uses of funds business plan

Capitalization | Sources and Uses of Funds

What is a sources and uses of funds section in a business plan, a sources and uses of fund section is a summary of how much money will be required for startup expenses and operating capital, and where you expect that money to come from..

The sources and uses of funds section of a business plan is an important financial component that outlines where the funds for the business will come from and how they will be used. This section typically includes information on the business’s funding requirements, the sources of funding that have been secured or are being sought, and a detailed breakdown of how the funds will be used to support the business’s operations and growth. It is important for a business to have a clear understanding of its funding needs and how the funds will be used in order to attract investors and secure financing.

The level of detail in the sources and uses of funds section of a business plan can depend on the intended audience and purpose of the plan. For example, if the plan is being used to attract investors or secure financing, it may need to be more detailed and include specific numbers and projections.

In this case, the section should include spreadsheets or tables that clearly show the funding requirements, sources of funding, and detailed breakdown of how the funds will be used.

If the plan is being used as an internal tool for current investors or the board, it may be more high-level and not include as much detail. It should still however, provide a clear overview of the funding needs, sources and usage of funds.

As a best practice, it’s always a good idea to include financial projections in the form of spreadsheets or tables, this way the audience can see the financial viability of the business, in a clear and easy-to-understand format.

Why the Sources of Uses of Funds Section is Vitally Important

Many entrepreneurs and business owners rely far too much on intuition and positive expectations. “I’m not an accountant” is not a good enough reason to forego having an understanding of the basics of cash flow. Of all the traditional financial statements including the balance sheet and income statement, a reliable cash flow statement is most important. The sources and uses of funds section of your business plan is in effect a high-level cash flow statement for investors. The primary purpose of fund statements is to demonstrate that the business will have sufficient capital to start, grow and thrive.

Your company’s financial health is critical to investors and the use of funds document is a simple financial statement they’ll expect to see.

If Charles Lindberg or Emelia Earhart came to a group of equity investors or providers of debt financing, they probably would have known very little about transatlantic flying, particularly since it had never been done. But the business minds would have quickly converged on the sources and uses of funds statement. The investors would want to know that the funds statement accounted for sufficient capital to build the plane and fly it across the ocean. After all, who would want to provide funding to get a plane halfway across the ocean?

Now, this a light-hearted way to talk about a funds statement, but it makes the point: Your sources and uses of funds statements will ensure that you have thought through the business requirements and are raising sufficient capital to get your business to the next investable milestone or profitability.

Creating Your Statement of Sources and Uses of Funds

The various sections of your business plan spell out how you will go about finding new customers, creating products and services they need, and building your business. The details regarding the costs and revenues from your “word plan” make it to the “numbers plan” in the financial section. So, what’s left?

This section on Capitalization and Use of Funds summarizes how much money will be required for startup expenses and operating capital, and where you expect that money to come from. Show your financial needs for a minimum of one year into the future, or until your business will become cash-flow positive, whichever is longer.

Business Plan Outline for Capitalization and Use of Funds Should Include:

Use of Funds

Startup Costs

Working Capital

Sources of funds.

Owner’s investment

Debt or senior debt (from lenders)

Equity (from investors)

Important Considerations

This section of your business plan is intended to provide an overview of the funds your business will require. The specific details regarding terms for investing in your company must be in a separate document, which will be governed by specific legal guidelines. By law, securities can be offered for sale or solicited only by a private placement memorandum, which is a formal legal document.

Start with the Use of Funds Section

The Use of Funds section of your business plan must include all of the costs required as well as the capital to sustain your business until it becomes cash-flow positive. The initial costs are those costs required to open the business. Working capital is the money it takes to pay your bills (including labor) until your business is generating sufficient cash to fund itself. Your financial projections (Section 9) will have taken you through the hard work required to arrive at these numbers.

A simple table or spreadsheet should be used to show your use of funds or costs. Summarize costs into major categories. Customize the example below for your business. Most importantly, include all expenses that are listed on your financial statements.

For the working capital number, look at your cash flow statement. If you had no funding whatsoever, how much money would your business consume before it starts to turn a profit or become cash-flow positive? That’s how much working capital your business will need, plus a contingency fund.

The example below is meant to be easily understood and is modeled around a startup business. It also includes rolled up numbers at a high level. It is okay to present your numbers in this manner, so long as you have the detailed version –that totals to the same amounts- if asked.

Sample Start-up Costs

Office Build-Out     $12,000

Prepaid Rent     $ 4,000

Office Equipment     $ 6,000

Grand Opening     $ 3,000

90-Day Ad Campaign  $ 5,000

Website Design   $  2,000

Administrative Costs

Insurance     $2,000

Fees & Permits    $ 1000

Miscellaneous Startup Costs, $15,000

Total Startup Costs     $50,000

Annual Salaries for 3 employees $300,000

Contingency capital funds $50,000

Total W/C      $350,000

Total Use of Funds      $400,000

Let’s start with the obvious. The sources of funds needs to meet or exceed the use of funds from the section above.

Now that you have laid out the financial needs of the business, where will that money come from? Ideally, at least some of that will be coming directly from you. Perhaps you’ll even include a “family and friends” round of investment. The balance will be the amount you need to bring in either as loans or outside investments. Customize the example below to your business.

Sources of Funds Table

Owner’s Cash Investment $50,000

Family and Friends Investment (Equity) $20,000

Loan Sought $330,000

While you don’t have to include it in your business plan, you should be prepared to talk about your collateral, or how you will guarantee that the lender will be repaid. Most financial institutions require a primary and secondary source of collateral. This topic is covered in the section titled, Exit Strategy or Payback Analysis.

Many people think about the balance sheet and income statement as the most important financial statements. It’s the cash flow statement that tells most about the company’s financial health and ability to continue. The “sources and uses of funds” section of your business plan is a means of looking ahead at the cash flows of the business – both incoming and outgoing – to determine how much cash you’ll need to raise.

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A solid business plan is one of the most important documents you’ll need to create for your company. This document provides a roadmap for your company’s future developments. However, no growth can occur without a sufficient amount of working capital. That’s why your business plan should include a source of funds section – it can remind you how to maintain the cash flow your company needs.

There’s another reason this part of your business plan matters. It can show certain lenders how much money you need beyond what the funding sources in your business plan can get you. That said, not all lenders will require you to share a business plan. For example, SmartBiz’s loan approval requirements don’t include business plans among the necessary paperwork. Either way, below are some source of funds examples in business plans.

What is a business plan?

A business plan is a document that guides your company’s growth. It helps define your business goals and provides a clear overview of how you’ll achieve them. You can also use it to plot out your marketing, operational, and sales approaches. Your business plan can be the foundation of a strategy to minimize risk and maximize growth.

Another reason why solid business plans are essential is that you’ll often need to provide them as you apply for business loans. Business plans provide an in-depth look at a company’s plan for profits, so lenders can more easily judge the borrower’s likelihood of repayment. Lenders are much more likely to finance borrowers whom they believe can pay back the loan amount in a reasonable timeframe.

8 source of funds examples

Having a source of funds – sometimes several sources of funding – is vital to growing your business . Common funding options include business loans, and sometimes, to qualify for them, you must show lenders your other funding sources. Understanding the below source of funds examples in business plans can help you better structure yours.

1. Personal savings

When you’re just getting your business off the ground, sometimes, the fastest way to fund it is directly from your current savings. However, entwining your personal savings into a company that could fail is a risky prospect – but it also shows commitment. Lenders and investors often respond well to a borrower who’s ready to go the distance with their ideas.

2. Money from friends and family

Money from family and friends, which you’ll also see called “love money,” is a viable source of funds in your business plan. However, just as it’s risky to get your own money wrapped up in a business, it’s dangerous with other people’s finances too. Plus, accepting money from a loved one can come with drawbacks. For starters, not everyone in your life has much to spare in the first place. Furthermore, if you borrow money from friends or family and you can’t repay it, the relationship could be damaged.

3. Federal and private grants

Occasionally, your business model can put you in line for federal grants. That said, rare is the business that qualifies for federal grants – technically, the government does not provide grants for small businesses growth. However, private companies ranging from FedEx to the NBA offer grants to small businesses that fit certain criteria. If there’s a chance your company could fit these criteria, you can include private grants as sources of funding in your business plan.

4. Share sales and dividends

Selling shares of your company to investors – as in, anyone who buys stocks – falls under a category of funding known as equity financing. This arrangement can be lucrative, which is a main reason why you see so many companies having initial public offerings (IPOs).

However, equity financing has a few drawbacks. For one, you’ll no longer have complete control over your company's future, as stockholders dilute your ownership. Additionally, you’ll have to account for dividends in your financial planning. You pay these sums to your shareholders every quarter.

5. Venture capital

If you need a large amount of cash, venture capitalists can be a viable option. Typically, though, venture capitalists are only interested in funding startup businesses in the tech sector with high growth potential.

Venture capital is a high-reward but high-risk funding source. It often requires you ceding a certain amount of ownership – and thus control – of your business. Furthermore, if your business fails, you may still need to repay any venture capitalists or firms that have funded your operations.

6. Angel investors

An angel investor is a wealthy private individual who invests in small businesses to help them get off the ground. They tend not to offer as much starting capital as a venture capitalist, but they can make up for the smaller amount with experience. Angel investors are often experts within a specific industry and put money back into it by investing in newer businesses within that sphere.

Although you’ll have to give an angel investor some control over your company, their experience and network can help your business grow. Additionally, the word “angel” in their name reflects that they typically don’t ask for their money back if your business fails. That makes them a safer bet than venture capitalists.

7. Business incubators

Unlike the previous funding options, a business incubator doesn’t offer direct monetary support. Instead, incubators help fledgling businesses thrive by allowing them into their workspace and letting them share resources as they get started. This type of funding is indirect – you’ll rarely get direct cash infusions, but you’ll get resources that would otherwise cost you money. It’s common in high-tech industries such as biotechnology, industrial technology, and multimedia.

8. Bank loans

Bank loans probably ring a bell for you. When a current or aspiring small business owner needs additional funds, these loans are often the first thing that comes to mind. They’re among the most in-demand funding options available given their large funding amounts, long-term repayment periods, and low interest rates . However, their high amounts introduce lender risk that can make them difficult to obtain. To minimize risk, most lenders impose strict qualification criteria that you might not make.

Why do you need to provide sources of funds in your business plan?

Providing a source of funds in your business plan paves a path toward obtaining and using your funding. Knowing where your money is coming from and what you’re spending can help with strategic financial planning. It also minimizes the chances of your business partners spending money the company doesn’t actually have.

In a lending context, your sources of funds may help you qualify for any loans you need in the future. Depending on the funding sources you’re using, lenders may view you as someone able to repay the debt financing they offer. For example, using personal savings shows your commitment to your business, meaning you’re likely a reliable borrower who won’t flake on a loan. You’ll show your commitment to your company and your business at the same time.

Parting thoughts

Reliable funding sources are essential to achieving your company’s objectives, and their presence in your business plan can help you obtain more funding. Namely, certain entities that offer small business loans require business plans as part of the borrower approval process. When your approval plan clearly shows why you need the loan money and how else you’re getting funding, lenders may trust you more.

However, certain lenders don’t require business plans. In fact, when you apply for SBA 7(a) loans , bank term loans, or custom financing through SmartBiz ® , you don't need a business plan. Check now to see if you pre-qualify * – the business funding you need might be closer than you think.

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Key Considerations of the Sources and Uses of Funds Statements

Free Startup Fundraising Checklist

Rudri Mehta

• January 2, 2024

A flow of funds statement is a document created to examine the factors that led to changes in a company’s financial position between two balance sheets . It displays the movement of money in and out, i.e. funding sources and applications for a specific period.

In other words, the source and uses of funds statement explain where a company’s money came from and how the organization has put it to use in the past and how they will use the funds in the future. It is also one of the business plan elements.

It contains the cash inflows into the company, the cash received, the cash outflows from the company, or the money spent.

So, what purpose does it serve?

Mostly, lenders will ask for these statements when you apply for a  business loan . It will also help investors understand where the funds have been used.

If sources and uses of funds statement are accurately prepared, it can communicate well with the readers, and hence, it is quite crucial to prepare compelling sources and uses of funds statement.

This article explains the sources and uses of funds statements and the step in creating the statements with examples.

Table of Contents

What is the Sources and Uses of the Funds Statement?

Steps to create the sources and uses of funds statement, sample sources and uses of funds statement.

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A company’s sources and uses of funds is a statement that provides information on how much did the company raise the money and how they were applied to achieve the company’s goals.

The sources and use of funds statements reflect the impact of changes in the balance sheet contents on the organization’s cash-in-hand. These are the statements that also guide organizations in their short-term planning decisions that involve available funds.

These statements are widely used for

• For business loan purposes,
• Attracting investors, and
• Predicting the impact of changes in the balance sheet

The Sources and Uses of Funds have two parts,

• The first part is the sources from which the company gets its funds, and
• The second part is the uses, applications, or spending of the money

Let’s understand both sections of the statement in detail.

Uses of Funds

It generally consists of the following components:

1. Money Required for Operational Activities

Organizations will need cash and working capital to run the business and perform day-to-day activities.

2. Opening Quantities of Supplies, Equipment, and Furniture

The opening balance of the supplies, equipment, and furniture tells us where the organization has already spent its money.

3. Purchase of Land and Building

The amount spent on acquiring land and building for business use is a huge  capital expense  and results in cash outflow.

4. Initial Startup Costs

These costs include rent, deposits paid for the rented building/apartment, machinery acquisition costs, initial payments for insurance, company setup costs, etc.

5. Other Working Capital Needs

These include other operating costs such as the rental expenses of the leased machinery, repairs and maintenance expenses, outsourcing costs, etc.

Sources of Funds

Hence, the sources of funds also include the money your investors have given to you.

Below are the other elements of the sources of funds for most businesses.

1. Owner Contributions

Owners of the businesses bring specific amounts of capital to start the company and they also contribute more capital as and when needed from time to time.

