Module 8 • The fi nancial plan


What can you do to prove you’re ready for the financing you’re seeking? Satisfy these criteria: • Your business plan must explain the business, not just the product or service and its competitive advantage.


• Your business plan must show that you understand the power of the bottom-line, and explain a way of repaying loans or producing an attractive return on your investment.


• You must have a clear strategy for marketing your product or service and know what it will cost to make or provide.


• You must show exactly how you will use the money to meet your company’s goals. • Before looking for money, you must prove that the business concept will work and that customers will buy your goods use your or services.


Activity 7


Use your Business Plan workbook to complete a budgeted income statement and cash-flow statement.


Revision questions 1. Complete a Cash-flow statement for the following business. Months


March April May June


Other Information: 1.1


Estimated Sales


R6 000 R3 000 R4000 R5500


Estimated purchases


R3 000 R2 000 R3 000 R4 000


A delivery van was bought in March. The deposit was R8000 with monthly instalments of R800 thereafter (two years)


1.2 The average expenses per month are: Wages R1 700, Rental R1200, Telephone R550, Electricity R180, Fuel R500


1.3 20% of all sales are on credit. Customers pay 30 days later. 1.4 An old computer was sold in April for R2 000 cash 1.5 They plan to buy a new computer in May paying R1500 deposit and thereafter monthly instalments of R500 for two years.


2. Use the following information to draw up an estimated cash-flow budget for the next three months. At the beginning of October they had a favourable bank balance of R500.


Month October


November December


Estimated Sales R1500 R2000 R2200


Estimated Purchases R1000 R1500 R2550


161


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