Tag Archives: Financial Projections

Non-Profit Revenue Sources: Fundraising

Non-Profit Idea and Steps from The Startup Garage

Non-Profit Revenue Sources: Fundraising

Importance of Relationships

  • No matter what the amount you are trying to raise, you must have a good connection with your donors.  Especially if the donor is contributing for the first time – a thank you note can go a long way to ensuring continued donations in the future.

Convince Your Potential Donor

  • Be specific and build a compelling case for why you need this donation.  Your potential donors have many options for where to donate – if they donate at all – and you must convince them that you are the best recipient of their financial support.

Don’t Forget the Bigger Picture

  • But keep the organization’s bigger picture in mind.  You can’t always hide your expenses as a compassionate need – maybe you just need office supplies.  A good fundraiser is also able to bring in funds for the overhead expenses of operating.

Make a Fundraising Budget

  • Unfortunately, some of the money you raise is turned around to spend on future fundraising efforts.  Fundraising can add up quickly so make sure you set a budget that is realistic for the amount of money you are wishing to bring in.  Look for ways to cut costs or to get time, space or materials donated to assist with the fundraising effort.

Consider Membership Opportunities

  • You can collect dues from members of your organization if you have a program that gives them something in return.  It could be a token gift or the right to participate in an exclusive group such as a list serve or a planning committee.  But you must somehow involve your members for them to feel connected to the organization and continue to provide membership dues, which are a source of revenue.


Whether you have a question about Non-Profit sources for Fundraising, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Non-Profit Legal Issues: Profit-Seeking Activities

Non-Profit Legal Team Setup from The Startup Garage

Non-Profit Legal Issues: Profit-Seeking Activities

Since non-profits are established with a specific promise to return the profits into the organization and to not pass them along to any officer, director or employee of the organization, some financial transactions are bound to raise a red flag or be a cause for a non-profit to lose access to federal grants, community donations, and tax exemption.  These transactions fall into two categories.

Private Benefit/ Inurement

  • While directors and staff employed by a non-profit have a right to a reasonable salary, anything beyond what is considered reasonable, even if it’s not a monetary compensation, is considered to be an inappropriate and illegal appropriation of non-profit funds.  This category includes the crime of embezzlement.

Unrelated Business Income

  • A non-profit could stand to lose its 501(c)(3) tax-exempt status if it has too much income generated from activities or trade that are regularly carried on and are unrelated to the exempt function of the organization.
  • If your business plan includes regularly carried on trade or business from which you would like to retain a profit, you can consider structuring your business as a social enterprise rather than a non-profit.  California recently introduced two “hybrid” corporate forms for social enterprises: flexible purpose corporations and benefit corporations.  The Startup Garage has helped several social enterprises begin their businesses – please look through The Startup Garage’s web site for more information on beginning a social enterprise.


Whether you have a question about Non-Profit Legal Issues, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

So You Want to Start a Business?

So You Want To Start A Business from The Startup Garage

So You Want to Start a Business?

7 visual steps to guide you through the startup process

This infographic from Bolt effectively outlines what you will need to know to get your business up and running. Below are links for more information on each step.

'So you want start a business?' Infographic

Step 1: Write a Business Plan

Step 2: Choose a Business Location

Step 3: Finance your Business and Choose a Legal Structure

Step 4: Register your Business Name

Step 5: Get a Tax Identification Number and Register for State and Local Taxes

Step 6: Obtain a Business License and Permits

Step 7: Understand Employer Responsibilities


Whether you have a question about Starting a Business, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

5 Rules for Your Cash Flow Plan

5 Rules For Your Cash Flow from The Startup Garage

5 Rules for Your Cash Flow Plan

Critical to your success, cash flow.

Create an effective plan for positive cash flow with five basic rules. Every business owner should have an understanding of his or her cash flow situation – sales minus expenses. Positive cash flow is critical to continuing business operations.

