This initial amount of capital generally comes from personal assets of the owner(s), family members, or friends.
It may be the case that the owners use person debt, such as credit cards, home loans, etc., to fund the startup.
This information serves the dual purpose of satisfying the requirements of lenders and investors.
Potential investors will want assurance about the owner’s ability to meet the financial needs of the business.
In other cases friends and family members either invest the necessary cash or make a loan to the entrepreneur.
Regardless of the source, seed capital is essential to starting the business.
All other sections of the plan (operations section, management section, marketing section, etc) show an investor whether or not an entrepreneurs' financial projections can materialize as envisioned. Notes to the Forecasted Financial Statements Click on the above links for information on each item of the Financial Plan. Your forecasted financial statements and analysis, however, should generally provide projections for at least a three year period.
The structure of the financial section generally includes the following items: Part A.
Demonstrating the financial status of the founders, owners, or major stockholders gives an indication of the ability of these individuals to supply necessary capital to the business.
The partners, members, shareholders, etc., will have more confidence if the other owners have the financial ability to meet the capital needs of the business.