NTC Technopreneurship Programme 5 May 2016

Content:

- Planning for Financial Success

- Start-up business concept

- Funding

Process:

Today was the sixth lesson of the technopreneurship course held by Mr Chia. He thought us about financial planning, which is vital for success, start-up business concepts that can minimise financial costs, and ways to get funding for your business.

A financial plan is important as it allows you to gain a better understanding of potential financial risks and rewards associated with your start-up. It identifies the start-up costs and the needed funds to be acquired, and it is a plan to help guide your business decisions and monitor your results. One aspect of the financial plan is the financial statement.

A financial statement should consist of a balance sheet, an income statement, and a cash flow report.

A balance sheet is a reflection of how much the company owns, how much is owed to the company, and how much the company owes to both creditors and owners. It shows the company's assets, liabilities, and the owner's equity.

An income statement shows how much a company has made or lost for a given period of time, also known as net profit or net loss. It shows the amount of revenue made by the company and the expenses incurred by the company.

A cash flow report charts the cash that flows in and out of a business each month and projects the company's ability to meet its cash obligations on a monthly basis. It is perhaps the most important supporting document in the business plan and also serves as the most important tool the management has for contemplating and controlling the financial affairs of the enterprise.

Start-up business concept:

The business concept or model of a start-up can affect the start-up costs and the profitability of a start-up. Different business concepts or models can result in different needs, and some business concepts might incur more rental costs, salaries, maintenance costs, vehicle costs, and equipment costs than others. This can impact the profitability of the business as the operating costs can be higher. 

Apart from the financial statement, the financial plan should also consist of the sources of financing and an exit strategy.

Funding:

There are a few ways to gain funding, namely equity and non-equity funding. Equity funding is the giving away of company shares in exchange for money. Non-equity funding on the other hand, has three main methods. 

The first method is bootstrapping. Bootstrapping is to use minimal or only existing resources to operate the start-up. It can be done by using the money of the owner, or simply by doing a lot with little.

The second method is grants. Grants are money given by the government or organisations. The advantage of taking grants is that there is neither debt attached or equity lost through taking grants.

The third method is debt financing. It can be through credit, long-term loans, or loans from friends and family. This method will incur debt but they will not be equity involved.

Reflection:

This lesson has exposed me to the more financial side of setting up a business, which is easy to know but harder to understand as many of the finer points need a deeper knowledge of economics etc. It is indeed very complex to create a start-up and there is much knowledge needed to know how to run a business. I now look at entrepreneurs with a different view. I am also interested in different business models and the advantages of the different concepts in relation to operation as well as costs.

Personal Development;

Over the weekend I will research on the different business concepts in order to understand more deeply the relationship between the business concepts and the running of the business. I will try to find out more about the similarities between successful start-ups and the cause of the failure of start-ups so as to understand how to better create a start-up.