2. Sales of Stock

It includes the sale of  finished goods  and any other inventory that will not be used by the company.

3. Sales of Assets

The assets that the companies sell due to the discontinuance of some of the operations or assets becoming non-operatable are another source of funds.

4. Cash Income

Any other cash income generated from the sale is also considered one of the sources of funds.

Funds statement’s uses

The following are prominent uses of funds:

• Adjusting operating net loss
• Purchase of non-current assets
• Repayment of either long-term or short-term debt , such as bank loans (debentures or bonds)
• Redeemable preference share redemption
• Payment of dividends in cash

One of the essential tasks of an organization in preparing the financial statements  of the company would be to prepare the sources and uses of funds statement.

It is because the statement reflects the efficiency of the business in depicting how effectively funds were utilized from the available sources. Even if you want to fund, then you will need these fund statements in your business plan. If you are not aware of that, then worry not, visit our business plan app .

The uses of funds section are prepared first, and then the sources of funds.

Let’s learn how to prepare the uses of funds section of the sources and uses of the fund’s statement.

Steps to Create Uses of Funds

• Note down all the costs included in the uses of funds, such as plant and machinery, initial startup costs, suppliers and marketing expenses, and other working capital costs.
• Add all the numbers and make a total to name ‘total of startup costs’ as shown in the example below.
• The capital costs required for purchasing the buildings, machinery, and vehicles and
• The working capital requirements to fund day-to-day operations.

While generating the uses of funds statement, focus on all the needs for the smooth and profitable functioning of the business rather than on the sources of funds.

Steps to Create Sources of Funds

• This section lists all the sources of funds, depicting where the money has come to fund the business.
• List the contributions received from the owners and the investors.
• Write the security that you offer for the loan you wish to secure.
• Any other sources of funds that you can use to fund the business in case you cannot pay the loan?
• It is also advisable to include all details concerning the contribution particulars.

While preparing the statement for sources and uses of funds, please note it has to be simple, and easy to understand. If you complicate the statement by adding difficult terms or complex numbers, readers may misinterpret the statement and you may lose a potential investor or a bank loan.

Statement of Sources and Uses of Funds:

The Bottom Line

As you  grow your business , you may need more funds to meet the business expansion costs, and hence, it is important not only the startup companies but the well-established businesses as well to craft a compelling statement of sources and uses of funds.

How Can We Help?

We can help you prepare the statement of sources and uses of funds faster and more accurately along with other reports such as  financial statements , and ratio analysis  to help you better understand the financial position of your company.

Request your free demo at  Upmetrics  ~ a business plan app to input only the minimum elements so that we can compute it for you.

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Frequently Asked Questions

What are the factors to be considered in choosing the source of funds.

• Tax benefits
• Flexibility & ease
• Purpose & time period

What are the 2 most important sources of funds?

• Equity shares
• Retained earnings

What is the importance of the sources and uses in the fund flow statement?

An organization’s working capital movements are described in a flow of funds statement. It takes into account the inflows and outflows of money (the sources and uses of money) throughout a specific period. The statement aids in analyzing how the financial situation of a company has changed across two balance sheet periods.

What are the uses of the funds flow statement?

Thus, the funds flow statement help in locating liquidity blockages and in formulating an efficient dividend policy. This declaration also acts as a company’s financial road map. It highlights the monetary difficulties that an organization can have soon.

About the Author

Rudri is a passionate financial content writer and a Chartered Accountant by profession. She enjoys sharing knowledge through her writing skills in finance, investments, banking, and taxation while also exploring graphic designing for her own content.

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Building a Strong Business Plan with the Use of Funds Slide

September 26, 2023 / Blog

A well-structured business plan outlines a business’s vision, mission, and strategies, providing a roadmap to success. However, one pitch deck slide that often stands out for investors and lenders alike is the Use of Funds slide.

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Let’s explore why a business plan is essential , what the Use of Funds slide entails, and how to make it an asset that propels your business forward.

The Role of a Business Plan

Before diving into the specifics of the Use of Funds slide, let’s take a moment to understand the broader role of a business plan. It’s not just a document; it’s the blueprint for your business’s future. A well-crafted business plan:

• Defines Your Vision : It lays out your business’s purpose, mission, and values. It clarifies what your company stands for and where it’s headed.
• Attracts Stakeholders : Investors, lenders, and partners often require a business plan before committing their resources. A solid plan can captivate their interest and support.
• Guides Decision-Making : It’s your compass for making informed decisions. From marketing strategies to financial projections, your plan ensures you stay on the right track.

Understanding the Use of Funds Slide

The Use of Funds slide offers a snapshot of how you intend to allocate the capital you seek . It’s not just about stating the sum; it’s detailing where every dollar will go.

What Is It?

The Use of Funds slide is a visual representation of your financial strategy. It succinctly outlines how much money you need, what you’ll use it for, and over what timeframe.

Why It Matters

This slide is a make-or-break element of your plan. Investors want to know that you will put their investment to good use—and this slide tells them precisely that.

The Use of Funds slide is typically in the early parts of the financial slides, right after your funding requirements. It sets the stage for the nitty-gritty financial details that follow.

Components of a Strong Use of Funds Slide

A compelling Use of Funds slide isn’t just about numbers but displaying clarity and precision. Here are the key components you should include:

• Funding Allocation : State clearly how much capital you’re seeking. Be specific. Investors appreciate a precise figure.
• Purpose of Funds : Detail what the money will be used for. Whether it’s product development, marketing, or hiring, be specific about your intentions.
• Timeline : Investors want to know when they can expect to see returns. Include a timeline indicating when the funds will be deployed and when results are anticipated.

Clarity is Key

Avoid vague or ambiguous language . Make it easy for anyone reading the slide to understand where the money is going.

Aligning the Slide with Business Goals

Your Use of Funds slide shouldn’t operate in isolation. It should seamlessly align with your broader business goals and strategies. Here’s the reason why alignment matters:

• Credibility : When your Use of Funds slide harmonizes with your business strategy, it instills confidence in investors. They see that you have a cohesive plan for success.
• Supports Strategy : Ensure that the allocation of funds supports your overarching business strategy. If you’re emphasizing growth, allocate funds accordingly.
• Transparency : Investors appreciate transparency. They want to see a logical connection between the capital you’re seeking and your business’s goals.

Addressing Risk and Contingency Planning

Investors are savvy individuals. They understand that risks are inherent in business. Thus, addressing risks in your Use of Funds slide demonstrates foresight and a willingness to adapt.

Risk Mitigation

Alongside the allocation of funds, consider including how you plan to mitigate risks . For example, set aside a portion of funds as a contingency for unforeseen challenges.

Contingency Plans

If your business faces a particular risk, such as supply chain disruptions, mention how you’ll navigate these hurdles using the allocated funds.

The Use of Funds slide is a pivotal element within your business plan, captivating investors and ensuring the alignment of financial strategies with broader business goals. By crafting a clear, precise, and well-thought-out slide, you set the stage for attracting support and achieving success in your entrepreneurial journey.

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The Sources & Uses of Funds Spreadsheet: What You Need to Know

by Diane Tarshis | Financials

If you’re not a numbers person, I recommend reading or listening to Financial Projections Explained (Even If You’re Not a Numbers Person) and The Difference Between P&L and Cash Flow Projections before reading this article.

• How much money do you really need?
• What will you be spending that money on?
• How, exactly, are you coming up with that number?

Even if you’re bootstrapping, you’re not off the hook.

Answering these questions helps to ensure that you have enough access to cash (also known as working capital or liquidity) to keep your business afloat until you become what I call “reliably profitable.” I say “reliably” because a single month or quarter isn’t enough time to guarantee that you’re on solid enough financial footing to be self-sustaining.

Where to start…

To answer these questions, you first need to build realistic financial projections using the standard spreadsheets I covered in Financial Projections Explained (Even If You’re Not a Numbers Person) . Specifically, you’re going to need the Sources & Uses of Funds.

• All the cash coming into your startup from loans, investments and grants (and from whom)
• How you plan to use that cash (by type or category)

The Sources & Uses of Funds will not only provide this information, but just as importantly, show that you’ve done your homework, which is a fantastic way to make sure you’re taken seriously. Gold star for you!

Why this spreadsheet is different from the others.

When you look closely at the 5 main spreadsheets startups use for their financial projections, you’ll see that the Sources & Uses of Funds is different from the all the others in one important aspect:

It’s the only spreadsheet that relies on information from other spreadsheets.

Specifically, you need to complete your Cash Flow Projections and Equipment List first. Then you can begin work on your Sources & Uses of Funds.

So let’s go over what you need to know to build this spreadsheet the right way, so you’ll have all your ducks in a row when you start asking for money.

First off, avoid this common mistake.

An unfortunate but common error many entrepreneurs make is including startup costs * in their profit and loss (P&L) and cash flow projections. Doing this is a problem because it distorts your financial picture.

The P&L relies on your estimated revenues and expenses to show your startup’s profitability, whereas cash flow projections rely on those same estimates to show your startup’s ability to pay its bills. Both are essential tools when it comes to setting your prices as well as budgeting. Including startup costs in these spreadsheets will throw your financial picture out of whack because they’re not part of your daily operations.

For example, money received from investors or other funding sources is not revenue. In fact, funding has nothing to do with measuring sales, which is what revenue is meant to show. And startup costs, such as building your website, buying a delivery van or hiring a consultant to write your business plan, have nothing to do with your daily operating expenses.

* When I refer to startup costs, I mean the one-time expenses you incur before you begin your normal daily operations.

Here’s what the Sources & Uses of Funds tells you:

Done right, a Sources & Uses of Funds will show you how much cash you’re going to need to:

• Launch your business.
• Cover your expenses until your startup is generating enough cash to cover its own expenses… or reach the next round of funding.
• Raise from investors, borrow from lenders or budget for yourself if you’re planning to bootstrap.

What goes in the “Sources” section.

In the Sources section you’re going to list everyone who is providing the startup funds that you need. Regardless of whether you’re planning to find outside investors, secure a loan, use your own money or some combination, this part of the spreadsheet has to show all the sources of funding for your business.

You’ll need to list each one on its own line, including the source’s name along with the amount they are investing or loaning to you.

Founder Contribution: Suzy Q.                         $xxx Founder Contribution: Andre M.                       xxx Investment from Tony Smith:                              xxx Investment from XYZ Ventures:                        xxx Total Sources:                                                           $xxx

When you’re completing this section, make sure not to leave out anything, including money coming from friends, family, co-founders or yourself, if you’re using your own money.

After each source is listed, you’ll total them up to determine the sum of all incoming funds. Then you’re ready to move on!

What goes in the “Uses” section.

The Uses section includes two different categories:

• Startup costs
• Working capital

1. Startup costs.

In the first category, you need to consider all of the expenses you’ll incur before you launch your business. This includes things like a website, furniture, equipment, legal fees, consultant fees, grand opening expenses and more.

Each category should be listed on its own line of the spreadsheet. For example, you’ll have one line for furniture, one for equipment, one for consultant fees and so on.

Reminder: If you need to purchase equipment for your startup — things like machinery, display cases, a delivery van, etc. — you’ll need to create a separate Equipment List spreadsheet where the individual items are listed in detail, along with delivery and installation fees, sales tax, etc. Then you put that total in the Uses section.

App Development                                                    $xxx Business Plan                                                                 xxx Equipment                                                                       xxx Legal                                                                                    xxx Grand Opening                                                             xxx Inventory/Supplies                                                    xxx Website                                                                            xxx

Cash Needs for 17 Months of Operations   xxx Cash Reserve for Contigencies                          xxx Total Uses:                                                                  $xxx

Now we’ll look at the next thing you have to account for in the Uses section…

2. Working capital.

This category refers to the amount of cash you’ll need to bridge the gap until your business is generating enough cash to fund itself and become self-sustaining.

This number will appear as its own line item labeled “Cash Needs for ___ Months of Operations.”

Of course, to figure out how many months it will take to become profitable, you’ll have to refer back to your Cash Flow Projections. That’s why you need to prepare them before tackling your Sources & Uses of Funds.

To estimate when your business will be “reliably profitable,” take a look at the bottom two lines of your Cash Flow Projections spreadsheet. They show the cumulative beginning and ending cash on hand each month.

Find the month when the negative numbers become consistently positive. However many months it is from when you start your business, that’s the number you’ll use to fill in the blank of “Cash Needs for ___ Months of Operations.”

Finally, I recommend adding an additional line labeled “ Cash Reserve for Contingencies . ” It’s always smart to have a small cushion to cover any surprises that crop up.

Two important points about the Sources & Uses of Funds:

1. the totals have to match..

In other words, Total Sources needs to equal Total Uses. This isn’t my rule, it’s an accounting rule.

If there’s a significant difference between Total Sources and Total Uses, then there’s something important missing in one of the sections. It’s important for you to find and fix any discrepancies.

It’s especially important to do this before showing your numbers to other people. If your Total Sources and Total Uses don’t match up, it’s a red flag to banks and potential investors that you don’t understand your financials.

If, on the other hand, your two totals are close but not exact, I tweak the Cash Reserves line item slightly — and I do mean slightly — to make the numbers match.

2. Double-check that your financial projections are realistic and credible.

You’ll know you’ve done things right when you’re confident that you can defend your assumptions if an investor or banker dives in and asks how/where/why you chose the numbers you did. Pro Tip: It’s not really about the numbers per se, it’s about the thinking behind the numbers that they’re testing you on.

Helpful reading and resources.

For more information on the financial spreadsheets mentioned in this article, take a look at my DIY Business Plan Kit . It goes into far greater detail on the five main spreadsheets you need for your business plan, and includes Excel templates with some formulas already built in.

Also take a look at The Difference Between Profit & Loss and Cash Flow Projections to get a better understanding of how each of those spreadsheets works. And if all of this numbers talk is new to you, be sure to take a look at Financial Vocabulary for People Who Hate Numbers .