  1. Forecast realistic monthly sales. It is very important that you don’t optimistically estimate sales figures. Base these numbers around historical data or worse-case scenario figures. The estimates set should be easily attainable. This is necessary to ensure the business creates enough revenue to continue to operate.
  2. Plan for timing of receivables. Sales made with payment terms can take weeks or months to become available cash for operations, while cash and credit card sales are immediately accessible. Depending on your business, payment terms should be set and plans should be made so that operations will not be negatively impacted by this fluctuation in timing.
  3. Consolidate base operating expenses. Your business will have a set of predictable monthly operating expenses, often including rent, payroll, and utilities. These should be consolidated into one operating expense to be the baseline for the amount of cash that must come in to keep the business running.
  4. Keep cash available for growth. Businesses often fail because they can’t afford the capital necessary to support growth when the opportunity arises. Project the expenses that will be required when an increase in sales occurs. This could include equipment or additional employees. Cash from the new sales will unlikely be available before costs are incurred for expenses, so be sure to have this on hand.
  5. Recognize and plan for the known unknowns. Scenarios may develop for your company when cash is needed in order to capitalize on an unusual opportunity. Create a comprehensive list of possible unknowns and their associated expenses. Every cash flow forecast should include a contingency plan with funds to cover an unexpected situation.


Whether you have a question about Cash Flow Plans, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

The 4 Ways you can Tax your LLC

Ways to Tax LLC from The Startup Garage

The 4 Ways you can Tax your LLC

Limited Liability Companies (LLC) are a growing trend in startup structure due to their personal liability protection without the bureaucratic red tape. But one big decision to make after choosing the LLC structure for your small business is to decide how your LLC will be taxed. There is flexibility with the LLC which is why it so appealing – all you have to do is choose was federal tax classification suits your company’s needs the best. Mashable wrote a great article on the 4 ways you can tax your LLC and we borrowed some snippets for you to take a look at.

  1. Single-Member LLC as a ‘Disregarded Entity’ – “As the name implies, you need to be the sole owner of the LLC. This classification falls into the ‘pass-through’ taxation category’ — the business itself doesn’t file any tax forms. As the owner of the LLC, you report business income or loss on your personal tax forms.”
  2. Multiple-Member LLC as a Partnership – “For federal tax purposes, if an LLC has two or more members, it will be taxed as a partnership unless it makes an election to be taxed as an S Corp or C Corp.”
  3. LLC as a C Corporation – “If you prefer to keep profits in the company (as opposed to distributing any end-of-the-year profits to owners), a C Corporation would work. In this case, only the company is taxed on the profits; individual owners are not responsible for paying taxes on whatever money stays in the business.”
  4. LLC as an S Corporation – “Individual LLC owners are taxed on their respective shares of the company’s profits (and profits are not subject to self-employment tax).”

Read the full article at Mashable.


Whether you have a question about Taxing your LLC, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

A Visual Look at US Angel Investing

Visual Look at Angel Investment from The Startup Garage

A Visual Look at US Angel Investing

The image below is the first of its kind – issued by Silicon Valley Bank (SVB) and CB Insights, the Halo Report image provides us with new and graphic information regarding the Angel Investment world.

Some of the highlights we took from the report:

  • California leads in deals and dollars among individual states at 21% of investment
  • Median angel group investments grew to $700,000
  • 58% of angel group investments were in healthcare and internet companies
    • 60% of healthcare investments were in medical device and equipment companies


Whether you have a question about US Angel Investing, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Financing Options

Financing Options Business Planning from The Startup Garage

Financing Options

Entrepreneurs have many options when raising funds for their startup including debt, equity and/or other types of financing. When it comes to deciding what type of funding to go after, there are no right answers. Every entrepreneur must determine what type of financing is right for them and their business. Some questions to help you make this decision include:

– Are your needs short or long term?

– How quickly will you be able to pay back the loan or provide return on the investment?

– Is the money for operating expenses or capital expenditures (items that will become assets)?

– Do you need the money upfront or in smaller pieces over time?

– Are you willing to assume all of the risk if the business does not success, or would you like to share this risk with investors?

Answering these questions can help you determine what type of financing is right for you. In this article, we introduce the various types of financing available to entrepreneurs and some of the advantages and disadvantages of each.

Debt Financing. For a startup business, debt usually comes from banks, microloan programs, private lending, personal credit cards or friends and family.

For bank loans, you borrow money with an agreement to pay it back at a pre-determined time frame and interest rate. While you maintain full ownership of your company with a bank loan, you are liable to pay back the loan regardless of whether your venture succeeds or not. These loans are often backed by assets or third-party guarantors.

Microloans are very similar to bank loans, however, they tend to loan lower amounts and usually provide a more competitive interest rate.

