This sample plan is for an imaginary investment company that acquires other companies to invest. As an initial investment fund, the Venture Capital firm has $20 million. In its early months of existence, it invests $5 million each in four companies. It receives a monthly management fee of two per cent (2%) of the fund’s value. It pays salaries to its partners and other employees, and office expenses, from the management fee.

The cash flow table lists investments as long-term investments. They are also included in the balance sheet as long term assets. In the sample plan, you can see them within the first few month.

The third year ends with one of the targeted companies failing, which results in $5 million being written off. You’ll see how that looks as a $5 million sale of long-term assets in the cash flow, and a balancing entry of $5 million in costs of sales in the profit and loss, making for a loss and write-off that year. This results in a tax deduction and the investment balance is increased to $15 millions.

One of the targeted companies transacts $50 million each year in the fifth. You’ll see in the sample how that shows up as a $45 million equity appreciation in the sales forecast, plus a $5 million sale of long-term assets in the cash flow. There’s now a $45million profit. Meanwhile, the balance of long term assets drops to $10million.

This is just one example. The business model holds long-term assets and waits for them to appreciate. It doesn’t show appreciation of assets until they are finally sold, and it doesn’t show write-down of assets until they fail. Sales and cost of sales are the appreciation and write-down of assets, plus the management fees.

The explanation above has been broken down and copied into key topics in the outline that are linked to corresponding tables. These topics are:

• 2.2 Summary for Start-up
• 5.5.1 Sales Forecast
• 6.4 Personnel
• 7.4 Projectioned Profits and Losses
• 7.5 Projection Cash Flow
• 7.6 Projected Balance Sheet