Technology Ventures: From Idea to Opportunity

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Budgets are not merely affairs of arithmetic, but
in a thousand ways go to the root of prosperity
of individuals, the relation of classes, and the
strength of kingdoms. William E. Gladstone
Summary
How do entrepreneurs describe the financial
elements of their new venture? Entrepreneurs
build a financial plan to determine the economic
potential for their venture. This plan provides
an estimate of the potential of the venture.
Technology Ventures From Idea to Opportunity
Chapter 17 Summary
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• Four Steps to Build A Financial Plan
• The Sales Forecast
• Time Frame Two or three years
• Assumptions about sales per customer, number of
  customers and growth rate of sales
• Calculation of the sales forecast
• 2. The Costs Forecast
• Assumptions about the costs of doing business in
  the specified time frame
• Calculation of the costs associated with the
  projected sales of Step 1.
• 3. The Income and Cash Flow Forecast
• Assumptions about the timing of cash receivables
  and payables specified in the time frame.
• Calculation of the income and cash flow
  associated with the projected sales and costs on
  a monthly basis over the time frame.
• 4. The Balance Sheet
• Assumptions about the starting value of cash and
  assets.
• Calculated based on the income and cash flows
  from Step 3.

Chapter 17Table 17.1
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Assets generate income and liabilities lead to
expenses. Net income is income minus expenses.
Chapter 17Figure 17.1
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Cash Flow is the amount of cash flowing into or
out a firm during a specific period. TC(N1)
(CF Disbursements) TC (N) Where TC(N)
Cash on hand at the end of the Nth month CF
Cash Flow into the firm in the Nth month
Chapter 17 Cash Flow
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Calculations of the Income Statement
Chapter 17Figure 17.2
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The Cash Flow Process
Chapter 17Figure 17.3
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Breakeven is defined as when the total sales
equal the total costs. R Q x P
TC FC VC and VC Qc Then Q x P FC
Qc Breakeven Q Where c Cost Per
Unit P Price Per Unit
Chapter 17Breakeven
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A sound financial plan demonstrates the potential
for growth and profitability for a new venture
and is based on the most accurate and reliable
assumptions available.
Chapter 17 Principle
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DVD Video Keeping a Financial Focus Gajus
Worthington (Fluidigm)
Technology Ventures From Idea to Opportunity
Chapter 17 DVD Video