 30
4. Electricity 3
5. Marketing 20
6. Human Resource 3060
7. Miscellaneous 19.5
TOTAL – 31,50,000
Revenue will be earned by selling the product created by upcycling the waste.
(The products mentioned are only to get an estimate for calculating revenue. They will change
based on the kind of waste available.)
Sl. No. Product Quantity Price Revenue
1. Bag 2500 200 5,00,000
2. Showpiece 400 700 2,10,000
3. Purse 6000 500 30,00,000
4. Racks 500 600 3,00,000
5. Basket 1000 300 3,00,000
TOTAL – 43,10,000
Assuming an 85% sale on production,
Revenue = (43,10,000) x 85% = 36,63,500
Monthly profit= 5,13,500
Yearly profit- 5,13,500 x 12 = 61,62,000
(No taxes are required to be paid under Start-up India Scheme)
6.5 Balance Sheet
Amount (Yr.
Particulars Amount (Yr. 2) Amount (Yr. 3)
1)
Liabilities
Partner’s Capital ₹ 42,40,000.00 ₹ 42,40,000.00 ₹ 43,40,000.00
Retained Earnings ₹ 35,000.00 ₹ 42,000.00 ₹ 92,400.00
Bills Payable ₹ 12,000.00 ₹ 14,400.00 ₹ 17,280.00
Sundry Creditors ₹ 78,000.00 ₹ 93,600.00 ₹ 1,12,320.00
TOTAL ₹ 43,65,000 ₹ 43,90,000 ₹ 45,62,000
Assets
Workshop Security Deposit ₹ 2,00,000 ₹ 2,00,000 ₹ 2,00,000
Computer ₹ 1,54,000 ₹ 1,07,800 ₹ 75,400
Delivery Vans ₹ 19,68,000 ₹ 16,13,760 ₹ 13,23,200
Machinery ₹ 8,20,000 ₹ 6,72,400 ₹ 5,51,300
Furniture ₹ 1,80,000 ₹ 1,62,000 ₹ 1,45,000
Inventory ₹ 46,000 ₹ 88,000 ₹ 2,25,350
Cash at bank ₹ 5,31,000 ₹ 8,47,040 ₹ 9,94,750
Bills Receivable ₹ 2,46,000 ₹ 3,69,000 ₹ 5,53,000
Sundry Debtors ₹ 2,20,000 ₹ 3,30,000 ₹ 4,95,000
TOTAL ₹ 43,65,000 ₹ 43,90,000 ₹ 45,62,000
6.6 Break Even analysis
Break Even Point in Units = Fixed Costs / Sales Price per Unit – Variable Cost per Unit
= 38,08,000/300 – 10
= 12,650
Break Even Period = Break Even Volume / Sales Volume per Period
= 12,650/4500
= 3 quarters
Working:
Fixed costs = Advertisements + depreciation + Rent + Salary
= 20,000 + 6,98,000 + 30,000 + 30,60,000
= 38,08,000
Variable costs = inventory + delivery + electricity + maintenance exp. + miscellaneous exp.
= 12,000 + 3,000 + 19,500 + 50,000
= 84,500
V.C. per unit = 10
6.7 Pay -Back period/ IRR
Payback Period = Initial Investment/ Cash Inflow
= 42,40,000/ 61,62,000
= 10 months (approx.)
Your financial plan is perhaps the most important element of your business plan. Lenders and investors
will review it in detail. Developing your financial plan helps you set financial goals for your startup and
assess its financing needs. Include the following:
1. 12-month profit & loss projection
Also known as an income statement or P&L, the 12-month profit and loss projection is the
centerpiece of your business plan. Download the 12-Month Profit and Loss Projection and fill in
your projected sales, cost of goods sold and gross profit. (Refer to the Sales Forecast you
created in Section IV). Then list your expenses, net profit before taxes, estimated taxes and net
operating income.
Be sure to explain the assumptions behind the numbers in your P&L. Keep detailed notes about
how you came up with these figures; you may need this information to answer questions from
potential financing sources.
2. Optional: 3-year profit & loss projection
A three-year profit and loss projection is not essential to a business plan. However, you may
want to create one if you expect your business’s financials to change substantially after the first
year, or if investors or lenders require it. Download the 3-Year Profit and Loss Projection
template, and use it to create your projection.
3. Cash flow projection
The cash flow statement tracks how much cash your business has on hand at any given time.
Once your business is up and running, you’ll want to keep close tabs on your cash flow
statement. For now, however, you’re creating a cash flow projection. Think of the cash flow
projection as a forecast for your business checking account. It details when you need to spend
money on things such as inventory, rent and payroll, and when you expect to receive payments
from customers and clients. For example, you may make a sale, have to buy inventory to fulfill
the sale, and not collect payment from the customer for 30, 60 or 90 days. The cash flow
projection takes these factors into account, helping you budget for upcoming expenses so your
business doesn’t run out of money.
Download the 12-Month Cash Flow Statement and use it to create your projections.
1. Optional: 3-year cash flow statement
Depending on your needs and the purpose of your business plan, you may also want to include a
3-year cash flow statement. If so, download the 3-Year Cash Flow Statement and use it to
create your projections. This is a much simpler document than the 12-month cash flow
statement, but can still be useful in making plans.
2. Projected balance sheet
A balance sheet subtracts the company’s liabilities from its assets to arrive at the owner’s equity.
You already created an opening day balance sheet in Section 1. Now, download the Balance
Sheet (Projected), and create a projected balance sheet showing the estimated financial
condition of your business at the end of its first year. The major difference between the two is
that the projected balance sheet includes any owner’s equity resulting from the business’s first
year in operation. Lenders and investors may want to see this projection
