MONEY NEEDED

TO START AN
ENTERPRISE
6.53

Mirjam Nilsson
RATIONALE
Setting up a business requires a certain amount of money that has to be spent
before the business activities can start to generate income though sales. Often
potential entrepreneurs underestimate the amount needed because they only
take into account the expenditures for investment items such as machines and
equipments, cars, and so on. They are not aware that during the first weeks or
months of operations (trading, manufacturing or providing services) the sales
revenues do not cover the expenditures for running the business. This can lead
to a problem of liquidity whereby the entrepreneur cannot pay salaries or
suppliers.
The amount needed as start-up capital is generally much higher than the
money the future businesswoman or businessman has at her/his disposal. As
the difference has to be found from other resources, it is important to know
exactly how much money is needed.

7/1/20XX Pitch deck title 2

ACTIVITIES
1. Have learners read HANDOUT 1 as homework. Explain the difference between
pre-operation payments and initial operation payments and factors that determine
the duration of the initial operation period.
2. Divide learners into small groups and ask them to indicate whether the payment is
either pre-operation payments, initial operation payments or other types of
payments and fill complete WORKSHEET 1. After they finished, discuss each
payment with the learners.

3. Have the learners read WORKSHEET 2. Divide them into groups of 4 or 5 to

answer the questions. Explain what a timeline and milestones are. Make sure that
the learners understand when the pre-operation period ends and the initial
payment period begins. Have each group present their findings. Show
TRANSPARENCIES 1 and 2 and let the learners fill the tables of pre operation
payments and initial operation payments.

7/1/20XX Pitch deck title 3

ESTIMATING THE START-UP CAPITAL
If someone wants to start a business he/she must be aware that a certain amount of
money is needed during the start-up process of a business for payments before the
business begins to earn its own income. This money is called start-up capital. It serves
two purposes.
• Pre-operation payments or investment capital
his means money that a person starting a business will have to pay before his business
starts operating. The money needed for these payments is invested in the business as
long as the business is operating.
Buying land, constructing a workshop, purchasing machinery, tools, equipment office
furniture, etc. are all pre-operation payments, as are legal fees, connections for water,
electricity and telephone, publicity and advertisement before opening, and so on.

7/1/20XX Pitch deck title 4

ESTIMATING THE START-UP CAPITAL
Business starters, are generally aware that they need money for machines, tools or
equipment for a shop. However, in particular young people, very often do not realize that a
number of other payments have to be made before they can really start their business. For
example, the cost for installation of machines and the training of workers to use them can
constitute quite a high percentage of the total cost of the machines. Fees for licenses and
insurance are also part of investment capital.

Initial operation payments or working capital

Initial operation payments will occur when a new business starts to operate, to cover
immediate expenses until revenues from sales flow back into the business. This time span
depends on the nature of the business. In general, in trading activities this period can be
less than one month while in manufacturing activities the time span between the starting
date of the production (processing time of the product, the time it remains in the
distribution system, e.g. store of finished goods in the factory, delivery to wholesalers or
retailers or to the customer) and receipt of money in the bank account or cash box can be
several months. This money is also invested permanently in the business and is working
capital. When the business expands the working capital needs to be increased

5
ESTIMATING THE START-UP CAPITAL
The need for working capital is also often underestimated. Business starters think they will
be paid immediately. This is often the case in trading activities; however, the shop owner
has to have a stock of goods because she/he cannot replace every article sold immediately.
Sometimes customers who place bigger orders ask for credit and payments are not always
made on time.
In manufacturing activities, working capital has to cover a longer period that can last
several months. If the working capital is underestimated, an entrepreneur may have a
flourishing business, but may run out of money to pay salaries, buy additional merchandise
for sale, or is not able to make bank repayments. It is recommended that a certain
percentage is included in the investment capital for unforeseen items. Working capital
should also include additional funds for unforeseen expenses.
The distinction between these two categories of payments depends on the moment when
the payments are made: either before the business starts to operate (investment capital) or
after it has started (working capital). The start-up capital for a new business is the sum of
the expenditures for the investment items and the working capital. The future entrepreneur
needs to have this amount of money by: using his/her own savings, finding partners and
negotiating loans with banks. As a general rule, 30% of the start-up capital should be from
the entrepreneur's own resources.

