1. BAEB501 : ENTREPRENEURSHIP
CHAPTER 9:
Financial Plan
© 2010 Cosmopoint

2. Chapter 9: Financial Plan
Topic Outlines
9.1 Financial Plan
9.2 Relationship Operating Budget and Financial Budget
9.3 Good Financial Plan
9.4 The importance of a financial plan
9.5 Process of developing Financial Plan
9.6 Components of Project Implementation Cost
9.7 Cash flow statement
9.8 Elements in Cash Flow
9.9 Elements in the Cash Outflow
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3. Chapter 9: Financial Plan
Learning Outcomes
 After completing this chapter, student should be able to:
 Explain the basic information of Financial Plan
 Understand the Financial in Entrepreneurship
 Apply the concepts learnt
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4. Chapter 9: Financial Plan
9.1 Financial Plan
 What is financial plan?
 A financial plan incorporates all
financial data derived from operating
budgets such as the marketing,
production (or operation) and
administrative budgets.
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5. Chapter 9: Financial Plan
9.2 Relationship Operating Budget and Financial Budget
© 2010 Cosmopoint Slide 5 of [11] Topics

6. Chapter 9: Financial Plan
9.3 Good Financial Plan
 Good financial plan may contain the following:
 Total project implementation costs
 Total amount of financing required and the
proposed sources of finance.
 Capital structure of the new firm
 Amount of depreciation on fixed assets
 Amount of loan and hire purchase repayments
 Cash inflow and outflow for the planned period
 Profit and loss at the end of the planned period
 Financial position at the end of the planned
period
 Financial viability of the proposed project
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7. Chapter 9: Financial Plan
9.4 The importance of a financial plan
 The importance is summarized as follows:
 To determine the size of investment example
the project implementation cost.
 To identify and proposed the relevant sources
of finance
 To ensure that the initial capital is sufficient
 To appraise the viability of the project before
actual investment is committed
 To be used as guideline for implementation
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8. Chapter 9: Financial Plan
9.5 Process of developing Financial Plan
 There are 7 steps involve:
1. Gather all financial input
2. Prepare the project implementation cost
schedule
3. Prepare the source of finance schedule
4. Prepare the cash flow statement
5. Prepare the income statements
6. Prepare the balance sheet
7. Perform financial analysis based on above
statements.
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9. Chapter 9: Financial Plan
9.6 Components of Project Implementation Cost
 There are four component involve:
3. Capital Expenditure
5. Working capital requirements
7. Other expenditure
9. Contingency cost.
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10. Chapter 9: Financial Plan
9.7 Cash flow statement
 The cash flow statement must be able to show the following
information:
3. Cash inflows – the projected amount of cash flowing into the
company
4. Cash outflows – the projected amount of cash flowing out of the
company
5. Cash deficit or surplus – the difference between cash flows and
cash outflows.
6. Cash position – the beginning and ending cash balances for a
particular period.
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11. Chapter 9: Financial Plan
9.8 Elements in Cash Flow
 The cash inflow is generally made up of the following:
3. Equity contribution in cash
5. Term loan
7. Cash sales
9. Collection of receivables
11. Sales of assets
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12. Chapter 9: Financial Plan
9.9 Elements in the Cash Outflow
 The cash outflow is generally made up of the following elements:
3. Operations expenditure
4. Marketing expenditure
5. Administrative expenditure
6. Term loan repayment
7. Hire purchase repayment
8. Purchase of fixed assets
9. Pre-operating expenditure
10. Payments for deposits
11. Miscellaneous expenditure
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