Funding plan is attached Using your funding plan as the basis for your slide deck, create a 10-15 slide deck incorporating the following information. Then submit your slide deck for evaluation. Title

Running head: FUNDING PLAN 0

FUNDING PLAN

Funding plan

In order to gather the needed capital to begin promise Inc, the firm owner plans on getting funding options from investors. The other funding options that are available have financial limitations in that if the business owner decides to use personal savings only $20,000 will be available whereas if he or she seeks bank loans they will be credited $100,00 which is not sufficient in running the business operations in the firm year. Taking into account that investors’ money is interest free and is up to $200,000, this will be the most suitable funding option. The investors will own one share for every $300 given to the business and their total percentage of shares is 30%. This implies that the business owner will remain with 70% shares which make him the decision maker. This money will not be returned and thus the firm will be in a position to use the returns gotten to fund the operations of the next year up to the fifth year.

In order to ensure that the firm remains financially healthy, there will be no dividends given to the investors for the first years and all the raised income will be used in investments which yield more income to the firm. Following the predicted upward trajectory in the business revenue, the firm will have to ensure that an approximate of a third of the total earnings are invested in expanding the business so as to increase its profitability (Chen.et.al, 2019). However, in future the firm will have to seek funding options such as loans with low interests so as to ensure that the business owner doe not lose much of his shares through increased funding from the investors who become shareholders afterwards.

The intended use of the current funding request is to buy new equipment which will enable the business operations to be conducted as expected. It is crucial to ensure that as much as financial resources are available, they are used in the right way through investing in those operations which are critical in a business. Therefore, using the acquired money to ensure that the material needed to ensure the business production system is strong is vital and an effective way of using it. Also, the firm will use the money to acquire resources such as land and buildings which are crucial part of investment.

Some portion of the finances will be used for capital expenditures; the firm will have to establish a firm foundation through acquiring as many assets as possible especially those assets that appreciate in value. Assets such as land, buildings will help the firm’s value to appreciate and therefore they should be obtained. Moreover, the firm will use the money to meet its every day operations (Chaudhry.et.al, 2017). To ensure that the current liabilities of the firm are paid on time, some of the available finances will be secluded and used within the four year period for this purpose. Moreover, acquiring current assets will be done using the funding obtained from investors.

In order to maximize the production activities of the organization, raw materials should be obtained in abundance so as to increase the operation capacity. Business activities such as purchase of new equipment which is done using the available finances will ensure that the capacity of business operations are increased which will be reflected in higher output and thus lead to more revenue and profits. All these business operations that need money so as to be carried out should be strategically planned so as to avoid excessive use of financial resources in certain operations which limits the available funds for other crucial operations of the business.

In the future, there are plans to recover some of the sold shares by the owner. Having numerous shareholders in the business is a god way to obtain financial resources but can also lead to limitations in regard to the profits that the owner and the business gets. The growth of the business will depend majorly on the amount of capital which is used to expand its everyday operations and its production system.

A huge number of shareholders require a certain amount of the company’s profits which could be used to perhaps diversify the business or purchase certain investment options. Therefore, in future, it would be crucial to buyout the investors so as to remain the sole owner of the business and have the full authority to make decisions pertaining the business (Rauh, 2016). This will ensure that the acquired profits of the firm are re-invested into the business and thus the value of the company will continued to increase and the performance of the business will increase.

Financial health of the firm is measured in regard to the operating activities of the business plus its asset column and the return from assets. As the sole owner of the business, one will be in a better position to make decisions and invest in areas that maximize the business’ growth and diversification as well as those areas which increase the asset column of the company. Buying out investors will be costly in future but this will be a good decision to the firm as well as to the owner of the company.

References

Chaudhry, N., Au Yong, H. H., & Veld, C. (2017). How does the funding status of defined benefit pension plans affect investment decisions of firms in the United States?. Journal of Business Finance & Accounting, 44(1-2), 196-235. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1111/jbfa.12219

Chen, X. P., Yao, X., & Kotha, S. (2019). Entrepreneur passion and preparedness in business plan presentations: a persuasion analysis of venture capitalists' funding decisions. Academy of Management journal, 52(1), 199-214. Retrieved from https://journals.aom.org/doi/abs/10.5465/amj.2009.36462018

Rauh, J. D. (2016). Investment and financing constraints: Evidence from the funding of corporate pension plans. The Journal of Finance, 61(1), 33-71. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.2006.00829.x