The cost and financing section is important because it breaks down all of your start up costs and financing. Lenders want to know: How much will the start up going to cost? And how are you going to finance it? Very important, especially if you are approaching lending and funding agencies. This is the cost and financing sheet for our fictitous company, ABC Cleaners.
ABC Cleaners is approaching SPA for funding contributions, and a bank for a loan. This is how they are going to structure their financing.
ABC Cleaners
Projected Funding and Financing
Projected Costs | Financing
| |||
|---|---|---|---|---|
| Capital & Operating | $ | Capital & Operating | Amount | % |
| Office furniture | $12,500 | Cash equity | $12,950 | 10% |
| Computer equipment | $7,500 | SPA funding | $71,225 | 55% |
| Telephone | $5,000 | Commercial financing | $45,325 | 35% |
| Leasehold improvements | $7,500 | |||
| Vehicles (3 vans) | $60,000 | |||
| Cleaning equipment | $15,000 | |||
| Legal | $1,500 | |||
| Sign | $1,000 | |||
| Working capital | $5,000 | |||
| Inventory | $15,000 | |||
| Sub total | $129,500 | Sub total | 129,500 | 100% |
Marketing | $ | Marketing | $ | % |
| Grand opening | $1,000 | Cash from operations | $2,400 | 40% |
| Marketing | $5,000 | SPA funding | $3,600 | 60% |
| Sub total | $6,000 | Sub total | $6,000 | 100% |
Business support | $ | Business support | $ | % |
| Mentoring & accounting | $10,000 | Cash from operations | $2,500 | 25% |
| SPA funding | $7,500 | 75% | ||
| Sub total | $10,000 | Sub total | $10,000 | 100% |
Total project costs | $ | Total project financing | $ | % |
| Capital & operating | $129,500 | Cash equity | $12,950 | 8.9% |
| Marketing | $6,000 | Cash from operations | $4,900 | 3.4% |
| Business support | $10,000 | Commercial financing | $45,325 | 31.2% |
| SPA | $82,325 | 56.6% | ||
| Grand Total | $145,500 | Grand Total | $145,500 | 100% |
Notice how everything balances out in each of the 3 sections, capital, marketing and business support. When putting together a cost and financing package, make sure all costs and financing balance out. Look closely at these figures and compare them to whats on the balance sheet. You will notice what items are included on the balance sheet such as the fixed assets, loan, equity and depreciation. This will help you place those items on the balance sheet.