30. How Much Capital is Needed

By Roger Bryan

All business plans, irrespective of their niche, are capital intensive and require capital in one form of the other to ensure smooth working of the company machinery. There are various aspects of capital requirement which you would like to take up in your business plan.

Estimate the amount of capital needed based on various factors (discussed below) and give sound logic in your plan with regards to the basis of outlay. Include market information, both current and prospective in concordance with the prevalent rates with regards to the requirements of your business.

Your capital outlay plan should also take cues from your competition and their financial levels. Think deeply into the marketing strategy, sales strategy, pricing, marketing channels, advertising plans and base your capital projections on these facts and figures. Take care to ensure that your outlay should be coherent and a sudden spike down or above the norm will raise a red flag with the investors.

If possible, include a sub section for expected inflation levels and a portion for unplanned expenditure that may be incurred. Keep a cushion for changes in market conditions. Details about supplier credit, management finances and other financial duties should be included in this section of your business plan.

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