Last but not least, if you’d like help putting together your financial projections — as well as learning how to use them so that you can take charge and feel comfortable changing things as you move forward — consider working with me one on one ( see more details here ).

Want some one-on-one help?   Book a free discovery call.

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How to Manage Business Loans After You Receive Funding

Posted june 9, 2021 by diane gilleland.

So you landed some funding for your business. You finished writing a solid business plan and used it to apply for a small business loan, or perhaps you made a successful pitch to investors . Either way, congratulations!

Now comes, possibly the more difficult part of receiving funding, managing it. 

The importance of managing your business finances

Consider this: When you wrote your original business plan, there were things you didn’t know. It’s true for every entrepreneur . No matter how much expertise you have in your field, there are always aspects of running a business that you won’t understand in advance.

This is completely fine because you’ll learn as you go. But that learning needs to be captured and acted on quickly, so your company can stay solvent. And this is where doing more use of funds reporting can really help you—not from a planning standpoint, but from a management standpoint.

The more you know about how your business is performing, the more you review and revise expectations, the better prepared you’ll be to take strategic action. 

4 steps to manage small business finances and strategically use your funds

We’ll dive into specific funding scenarios later on in this article, but for now, here are the 4-steps you should take to better manage the cash you received.

1. Compare your forecasts to actual performance

Similar to how you don’t have all the answers regarding how you’ll actually spend funding before launching your business, your other projections likely aren’t perfect. Forecasting isn’t about seeing into the future, but making educated guesses regarding financial performance, market factors, and customer interest. And when you’re a virtually new business, you’re typically basing these assumptions off competitors or industry benchmarks, not previous sales or cash flow data.

So, rather than working off of outdated assumptions, the best thing you can do is compare your forecast to how your company actually performed . Doing this on a monthly basis helps you quickly identify where real-world sales and costs deviated from your projections. 

With LivePlan’s Live Forecast™ feature , you can make these adjustments with a single click and start your analysis directly within your Profit and Loss Statement. This allows you to spend less time updating your forecasts, and more time exploring what changes you should be making based on actual results.

2. Adjust your forecast

The other piece of comparing your forecasts to actual performance is revising your forecasts with actual sales data. We call this adjust to actuals, and doing this practice regularly ensures that your upcoming projections are always more accurate than the last. This ensures that you won’t be surprised by dips in sales, a lack of cash, or not having enough supply to satisfy demand.

3. Review your cash runway

Part of revising forecasts based on actual performance is looking at your cash burn rate and understanding your cash runway. These metrics tell you how quickly you are using up your funding and how long you have left until it potentially runs out. You’ll want to look at your projected cash flow statement to fully understand how solvent your business is in the coming months.

4. Make a plan and set milestones to bridge that money gap

Keep in mind that, especially for startups, you’ll probably be looking at a hefty burn rate and negative cash flow in the first few months. That’s perfectly ok, but you want to be sure you have milestones in place for when you need to see your cash intake flip to positive. Otherwise, you’ll keep on burning through cash thinking it’s perfectly fine until it’s too late.

This is when you should revisit your overall business plan once again, and revise or adjust any initial milestones you have. Just like forecasts benefit from adjusting to actual results, your overall strategic plan does as well. You’ll want to consistently revisit elements of your plan over time and keep them up to date. That way it can be used as a management tool rather than just a static plan that helped you get funding.

Tips for managing your small business finances

Having a system in place to manage your finances is an excellent first step. Putting it into action can be a bit difficult at first, so here are some additional tips to help make it a consistent process.

Start with your business plan

When you built your business plan , you likely included a section that explained how you plan to use the money you requested from lenders or investors.

This probably looked like a report on “use of funds” (or “use of proceeds,” as it’s sometimes called). It’s a standard part of writing a business plan to get funding. A use of funds report is a simple statement of why you need the funding and how it will help your business.

Since there are so many ways to use funding (purchasing equipment or other assets, adding staff, expanding marketing, and so on), a use of funds report can take the form that best meets your needs. It might be a spreadsheet, a forecast, or simply a few paragraphs of text.

And now that you have that cash in hand, it’s tempting to think that your business plan has done its job, and now all you have to do is use the money. But many entrepreneurs fail because of this exact belief. They haven’t quite thought through all the ways their original plan will probably change over time, or how to manage their funding while they navigate these changes.

Revisit and revise your forecasts and strategy

Peter Gregory, chairman, and CEO of Green Energy Corp currently uses LivePlan to do strategic planning, use of funds management, and reporting. He is a vocal advocate of doing the process we just walked through early and often.

“If you spend the last 10 minutes of every day looking at your actuals and updating your forecast , then you can get your monthly reporting done in as little as 10 minutes,” says Gregory. “If you wait three months to check in with your numbers, then it’ll take more like four hours to build your report. If you wait a year to look at your numbers, you’ll spend three months coming up with a report.”

“It’s a little like cleaning the shower —if you do it often, it’s no big deal. Wait a year to do it, and you’re going to have to hire a contractor to come rip out your shower.”

Prepare for positive and negative outcomes

As Peter Gregory says, “Keep in mind that good news, as well as bad, can affect your cash flow.” A large, unplanned expense can cause you to run short of cash down the road. But a large, unplanned revenue event creates an opportunity to invest in growth. Either way, the sooner you know what’s happening, the more effectively you can react. By staying in touch with your forecast in this way, you’ll be much better able to see your future.

The cash flow statement, then, becomes a kind of crystal ball. If your forecast is up to date, then you’ll be able to see, on the bottom line, exactly when your cash will dip into the negative:

These are the months when you’ll plan to use your line of credit, and now you can see the amount you’ll be using. With this visibility, you can plan your spending effectively. Not only that, you’ll be able to see what funding you might need a year from now, and that gives you time to find it.

The worst moment to discover that you’re running out of cash is the moment when you’re actually running out of cash.

Stay on top of anything associated with your funding

Aside from the internal management of your funding, you’ll need to be aware of and effectively track some external factors as well. These may be directly tied to your funding, or are elements that can affect your business due to bringing on debt. Here are a few additional things to consider:

Keep track of your credit

Depending on the type of funding that you acquire, it can have an impact on your business credit score . A loan or line of credit specifically, will either add a new amount of debt to your credit report or increase the amount of available credit you have available. Taking on debt is a common part of business, but you want to be sure that when you do, you’re keeping track of your credit score and doing everything you can to improve it.

In general, you want to be aware of the following:

• Your payment history and overall repayment timeline
• The amount borrowed compared to the amount of credit you have available
• How long your credit has been on file
• The number of credit inquiries you have outstanding
• The types of credit and debt you have

In short, you want to make sure you’re making payments on time, lowering your overall debt to healthy levels, and have enough available credit to leverage in a crisis. Doing so will not only improve your credit score but make it easier for you to negotiate future loans and funding with favorable terms.

Leverage available cash

You’ve likely acquired funding to grow your business. As you begin to do so, you may find that you have more available cash than you initially forecasted. In this situation, it can be tempting to immediately go outside of how you initially scoped out your use of funds. Instead, it may be wise to use that extra cash to pay off higher debt or loans that you currently have.

Now, you don’t want to make this decision blindly. Thankfully, by leveraging this process and consistently reviewing your position, you should already have been making necessary adjustments. If you really have excess cash, having this prepared can make it far easier to determine where it could be reallocated, and how much can simply go toward paying off your loans.

Avoid new debt

As you manage the funding you’ve acquired, it’s important that you avoid bringing on additional debt if possible. You want to be sure that you’re able to effectively turn the debt you have into profit. So, first and foremost you want to be sure you’re able to make payments on time.

If you’re struggling to do so or find that the funding is not leading to growth like you initially expected, it’s time to identify some cost-cutting strategies. If you bring on more funding, loans, or any other type of debt in this situation, it will simply stack on additional risks that you may not be able to handle.

Stay in touch with your lender

Once you receive any form of funding, you’ll want to remain in touch with your lender. This ensures that you are actively addressing any questions, concerns, or potential changes that you or the lender have in mind. This may include things like:

• An extension or adjustment of the financing terms
• Adjustments to your repayment plan
• Interest rate adjustments
• Delay of payment

More than likely, you’ll also need to report on the way you use the funds in some way. Let’s dive into how to create a use of funds report. 

How to report your use of funding

If you built your business plan in LivePlan, then you’re halfway to your use of funds report already. You can easily update your forecast, and see a visual comparison between your forecast and actual performance in the Dashboard tab . You can even generate reports for your investors or management team at any time.

You’ll need to do this reporting no matter what kind of funding you’ve taken on—a loan, line of credit, or angel investment. Let’s look at the specifics of the use of funds reporting for all three kinds of funding. 

Do keep in mind that the reporting we will be walking through is based on how you do it in LivePlan. But the processes and methodology still apply even if you don’t currently use this planning tool.

Use of funds reporting if you’ve received a loan

When a bank loans you money, you aren’t required to formally report back to them on how you’ve used it. But you’ll want to maintain a personal record of what expenditures you’ve made with the funds, and how soon your funds might run out.

If you’re using accounting software like QuickBooks or Xero , this record will happen as part of your accounting, but if you are not yet using accounting software, you’ll want to keep an accurate record of your spending.

If you took on a loan of a specific amount, earmarked for a specific set of purchases, obviously that’s a simple picture. The money comes in, and you spend it on what your business plan said you were going to spend it on. And then you make sure that these expenditures are represented in your forecast.

The LivePlan Schedule tab can be very helpful in planning this kind of spending. Major business expenditures, such as buying equipment, often have important deadlines tied to them. It’s also possible that the loan you’ve received has deadlines attached to it as well. You can create milestones with due dates in LivePlan for these deadlines, which helps you and your team stay on track.

Use of funds reporting if you’ve received a line of credit

Another common type of lending small businesses use is a line of credit —a revolving loan that you can draw on and pay back as needed. When you’re managing a line of credit, LivePlan can not only help you track your use of funds, but it also helps you predict exactly when you’ll need to use that line of credit to bridge future gaps in your cash flow.

It all begins with your business plan forecast . When you take on a line of credit, you’ll first enter it in your forecast. Then you’ll make monthly predictions about your spending, entering them as dollar values in each month.

As the months’ progress, check in on these values and make sure they represent your actual spending picture. Doing these regular checks will keep your cash flow forecast up to date, giving you a more accurate picture of what your cash will look like in upcoming months. A good entrepreneur regularly updates her forecast, so it reflects any unexpected expenses (or earnings) month to month.

When you were pitching to investors , it’s likely you showed them your early use of funds report, so they could understand how you were planning to spend the money. Now that you have an investor, you’ll need to submit a use of funds report to them regularly.

The frequency and level of detail in your reports will usually be dictated by the investment contract you’ve signed, but it’s good to plan on reporting to your investors monthly. (Or if you like, you can always send your investors an invitation to your LivePlan account , so they can check on the data whenever they want to.)

The process for preparing these reports is the same as the process we recommend above for managing a loan or line of credit. You’ll regularly:

• Check your forecast against your actual performance
• Update the forecast
• Look for future cash flow problems, and make a plan to solve them

The only difference is, in this case, you’ll need to make a presentation of your findings to the investor. Most investors will want to see a set of projected financial statements— profit and loss , balance sheet , and cash flow . You can print these from the Forecast tab in LivePlan.

Investors want to see how you react to the unexpected

Your investor will also want to see how you’re reacting to the unexpected events that pop up as your company operates.

“Investors want to know how their money is being used now, and how it will be used it in the future,” says Gregory. “That future picture can shift over time, so it’s important to be able to explain what that means to the investor. Investors are used to seeing companies change. They just want to know that you’re on top of it, and what the next 12 months to three years look like. That way they can either plan to invest more or not lose more.”

Not only that, an entrepreneur who keeps up on her forecast has more value for investors. “An investor would much rather see your forecast evolve into a target you can hit,” says Gregory. “It doesn’t help anyone if you stick to your original forecast goals and don’t meet them. Investors want to know that you can use this month’s numbers to plan a realistic future. That gives them more confidence, so they’re more likely to stay with you.”

Funding is cyclical

Many new entrepreneurs think that their initial funding is all they’ll need and that the business will be funding itself by the time that borrowed or invested cash is spent.

In reality, however, a business will likely need to seek funding more than once in its lifetime. According to a 2017 Federal Reserve survey of small businesses, over 60 percent needed additional funding to either grow or resolve business challenges.

There could be a temporary dip in your market or an unforeseen pandemic , and you’ll need bridge cash. Or there may be times when you’re ready to grow the company in a new direction, and you’ll need an infusion of cash to ramp up. 

This is why good use of funds reporting is so important. The more you can show that you’ve used your funding well to make a positive impact on your company, the more attractive your business will look to lenders and investors in the future.

Editors’ note: This article was originally published in 2019 and updated for 2021.

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How to Prepare a Sources and Uses of Funds Statement

What Is a Sources and Uses of Funds Statement?

The sources and uses of fund statement is an accounting statement that summarizes the financial statement and financial plan . It shows the sources from which a business or a company obtains its cash and the uses to which this cash is put during a trading period.

Large companies and businesses include sources and uses of funds statement in their annual report . It is their way to show the lenders how much they need for a startup financial and how much collateral they will contribute. Creating sources and uses of fund statement is also one of the ways to strategize business financially.

The Sources and the Uses

Let us take a closer look at the sources and the uses of funds.

Sources of funds. The sources of funds is where all the money for funding is going to come from. For example, you may be providing furniture for your office, getting a loan to purchase equipment, or getting a line of credit for working capital.

Uses of funds.  The money needed for various purposes for business startup. This includes:

• The beginning quantities of supplies, equipment, and furniture.
• Purchase of building or land.
• Costs of deposits for rent

What Is the Statement of Sources and Application of Funds?

The statement example in word  of sources and application of funds shows the total sources of new funds that are generated between the balance sheet dates and the total uses of those funds in the same period. it is also made up of a list of the changes that occur in all of the Balance Sheet Items between any two balance sheet dates.

