Required Investment for Your Business

This chapter’s objective is to develop the amount of money you need to start or expand your business. That amount of money is the sum of two numbers:  the total dollars you developed from the Capital Spending Plan, and  the largest negative figure you developed on line 13 (Cumulative Net Cash) of the monthly Cash Flow Forecast. Make this calculation for your business. You’ll use this figure later, when you write your plan summary and spell out your need for funds to start or expand your business.

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For the M & M Copy Shop, the maximum negative cash flow of $4,500 was reached in the third month (assuming that future individual monthly cash flow figures continued to be positive figures). That is the amount of working capital that M & M Copy Shop needs to begin operation. Mickey and Michele add together the amount listed in their Capital Spending Plan to $4,500 to derive the amount of cash they need to open their business.

starts out high. That means her total cash investment will be limited to the amount from her Capital Spending Plan or $162,500. She chooses not to reduce that amount by subtracting any of her first year’s cash flow from the total so she can have a salary for herself.

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