Entrepreneurial Finance Report: Startup Costs, Finances, and Analysis

This report provides a detailed analysis of the startup costs, funding sources, and financial projections for Paper Media Digital Marketing Consulting. The report breaks down startup expenses into categories such as buildings, equipment, and advertising, providing specific cost estimations for each. It details the sources of capital, including owner investment and bank loans, and outlines the opening day balances of assets and liabilities. Furthermore, the report includes a personal financial statement of the owner, highlighting assets, liabilities, and capital. The report also includes references to relevant literature in the field of entrepreneurial finance and business startup. The startup costs are estimated to be $342,500, with $100,000 from owner's investment and $242,500 from loans. The opening balance sheet shows total assets of $352,500 and total liabilities of $252,500, with the owner’s equity at $100,000. The personal financial statement shows the owner’s assets totaling $520,000 and liabilities of $150,000, with a capital of $370,000.

Running head: ENTREPRENEURIAL FINANCE
Entrepreneurial Finance
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Startup expenses..............................................................................................................................2
Opening day balances......................................................................................................................5
Personal finances.............................................................................................................................7
Bibliography....................................................................................................................................9

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Startup expenses
Starting a new business requires investment in fixed assets, working capital as well as
incurring certain preliminary expenses. All those investments and preliminary expenses are
together called the startup costs. Therefore, startup costs includes investment in assets and
infrastructures as well as payments for preliminary and promotional expenses. For the proposed
business startup namely Paper Media Marketing Consulting, the startup expenses and
investments have been listed out as follows.
Startup Expenses
Paper Media Digital Marketing Consulting
Sources of Capital
Owners' Investment (name and percent ownership)
Your name and percent ownership $ 100,000
Total Investment $ 100,000
Bank Loans
Central Bank of United Arab Emirates $ 150,000
Total Bank Loans $ 150,000
Other Loans
HSBC $ 92,500
Total Other Loans $ 92,500
Startup Expenses
Buildings/Real Estate
Purchase $ 50,000
Construction 25,000
Remodeling 5,000
Other 2,500
Total Buildings/Real Estate $ 82,500
Leasehold Improvements

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Improvement of the leasehold property $ 2,500
Total Leasehold Improvements $ 2,500
Capital Equipment List
Furniture $ 10,000
Equipment 20,000
Fixtures 12,000
Machinery 25,000
Other 5,000
Total Capital Equipment $ 72,000
Location and Admin Expenses
Rent & Related Costs $ 5,000
Utility deposits 10,000
Legal and accounting fees 5,000
Prepaid insurance 10,000
Pre-opening salaries 8,000
Other 2,000
Total Location and Admin Expenses $ 40,000
Opening Inventory
Stock of office supplies $ 2,500
Total Inventory $ 2,500
Advertising and Promotional Expenses
Advertising $ 25,000
Signage 10,000
Printing 5,000
Travel/entertainment 8,000
Other/additional categories 2,500
Total Advertising/Promotional Expenses $ 50,500
Other Expenses
Other office expenses $ 5,000
Other preliminary expenses 2,500
Total Other Expenses $ 7,500
Reserve for Contingencies $ 60,000
Working Capital $ 25,000
It has been assumed that there will be a total initial investment of $82,500 in the
buildings and real estate. It has been assumed that the building for the proposed business will be
purchased at a total cost of $50,000 and additional construction expenses of $25,000 will be

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incurred for making the building suitable for the office with all the required facilities and
arrangements. For remodeling and decoration of the office additional $5,000 will be spent and
other building and real estate related expenses will be $2,500. For the leasehold premises $2,500
will be spent for the arrangement of the front space and parking space for the office. For
purchasing the office furniture $10,000 will be required and for office fixtures additional
$12,000. For purchasing the office equipment other machineries, total of $45,000 will be
required. Office equipment mainly includes computers and computer peripherals. Machineries
includes other security devices and videography and broadcasting devices for the marketing and
advertising. It has been also assumed that additional $5,000 will be required for other equipment
and assets.
For the leasehold premises the business will have to pay an amount of $5,000 in advance
as the lease rental. For purchasing utilities the company is required to make an initial deposit of
$10,000. It has been assumed that for the legal consultancy for the startup of the business, the
company is required to pay $5,000 as the legal and accounting fees. Further the insurance for one
month for the office building and premises of $10,000 will have to be paid in advance at the
initiation of the month. Salaries expenses will be $8,000 for the preliminary period before
starting the operations of the business. It has further been assumed that there will some other
such expenses related to the establishment and employees at the preliminary period. As the
business is a service providing business, there will be no requirement of such inventories and raw
materials but there will be a requirements of office supplies. Hence, it has been assumed that
there will be a requirement of $2,500 for the inventory of office supplies.
For a new startup, advertisement and promotional expenses is an important startup cost. It
has been assumed that there will be a total spending of $50,500 for the advertisement and

