Unit[image]

Units sold - Price per unit = Total sales

Product #1

Units Sold - Cost per Unit = Total Cost

Budget correctly and always anticipate more monies is needed.

1. Salaries / Wages & Benefits
2. Outside Services
3. Insurance
4. Advertising Budget
5. Occupancy Expense
6. Miscellaneous Expenses
7. Sales Forecast
8. Cost of Projected Production Units Sold
9. Fixed Assets
10. Growth (or Start-up) Expenses
11. Existing Debt

COGS

Cost of Goods Sold

Units Sold - Cost per unit = Total Cost

How many units do you need to sell before you start making a profit?

Break-Even Units Volume:

Fixed Costs

Price - Variable Costs

Example

Selling Price is $10 per unit

Variable costs are $5.50 per unit

Contribution margin is $4.50 per unit

Fixed costs are $1,350 per month

Break-even Point in units: $1350 _divided $4.50= 300 units per month

When you sell unit #301, you will start making a profit for that month

Break-even in dollars of sales:

300 units _times $10 = $3,000

6-18 months break-even is standard

Fixed costs _{divided by} price - variable costs

Can you sell your units per month?

How much profit do you want to make?

1. Purchase merchandise
2. Sell merchandise
3. Collect Cash
4. Pay suppliers

Inventory

Managing

Inventory turnover = Cost of goods sold _divided Average inventory

Ex.

Cost of goods sold = 390,000

Average inventory = 30,000

390,000 / 30,000 = 13

So, inventory turns 13 times per year.

Inventory

Managing

Average Days in Inventory = 365 days _divided Inventory turnover

Ex.

Inventory turns over 13 times a year.

365 / 13 = 28 days

So, goods remain in inventory for 28 days

Recievables Turnover = Net Credit Sales _divided Average A/R

ex.

Net Credit Sales = 715,000

Average A/R = 65,000

715,000 / 65,000 = 11

So, receivables turn 11 times per year

Average collection period = 365 days _divided Receivables turnover

ex.

receivables turn 11 times per year

365 days / 11 = 33

So, it takes 33 days to collect receivable

1. Authorization
2. Receiving Bank account statements
3. Reconciling bank accounts
4. Segregation of Duties
5. Physical Controls
6. Controls for Cash Registers

Segregate Duties

Have systems in place to ensure stealing is kept to a minimum and good proceedures are followed for success of the business.

Income Statement

* period of time Jan 1 - Dec. 31

Income statement (also referred to as profit and loss statement (P&L), revenue statement, statement of financial performance, earnings statement, operating statement or statement of operations)is a company's financial statement that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as Net Profit or the "bottom line"). It displays the revenues recognized for a specific period, and the cost and expenses charged against these revenues, including write-offs (e.g., depreciation and amortization of various assets) and taxes. The purpose of the income statement is to show managers and investors whether the company made or lost money.

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities and equities) in a balance sheet is represented as a proportion of the total account. The main advantages of vertical analysis is that the balance sheets of businesses of all sizes can easily be compared. It also makes it easy to see relative annual changes within one business.

• Ratios that reflect activities crucial to making a profit

• Gross Profit Percentage = Gross profit÷Net Sales

• Inventory Turnover = Cost of Good Sold ÷ Average Inventory

• Receivable Turnover = Net Credit Sales ÷ Average Net Receivable

Ratios that compare earning to the resources available

(Think of these rations as answering the question, "How well did I do, given what I had to work with?")

• Return on Sales = Net Income ÷ Net Sales

• Return on Assets = Net income ÷ Total Assets

• Earnings Per Share = Net income ÷ Average # of Common shares outstanding

One of the quarterly financial[image] reports any publicly traded company is required to disclose to the SEC and the public. The document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter

1. Research and development
2. Growth or start-up expenses
3. Purchase a business
4. Seasonal Working Capital
5. Permanent Working Capital
6. Equipment acquisition
7. Real Estate Acquisition
8. OTher

• Short-term Debt
• Intermediate Debt
• Long-term Debt

used to meet shor-term needs, such as seasonal inventory or short-term liquidity problems.

