Asking for funds for expansion is easy. There are financials viz: Profit and Loss Account, Balance Sheet, Bank Account Operations etc.. which shows the turnover the specific assets needed for business expansion like a new machine or a new office at a foreign country etc..

 How to estimate the Capital Requirement of a Good Business Idea which is yet to take off?

 

 

.
Comments (3)

• Market survey and Market forecast is essential to create a business forecast. A Project report is prepared which takes into account the revenues and the cost. Such a report has the market volumes projection, revenue generation year wise, cost requirements yearwise which include manpower cost, equipment cost (machines, tools, quality instruments, infrastructure etc) overhead cost, material cost, working capital cost etc. This could be summed up into capital requirement Posted by Varadarajan Sundararajan | 27 Mar, 2009

• The question is not very specific and thus does not attract a specific answer, capital can be broadly clssified into Infrastructure Capital and Working Capital. I believe you must be relating to working capital, this means cost of input materials+labour+conversion expenses+logistics and distribution expenses, in the case of Infrastructure it would vary from Industry to industry.
  RAM Posted by Ramachandran karancherry | 27 Mar, 2009

• Dear Mr. Varadarajan Sundararajan and Dear Mr. Ramachandran Karancherry,
  
  1.Thanks for your comments.
  
  2.Yes. Market survey and forecast based on market survey are a good method to calculate fixed and working capital requirement. Yet, the REAL newness of idea that is going to be implemented, may be because of its NEWNESS prevent a scientific market survey estimate of required capital.
  
  3.In the absence of any other tool, market survey and market and company forecast study will be extremely useful.
  
  Take my own business at www.bstaff.com which is launching exciting new internet products. Market survey will be a guidance to decide the fixed & working capital, though I suppose there may be other Investor tools to assess the business potential.
  
  4. I agree that fixed capital may be different for different industry.For example, a Project company may require lesser fixed capital and more working capital while it will be exact opposite for a steel manufacturing or power generation company where fixed capital is almost 70% of total fixed & working capital funds.
  
  My businesses which are web-based, will require different funding evaluations, I suppose.
  
  s.seshadri Posted by Seshadri S | 28 Mar, 2009