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promotional activities and almost fifty percent of that will be spent on the advertisement. It has
been assumed that there will be some office related expenses of $5,000 and other preliminary
expenses for the establishment of the business of $2,500. Lastly, $60,000 has been set aside for
the contingencies and an additional working capital of $25,000 will be required initially.
Clubbing all these expenses and investment, the total initial startup costs will be
$342,500 which will be financed by the won capital as well as by the loan capital. It has been
assumed that the own contribution by the owner would be $100,000 and the remaining $242,500
will be financed by loan capital. It has been assumed that a long term loan of $150,000 will be
raised from the Central Bank of United Arab Emirates at an interest rate of 8% for 10 years term
and a short term loan of $92,500 will be raised from the HSBC at an interest rate of 6%. For such
loans form the banks and financial institutions, there will be a collateral mortgage of $200,000 of
the personal property of the owner and $82,500 of collateral of the office building and premises.
Opening day balances
With the above assumptions and estimations of the initial expenses and investment
following table shows the opening balances of assets and liabilities at the startup of the business
of the Paper Media Digital Marketing Consulting LLC.
Opening Day Balance Sheet
Paper Media Digital Marketing Consulting
Assets
Current Assets
Cash in Bank $ 175,500
Inventory 2,500
Prepaid Expenses 10,000
Other 5,000
Total Current Assets $ 193,000

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Fixed Assets
Machinery & Equipment $ 45,000
Furniture & Fixtures 22,000
Leasehold Improvements 2,500
Real Estate / Buildings 82,500
Other 5,000
Total Fixed Assets $ 157,000
Other Assets
Preliminary expenses $ 2,500
Total Other Assets $ 2,500
Total Assets $ 352,500
Liabilities & Net Worth
Current Liabilities
Accounts Payable $ 10,000
Taxes Payable -
Notes Payable (due within 12 months) -
Current Portion Long-term Debt 92,500
Other current liabilities (specify) -
Total Current Liabilities $ 102,500
Long-term Liabilities
Bank Loans Payable (greater than 12 months) $ 242,500
Less: Short-term Portion (92,500)
Notes Payable to Stockholders -
Other long-term debt (specify) -
Total Long-term Liabilities $ 150,000
Total Liabilities $ 252,500
Owners' Equity (Net Worth) $ 100,000
Total Liabilities & Net Worth $ 352,500
All the expenses which are required to be paid in advance before starting the business or
at the initiation of the business are grouped under the prepaid expenses and other initial expenses
are reported as the preliminary expenses. Loan taken from the Central Bank of United Arab

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Emirates have been classified as the long term loan in the balance sheet and the loan taken from
the HSBC had been classified as the short term loan. It has been assumed that there will be an
opening balance in the accounts payable for the expenses and office supplies. Inventory of office
supplies has been shown in the inventory head and the working capital and amount set aside for
the contingencies have been kept in the cash in hand and at bank.
Personal finances
Personal finances and personal financial position is an important aspect of the startup of a
new business as based on that the investors or lenders will show interest in financing the
business. Hence, state of affairs should be mentioned in the startup proposal. The owner
promoting the business the Paper Media Digital Marketing Consulting LLC is having personal
property of $250,000 of which $200,000 will be used as the collateral for the loans. The owner is
having investment balance of $150,000 and a cash balance of $120,000 of which $100,000 will
be contributed as the own capital to the business. The owner is having a monthly mortgage for
home of $2,500 and a monthly income from salary of $8,000. Following table shows the
personal financial position of the owner.
Personal Financial Statement
Assets:
Land and building $ 2,50,000
Balance in short term investments $ 1,50,000
Cash balance $ 1,20,000
Total Assets $ 5,20,000
Liabilities:
Mortgage due $ 1,50,000
Total liability $ 1,50,000

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Capital $ 3,70,000
Total of liabilities and capital $ 5,20,000

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