Financial Management

1
Financial Management

• Guide to building a budget

2

• Are you going to have a
• Non-profit business
• For profit business
• Create a new public entity

3
NON-PROFIT BUSINESS

• Funding to get 501 (c) tax status
• Steps in meeting requirements to get 501 (c)
  started
• Grants
• Donations
• (Need a mix of grants and donations)

4
FOR PROFIT

• Funding - how will you pay for start up and cost
  of operations
• Loan Interest rates, collateral, terms
• Small business loan
• Conventional loan
• Business formation
• LLC
• Corporation
• Partnership
• Sole Proprietor

5
PUBLIC RECREATION

• Traditionally use tax money as their primary
  source of revenue
• User fees and other funding sources supplement
  taxation
• Grants
• Outsourcing?

6

• http//www.sos.ms.gov/business_services_business_f
  ormation.aspx business formation
• http//www.irs.gov/ taxes
• http//www.petfinder.com/admin-content/admin-501c3
  .html good resource for 501 (c) information
• http//www.irs.gov/publications/p557/index.html
  501 (c) information
• http//www.grants.gov/ grants available
• http//www.sba.gov/ small business association

7

• Major functions of financial management can be
  done through the executive summary
• Determine the scope and content of fiscal
  policies
• Obtain the best possible mix of financing
  alternatives

8
Executive Summary summarizes

• The Mission Statement  This explains what your
  business is all about. It should be between
  several sentences and a paragraph.
• Company Information  Include a short statement
  that covers the names of the founders and their
  roles, your number of employees, and your
  business location(s).
• Your Products/Services -- Briefly describe the
  products or services you provide.
• Financial Information  information about your
  plan for financing
• Summarize future plans  Explain where you would
  like to take your business.
• With the exception of the mission statement, all
  of the information in the executive summary
  should be covered in a concise fashion and kept
  to one page. The executive summary is the first
  part of your business plan many people will see,
  so each word should count.

9

• http//www.bplans.com/bakery_business_plan/executi
  ve_summary_fc.php

10

• What are your cost centers going to be?
• It will be difficult to create a budget for your
  business without organizing your expenses first.
  Start by making a list of everything you spend
  money on related to the business. Sort them by
  use, like utilities, payroll and advertising,
  then itemize specific spending allotments.

11

• Some expenses have a fixed rate, like costs for
  mailing regular shipments to a long-term client,
  while others, like utilities, will vary from week
  to week or monthly. Categorize these expenses
  separately in your budget. It will be easy to
  budget amounts for fixed expenses first, whereas
  variable amounts will require more budgeting
  savvy.

12

• Your budget will be partially based on your
  projected or estimated income. Be realistic and
  rational when you determine this number.

13

• Input unchanging expenses such as rent, loan
  payments or pre-paid costs for "Fixed Expenses"
  and changing expenses such as utilities,
  supplies, etc. for "Variable Expenses." Determine
  budgeted expenses by averaging past expenses in
  each category. 

14

• Insert your forecasted income from earnings and
  any other expected revenue sources under the
  "Budgeted" subheading for "Income.

15

• Mortgage or rent on the office
• Payroll expenses (salaries, benefits, etc.)
• Utilities
• Insurance
• Office Supplies
• Marketing and advertising
• Inventory
• Maintenance costs
• Taxes and legal fees
• Interest on money owed
• Janitorial supplies
• Misc

16

• http//www.prm.nau.edu/prm426/sample_line_item_bud
  get_format.htm
• http//bizfinance.about.com/od/businessbudgeting/a
  /budget_wksheet.htm