List of Assets & Competencies Required & Its Valuation

List of Assets & Competencies Required & Its Valuation

TW11

Dr Waqas Ahmed

Agenda

• Tentative Assets Required
• Tentative Competencies Required
• Checking the valuation of assets
• Contingency Planning
• Total Capital Required
• Sources of Financing
• Presentation Guide

Assets & Expenses

• It is important for investors to know what will it cost you to get your business up and running.
• This will include both tangible assets (for example, equipment and inventory) and services (for example, remodeling, and insurance).
• Assets provide long-term benefits, e.g., cars, machines, buildings, equipment, furniture, copyright, logo, trademark, patents, etc.
• Expenses could be anything that benefits less than one year. It may include payments for repairs, salaries, legal fees, raw materials, prepayments, etc.
• When planning for business, keep a cushion of up to 6 months for expenses.

Contingencies

• Cost contingencies are the amounts added to expenses in the budget to represent uncertainty.
• Contingencies may include minor unforeseen expenses that happen occasionally. You may rely on experts' opinions if you don’t have reference class forecasting. Contingencies may also be prone to the number of risks in planning. Normally, it is expected to keep up to 20% of working capital as a contingency.
• Be sure to explain in your narrative how you decided on the amount you put into this reserve.

Working Capital

• You cannot open an empty bank account. You need a cash cushion to meet expenses while the business gets going. Eventually, you should make a 12-month cash flow projection. This is where you will work out your estimate of working capital needs.
• Make your best guess of how much cash you need to burn before the business makes enough revenue.

Competencies Requirement

Research & Development
Careful research of the industry and consumer makeup must be conducted before starting a business. Some business owners hire market research firms to aid them in the assessment process. You could also need testing and research facilities for your business.
Legal Charges for Establishment, License, and Permit
Many businesses are expected to submit to health inspections and authorizations to obtain specific business licenses and permits. Some businesses might require essential licenses, while others need industry-specific permits. Hiring a lawyer/consultant to help
Technological Expenses
Technological expenses include a business's cost of a website, information systems, and software, including accounting and point of sale (POS) software. Some small business owners choose to outsource these functions to other companies to save on payroll and benefits.
Procurement / Supply Chain
Businesses can not work without an established supplier relationship. This requires careful consideration and due diligence.

Total Financing Required

Once you have estimated how much money will be needed to start, you should turn your attention to how you are going to finance it. Estimate amounts you will put in yourself, how much will be injected by partners or investors, and how much will be supplied by borrowing.

Sources of Financing

Companies constantly seek sources of funding to grow their business. Funding, also called financing, represents an act of contributing resources to finance a program, project, or need. Funding can be initiated for either short-term or long-term purposes.
In equity capital, you can either use your own money or raise funds from the public in exchange for a proportionate ownership stake in the company in the form of shares issued to investors/shareholders.
In debt financing, companies obtain debt financing privately through bank loans. They can also source new funds by issuing debt to the public.
Funding sources also include angel financing, venture capital, donations, and government grants. They are also called “crowdfunding” or “soft funding.”

Exercise

• Go to https://docs.google.com/spreadsheets/d/1rC06LH8I7OL8FaNBDdle0YOhWBlHRQHogD4Pd-iOkAU/edit#gid=1456017777 or scan QR Code.
• Use your google credentials to make a copy.
• Fill out the sheet and find out your startup expenses and sources of finance

Presentation Guide

You will not be allowed to present if you don’t have a signed approval form in your slides. If you haven’t got the signature, you have to get it before the presentation.
Only one student will present at the designated time, and no other student will be allowed in the classroom. You can not present if you miss your slot.
Use the elevator pitch slide to explain your business idea in maximum 3 minutes.
Answer the questions about all elements in the presentation format. Don’t worry; you will not be marked on the day of the presentation, but you can take feedback from teachers.
You must provide all formats in the seminar slides when you upload them. The formats link should be provided if you take a snapshot of the content.
The slides must be uploaded in PDF format maximum by December 28, 2022.