The Financial Plan

The next component, which is critical after having all the 5 W’s and 1 H answered the next, comes in getting the clarity of what’s the cost going to be. With clarity on what will be the time frame and how the impact for existing business will happen and how will it be covered these are the questions that need to be answered.

The first step is to ascertain the investment on capex or the capital expenditure as this investment goes in first for setting up the infrastructure and which will also determine the quantum of the project and the purpose to be achieved will depend on the infrastructure that is being setup.

The cost as the currency of your current business place may be lesser than the existing business or can be vice versa, then comes the cost of getting the legalities done and your law of the land may be completely different with different rules in the new place.

Once you have arrived at the amount required for setting up the infrastructure, then comes the time it is going to take to finish the setup the gestation period.

You also need to take a decision at this point what will be the cost incase due to reasons which are not in your control and you are not able to complete the setup after having the invested the amount or un able to start after having completed the investment

Clarity of how much amount, will be lost and the impact of the amount on the existing business.

Then the challenge of how the funds will be raised for setting up cost and once the new project is running the impact of revenue it can create for company and its stakeholders benefits also needs to be looked in.

The financial plan needs to answer all questions of cost of running the business, the cost of opex, and till the new business becomes sustainable how the burn rate will be taken care and its impact on the current business needs to be evaluated.

In clarity the financial plan will lay out the cost that will be incurred for the strategy that will be adopted for starting up new business.