Objectives when starting up
Financial : NON-Financial:
Survival Personal Satisfaction
Profit & Income Independance & Control
Wealth Helping Others
financial Security (^Social Enterprise^)
Qualities Shown By Entrepreneures
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
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
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
The Business Plan
~convince a bank to loan money
~forecast financial projections
~identify the needs of customers
~formulate market research into important information
~provide the owner with a 'plan of action' that will minimise risk
Long- Term sources of Finance
Short-Term sources of Finance
What is Included?
~KEY STAFF (+ skills)
~CASH FLOW FORECASTS
~SOURCES OF FINANCE