The statement of sources and application of funds will exactly tell where the company got their money from and detail how the money was spent. It also tells whether the management plan has made reasonable investment decisions.

Steps in Creating a Sources and Uses of Funds Statement

As we have already learned in this article, there are two sections of the statement example in excel for funds: the sources and the uses. Here are the steps in creating the sources and the uses in the fund statement.

• In the first section, which is the uses of funds, use the subtotals from your startup costs worksheets, such as the facilities, equipment and vehicles, supplies and advertising, and other startup costs. After that, total those numbers.
• Include an estimate of your working capital needs. The working capital needs are the amount of money you have to obtain in order for you to pay the bills while you are still establishing your business analysis .
• To determine the total use of funds, Add the total of startup funds and working capital needs.
• Equity in your company
• A savings account
• An IRA (Individual Retirement Account)
• The difference of the total of the uses of funds and the total collateral you are providing must be equal to the amount of financing needed.

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How to Create a Winning 'Use of Funds' Slide for Your Pitch Deck

There might not be any slide more important than the "use of funds" slide in your pitch deck. This crucial slide does more than just outline where the money will go; it paints a picture of how each dollar will strategically drive your startup's growth and success.

For potential investors, it’s a window into your planning and financial acumen, showcasing your understanding of resource allocation and your strategic vision for the future.

Creating a winning use of funds slide demands a balance of clarity, detail and foresight, ensuring that investors can see the direct correlation between their funding and your startup’s trajectory.

What Is a Use of Funds Slide?

A use of funds slide details how the capital raised will be utilized. It’s a clear, concise breakdown of the different areas where the investment will be allocated, such as product development, marketing, hiring, operations or research and development.

This slide is more than just a financial plan. It’s a strategic tool that communicates to potential investors how their funds will directly contribute to the growth and scaling of the business.

Why Are Use of Funds Slides Important to Investors?

For investors, the use of funds slide is a critical factor in their decision-making process. It demonstrates the startup’s strategic planning skills and its understanding of what it takes to grow the business.

Investors use this slide to gauge:

• Financial Acumen - How well the startup understands and manages financial resources. It shows that the founders are prudent, realistic and have a clear plan for managing capital efficiently.
• Strategic Prioritization - The allocation of funds highlights the startup’s priorities. It answers crucial questions about which aspects of the business are deemed most critical to its success and how different areas will be balanced.
• Growth Potential - By showing where the funds will be spent, this slide outlines the startup's roadmap for growth. Investors can see how their investment will fuel key activities like market expansion, product development or talent acquisition.
• Return on Investment - Ultimately, investors want to know that their investment will yield a significant return. The use of funds slide should connect the dots between the investment and the anticipated growth outcomes, indicating a clear path to profitability.

Crafting an Effective Use of Funds Slide

An effective use of funds is more than a simple list of expenses. It weaves a narrative that aligns your financial planning with the long-term objectives of your startup.

Clarity and Precision

The use of funds slide must be clear and precise. Avoid vague categories and generalizations. Instead, provide specific, itemized breakdowns of how the funds will be allocated.

This might include detailed percentages or figures for areas like product development, marketing, staff salaries or operational costs. The aim is to give investors a transparent and detailed view of your spending strategy, ensuring they understand exactly how their capital will be utilized to drive growth.

Aligning with Business Goals

Every dollar outlined in your use of funds slide should clearly contribute to your overarching business goals.

Whether it's expanding your team to accelerate product development or allocating funds for market research, it's important to show how each expenditure is a strategic step towards achieving your business objectives. This alignment reassures investors that their funds will be used to directly support the growth and scalability of your startup.

Presenting Evidence

Support your financial projections and allocations with evidence. This could include market research, pilot studies or historical financial data from your business.

Demonstrating a data-driven approach in your financial planning adds credibility to your use of funds slide. It shows investors that your allocations are not just theoretical but are based on solid research and realistic projections of your business’s growth trajectory.

Common Mistakes to Avoid in Your Use of Funds Slide

We'll preface this section by saying that your mileage may vary, as different investors look for different things in pitch decks. However, there are some common mistakes that founders run into when presenting their business plans.

• Overgeneralization - One of the most common errors is being too vague about how the funds will be used. Broad categories like 'marketing' or 'development' don't offer enough insight into your strategy. Investors prefer detailed breakdowns that show a thorough understanding of how each dollar will be utilized.
• Lack of Alignment with Business Strategy - Every item on your use of funds slide should directly relate to and support your overall business strategy and objectives. Including expenses that don't clearly contribute to specific business goals can raise doubts about your strategic planning abilities.
• Unrealistic Projections - Overly optimistic or unrealistic financial projections can be a red flag for investors. Your financial needs should be grounded in realistic assumptions and backed by credible market research and data.
• Ignoring Operational Costs - While it might be tempting to focus solely on growth-focused expenditures like product development or marketing, neglecting to include operational costs can give an incomplete picture of your financial needs and raise questions about your understanding of running a business. And conversely, only including salaries in your use of funds slide tells investors that you aren't as focused on growth as you should be.
• Forgetting Contingency Plans - Not including a budget for contingencies or unexpected expenses can make your financial planning appear naive. It's important to show investors that you're prepared for potential hurdles.
• Omitting Future Funding Rounds - If you anticipate the need for additional funding rounds in the future, it's wise to mention this in your use of funds slide. This transparency helps set realistic expectations about the company's financial trajectory and funding requirements.

Preparing for Investor Questions

When presenting your pitch deck, particularly the use of funds slide, be prepared for a thorough questioning from potential investors. These questions are not just about validating the information presented, but also about gauging your understanding of the business and your readiness to handle the challenges ahead.

• Clarifications on Expenditure Breakdowns - Investors may ask for more details about specific line items on your use of funds slide. Be prepared to explain the rationale behind each allocation, how you arrived at the figures and how each expense will contribute to the business’s growth.
• Assumptions Behind Projections - Be ready to discuss the assumptions underlying your financial projections. Investors will be interested in understanding the market research, historical data or trends you’ve used to inform your forecasts.
• Scalability and Long-Term Funding - Questions may arise about your startup’s scalability and long-term financial sustainability. Investors will be interested in how the current funding round will help you reach key milestones and what your plans are for future funding needs.
• Risk Management and Contingency Plans - Expect questions about risks and your plans to mitigate them. Be honest about the risks your business faces and discuss your strategies for managing these risks, including contingency budgets.
• Performance Metrics and Milestones - Investors will likely inquire about the metrics and milestones you plan to use to measure success and progress. Be specific about your key performance indicators and how they align with the use of funds.
• Operational Costs and Management - Be prepared to discuss the operational aspects of your business. This includes questions about day-to-day management, the efficiency of operations and how operational costs have been factored into your financial planning.

Remember, the key to effectively addressing investor questions is not just in providing the answers, but in demonstrating a deep and thoughtful understanding of your business. Your responses should reflect thorough preparation and confidence,

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Before you can proceed with a real estate project, you must identify how you will obtain funding and how you will spend those funds. Clearly, Sources and Uses (S&U) of funds is key to property development. Therefore, this article defines sources and uses of funds, where funds come from and how we use them. Next, we’ll explain the sources and uses table and the sources and uses template. Finally, we’ll conclude with the answers to some frequently asked questions about sources and uses of cash.

Video:  LBO Model:  Sources and Uses

What Are Sources and Uses of Funds?

Sources and uses of funds is an accounting concept used by all sorts of businesses. In this article, we’ll focus on sources and uses of funds for commercial real estate projects. Besides being a fundamental accounting concept, the sources and uses statement is one of the major accounting reports. Managers, investors and regulators pour over the latest S&U reports to help evaluate the health of an organization or project.

The S&U Statement

The S&U statement shows how project funding arises and where the capital goes. The primary rule for the sources and uses of cash statement is that the combined sources of funds must match the combined uses. The report itself can have a basic format. First, you list sources by line item and then total them. Next, uses receive the same treatment. Obviously, the statement reader can quickly verify that total sources equals total uses. In order to make the two totals match, the preparer may have to add a category. Specifically, that category plugs for the difference between sources and uses as follows:

• If sources > uses, plug with the use category “cash flow distribution.”
• If sources < uses, plug with the source category “additional equity required.”

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Major uses of funds.

The use of funds section is the first one you derive because it dictates how much money to raise. Typically, the project sponsor identifies project costs as price per square foot or price per unit. Also, sponsors can specify each item’s percentage of total costs. Normally, you group project costs by purchase price, hard costs and soft costs. Thereafter, you can break down each group into line items and/or roll up the costs to the group level.

Purchase Price

There is no great mystery about purchase price. Specifically, it is the price the sponsor pays for the land and any improvements, such as infrastructure and buildings. If you don’t purchase the land, then the price includes the cost of the lease-hold interest on the property acquired. By specifying the cost per square foot, you can compare the price to comparable transactions.

Another major use of funds is to pay hard costs. Specifically, hard costs are items that directly add to property improvement, such as materials and labor. In addition, hard costs can include contingencies for direct cost overruns. By including unit costing, you can compare your costs to market averages.

Hard cost projections can tell you a lot about the project. To illustrate, suppose an investor must choose between two $20 million acquisition properties. In the first, the hard cost estimate is only $1 million, but the second one anticipates a $9 million hard cost. In the first project, the building requires little development or rehab. However, the second project requires extensive improvement. As an investor with specific risk preferences, you can use this information to decide on the right investment.

Hard Cost Line Items

A use of funds template might break down the category into line items. That is, the template might specify detailed costs, such as roof repair, new HVAC, sewage hookups and so forth. The breakdown of costs might indicate substantial deferred maintenance that the sponsor must address. Indeed, the cost to rehab the property will help the sponsor to keep existing tenants from moving to another property. On the other hand, the costs might indicate a desire to move the property upscale. For example, these might be costs like renovating the lobby, new landscaping, and bathroom renovations. Clearly, these costs aim to allow the sponsor to charge new tenants market rents or possibly even higher.

Soft costs arise from a project but don’t tangibly improve the property’s value. They include use of funds template items like:

• Organizational fees
• Purchase closing costs
• Broker and leasing commissions
• Acquisition costs
• Equity reserves
• Interest reserves

You improve the report’s usefulness by including soft costs per square foot and as a percentage of total costs. If the sponsor seems to be paying too much for soft costs, it could indicate incompetence or even bad luck. Furthermore, excessive reserves for equity and interest might indicate high uncertainty within the business plan.

Major Sources of Cash Flow

The sources of funding will resemble the project’s capital structure , with some important differences. For one thing, the sources of funds section will show in detail all sources of funds, not just capital providers. For example, sources of cash flow might include operations. That is, a portion of a property might yield rent revenue while another undergoes improvement. The rental income is a source of funds outside the capital stack. Other sources might include grants, donations and retained equity.

Nonetheless, the capital stack usually represents the bulk of cash funding. To clarify, the stack contains debt and equity, including common stock, preferred stock and warrants. Naturally, each source of funds has its own cost, which creates a weighted average cost of capital (WACC). Clearly, a project’s return must exceed its WACC by a minimum threshold to warrant funding. If not, it would probably be best to entertain another property investment.

Fund Timing

The sources of funds portion of the sources and uses of cash statement adds an element of fund timing. For example, you will need some cash at closing, while you may escrow other funds for later use. Typically, if cash flow is a source of funding, you use it to pay future expenses. Importantly, lenders may release loans in installments as a project progresses. Frankly, these are details that the capital stack doesn’t reveal. Naturally, when loans are contingent upon events, they may not match the capital stack depiction. It’s important for planning purposes to understand the timing of debt sources, both short-term and long-term.

We should make clear that an S&U statement is not the best resource for raking over past mistakes. Rather, it is a forward-looking document, showing when and where funds will flow through a project. By examining the S&U statement, investors can quickly understand a project’s scope and complexity.

Sources and Uses Sample Templates

You can find reference a sources and uses template from several sources on the internet. For example, the Local Initiatives Support Corporation offers this sources and uses template. You can find other websites offering a use of funds template as well.

Sources and Uses Table

A sources and uses table is simply the tabular presentation of sources and uses. You can also think of it as the spreadsheet or database containing the data required for the S&U table. For example, see this S&U table from the Securities and Exchange Commission.

Frequently Asked Questions – Sources & Uses

How do you calculate sources and uses of funds.

The calculation occurs in two parts. First, you total all the uses of funds necessary for financing a project. Then, you do the same for all the sources of funds. Plug any differences with the appropriate category for future sources or uses. The final totals for sources and uses should match exactly to the penny.

What is a source and application of funds statement?

It’s one of several alternate names for the S&U statement. Other equivalent names include:

• Statement of changes in financial condition
• Statement of changes in financial position
• Funds statement

Note that the cash flow statement largely replaces the sources and uses statement in modern accounting.

What does application of funds mean?

It means to use funds for a project. Typically, you use funds to pay for the purchase price of a property, hard costs and soft costs. Furthermore, you can break down these categories to reveal more detail in the S&U statement.

What is IBO analysis?

An IBO analysis is an institutional buyout analysis. An IBO analysis occurs when an outside institution acquires control of a company. Typical institutional investors include commercial banks, venture capital firms, and private equity firms. Importantly, it’s one way to take a public company private or to directly purchase a private company.

What is an LBO?

An LBO is a leveraged buyout , the purchase of a company using borrowed money. Frequently, the company’s assets serve as collateral for the loan. The buyer services the debt by selling off assets, laying off personnel and, frequently, bankrupting the company . Typical LBO’s consist of 90% debt, 10% equity funding.

The sources and uses of funds statement plays an important role in the development of real estate projects. In terms of fund sourcing, Assets America ® can arrange financing starting at $10 million with no upper limit, though we prefer loans from $20 million and above.  Contact us to learn how we can source the funding for your next large, commercial real estate project.

