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Determine The Cost
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It is
essential to determine the costs of starting your venture and know how
much capital is required before you begin.
Your financial planing will serve you better and prove your
professionalism when you go out in search for financing. It is good
idea to prepare BEST, WORST, and MOST LIKELY case scenarios.
The funds you'll require fall into two main categories:
 INITIAL COSTS - land, building,
fixtures, supplies, equipment, cars, trucks, licenses and permits,
decorating and remodeling, starting inventory, utility installation
fees, promotion for opening and unexpected expenses.
OPERATING COSTS - day-to-day costs
such as rent, supplies, salaries, taxes, rising inventories, insurance,
advertising, distribution, repayment of loan and interest car expense
or travel, other financial expenses (sales discounts, bad debts),
professional services (lawyers, business consultants, accountants etc)
and many other business costs depends on type of business. |
|
 CASH FLOW FORECAST |
| It
is very important to calculate your cash flow. Take time to anticipate
when cash will be short, because sales and revenues of business are
rarely constant. Some businesses are seasonal, others extend credit to
customers etc. Cash flow planning help you to have enough cash to cover
all your business needs. |
|
| BREAK-EVEN CALCULATIONS |
Try
to calculate the amount of sales needed for your enterprise to find
break-even. Break-even point is the point where your total revenues are
equal to your total costs. When you hit break-even point your business
will start to earn a profit. Break even (BE) depends on many factors:
CALCULATION:
Total fixed costs / (price - less cost of sale - less variable costs) =
Break even
Fixed costs (FC)
Price (P)
Cost of sale (CS)
Variable costs (VC)
Break even (BE)
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| RECOMMENDED
LITERATURE |
|
Private Equity and Venture Capital - A
Guide for Investors and Practitioners - With contributions
from experts in private equity finance and the leading investors in
this growing asset class, this book provides detailed insight into this
expanding area of finance. This book is essential reading for those who
need to understand the risks and returns involved in private equity
investment as well as experienced investors who want to profit from
markets other than their own.
How to Really Start Your Own Business
- W.D.Bygrave, professor of entrepreneurship, Babson College "Gumpert's
how-to book is simply the best. No would-be entrepreneur should launch
a business before reading this book."
Be Your Own Business!: The Definitive Guide
to Entrepreneurial Success - The road to
entrepreneurship can be quite confusing. Many people do not know where
to begin. This systematic and comprehensive guide to choosing the right
kind of business and dealing with the unique challenges of
entrepreneurship helps readers make all the right choices at every step
along the road to becoming successful entrepreneurs.
Tested Advertising Methods - A
legend in advertising for more than 60 years, John Caples still serves
as a guide to generations of creative marketing people. Now his classic
work on how to create successful advertising has been updated by
respected advertising consultant Fred Hahn. It retains all the clarity,
candid analysis, time-tested experience and invaluable award-winning
ideas from the original, while bringing it right up-to-the-minute on
the many new changes in the field.
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