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III. Financial Management Sound financial management is one of the best ways for your business to remain profitable and solvent. How well you manage the finances of your business is the cornerstone of every successful business venture. Each year thousands of potentially successful businesses fail because of poor financial management. As a business owner, you will need to identify and implement policies that will lead to and ensure that you will meet your financial obligations. To effectively manage your finances, plan a sound, realistic budget by determining the actual amount of money needed to open your business (start-up costs) and the amount needed to keep it open (operating costs). The first step to building a sound financial plan is to devise a start-up budget. Your start-up budget will usually include such one-time-only costs as major equipment, utility deposits, down payments, etc. The Financial Management portion of your plan can be divided into the following sections: Section A – Startup Costs Section B – Operating Costs Section C – Financial Considerations And Projections A. Startup Costs Identify anticipated start-up costs and create a start-up budget. These are expenses that will be incurred prior to and during the start-up phase of your business. Money will have to be provided to cover these costs prior to any revenue being generated by the business. The start-up budget should allow for the following expenses: • personnel (costs prior to opening) • legal/professional fees • occupancy • licenses/permits • equipment • insurance • supplies • advertising/promotions • salaries/wages • accounting • income • utilities • payroll expenses www.hsi.us care@hsi.us 41

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