Welcome back! This week we have the 3rd and final set of questions detailed below.
Answering these questions on your cash flow will show the investor that your business is viable and will be profitable - if not then it may be time to go back to the drawing board!
These data questions will enable the investor to become confident in their decision to invest.
Answer these questions thoroughly and accurately. Investors will want to hear the reasoning behind your numbers so prepare to back up the figures.
And remember an investor isn't just giving your company money, they are giving it to you. They will invest if they believe in you.
Section 6 - Cash Linked to P&L: past inflows/outflows
Include some information about your Profit and Loss cash flow to date. Financial year start dates, currency trading in, total revenues* and sales for this and the past financial year, development costs* (Capital Expenditure), operational costs*.
Section 7 - Cash Linked to P&L: Current FY and future projections
Include your expected revenues, expenditure, and staff levels over the next two years.
What is your forecast for future Revenue?
What is your forecast for future Development Costs?
What is your forecast for future Operational Costs?
How many people (or the equivalent of full-time people) do you employ, and how do you see that changing in the next few years?
How many paying customers do you currently have, and how do you see that changing in the next few years?
*Revenue is the income generated from normal business operations and includes discounts and deductions for returned merchandise. It is the top line or gross income figure from which costs are subtracted to determine net income.
*Development Costs are funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, an industrial plant, technology, or equipment. It would also include development costs for software etc.
*Operational Costs are the cost a company incurs for running its day-to-day operations. These expenses should be ordinary and customary costs for the industry in which the company operates. It will include things like property rental, most salaries, electricity, and heating costs.