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Ronny was a pleasure to work with and is extremely knowledgeable. His hard work was never ending until the job was done. They handled a complex lease and guided us through entire process, including the paperwork. Not to mention a below market lease rate and more than all the features we needed in a site. We later used Assets America for a unique equipment financing deal where once again Ronny and team exceeded our expectations and our timeline. Thank you to Assets America for your highly professional service!

Great experience with Assets America. Fast turn around. Had a lender in place in 30 minutes looking to do the deal. Totally amazing. Highly recommend them to anyone looking for financing. Ronny is fantastic. Give them a call if the deal makes sense they can get it funded. Referring all our clients.

Assets America guided us every step of the way in finding and leasing our large industrial building with attached offices. They handled all of the complex lease negotiations and contractual paperwork. Ultimately, we received exactly the space we needed along with a lower than market per square foot pricing, lease length and end of term options we requested. In addition to the real estate lease, Assets America utilized their decades-long financial expertise to negotiate fantastic rates and terms on our large and very unique multimillion dollar equipment purchase/lease. We were thankful for how promptly and consistently they kept us informed and up to date on each step of our journey. They were always available to answer each and every one of our questions. Overall, they provided my team with a fantastic and highly professional service!

Assets America was responsible for arranging financing for two of my multi million dollar commercial projects. At the time of financing, it was extremely difficult to obtain bank financing for commercial real estate. Not only was Assets America successful, they were able to obtain an interest rate lower than going rates. The company is very capable, I would recommend Assets America to any company requiring commercial financing.

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I’ve worked with this company for decades. They are reputable, knowledgeable, and ethical with proven results. I highly recommend them to anyone needing commercial financing.

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Ronny was very friendly and though we were unable to make something happen at the moment he gave me some direction to go.

My business partner and I were looking to purchase a retail shopping center in southern California.  We sought out the services of Ronny, CFO of Assets America.  Ronny found us several commercial properties which met our desired needs.  We chose the property we liked best, and Ronny went to work. He negotiated very aggressively on our behalf. We came to terms with the Seller, entered into a purchase agreement and opened escrow.  Additionally, we needed 80 percent financing on our multimillion-dollar purchase.  Assets America also handled the commercial loan for us.  They were our One-Stop-Shop. They obtained fantastic, low, fixed rate insurance money for us.  So, Assets America handled both the sale and the loan for us and successfully closed our escrow within the time frame stated in the purchase agreement.  Ronny did and performed exactly as he said he would. Ronny and his company are true professionals.  In this day and age, it’s especially rare and wonderful to work with a person who actually does what he says he will do.  We recommend them to anyone needing any type of commercial real estate transaction and we further highly recommend them for any type of commercial financing.  They were diligent and forthright on both accounts and brought our deal to a successful closing.

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16.3: How Organizations Use Funds

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2. What types of short-term and long-term expenditures does a firm make?

To grow and prosper, a firm must keep investing money in its operations. The financial manager decides how best to use the firm’s money. Short-term expenses support the firm’s day-to-day activities. For instance, athletic-apparel maker Nike regularly spends money to buy such raw materials as leather and fabric and to pay employee salaries. Long-term expenses are typically for fixed assets. For Nike, these would include outlays to build a new factory, buy automated manufacturing equipment, or acquire a small manufacturer of sports apparel.

Short-Term Expenses

Short-term expenses, often called operating expenses, are outlays used to support current production and selling activities. They typically result in current assets, which include cash and any other assets (accounts receivable and inventory) that can be converted to cash within a year. The financial manager’s goal is to manage current assets so the firm has enough cash to pay its bills and to support its accounts receivable and inventory.

Cash Management: Assuring Liquidity

Cash is the lifeblood of business. Without it, a firm could not operate. An important duty of the financial manager is cash management , or making sure that enough cash is on hand to pay bills as they come due and to meet unexpected expenses.

Businesses estimate their cash requirements for a specific period. Many companies keep a minimum cash balance to cover unexpected expenses or changes in projected cash flows. The financial manager arranges loans to cover any shortfalls. If the size and timing of cash inflows closely match the size and timing of cash outflows, the company needs to keep only a small amount of cash on hand. A company whose sales and receipts are fairly predictable and regular throughout the year needs less cash than a company with a seasonal pattern of sales and receipts. A toy company, for instance, whose sales are concentrated in the fall, spends a great deal of cash during the spring and summer to build inventory. It has excess cash during the winter and early spring, when it collects on sales from its peak selling season.

Because cash held in checking accounts earns little, if any, interest, the financial manager tries to keep cash balances low and to invest the surplus cash. Surpluses are invested temporarily in marketable securities , short-term investments that are easily converted into cash. The financial manager looks for low-risk investments that offer high returns. Three of the most popular marketable securities are Treasury bills, certificates of deposit, and commercial paper. ( Commercial paper is unsecured short-term debt—an IOU—issued by a financially strong corporation.) Today’s financial managers have new tools to help them find the best short-term investments, such as online trading platforms that save time and provide access to more types of investments. These have been especially useful for smaller companies who don’t have large finance staffs.

Companies with overseas operations face even greater cash management challenges. Developing the systems for international cash management may sound simple in theory, but in practice it’s extremely complex. In addition to dealing with multiple foreign currencies, treasurers must understand and follow banking practices and regulatory and tax requirements in each country. Regulations may impede their ability to move funds freely across borders. Also, issuing a standard set of procedures for every office may not work because local business practices differ from country to country. In addition, local managers may resist the shift to a centralized structure because they don’t want to give up control of cash generated by their units. Corporate financial managers must be sensitive to and aware of local customs and adapt the centralization strategy accordingly.

In addition to seeking the right balance between cash and marketable securities, the financial manager tries to shorten the time between the purchase of inventory or services (cash outflows) and the collection of cash from sales (cash inflows). The three key strategies are to collect money owed to the firm (accounts receivable) as quickly as possible, to pay money owed to others (accounts payable) as late as possible without damaging the firm’s credit reputation, and to minimize the funds tied up in inventory.

Managing Accounts Receivable

Accounts receivable represent sales for which the firm has not yet been paid. Because the product has been sold but cash has not yet been received, an account receivable amounts to a use of funds. For the average manufacturing firm, accounts receivable represent about 15 to 20 percent of total assets.

The financial manager’s goal is to collect money owed to the firm as quickly as possible, while offering customers credit terms attractive enough to increase sales. Accounts receivable management involves setting credit policies, guidelines on offering credit, credit terms, and specific repayment conditions, including how long customers have to pay their bills and whether a cash discount is given for quicker payment. Another aspect of accounts receivable management is deciding on collection policies, the procedures for collecting overdue accounts.

Setting up credit and collection policies is a balancing act for financial managers. On the one hand, easier credit policies or generous credit terms (a longer repayment period or larger cash discount) result in increased sales. On the other hand, the firm has to finance more accounts receivable. The risk of uncollectible accounts receivable also rises. Businesses consider the impact on sales, timing of cash flow, experience with bad debt, customer profiles, and industry standards when developing their credit and collection policies.

Companies that want to speed up collections actively manage their accounts receivable, rather than passively letting customers pay when they want to. According to recent statistics, more than 90 percent of businesses experience late payments from customers, and some companies write off a percentage of their bad debt, which can be expensive. 4

Technology plays a big role in helping companies improve their credit and collections performance. For example, many companies use some type of automated decision-making, whether that comes in the form of an ERP system or a combination of software programs and supplemental modules that help companies make informed decisions when it comes to credit and collection processes. 5

Other companies choose to outsource financial and accounting business processes to specialists rather than develop their own systems. The availability of cutting-edge technology and specialized electronic platforms that would be difficult and expensive to develop in-house is winning over firms of all sizes. Giving up control of finance to a third party has not been easy for CFOs. The risks are high when financial and other sensitive corporate data are transferred to an outside computer system: data could be compromised or lost, or rivals could steal corporate data. It’s also harder to monitor an outside provider than your own employees. One outsourcing area that has attracted many clients is international trade, which has regulations that differ from country to country and requires huge amounts of documentation. With specialized IT systems, providers can track not only the physical location of goods, but also all the paperwork associated with shipments. Processing costs for goods purchased overseas are about twice those of domestic goods, so more efficient systems pay off. 6

Another use of funds is to buy inventory needed by the firm. In a typical manufacturing firm, inventory is nearly 20 percent of total assets. The cost of inventory includes not only its purchase price, but also ordering, handling, storage, interest, and insurance costs.

Production, marketing, and finance managers usually have differing views about inventory. Production managers want lots of raw materials on hand to avoid production delays. Marketing managers want lots of finished goods on hand so customer orders can be filled quickly. But financial managers want the least inventory possible without harming production efficiency or sales. Financial managers must work closely with production and marketing to balance these conflicting goals. Techniques for reducing the investment in inventory are inventory management, the just-in-time system, and materials requirement planning.

For retail firms, inventory management is a critical area for financial managers, who closely monitor inventory turnover ratios. This ratio shows how quickly inventory moves through the firm and is turned into sales. If the inventory number is too high, it will typically affect the amount of working capital a company has on hand, forcing the company to borrow money to cover the excess inventory. If the turnover ratio number is too high, it means the company does not have enough inventory of products on hand to satisfy customer needs, which means they could take their business elsewhere. 7

Long-Term Expenditures

A firm also invests funds in physical assets such as land, buildings, machinery, equipment, and information systems. These are called capital expenditures . Unlike operating expenses, which produce benefits within a year, the benefits from capital expenditures extend beyond one year. For instance, a printer’s purchase of a new printing press with a usable life of seven years is a capital expenditure and appears as a fixed asset on the firm’s balance sheet. Paper, ink, and other supplies, however, are expenses. Mergers and acquisitions are also considered capital expenditures.

Firms make capital expenditures for many reasons. The most common are to expand, to replace or renew fixed assets, and to develop new products. Most manufacturing firms have a big investment in long-term assets. Boeing Company, for instance, puts billions of dollars a year into airplane-manufacturing facilities. Because capital expenditures tend to be costly and have a major effect on the firm’s future, the financial manager uses a process called capital budgeting to analyze long-term projects and select those that offer the best returns while maximizing the firm’s value. Decisions involving new products or the acquisition of another business are especially important. Managers look at project costs and forecast the future benefits the project will bring to calculate the firm’s estimated return on the investment.

CONCEPT CHECK

• Distinguish between short- and long-term expenses.
• What is the financial manager’s goal in cash management? List the three key cash management strategies.
• Describe a firm’s main motives in making capital expenditures.

Understanding the Different Types of Funding for Your Business

By alex ryzhkov, introduction.

Funding sources are an important part of any business plan. They serve as a means to finance the completion of activities, as well as to facilitate new ones. Generally, there are three different types of funding sources, each of which comes with its own advantages and disadvantages.

A funding source can be defined as any type of financial resource that a business can use to embark on or fulfill obligations. It includes, but is not limited to, money from an individual, a government grant, a loan, and/or investments.

The three kinds of funding sources most commonly used in business planning are:

Debt Financing

Equity financing, hybrid financing, debt funding.

Debt funding is a common way for businesses to acquire financing. This involves borrowing money, usually from a bank, to fund a business plan or project. Debt funding typically has to be repaid over a certain period of time and with interest. There are two main types of debt funding: loan or a line of credit.

A Loan or Line of Credit

A loan is when a business takes out a set amount of money from a lender for a predetermined amount of time, usually at an agreed upon interest rate. A line of credit is similar except that it allows a business to draw funds as needed, usually up to a set limit, for a predetermined amount of time. Interest is only charged when money is drawn from the line of credit.

Advantages / Disadvantages

Debt funding has several advantages. One of the main advantages is that a business is able to receive a lump sum of money quickly. Furthermore, a business will not have to surrender any equity or profits in exchange for the loan. On the other hand, debt funding has some disadvantages. The most notable of these is the interest that will be charged, as well as the need to establish a consistent repayment schedule. Additionally, the repayment of the loan or line of credit will create a financial strain on the business.

• Quick access to a lump sum of money
• No need to give up any equity or profits
• Interest charges
• Financial strain from repayments

Equity Funding

Equity funding is one of the most popular sources of funding for businesses. This form of financing involves issuing shares or ownership in your business in exchange for investment money. As the owner, you'll maintain some level of control and will be required to pay dividends to shareholders, depending on the terms of the agreement.

Seeking An Investor

When seeking out an equity investor, there are a few things to consider. First, determine the type of equity investor you wish to attract. Are you seeking angel investors, venture capitalists, or private equity firms? Each type offers its own set of advantages and drawbacks.

Once you have identified your desired equity investor, create a targeted pitch. Make sure to include information about your business and the funding you seek, as well as a realistic timeline and financial projections. Finally, make sure to research potential investors and reach out to them with a well-crafted introduction.

Equity funding has several advantages. For one, you don't have to worry about loan repayments or having to cut ties with your business. You also benefit from the investor's expertise and resources, which can help to grow and expand your business. Additionally, the investor is likely to contribute more money than traditional lenders, so you'll have a greater amount of capital with which to start your business.

One of the downsides of equity funding is that you give up partial control of your enterprise and you may be subject to additional scrutiny. Moreover, the return on your investment may not be realized for years. As such, you'll need to weigh the advantages and disadvantages of equity funding and consider if it is the right fit for your business.

Crowdfunding

Crowdfunding is an increasingly popular method for small businesses or entrepreneurs to acquire funding for their business plans. Fundraising campaigns on crowdfunding platforms have become an attractive, alternative to traditional banking and capital investment.

Online Platforms

One of the largest and best-known crowdfunding platforms is Kickstarter, where a user can set up a page on their website and collect money from website visitors and other investors. They can offer rewards to incentivize larger donations or investments, such as products related to the business. Other popular crowdfunding platforms include: Indiegogo, GoFundMe, Fundly, and Patreon.

Advantages/Disadvantages

The primary benefit of crowdfunding is that it offers the ability to raise significant amounts of capital in a short period of time, which can be attractive for business owners who need to get their ideas off the ground quickly. It also allows for greater exposure for your business idea, and can be a great way to gain public interest or momentum. However, it can be difficult to make your campaign stand out on a platform, and it cannot replace traditional methods of financing, such as debt or equity.

