How to Finance Your Business: How to Finance Your Business
Mark Wan, Business Advisor
Farmingdale State Small Business Development Center Agenda: Agenda Introduction
Financial Statement Basics
Cases Financial Statement Basics: Financial Statement Basics Income statement
Cash flow statement
Balance sheet Income Statement: Income Statement Shows the profits or losses of the business
Variable costs/Cost of goods
Fixed costs/Operating expenses
Profit/Loss Income Statement: Income Statement Cash flow statement: Cash flow statement Shows cash income and outgoing over a period of time
Slide7: Balance sheet: Balance sheet Snapshot of the businesses assets and liabilities
Assets = Liabilities + Shareholder’s Equity Slide9: Debt Financing: Debt Financing Equity Financing: Equity Financing Miscellaneous Financing: Miscellaneous Financing Case 1: The Mocha Maker: Case 1: The Mocha Maker Background
Jerry Winthrop is an electrical engineer who works at Symbol Technologies. In addition to be a great engineer, Mr. Winthrop is a chocolate fanatic and collects several brands of exotic hot chocolates from around the world. While trying to fix his espresso machine Winthrop gets the idea to create a hot chocolate maker for those that love hot chocolate as much as he does.
Winthrop’s idea is to have a machine that takes bars of chocolate and milk on one end and produces luxuriously rich, delicious hot chocolate on the other end. Mocha Maker Startup Costs: Mocha Maker Startup Costs Possible Sources for Mocha Maker: Self finance the prototype, enter an invention contest such as QVC or Hammacher Schlemmer.
Self-finance the prototype, get purchase orders and get purchase order financing.
Self-finance the prototype, get free help from lawyer friends and license the idea to a manufacturer.
Self-finance the prototype, pitch to an angel investor Possible Sources for Mocha Maker Case 2: The Jalapeno: Case 2: The Jalapeno Background
Mary Worth has been working as a manager of Gonzalez’s a chain of Mexican Restaurant. She just recently got laid off as a result of corporate decision to close down the north east restaurants. She’s always been dreaming of starting her own restaurant; now she believes her time has come.
Worth wants to create an exciting restaurant that has an inviting atmosphere for the whole family and that centers around the almighty Jalapeno, a spicy pepper. Because of Worth’s experience at Gonzalez’s she knows many jalapeno based recipes and knows many of the suppliers. The Jalapeno’s Startup Costs: The Jalapeno’s Startup Costs Sources of Funding for The Jalapeno: Get suppliers to extend credit
Get contractor friends to finance the construction
Barter for advertising Sources of Funding for The Jalapeno Case 3: Database Dynamos: Case 3: Database Dynamos Background
Brian Jones has worked 20 years as a project manager for a major IT consulting firm. Since he anticipate layoff’s Jones decides he is going to establish his own consulting practice.
Jones main expertise is database programming. He can operate at the expert level on Access, Oracle and Siebel. Jones is mainly looking to target mid-size businesses that are looking to make their current IT projects more efficient. Database Dynamos Startup Costs: Database Dynamos Startup Costs Sources of Funding for Database Dynamos: Sources of Funding for Database Dynamos Lease equipment
Barter for advertising
Use credit cards for working capital
Operate from a virtual office
Have accounting friend do the taxes