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Cash Flow
The section covering your product profile and the structure and management of your venture were discussed above and in chapter 11. Description and discussion should be through and clear with references made, as appropriate, to supporting material in the appendix. The operation plan incorporates the financial so some additional comments are in order:As previously noted, your enterprises may need more cost entry lines than used in the example form –simply add the item and the costs in rows. Don’t forget that profitable business have to pray taxes and that you should anticipate and outgoing within the fiscal year period applicable to tax payment. It’s disturbing to see a business suffer because the management failed to foresee tax payment and has to borrow with interest loading to meet the obligations. Whether it might be the regular payment of collected sales tax, the annual or installment payment of taxes on profits, or the payment of the portion of an employee’s salary deducted for income tax, plan for the outgoings. These are demands on your cash and the tax authorities have fairly strong backing to obtain what is due them.
If you make an initial personal or externally obtained investment I the business at the start, it is seen a capital investment and provides a commencing funding basis. It is also relevant to that all encompassing factor –cash flow.
Revenue / sales represent income and mean just that: something comes in orders received are the joy for a salesperson, but they mean little to the financial operations. When you actually get paid by a customer is the time that a sale or transaction has been totally completed unless, perhaps, you are contracting and receive progress payment. If your venture is primarily a cash business such as a small shop, direct personal service, possibly a restaurant, you may not depend on invoice or statement with a payment term offered to the customer.