• Raise significant amounts of capital in a short period of time
• Greater exposure for your business idea
• Gain public interest or momentum
• Difficult to make your campaign stand out
• Cannot replace traditional methods of financing

Alternative Funding Sources

Starting a business can be an expensive undertaking, but fortunately, there are many potential funding sources available to entrepreneurs. Knowing the different types of financing available can help entrepreneurs make the best decisions for their business. Here are some of the other alternative funding sources that entrepreneurs may find useful.

Government Grants

Government grants are a type of finance offered to entrepreneurs, usually to support a particular purpose or cause. The specific terms and conditions of government grant availability vary based on country or region. Generally, they are designed to encourage entrepreneurship by providing access to need-based resources. Government grants are appealing as they usually carry no interest, but they also tend to have a lot of restrictions and requirements that need to be met.

Specialized Loans

Specialized loans are available for certain types of businesses, such as small business loans offered by the Small Business Administration. These are tailored to meet the specific needs of particular businesses and the requirements for eligibility can vary based on the loan. Businesses that may be eligible for such loans may include startups, older businesses, and those of particular industries such as agriculture. Specialized loans tend to have better interest rates than other types of finance and may also be easier to apply for.

• Government grants are a type of finance offered to entrepreneurs, usually to support a particular purpose or cause.
• Specialized loans are tailored to meet the specific needs of particular businesses and may offer better interest rates and easier applications.

Strategies for Acquiring Funding

If you want to be successful in launching your own business, understanding all the options available to you regarding funding is of the utmost importance.

An essential part of this process is building your business plan. Your business plan will provide answers to questions that prospective funders may have and can help provide a plan of action that can be followed to reach your business goals and objectives. Additionally, it will help you to identify the types of funding you need to pursue.

When searching for potential funders, it is important to create a detailed list of options that can help support your business. Before doing so, it is important to understand the different types of funding that can be leveraged:

• Equity and Investment
• Crowdfunding Platforms
• Business Incubators and Accelerators
• Family, Friends and Angel Investors

Building Your Business Plan

Creating a solid business plan is one of the most important strategy for acquiring funding for your business. A well-crafted business plan will demonstration to potential investors or lenders that your business will be able to not only sustain but also grow. It should include a mission statement, detailed market research, a list of short and long-term goals, a staffing outline, and your financial projections.

Creating a business plan should also include a “projected use of funds” section. This should detail precisely what each funding source would be used for and how much you would need for each purpose. For example, if you are applying for a loan, this should include a description of how you plan on repaying the loan.

Identifying Your Funders

Once your business plan is complete, the process of identifying funders and the types of funding that make the most sense for your business can begin. Depending on the stage of your business, different types of funders might be more suitable. For example, if you are in the early stages of development, then crowdfunding platforms, angel investors, and venture capital might make the most sense, while if your business is further along, then a bank loan or line of credit might better fit your needs.

These decisions should be based on the amount of money you need, the types of investments you are willing to make, and the repayment methods you are able to commit to. Ultimately, it is important to carefully evaluate each option before deciding on the best fit.

Funding is an essential part of any business plan, and understanding the different types of funding sources available is key to identifying the best option for your business. In this article, we took a comprehensive look at the different types of funding sources, from traditional lenders like banks, to alternative forms like crowdfunding and venture capital. We also discussed the advantages and disadvantages of each type of funding, as well as the steps you should take to make sure you get the best deal possible.

Weighing Your Options

When it comes to funding your business, there are many options to consider, and it can be difficult to know which one is right for you. That’s why it’s important to take the time to research each option, and weigh the pros and cons against your particular business needs. As you do your research, make sure to consider things like interest rates, terms, and the amount of documentation needed.

Continuing to Investigate Funding Options

It's important to remember that the world of business funding is always changing. New options are emerging all the time, so it's important to stay informed about the latest developments. Monitor the business news, and talk to other entrepreneurs and financiers, to get an idea of the latest funding trends. Additionally, consider seeking out professional advice if you need help making the right decisions.

• Monitor business news
• Talk to other entrepreneurs and financiers
• Seek out professional advice

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How to write a business plan for a fund management company?

Creating a business plan for a fund management company is an essential process for any entrepreneur. It serves as a roadmap that outlines the necessary steps to be taken to start or grow the business, the resources required, and the anticipated financial outcomes. It should be crafted with method and confidence.

This guide is designed to provide you with the tools and knowledge necessary for creating a fund management company business plan, covering why it is so important both when starting up and running an established business, what should be included in your plan, how it should be structured, what tools should be used to save time and avoid errors, and other helpful tips.

We have a lot to cover, so let's get to it!

In this guide:

Why write a business plan for a fund management company?

• What information is needed to create a business plan for a fund management company?
• What goes in the financial forecast for a fund management company?
• What goes in the written part of a fund management company business plan?
• What tool can I use to write my fund management company business plan?

Understanding the document's scope and goals will help you easily grasp its structure and content. Before diving into the specifics of the plan, let's take a moment to explore the key reasons why having a fund management company business plan is so crucial.

To have a clear roadmap to grow the business

Small businesses rarely experience a constant and predictable environment. Economic cycles go up and down, while the business landscape is mutating constantly with new regulations, technologies, competitors, and consumer behaviours emerging when we least expect it.

In this dynamic context, it's essential to have a clear roadmap for your fund management company. Otherwise, you are navigating in the dark which is dangerous given that - as a business owner - your capital is at risk.

That's why crafting a well-thought-out business plan is crucial to ensure the long-term success and sustainability of your venture.

To create an effective business plan, you'll need to take a step-by-step approach. First, you'll have to assess your current position (if you're already in business), and then identify where you'd like your fund management company to be in the next three to five years.

Once you have a clear destination for your fund management company, you'll focus on three key areas:

• Resources: you'll determine the human, equipment, and capital resources needed to reach your goals successfully.
• Speed: you'll establish the optimal pace at which your business needs to grow if it is to meet its objectives within the desired timeframe.
• Risks: you'll identify and address potential risks you might encounter along the way.

By going through this process regularly, you'll be able to make informed decisions about resource allocation, paving the way for the long-term success of your business.

To maintain visibility on future cash flows

Businesses can go for years without making a profit, but they go bust as soon as they run out of cash. That's why "cash is king", and maintaining visibility on your fund management company's future cash flows is critical.

How do I do that? That's simple: you need an up-to-date financial forecast.

The good news is that your fund management company business plan already contains a financial forecast (more on that later in this guide), so all you have to do is to keep it up-to-date.

To do this, you need to regularly compare the actual financial performance of your business to what was planned in your financial forecast, and adjust the forecast based on the current trajectory of your business.

Monitoring your fund management company's financial health will enable you to identify potential financial problems (such as an unexpected cash shortfall) early and to put in place corrective measures. It will also allow you to detect and capitalize on potential growth opportunities (higher demand from a given segment of customers for example).

To secure financing

Crafting a comprehensive business plan for your fund management company, whether you're starting up or already established, is paramount when you're seeking financing from banks or investors.

Given how fragile small businesses are, financiers will want to ensure that you have a clear roadmap in place as well as command and control of your future cash flows before entertaining the idea of funding you.

For banks, the information in your business plan will be used to assess your borrowing capacity - which is defined as the maximum amount of debt your business can afford alongside your ability to repay the loan. This evaluation helps them decide whether to extend credit to your business and under what terms (interest rate, duration, repayment options, collateral, etc.).

Similarly, investors will thoroughly review your plan to determine if their investment can yield an attractive return. They'll be looking for evidence that your fund management company has the potential for healthy growth, profitability, and consistent cash flow generation over time.

Now that you understand the importance of creating a business plan for your fund management company, let's delve into the necessary information needed to craft an effective plan.

Information needed to create a business plan for a fund management company

You need the right data in order to project sales, investments and costs accurately in the financial forecast of your fund management company business plan.

Below, we'll cover three key pieces of information you should gather before drafting your business plan.

Carrying out market research for a fund management company

As you consider writing your business plan for a fund management company, conducting market research becomes a vital step to ensure accurate and realistic financial projections.

Market research provides valuable insights into your target customer base, competitors, pricing strategies, and other key factors that can significantly impact the commercial success of your business.

Through this research, you may uncover trends that could influence your fund management company.

You could discover that your fund management company may need to focus more on digital marketing strategies, as research might reveal that more and more people are investing online. Additionally, research might indicate that investors may be looking for more diverse investment options, so you may need to adjust your offerings accordingly.

Such market trends play a significant role in forecasting revenue, as they offer valuable data about potential customers' spending habits and preferences.

By incorporating these findings into your financial projections, you can present investors with more accurate information, helping them make informed decisions about investing in your fund management company.

Developing the sales and marketing plan for a fund management company

As you embark on creating your fund management company business plan, it is crucial to budget sales and marketing expenses beforehand.

A well-defined sales and marketing plan should include precise projections of the actions required to acquire and retain customers. It will also outline the necessary workforce to execute these initiatives and the budget required for promotions, advertising, and other marketing efforts.

This approach ensures that the appropriate amount of resources is allocated to these activities, aligning with the sales and growth objectives outlined in your business plan.

The staffing and capital expenditure requirements of a fund management company

Whether you are starting or expanding a fund management company, it is important to have a clear plan for recruitment and capital expenditures (investment in equipment and real estate) in order to ensure the success of the business.

Both the recruitment and investment plans need to be coherent with the timing and level of growth planned in your forecast, and require appropriate funding.

A fund management company might incur the cost of hiring fund managers, portfolio managers, and administrative staff. Additionally, they may need to purchase financial software, analytical tools, and other equipment necessary for the efficient management of their funds.

In order to create a realistic financial forecast, you will also need to consider the other operating expenses associated with running the business on a day-to-day basis (insurance, bookkeeping, etc.). 

Once you have all the necessary information to create a business plan for your fund management company, it is time to start creating your financial forecast.

What goes into your fund management company's financial forecast?

The objective of the financial forecast of your fund management company's business plan is to show the growth, profitability, funding requirements, and cash generation potential of your business over the next 3 to 5 years.

The four key outputs of a financial forecast for a fund management company are:

• The profit and loss (P&L) statement ,
• The projected balance sheet ,
• The cash flow forecast ,
• And the sources and uses table .

Let's look at each of these in a bit more detail.

The projected P&L statement

The projected P&L statement for a fund management company shows how much revenue and profit your business is expected to make in the future.

A healthy fund management company's P&L statement should show:

• Sales growing at (minimum) or above (better) inflation
• Stable (minimum) or expanding (better) profit margins
• A healthy level of net profitability

This will of course depend on the stage of your business: numbers for a startup will look different than for an established fund management company.

The projected balance sheet of your fund management company

The balance sheet for a fund management company is a financial document that provides a snapshot of your business’s financial health at a given point in time.

It shows three main components: assets, liabilities and equity:

• Assets: are resources owned by the business, such as cash, equipment, and accounts receivable (money owed by clients).
• Liabilities: are debts owed to creditors and other entities, such as accounts payable (money owed to suppliers) and loans.
• Equity: includes the sums invested by the shareholders or business owners and the cumulative profits and losses of the business to date (called retained earnings). It is a proxy for the value of the owner's stake in the business.

Examining the balance sheet is important for lenders, investors, or other stakeholders who are interested in assessing your fund management company's liquidity and solvency:

• Liquidity: assesses whether or not your business has sufficient cash and short-term assets to honour its liabilities due over the next 12 months. It is a short-term focus.
• Solvency: assesses whether or not your business has the capacity to repay its debt over the medium-term.

Looking at the balance sheet can also provide insights into your fund management company's investment and financing policies.

In particular, stakeholders can compare the value of equity to the value of the outstanding financial debt to assess how the business is funded and what level of financial risk has been taken by the owners (financial debt is riskier because it has to be repaid, while equity doesn't need to be repaid).

The cash flow forecast

As we've seen earlier in this guide, monitoring future cash flows is the key to success and the only way of ensuring that your fund management company has enough cash to operate.

As you can expect showing future cash flows is the main role of the cash flow forecast in your fund management company business plan.

It is best practice to organise the cash flow statement by nature in order to show the cash impact of the following areas:

• Cash flow generated from operations: the operating cash flow shows how much cash is generated or consumed by the business's commercial activities
• Cash flow from investing activities: the investing cash flow shows how much cash is being invested in capital expenditure (equipment, real estate, etc.) either to maintain the business's equipment or to expand its capabilities
• Cash flow from financing activities: the financing cash flow shows how much cash is raised or distributed to financiers

Looking at the cash flow forecast helps you to make sure that your business has enough cash to keep running, and can help you anticipate potential cash shortfalls.

Your fund management company business plan will normally include both yearly and monthly cash flow forecasts so that the readers can view the impact of seasonality on your business cash position and generation.

The initial financing plan

The initial financing plan, also known as a sources and uses table, is a valuable resource to have in your business plan when starting your fund management company as it reveals the origins of the money needed to establish the business (sources) and how it will be allocated (uses).

Having this table helps show what costs are involved in setting up your fund management company, how risks are shared between founders, investors and lenders, and what the starting cash position will be. This cash position needs to be sufficient to sustain operations until the business reaches a break-even point.

Now that you have a clear understanding of what goes into the financial forecast of your fund management company business plan, let's shift our focus to the written part of the plan.

The written part of a fund management company business plan

The written part of the business plan is where you will explain what your business does and how it operates, what your target market is, whom you compete against, and what strategy you will put in place to seize the commercial opportunity you've identified.

Having this context is key for the reader to form a view on whether or not they believe that your plan is achievable and the numbers in your forecast realistic.

The written part of a fund management company business plan is composed of 7 main sections:

• The executive summary
• The presentation of the company
• The products and services
• The market analysis
• The strategy
• The operations
• The financial plan

Let's go through the content of each section in more detail!

