Putting a business idea into practice

Objectives when starting up

Financial :                                      NON-Financial:

Survival                                                     Personal Satisfaction

Profit & Income                                         Independance & Control

Wealth                                                      Helping Others

financial Security                                     (^Social Enterprise^)

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Qualities Shown By Entrepreneures

~PLANNING

~MAKING DECISIONS

~PERSUASION

~TAKING RISKS

~DETERMINATION

~LUCK

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Revenue, Costs and Profits

Revenue, Sales Revenue and Turnover are the same thing!

REVENUE= PRICE PER ITEM x QUANTITY OF ITEMS

Fixed Costs= don't vary

Variable Costs= change with no. of products

TOTAL VARIABLE COSTS= FIXED + TOTAL VARIABLE

PROFIT= TOTAL REVENUE - TOTAL COSTS

Ways to INCREASE Profit=

~LOWER Variable + Fixed Costs

~HIGHER Sales + Quality

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Cash Flow & Forecasts

CASH FLOW= All of the money going in and out of the business.

Cash flow FORECAST= Predicts cash flow over time and can see if there will be...

Cash flow PROBLEMS= Can't pay day-to-day bills.

NET CASH FLOW= INFLOW - OUTFLOW

CLOSING= OPENING + NET

OPENING= LAST MONTHS CLOSING

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What impacts on Cash Flow?

Change in sales REVENUE / DEMAND

Change in COSTS

Seasonality in SALES

Business EXPANSION or CONTRACTION

Change in STOCK LEVELS

CREDIT TERMS can change

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The Business Plan

Purpose:

~convince a bank to loan money

~forecast financial projections

~identify the needs of customers

~formulate market research into important information

~provide information

~provide the owner with a 'plan of action' that will minimise risk

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Long- Term sources of Finance

~SHARE CAPITAL

~PERSONAL SAVINGS

~VENTURE CAPITALISTS

~GRANTS

~LOANS

~MORTGAGE

~RETAINED PROFIT

~LEASING

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Short-Term sources of Finance

~BANK OVERDRAFT

~TRADE CREDIT

~FACTORING

~CREDIT CARDS

~DELAYED PAYMENT

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What is Included?

~KEY STAFF (+ skills)

~COSTS,REVENUES,PROFITS

~PRODUCT/SERVICE/MARKET RESEARCH

~SUPPLIERS

~EQUIPMENT NEEDED

~CASH FLOW FORECASTS

~SOURCES OF FINANCE

~NAME,LOCATION,OWNERSHIP,OBJECTIVES

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