Question

The entrepreneur should develop a sound financial plan as timely availability of funds in the right volume is key to entrepreneurial success. In light of the given statement, examine the relevance of a financial plan for an entrepreneur.

Answer 1

Availability of finance facilitates the entrepreneur to bring together men, material, machines and methods to produce goods/services.

The financial plan should be able to meet all financial obligations and the company should maintain its liquidity in order to pay off the debts and also provide good returns on the investment made.

Financial plan must project:

1. The potential investment commitment needed for the new venture, and
2. Economic feasibility of the enterprise

The entrepreneur uses various financial projection techniques and tools to draft the financial plan. The entrepreneur will need to present three years of projected financial data to satisfy any outside investors.