1. The executive summary

The first section of your fund management company's business plan is the executive summary which provides, as its name suggests, an enticing summary of your plan which should hook the reader and make them want to know more about your business.

When writing the executive summary, it is important to provide an overview of the business, the market, the key financials, and what you are asking from the reader.

Start with a brief introduction of the business, its name, concept, location, how long it has been in operation, and what makes it unique. Mention any services or products you plan to offer and who you sell to.

Then you should follow with an overview of the addressable market for your fund management company, current trends, and potential growth opportunities.

You should then include a summary of your key financial figures such as projected revenues, profits, and cash flows.

Finally, you should detail any funding requirements in the ask section.

2. The presentation of the company

In your fund management company business plan, the second section should focus on the structure and ownership, location, and management team of your company.

In the structure and ownership part, you'll provide an overview of the business's legal structure, details about the owners, and their respective investments and ownership shares. This clarity is crucial, especially if you're seeking financing, as it helps the reader understand which legal entity will receive the funds and who controls the business.

Moving on to the location part, you'll offer an overview of the company's premises and their surroundings. Explain why this particular location is of interest, highlighting factors like catchment area, accessibility, and nearby amenities.

When describing the location of your fund management company, you may want to highlight the potential for growth in the area. You could mention the presence of a strong market with a wide range of businesses, as well as the availability of qualified professionals to help manage the fund. You could also emphasize the potential for access to capital from multiple sources, as well as the potential for long-term investments. Additionally, you might want to talk about the potential for a large, diverse customer base in the area. All of these factors could make the location an attractive choice for third-party financiers.

Finally, you should introduce your management team. Describe each member's role, background, and experience.

Don't forget to emphasize any past successes achieved by the management team and how long they've been working together. Demonstrating their track record and teamwork will help potential lenders or investors gain confidence in their leadership and ability to execute the business plan.

3. The products and services section

The products and services section of your business plan should include a detailed description of the offerings that your company provides to its customers. 

For example, your fund management company could offer services such as portfolio diversification, asset allocation advice, and portfolio risk analysis. These services would help customers to make informed decisions about their investments and provide them with the guidance and tools they need to manage their investments. Additionally, your fund management company could offer retirement planning services such as helping customers to create a retirement plan, retirement income planning, and Social Security benefits advice. These services would help customers plan and prepare for their retirement years.

When drafting this section, you should be precise about the categories of products or services you sell, the types of customers you are targeting and how customers can buy them.

4. The market analysis

When you present your market analysis in your fund management company business plan, it's crucial to include detailed information about customers' demographics and segmentation, target market, competition, barriers to entry, and any relevant regulations.

The main objective of this section is to help the reader understand the size and attractiveness of the market while demonstrating your solid understanding of the industry.

Begin with the demographics and segmentation subsection, providing an overview of the addressable market for your fund management company, the key trends in the marketplace, and introducing different customer segments along with their preferences in terms of purchasing habits and budgets.

Next, focus on your target market, zooming in on the specific customer segments your fund management company aims to serve and explaining how your products and services fulfil their distinct needs.

For example, your target market might include high net worth individuals. These are individuals with a net worth greater than $1 million or an annual income of more than $200,000. These customers have a large amount of liquid capital available and are willing to invest in funds that have the potential to generate high returns.

Then proceed to the competition subsection, where you introduce your main competitors and highlight what sets you apart from them.

Finally, conclude your market analysis with an overview of the key regulations applicable to your fund management company.

5. The strategy section

When writing the strategy section of a business plan for your fund management company, it is essential to include information about your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

The competitive edge subsection should explain what sets your company apart from its competitors. This part is especially key if you are writing the business plan of a startup, as you have to make a name for yourself in the marketplace against established players.

The pricing strategy subsection should demonstrate how you intend to remain profitable while still offering competitive prices to your customers.

The sales & marketing plan should outline how you intend to reach out and acquire new customers, as well as retain existing ones with loyalty programs or special offers. 

The milestones subsection should outline what your company has achieved to date, and its main objectives for the years to come - along with dates so that everyone involved has clear expectations of when progress can be expected.

The risks and mitigants subsection should list the main risks that jeopardize the execution of your plan and explain what measures you have taken to minimize these. This is essential in order for investors or lenders to feel secure in investing in your venture.

Your fund management company faces certain risks in its operations. One risk is the potential loss of assets due to a cyber attack. With the increasing sophistication of cyber criminals, your company could become a target of malicious actors. Furthermore, your company may face market risk due to fluctuations in the financial market. Economic downturns or market crashes could lead to a decrease in the value of the assets managed by your company.

6. The operations section

The operations of your fund management company must be presented in detail in your business plan.

Begin by addressing your staff, specifying the main roles and your recruitment plan to support the anticipated growth. Outline the qualifications and experience needed for each role and discuss your recruitment strategies, which may involve using job boards, referrals, or headhunters.

Next, clearly state your fund management company's operating hours, allowing the reader to gauge the adequacy of your staffing levels. Additionally, mention any considerations for varying opening times during peak seasons and your approach to handling customer queries outside regular operating hours.

The key assets and intellectual property (IP) required to run your business should also be highlighted. If you rely on licenses, trademarks, physical structures like equipment or property, or lease agreements, ensure they are well-documented in this section.

You may have key assets such as proprietary algorithms and software for fund performance analysis, as well as a database of customer and financial data. As for IP, you could have rights to unique investment strategies and fund management techniques, as well as valuable trademarks and logos. These assets and IP could be essential to success in the fund management industry.

Finally, provide a comprehensive list of suppliers you intend to collaborate with, along with a breakdown of their services and main commercial terms, such as price, payment terms, break clauses and contract duration. Investors often seek insight into the reasons behind your supplier choices, which may include a preference for higher-quality products or established relationships from past ventures.

7. The presentation of the financial plan

The financial plan section is where we will include the financial forecast we discussed earlier in this guide.

Now that you have a clear idea of what goes into a fund management company business plan, let's look at some of the tools you can use to create yours efficiently.

What tool should I use to write my fund management company's business plan?

In this section, we will be reviewing the two main options for writing a fund management company business plan efficiently:

• Using specialized software,
• Outsourcing the drafting to the business plan writer.

Using an online business plan software for your fund management company's business plan

Using online business planning software is the most efficient and modern way to create a fund management company business plan.

There are several advantages to using specialized software:

• You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can access a library of dozens of complete business plan samples and templates for inspiration
• You get a professional business plan, formatted and ready to be sent to your bank or investors
• You can easily track your actual financial performance against your financial forecast
• You can create scenarios to stress test your forecast's main assumptions
• You can easily update your forecast as time goes by to maintain visibility on future cash flows
• You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here .

Hiring a business plan writer to write your fund management company's business plan

Outsourcing your fund management company business plan to a business plan writer can also be a viable option.

Business plan writers are skilled in creating error-free business plans and accurate financial forecasts. Moreover, hiring a consultant can save you valuable time, allowing you to focus on day-to-day business operations.

However, it's essential to be aware that hiring business plan writers will be expensive, as you're not only paying for their time but also the software they use and their profit margin.

Based on experience, you should budget at least £1.5k ($2.0k) excluding tax for a comprehensive business plan, and more if you require changes after initial discussions with lenders or investors.

Also, exercise caution when seeking investment. Investors prefer their funds to be directed towards business growth rather than spent on consulting fees. Therefore, the amount you spend on business plan writing services and other consulting services should be insignificant compared to the amount raised.

Keep in mind that one drawback is that you usually don't own the business plan itself; you only receive the output, while the actual document is saved in the consultant's business planning software. This can make it challenging to update the document without retaining the consultant's services.

For these reasons, carefully consider outsourcing your fund management company business plan to a business plan writer, weighing the advantages and disadvantages of seeking outside assistance.

Why not create your fund management company's business plan using Word or Excel?

Using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write a fund management company business plan is a terrible idea.

For starters, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.

As a result, it is unlikely anyone will trust your numbers unless - like us at The Business Plan Shop - you hold a degree in finance and accounting and have significant financial modelling experience in your past.

The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Also, using software makes it easy to compare actuals vs. forecasts and maintain our forecasts up to date to maintain visibility on future cash flows - as we discussed earlier in this guide - whereas this is a pain to do with a spreadsheet.

That's for the forecast, but what about the written part of my fund management company business plan?

This part is less error-prone, but here also software brings tremendous gains in productivity:

• Word processors don't include instructions and examples for each part of your business plan
• Word processors don't update your numbers automatically when they change in your forecast
• Word processors don't handle the formatting for you

Overall, while Word or Excel may be viable options for creating a fund management company business plan for some entrepreneurs, it is by far not the best or most efficient solution.

• Using business plan software is a modern and cost-effective way of writing and maintaining business plans.
• A business plan is not a one-shot exercise as maintaining it current is the only way to keep visibility on your future cash flows.
• A business plan has 2 main parts: a financial forecast outlining the funding requirements of your fund management company and the expected growth, profits and cash flows for the next 3 to 5 years; and a written part which gives the reader the information needed to decide if they believe the forecast is achievable.

We hope that this in-depth guide met your expectations and that you now have a clear understanding of how to write your fund management company business plan. Do not hesitate to contact our friendly team if you have questions additional questions we haven't addressed here.

Also on The Business Plan Shop

• How to write a business plan to secure a bank loan?
• Key steps to write a business plan?
• Top mistakes to avoid in your business plan

Do you know entrepreneurs interested in starting or growing a fund management company? Share this article with them!

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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How To Write the Funding Request for Your Business Plan

What goes into the funding request, parts of the funding request, important points to remember when writing your request, frequently asked questions (faqs).

MoMo Productions / Getty Images

A business plan contains many sections, and if you plan to seek funding for your business, you will need to include the funding request section. The good news is that this section of your business plan is only needed if you plan to ask for outside business funding. If you're not seeking financial help, you can leave it out of your business plan. There are a variety of  ways to fund your business  without debt or investors. Below, we'll cover how to write the funding request section of your business plan.

Key Takeaways

• The funding request section of your business plan is required if you plan to seek funding from a lender or investors.
• You'll want to include information on the business, your current financial situation, how the money will be used, and more.
• Tailor each funding request to the specific funding source, and make sure you ask for enough money to keep your business going.

The funding request section provides information on your future financial plans, such as when and how much money you might need. You will also include the possible sources you could consider for securing your funds, such as loans or crowdfunding. Later, you can update this section when you need outside funding again for business growth.

An Outline of the Business

Yes, you've done this already in past sections, but you want to give potential lenders and investors a recap of your business. In some cases, you might simply share the funding request section so you need to have your business details such as what you provide, information about your target market, your structure (i.e. LLC), owners' and members' information (for partnerships and corporations), and any successes you've had to date in your business.

Current Financial Situation

Again, you've provided some financial information in the financial data section , but it doesn't hurt to summarize. If you're submitting just the funding request, you'll need this information to help financial sources understand your money situation.

Provide financial details such as income and cash flow statements, and balance sheets in your funding request section.

Offer your projected financial information as well. If you're asking for a loan for which you'll be offering collateral, include information about the asset. If the business had debt, outline your plan for paying it off. Finally, share how you'll pay the loan or what sort of return on investment (ROI) investors can expect by investing in your business.

How Much Money Do You Need Now and in the Future?

Indicate what type of funding you're asking for such as a loan or investment. Outline what you need now and what you might need in the future as far as five years out. 

How Will the Funds Be Used?

Detail how you'll be using the money, whether it's for inventory, paying a debt, buying equipment, hiring help, and more. If you plan to use the money for several things, highlight each and how much money will go to each.

Most financial sources would rather invest in things that grow a thriving business than things that pay for debt or overhead expenses. 

Current and Future Financial Plans

Current and future financial plans include items such as loan repayment schedules or plans to sell the business. If you're getting a loan, outline your plans for repayment (although most lenders will have their own schedules). If you have plans to sell the business, let the lender know that and how it will affect them. Other issues to consider are relocation (if you move) or a buyout. Finally, let investors know how they can exit the deal, such as cashing out (and how long before they can do that).

You're asking for money, so you need to always be professional and know your business inside and out. Here are some other things to keep in mind:

• Tailor your funding request to each financial source : Lenders and investors need different information, such as loan repayment versus ROI, so create different reports for each. 
• Keep your funding sources in mind : Each resource will have different questions and concerns. Do a little research so you can address them in your report.
• Ask for enough to keep your business going : Don't be stingy, as you don't want your business to fail from a lack of money. At the same time, don't be greedy, asking for more than you need. 

How do you request funding for a nonprofit?

Most nonprofits seek funding in the form of grants. Write a grant proposal that includes information on the project or organization, preliminary budget needs, and more. Be sure to format it with a cover letter, proposal summary, the introduction of the organization, problem statement, objectives, methods, evaluation, future funding needs, and the budget.

What are three methods of funding?

Grants and scholarships, equity financing, and debt financing are the main three methods of funding for small businesses . Grants and scholarships do not need to be repaid and are often best for nonprofit organizations. Equity financing is when you receive money in exchange for ownership and profits. Debt financing is when you borrow money that needs to be repaid.

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Small Business Administration. " Fund Your Business ."

Congressional Research Service. " How To Develop and Write a Grant Proposal ."

Library of Congress Research Guides. " Types of Financing ."

April 12, 2023

Can't find what you're looking for?

Use of Funds Slide Best Practices With Pitch Deck Examples

Use of Funds Slides are used to present your company’s financial information in a pitch deck with a way that is easily understandable. If you don’t know where to start, consider our best practices below!

What's Inside?

There's no question that a well-presented funding slide can make or break a pitch. Even if you have the most amazing product or service in the world, if you can't convince your audience that you're worth investing in, you won't get very far.

In this blog post, we'll take a look at some best practices for creating and delivering a successful use of funds slide . We'll also provide some examples to help illustrate these concepts. Let's get started!

What is a pitch deck ?