6
 SOLUTION
CLOSE THE GAP
Our product offers the style and function of traditional commercial spaces,
but with a plan for energy efficiency

TARGET AUDIENCE
Gen Z (18-25 years old)

COST SAVINGS
Reduce expenses for building electricity and air conditioning

EASY TO USE
A simple building that gives customers the space they need without the high
cost of building maintenance

7/1/20XX Pitch deck title 7

 PRODUCT OVERVIEW

UNIQUE TESTED
Only product specifically dedicated to the commercial Conducted testing with young business owners in the
market area

FIRST TO MARKET AUTHENTIC

First beautifully designed building that's both stylish Designed with the help and input of architecture
and functional experts in the field 

7/1/20XX Pitch deck title 8

 PRODUCT BENEFITS

Simple and quick to Creates spaces for Reduces carbon

build community footprint
interactions

7/1/20XX Pitch deck title 9

COMPANY OVERVIEW
 BUSINESS MODEL

RESEARCH DESIGN ABSTRACT

We based our research on We believe people need Minimalist design and

market trends and energy efficient buildings easy to build
commercial sales

7/1/20XX Pitch deck title 11

 MARKET OVERVIEW

$3B $2B $1B

Opportunity to build Freedom to invent Few competitors

Fully inclusive market Selectively inclusive market Specifically targeted market

Total addressable market Serviceable available market Serviceable obtainable market

7/1/20XX Pitch deck title 12

 MARKET COMPARISON

$3B $2B $1B

OPPORTUNITY TO FREEDOM TO FEW
BUILD INVENT COMPETITORS

Addressable market Serviceable market Obtainable market

7/1/20XX Pitch deck title 13

OUR COMPETITION

CONTOSO COMPETITORS

• Our product is priced below that of other • Company A

architecture companies on the market Product is more expensive

• Simple and easy to build, compared to the • Companies B & C

complex building materials of the competitors Product is expensive and inconvenient to use

• Affordability is the main draw for our consumers • Companies D & E

to our product Product is affordable, but inconvenient to use

7/1/20XX Pitch deck title 14

 OUR COMPETITION

CONVENIENT
Contoso
A

EXPENSIVE AFFORDABLE

C
D

B
E
INCONVENIENT

7/1/20XX Pitch deck title 15

 GROWTH STRATEGY
How we’ll scale in the future

FEB 20XX MAY 20XX OCT 20XX

Roll out drafts to local companies Release the drafts to the general Gather feedback from architectural
in the region to help establish the public and monitor press and firms and commercial business
product regional market trends owners to expand availability of
the product

7/1/20XX Pitch deck title 16

 TRACTION
Forecasting for success

KEY METRICS REVENUE BY YEAR

$40,000

Gross
Clients Orders Net revenue
revenue
$30,000

20XX 10 1100 $10,000 $7,000

$20,000
20XX 20 200 $20,000 $16,000

20XX 30 300 $30,000 $25,000

$10,000

20XX 40 400 $40,000 $30,000

$0
20XX 20XX 20XX 20XX

7/1/20XX Pitch deck title 17

TWO-YEAR ACTION PLAN

Draft plans Run focus groups Gather feedback

Feb 20XX May 20XX Oct 20XX

20XX JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

20XX JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Test with businesses Regional launch Deliver to client

Feb 20XX July 20XX Dec 20XX

7/1/20XX Pitch deck title 18

FINANCIALS
YEAR 1 YEAR 2 YEAR 3

Income

Users 50,000 400,000 1,600,000

Sales 500,000 4,000,000 16,000,000

Average price per sale 75 80 90

Revenue @ 15% 5,625,000 48,000,000 216,000,000

Gross profit 5,625,000 48,000,000 216,000,000

Expenses

Sales & marketing 5,062,500 38,400,000 151,200,000 70%

Customer service 1,687,500 9,600,000 21,600,000 10%

Product development 562,500 2,400,000 10,800,000 5%

Research 281,250 2,400,000 4,320,000 2%

Total expenses 7,593,750 52,800,000 187,920,000

7/1/20XX Pitch deck title 19

MEET THE TEAM

Takuma Hayashi Mirjam Nilsson Flora Berggren Rajesh Santoshi

President Chief Executive Officer Chief Operations Officer VP Marketing

7/1/20XX Pitch deck title 20

MEET THE FULL TEAM

Takuma Hayashi Mirjam Nilsson Flora Berggren Rajesh Santoshi

President Chief Executive Officer Chief Operations Officer VP Marketing

Graham Barnes Rowan Murphy Elizabeth Moore Robin Kline

VP Product SEO Strategist Product Designer Content Developer

7/1/20XX Pitch deck title 21

FUNDING

PROPERTIES ANGEL CASH SHARES

INVESTMENTS
$12,000 $14,000 $32,000 $82,000
Revenue obtained from Amount obtained through Liquid cash we have on Number of shares
property rentals other investors hand converted into USD

7/1/20XX Pitch deck title 22

 SUMMARY

At Contoso, we believe in giving 110%. By using

energy efficient building methods, we help
commercial businesses grow and foster a consumer
first mindset. We thrive because of our market
knowledge and a great team behind our product. As
our CEO says, "Efficiencies will come from
proactively transforming how we do business."

7/1/20XX Pitch deck title 23

 THANK YOU
Mirjam Nilsson​
206-555-0146
mirjam@contoso.com
www.contoso.com

7/1/20XX Pitch deck title 24