Joseph Fabiilli : Do You Know about Personal Financial Statement

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Do You Know about Personal Financial Statement
Joseph Fabiilli
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Startup Costs

• You need to be sure you have all expenses
  accounted for.
• Examples
• Equipment and Supplies
• Furniture and Fixtures
• Vehicles
• Remodeling
• Legal and Accounting Fees
• Licensing Fees

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Personal Financial Statement

• In order to determine if you have the resources
  to finance your business, begin by assessing your
  Net Worth (or equity).
• Net Worth is the difference between what you own
  and what you owe (assets vs. liabilities).
• To do this you should prepare a personal
  financial statement.

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Generating Capital

• There are two ways to generate capital for your
  business
• Equity financing
• Debt financing
• First you must calculate your debt to equity
  ratio.
• The relation between dollars you have borrowed
  (debt) vs. the dollars you have invested (equity)
• Total Liabilities Total Equity
• A high ratio means company has been funded
  through debt (red flag)
• Low ratio means company was financed through
  equity

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Equity Financing

• Equity Capital money invested in business in
  exchange for a share in the profits of the
  business.
• Places to gain equity capital
• Personal Contributions
• Friends and Relatives
• Venture Capitalists
• Individuals or companies that make a living
  investing in startup companies
• They look for companies who make above average
  profits, have a chance of making hundreds of
  millions within a few years, and are likely to go
  public
• Not a solid option for small business because of
  above criteria.

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Debt Capital

• Debt Capital is money loaned to a business with
  understanding that money will be paid back with
  interest.
• Friends/Relatives
• Banks

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Bank Loans

• Secured Loans loans backed by collateral
• (property that a borrower forfeits if he/she
  defaults on loan).
• Types of loans
• Line of Credit
• Long-Term Loan
• Accounts Receivable Financing
• Inventory Financing

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Be Ready

• A bank may decline you for a loan for these
  reasons
• Business is a startup
• Lack of solid business plan
• Lack of experience
• Lack of confidence
• Inadequate personal investment

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Other Sources of Loans

• Small Business Administration (SBA)
• Small Business Investment Co. (SBIC)
• Minority Enterprise SBICs
• Department of Housing and Urban Development (HUD)
• Economic Development Admin (EDA)
• State Governments
• Local Municipalities

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Pro Forma Financial Statements

• The financial statements you prepare for your
  business plan are called pro forma financial
  statements and are based on projections.
• They consist of
• Cash Flow Statement
• Income Statement
• Balance Sheet

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Cash Flow Statement

• Definition An accounting report that describes
  the way cash flows in and out of your business
  over a period of time
• Show how much cash you have to pay bills and
  whether you have enough to continue operating.
• Equation
• Cash Receipts Cash Disbursements Net Cash Flow

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Thank You