Private lending is a good alternative when banks are unwilling to provide a loan. Private lenders terms are similar to banks, however, they usually specialize in a specific industry and are more willing to take on higher-risk loans.

Though we do not recommend using credit cards for long term financing, they are a great tool for cash flow management. It is important to pay off your balance at the end of every month to avoid high interest rates and digging your company into a pile of debt. If managed correctly, credit cards can be some of the cheapest money around. However, if managed poorly, they can be some of the most expensive forms of funding.

Lastly, friends and family can be a great source of funding for your small business. They are typically less rigid regarding your credit history and loan terms. Nonetheless, we still recommend structuring the deal with the same legal thoroughness that you would with any other lender to avoid problems down the road.

Equity Financing. If you decide to pursue equity financing, there are angel investors, venture capital firms and friends and family. With equity financing, you sell partial ownership of your company in exchange for cash. In this scenario, the investor assumes most of the risk for if the company fails, they lose their money and you do not owe them their losses. However, if the company succeeds, equity investors generally receive a much better return on their investment than the interest rates a bank would receive on the same amount of cash. Furthermore, as equity investors take on a much higher risk than lenders, they typically want to be involved with the company on an advisory level. This can be a blessing and a curse. Many entrepreneurs relish the opportunity to gain guidance and support from seasoned professionals. However, investors interests may not be aligned with yours so it is important to not give up too much control of your company when passing out equity.

The type of equity investor you approach depends heavily on the amount of money you need, the stage of the business you are at, the industry you are in and the growth potential of your company.

Similar to debt equity, friends and family can be a great source of equity funding for your business. Rather than agreeing to a payment plan and interest rate, you agree to a percentage of equity.

Angel investors work in the same way, however, they are usually considered to be a step up from friends and family in terms of sophistication and investment amount. They usually invest in sectors that they have a personal interest in and rarely look at investment below $1 million.

Venture capital firms are professional investment organizations that invest in growing businesses knowing that some of their investments may not be successful but are able to take that risk because their return is so large. Venture capitalists will generally want a large percent of equity in exchange for their cash and as a result, the option to exert a significant amount of control.

Other Financing Methods. There are other methods of raising money including crowdfunding and grants.

Thanks to social media and other internet based technology, entrepreneurs are able to leverage their networks of friends, colleagues and like-minded individuals to gain funding through crowdfunding websites. Typically, entrepreneurs post a request for funding on a crowdfunding site, such as kickstarter.com , with a description of their project or company and what they tend to spend the money on. Depending on the site, funding may come as a donation or a loan. Crowdfunding is not for everyone. It is generally successful for entrepreneurs with a compelling story or project that has universal appeal.

Another source of funding comes from grants. However, grants are extremely rare for for-profit businesses and we usually recommend against pursuing this strategy.

Despite the tough economic environment there are still ways to raise money in this day and age if you have a good business that is also a good investment. No matter what method of financing you chose, we recommend that you put together a professional business plan and speak with a trusted financial adviser.

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Whether you have a question about financing options, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

What is in a Business Plan: Financial Projections (Part 11 of 11)

Financial Projections from the Startup Garage

What is in a Business Plan: Financial Projections (Part 11 of 11)

Time For Completion: Approximately 35 hours

Financial statements are a very important part of your business plan.

They give you an idea of how your business would be performing according to the market assumptions and the business model you choose.

Ask somebody already in the business, or call service providers and ask them how much it will cost. This is great to start building your financial model.

Whats in it?

The Financial Projections section should include an Excel spreadsheet that can help you in preparing your projections. It usually includes key metrics such as the startup expenses, marketing goals, unit sales and costs, personnel, P & L, cash flows and finally it includes the balance sheets. The first years projections are prepared month by month, then annually for the following two to four years.

Why its Important

Your financial projections give you an idea of how your business should be doing at any moment in time. It also shows your potential investors how you will be profitable over time.

You have to be as realistic as possible in estimating your startup initial costs as they will determine how you will start your business as well as your expected profits. A business can easily fail if they honestly believe that they will sell more product and services than their market research suggests is possible. Therefore, financial statements in a business plan should always be conservative so they are believable.

Ask somebody already in the business, or call service providers and ask them how much it will cost. This is great to start building your team and determines how much cash you need to reach profitability.


Whether you have a question about Business Plan Financial Projections or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!