Business Financial Information Secrets

CHAPTER 13Capitalizing a Business

THE NEED FOR FINANCIAL CAPITAL AND A BUSINESS PLAN

In the final five chapters of the book, we turn our attention from the “What, When, and Where” of preparing financial information (covered in Chapters 1 through 7) and the “How” financial information is analyzed (covered in Chapters 8 through 12) to a final discussion on the “Why” of financial information. I mean, really, why go through all this trouble to prepare complete, accurate, reliable, and timely (CART) financial information and then analyze the financial reports, statements, flash reports, and so on if there is no pot of gold at the end of the rainbow?

While the answer should be obvious (i.e., to build an economically viable business that creates real value), we spend the final five chapters of this book spelling it out in a clear and concise manner covering five main topics:

1. The business plan, types of capital, and a closer look at debt capital (Chapter 13)
2. Improving profits, what is real, and what is imaginary (Chapter 14)
3. How and why businesses are valued (Chapter 15)
4. Business acquisition basics (Chapter 16)
5. The business capitalization table and who owns and controls what (Chapter 17)

The remainder of this chapter provides an overview of options and strategies available to capitalize newly formed businesses as well as how existing businesses evaluate, deploy, and utilize capital with a focus on debt‐based capital sources.

THE BUSINESS PLAN

It should go without saying that when ...