Finding Starting Capital

Avenues for Finding Starting Capital

In groups of five, determine how you can use bootstrapping approaches for your
business idea!
Discuss the pros and cons of each money source!

Bootstrapping options Pros Cons

1. __________________ 1. __________________ 1. __________________

2. __________________ 2. __________________

3. __________________ 3. __________________

4. __________________ 4. __________________

2. __________________ 1. __________________ 1. __________________

2. __________________ 2. __________________

3. __________________ 3. __________________

4. __________________ 4. __________________

3. __________________ 1. __________________ 1. __________________

2. __________________ 2. __________________

3. __________________ 3. __________________

4. __________________ 4. __________________

4. __________________ 1. __________________ 1. __________________

2. __________________ 2. __________________

3. __________________ 3. __________________

4. __________________ 4. __________________

Action Working Sheet 06 – Finding Starting Capital - 39 -

Bicol University & Leuphana University │STEP – Student Training for Entrepreneurial Promotion
Net Present Value (NPV)

Period Cash Cash inflows Net Cash Present Present

outflows Flow Value rate at Value
21%
0

In your groups of five determine if your decision would change if:

 The risk premium changed to 15% and 25%
 You re-evaluated and found out that initial outlay for the investment was USD
2,000,000 or USD 850,000 at the current discount rate.
 The cash inflows rose to USD 500, 000 but were then subject to a 2% tax and the initial
outlay and rate of return were not altered.

Action Working Sheet 06 – Finding Starting Capital - 40 -

Bicol University & Leuphana University │STEP – Student Training for Entrepreneurial Promotion
Return on Investment (ROI)

Compare these two investments

 A: A USD 1,000,000 investment that earns USD 50,000 in interest.
 B: A USD 200,000 investment that earns USD 15,000 in interest.

Which one generates more investment?

Which one earns a higher return on investment?
Which is the best investment option?

Year 1 Year 2 Year 3 Year 4

Cashout
Lay

Return in
USD

ROI

Action Working Sheet 06 – Finding Starting Capital - 41 -

Bicol University & Leuphana University │STEP – Student Training for Entrepreneurial Promotion
 Investment Plan
Now it’s coming to figures. Before you start your business you should have a clear picture of the money
issues because money and profit is essential for the success of your business. First provide an estimation
of the investments you have to make to set-up your business. The items listed below are only examples.
Not all the items may be applicable to your business and there may be other items applicable to your
business.

Start-Up Investments
Amount (Php)
Assets
Furniture & Fittings
Tools & Equipment
Plant & Machinery
Motor vehicle
Land & Buildings
Mobile phone

Set-up fees
Deposit & First rent
Legal fees & Tax
Licenses
Telephone line

Preliminary expenses
Insurance
Advertising
Printing & Stationary
First Stock & Raw materials
Working capital

TOTAL

Action Working Sheet 06 – Finding Starting Capital - 42 -

Bicol University & Leuphana University │STEP – Student Training for Entrepreneurial Promotion
 Starting Capital Plan
This is the second part of your finance plan. Review the capital you need for setting-up your business
(Action Working Sheet 11 – Investment Plan). Now, provide an overview of the sources of the capital to
finance your start-up investments.

Sources of Capital
Review Action Working Sheet 11 – Investment Plan: Determine the amount of money you will need for
your business!
List the different sources and obligation in respect to the above amount.
Amount (Php)
Source
Business owner(s) investments
Loans and money borrowed:
Source A
Source B
Source C
Source D
Source E
Source F
…

TOTAL (Loans and money borrowed)

TOTAL

In case one of your sources disappoints you, where else will you get the money and how much will it be?
Alternative Sources Amount (Php)
Source A
Source B
Source C
…

Action Working Sheet 06 – Finding Starting Capital - 43 -

Bicol University & Leuphana University │STEP – Student Training for Entrepreneurial Promotion