Finance

Finance Tips & Info

Determine the Cost


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, travel, other financial expenses (sales discounts, bad debts), professional services (lawyers, consultants, accountants etc.) and other business costs (depends on type of business).

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)


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.



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Getting a Financial Picture

If you want run successful business you should have real financial picture of a business. Accurate, up-to date records are very important for every aspects of your business. It's certainly not fun, but without accurate records, you simply cannot run a successful business. It is much easier to deal with various tax departments of government or with your banker if your records are complete and comprehensible. Learn more...
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Did You Know?

Marketing a new product or service is very challenging, because billions of dollars are spent regularly developing and launching new products and services all over the world.

Market failure is the most common reason for a product or service to fail. The other common failures are: financial failure (when product or service doesn't make any or enough money, cost of production and implementation of the service have not been sufficiently thought out in the specification stage, waste of time, etc.); organizational failure (poor management, miscommunication, lost productivity, failure to innovate, poor or bad collaboration, etc.) technical failure (when it doesn't work properly, wrong concept, poor implementation etc.) and political failure (when the source of failure is action by the government). Find out more...