A pitch deck is simply a presentation that entrepreneurs use to communicate the key ingredients of their startup story to potential investors.

A great pitch deck should be clear, concise, and compelling, while also visual and easy to follow.

The best pitch decks tell a complete story about the problem the startup is solving, the market opportunity , the product or solution, the team, traction to date, and how all of this translates into a large business with significant upside potential.

Additionally, a good pitch deck will address any areas of concern that investors might have and provide thoughtful responses.

In short, a pitch deck is an essential tool for any startup seeking outside investment.

Types of use of funds slides

The use of funds slide can be a really important part of the pitch deck, and it should explain how you intend to spend your money. For example, if you are using equity financing rounds, then the use of funds slide should detail how you intend to spend that money.

One type of use of funds slide is a pie chart that breaks down the percentage of each category that will be allocated to research and development, sales and marketing, administration, and so on.

Another type of use of funds slide is a bar graph that shows how the money will be distributed over time. This can help investors see when the company expects to start spending the money and how it will be used over time.

Financial slides, on the other hand, are more detailed than the use of fund slides. To mention a little, they can be used to help present your company's financials. Some of the most common are the income statement, balance sheet, and cash flow statement.

Each of these slides can provide different insights into your company's financial health and where your funds are being allocated.

For example, the income statement shows how much revenue your company is generating and how much profit it is making, while the balance sheet shows what assets and liabilities your company has. The cash flow statement shows how much cash your company is bringing in and spending.

Best practices for use of funds slides

There are no definitive "best practices" for use of funds slides, as every company is different and will have different needs. However, here are a few general tips to keep in mind when creating your company's funds slide:

1. Make sure your numbers are accurate and up-to-date. Investors will want to see evidence that you are making smart and responsible use of the funds they invest in you.

2. Be clear and concise in your presentation of information. Investors don't want to have to dig through a bunch of numbers to figure out what's going on - they want to be able to understand your financial situation at a glance.

3. Keep it simple. Your funds slide should be clear and concise, so avoid overcrowding it with too much information.

Examples of use of funds slides

Facebook's pitch deck template.

If you're looking to create a pitch deck for your startup, Facebook has a template that you can use. The social media giant released the pitch deck template that its own developers used when pitching Facebook to investors back in 2004.

The deck includes slides on the problem that Facebook is solving, the market opportunity, the product, the team, the business model, and the competition.

While it's not necessary to use Facebook's exact template, it can be a helpful starting point for creating your own pitch presentation .

Uber's pitch presentation

Uber's pitch presentation is one of the most pitches in their arsenal. It's a way to convince potential investors that Uber is a good bet and to get them excited about the company's prospects.

The pitch deck is also a valuable tool for Uber when it comes to fundraising. By giving potential investors a clear picture of the company's plans and prospects, they're more likely to invest.

Airbnb’s investor pitch deck

A pitch deck is a presentation that entrepreneurs use to pitch their business idea to potential investors. The pitch deck is a key component of the fundraising process, and it can make or break a startup’s chances of success.

Airbnb ’s pitch deck is a great example of how to craft an effective pitch. The deck is concise and to the point, and it tells a compelling story about the company’s vision and mission.

It also includes concrete data points that illustrate Airbnb’s impressive growth. Perhaps most importantly, the deck conveys a strong sense of confidence, which is critical when pitching to potential investors.

Overall, Airbnb ’s pitch deck is a great example of how to effectively communicate your startup’s story.

How to make use of funds slide?

There's no one-size-fits-all answer to this question, as the best way to make a "use of funds" slide will vary depending on your company and its specific funding situation. However, here are a few tips to help you get started:

1. Start by outlining your company's key milestones and objectives, and then show how each milestone was funded (e.g., through investment, grants, etc.).

2. Use graphs and visuals to illustrate how your company is using its funds effectively. For example, if you've received a grant for research and development purposes, you could use a graph to track how many new products have been developed with that grant money.

3. Keep it simple: Your audience should be able to understand your slide without having to read any accompanying text. Use easy-to-understand visual representations of your data, and make sure all information is accurately represented.

4. Be clear and concise: Your slide should communicate exactly what it means in a clear and concise way. Avoid using jargon or complex terms that might confuse your audience.

Tips for building a good pitch deck

A pitch deck is a presentation that startups use to raise funding from investors. A well-crafted pitch deck should be able to articulate your company's vision, business model, and competitive advantages.

It should also provide an overview of your financial projections and use of funds. While there is no one-size-fits-all formula for a winning pitch deck, there are a few key components that every good pitch deck should have.

First, your pitch deck should have a clear and compelling story. Investors will want to know what problem you're solving and why your solution is unique. Be sure to articulate your value proposition clearly and concisely.

Second, your pitch deck should include a use of funds slide. This slide will show investors how you plan on using the funding you're requesting. Be sure to be realistic and clear about your plans for the use of funds.

Third, your pitch deck should be visually pleasing and easy to follow. Remember that investors will be seeing a lot of pitch decks, so you want yours to stand out. Use high-quality visuals and graphics to help tell your story in an engaging way.

Fourth, your pitch deck should be well-rehearsed. You'll only have a limited amount of time to make your case.

Do's and don'ts of pitch deck delivery

When delivering a pitch deck, there are a few things to keep in mind in order to make the most impact.

First, use the use of funds slide to help tell your story and communicate your strategy.

Second, focus on the key points you want to get across and don't try to cram too much information into the presentation.

And finally, practice, practice, practice! There's nothing worse than getting stage fright in front of potential investors.

Also, there are some things to avoid doing if you want to make a good impression. First, don't use too much jargon or technical terms that your audience won't understand.

Second, don't try to cram too much information into your presentation - focus on the key points you want to get across.

Third, don't just read from your slides - engage with your audience and make eye contact.

And finally, don't forget to practice your presentation before you give it! If you follow these tips, you'll be sure to give a pitch deck presentation that impresses you.

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Biden-Harris Administration Announces $60 Million for Emergency Work in Wake of the Collapse of the Francis Scott Key Bridge in Baltimore

$60 Million in ‘Quick Release’ Emergency Relief funds are a down payment on Maryland’s initial costs for emergency repairs, design, and reconstruction of the bridge

FHWA 10-24 Contact: [email protected] Tel: (202) 366-0660

WASHINGTON – Within hours of receiving the request, the U.S. Department of Transportation’s Federal Highway Administration (FHWA) today announced the immediate availability of $60 million in “quick release” Emergency Relief (ER) funds for the Maryland Department of Transportation to rebuild the Francis Scott Key Bridge after a cargo container ship struck the bridge on March 26. These funds serve as a down payment toward initial costs, and additional Emergency Relief program funding will be made available as work continues.

“No one will ever forget the shocking images of a container vessel striking the Francis Scott Key Bridge, causing its collapse and the tragic loss of six people,” said U.S. Transportation Secretary Pete Buttigieg . “The federal emergency funds we’re releasing today will help Maryland begin urgent work, to be followed by further resources as recovery and rebuilding efforts progress. President Biden has been clear: the federal government will do everything it takes to help rebuild the bridge and get the Port of Baltimore back open.”

“We are supporting President Biden’s whole-of-government response to this tragic incident and the federal government is committed to providing all necessary resources to rebuild the bridge,” said Federal Highway Administrator Shailen Bhatt . “The Emergency Relief funding announced today provides an initial down payment of funds to help Maryland manage ongoing disruptions to traffic, supply chains, and daily life, and is the first step in our joint efforts to reconstruct the Francis Scott Key Bridge.”

FHWA’s Emergency Relief program provides funding to States, Territories, Tribes, and Federal Land Management Agencies for highways and bridges damaged by natural disasters or catastrophic events. These “quick release” Emergency Relief funds are an initial installment to help restore essential transportation. Additional funds needed for the rebuilding of the bridge will be supported by the Emergency Relief program through nationwide funding allocations. FHWA is also providing technical assistance, conducting site assessments, and administering emergency contracts for the new bridge.

The structure is located in the Baltimore Harbor and Port of Baltimore. Following the incident, the channel has been closed, and all shipping traffic to Seagirt Marine Terminal at the Port of Baltimore has been stopped and diverted elsewhere. The Port of Baltimore is essential to the regional economy and national supply chains, and the I-695 corridor, of which the bridge was a part, provides a vital connection for people and goods traveling along the East Coast. FHWA is actively coordinating with federal, state, and local officials in the region, including the Maryland Department of Transportation, the Maryland Transportation Authority, the City of Baltimore, U.S. Coast Guard, the National Transportation Safety Board (NTSB), and others to mitigate supply chain impacts, manage traffic, reopen the port, and ultimately rebuild the bridge. The NTSB, an independent agency, is the leading the investigation into the vessel allision and subsequent bridge collapse.

The Governor of Maryland has declared a State of Emergency and FHWA has approved MDOT’s application, making the event eligible for Emergency Relief funding. The funds will be used for eligible costs associated with debris removal, demolition, detours, emergency repairs, and design and reconstruction on I-695 and the Francis Scott Key Bridge. The Maryland Department of Transportation is continuing to conduct necessary emergency operations, such as implementing detours, to maintain traffic as the disaster area is not passable, and to repair applicable sections sufficiently to protect facilities from further damage and clearing the navigable waters to safely reopen operations at the Port of Baltimore.

The FHWA Emergency Relief program complements the Bipartisan Infrastructure Law by encouraging agencies to identify and implement measures to incorporate resilience in the design, restoration and repair of damaged infrastructure, in order to better withstand future damage from climate change and future weather events.

More information about FHWA’s Emergency Relief program can be found online at https://www.fhwa.dot.gov/programadmin/erelief.cfm

Panasonic to Sell Autos Business to Apollo Global-Managed Funds

A man is seen next to Panasonic Corp's logo at Panasonic Center in Tokyo, Japan, February 2, 2017. REUTERS/Kim Kyung-Hoon/ File Photo

TOKYO (Reuters) -Japan's Panasonic Holdings said on Friday it will sell its entire stake in Panasonic Automotive Systems (PAS) to funds managed by U.S. private equity firm Apollo Global Management, and then make an investment in the new holding entity.

The transaction has a total enterprise value of 311 billion yen ($2.06 billion), subject to adjustments at closing, which is expected by the end of the first quarter of 2025, Apollo said in a statement.

Panasonic said it will acquire a 20% stake in Star Japan Holdings, the company which will own the new parent company of PAS. The automotive business will maintain its strategic relationship with Panasonic Group, Apollo said in its statement.

Panasonic has previously said the business could potentially be listed in the future.

Separately, Panasonic said its unit Blue Yonder would acquire U.S. digital supply chain network supplier One Network Enterprises for $839 million, expecting the deal to be completed in the July-September quarter of 2024.

($1 = 151.3300 yen)

(Reporting by Mariko Katsumura and Daniel Leussink; Editing by Christian Schmollinger, Miral Fahmy and Emelia Sithole-Matarise)

Copyright 2024 Thomson Reuters .

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Microsoft and OpenAI plan to build a $100 billion supercomputer to power artificial intelligence: report

• Microsoft and OpenAI are working on a $100 billion supercomputer, according to The Information.
• The project could launch as soon as 2028 as part of the companies' five-phase plan.
• The US-based supercomputer, known as Stargate, would far exceed current computing power.

Microsoft and OpenAI are planning an unprecedented supercomputer that uses millions of specialized server chips and could cost up to $100 billion, The Information reported this week.

The US-based supercomputer, known as "Stargate," would be the centerpiece of a five-phase plan focused on a series of supercomputer installations the companies plan to build in the next six years, the outlet reported. Stargate, which would be phase 5 of the plan, could launch as soon as 2028, people involved in the proposal told The Information.

Executives at both companies have already drawn up plans for the data center project, which would power OpenAI's artificial intelligence, according to the outlet.

A spokesperson for Microsoft declined to comment directly on the report but highlighted the company's demonstrated ability to build pioneering AI infrastructure. 

"We are always planning for the next generation of infrastructure innovations needed to continue pushing the frontier of AI capability," a representative for the company told Business Insider. 

OpenAI did not immediately respond to a request for comment from BI.

Related stories

Microsoft, which has already committed more than $13 billion to OpenAI, would likely provide funding for Stargate, per the report. OpenAI currently uses Microsoft data centers to power its generative AI system ChatGPT in exchange for Microsoft having exclusive rights to resell OpenAI's technology to its own customers.

Microsoft insiders told Business Insider earlier this month that the company's strategy has increasingly focused on its work with OpenAI , leading some to worry that Microsoft is essentially becoming an IT department for the startup. 

The supercomputer could be 100 times more expensive than the largest data centers currently in operation, per the report. The project signals the massive amount of money likely to be poured into the industry as artificial intelligence continues to evolve in the coming years.

Stargate also has the potential to far exceed the computing power currently supplied by Microsoft to OpenAI from its data centers around the country but would require at least several gigawatts of power to do so, The Information reported,

Microsoft's involvement in the project, however, hinges on OpenAI fulfilling its promise to boost its AI's capabilities , a source told the outlet.

The quest to obtain the necessary server chips is the primary factor driving Stargate's hefty price tag, according to the report. Finding enough energy sources to power the project could also pose challenges, and the two companies have talked about possibly using alternative power sources like nuclear energy , sources said.

The demand for AI chips has reached a fever pitch, allowing a select few companies — primarily Nvidia — to control the market. Altman has expressed frustration with the "brutal" situation and signaled earlier this year that he wants to make his own. 

The chip dilemna is just one of several details that still need to be ironed out with regard to Stargate. People familiar with the project told The Information that Microsoft needs to figure out how to put more GPUs into a single rack than it currently does in order to boost the chips' performance. The company also needs to find a way to prevent the chips from overheating, according to the report.

It's not clear where Stargate would be located or whether it would be built in just one data center or several nearby centers, The Information reported.

Axel Springer, Business Insider's parent company, has a global deal to allow OpenAI to train its models on its media brands' reporting.

Watch: An AI expert discusses the hardware and infrastructure needed to properly run and train AI models

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