Projecting Capital Needs

The adviser prepares a feasibility analysis report that outlines all assumptions and income and expense projections based on standard financing practices and presents it to the steering committee. The report is reviewed and revised to develop a realistic business plan that can be approved by potential members and implemented without significant change.

This report is discussed at a fourth general meeting of potential members. It should cover the cooperative’s purpose, goals, and economic functions, including assumptions and financial projections for startup and at least the first 3 years of operations. Specific topics include:

1. Volume projections;
2. Risk capital (equity) investment requirements-initial and continuing;
3. Financing projections, including tables for monthly cash flows, annual projections of operating statements, balance sheets, and a statement of cash flow;
4. Financial package and method of capitalization;
5. Payment schedules;
6. Projected patronage refunds-cash and retained; and
7. Implementation schedule.

Financial projections may include “best” and “worst” case scenarios to demonstrate sensitivity to changes in operating assumptions.

By now, most specific operational plans have been determined. Yet to be decided is the selection of a manager, facility location, and subjects to be covered in the articles of incorporation and bylaws.

If members elect to continue the process, the steering committee is instructed to arrange for incorporation and carry out the business plan.

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