Repayment : one year

Used for permanent working capital equipment acquisitions

repayment : 3 to 7 years

used for real-estate purchases or the initial purchase of a business

repayment: 7 to 9 years

debt or equity financing considerations

1. change of ownership
2. obligation to repay
3. tax consideration
4. captial structure
5. time required
6. cost to obtaining the funds
7. personal factors / references
8. lender and investor reactions

• CREDIT HISTORY
• CHARACTER
• CAPACITY
• COLLATERAL
• CONDITIONS
• CAPITAL

Documents for a loan

1. Business plan
2. loan application

Self

Friends

peer to peer / crowd financing

suppliers

customer deposits

credit cards

insurance companies

factoring companies

loan guarantor

loan broker

franchising

grants

others

Business Reasons

Competition beat or catch-up

win new customers or satisfy them

earn or save money

Political Reasons

achieve energy independence

effect a political change

solve or prevent a crisis

Legal reasons

avoid regulatory burdens

meet legal requirements

Ethical Reasons

benefit future generations

benefit animals

benefit or protect a community / culture

Environmental Reasons

Save natural resources

benefit or protect the environment

Green business prctices

Customers

Employees

Suppliers and distributors

• Bright Green - 17% of population
• Light Green - 35% of population
• Conventional - 30% of population
• Non-Green Consumer - 10-15% of population

1. Self-Image
2. Health and Security
3. Time Savings and Convenience
4. Uniqueness
5. Rewards and Gifts
6. Altruism

Rules for Green Marketing

1. Take your time
2. Be honest
3. Be consistent
4. Be exciting
5. Be positive
6. Be specific
7. Educate your customers
8. Get them involved

1. Know target market
2. understand your customer's everyday needs
3. don't oversell green features
4. balance price and benefits
5. don't exaggerate
6. don't overreach

1. Both sides expect a benefit
2. Goal of negotiation is to create a new situation that's better than the old one.
3. Unfair deals last only while one party feels weaker than the other
4. Win-win negotiation delivers the best, most enduring deals
5. Negotiation skills can be learned and practiced

1. understand their counterpart's interests and perspectives
2. understand the difference between positions and interests
3. understands the difference between real power and perceived
4. know their settlement range
5. know their BATNA - Best Alternative To a Negotiated Agreement
6. know when to walk away

1. Soft
• Avoid conflict
• doesn't stand up for their best interest
2. Hard
• Aggressive and competitive
• may use threats of bluffs
• not trusting or trustworthy
3. Win-Win
• works towards the best outcome for all
• flexible, but can be firm when its appropriate
• attack problems, not people
  

1. Setting an agenda
2. Voicing demands and offers
3. Working to minimize differences
4. Closing the deal

1. recognize manipulative tactics
2. open your ears and listen
3. get in the other person's shoes
4. when things get stressful, slow down and regroup
5. don't make important decisions on the spot
6. know when to walk away.

• create processes and practices
• review timeframe
• evaluate benchmarks and measures
• identify smaller untis wihtin the contract
• define responsibilities of each partner
• identify contingency plans
• establish regular meeting times
• resolve conflicts and problems
• review preformance and improve where necessary

1. increase sales without increasing costs
2. reduce your fixed costs without causing a decrease in sales
3. increase your contribution margin by:
• increasing the sales price without decreasing volume
• decreasing variable cossts
• changing product mis to those with higher contribution margins without decreasing volume

1. Liquity Ratio
2. Asset Management Ratio
3. Profitalitiy Ratio
4. Captial Structure Ratios

Can your business meet it's short-term obligations?

Ex. Quick Ratio, Current Ratio

How efficiently does your company handle assets?

Ex. Inventory Turnover Ratio, Receivables, Turnover Ratio

What is your return on sales and capital?

Ex. Gross Profit Margin Ratio, Net Profit Margin Ratio, Return on Investment Ratio

How much does your business owe, and own?

Ex. Debt to Equity Ratio, Debt to Asset Ratio

1. Initiation
2. Planning
3. Execution
4. Close Out

1. need or opportunity is defined
2. project manager chosen
3. general plan is structured
4. team memebers chosen

1. activities and tasks are assigned
2. money is budgeted
3. time is scheduled

1. work is performed
2. monitored and guided by project manager

Close Out

1. deliver deliverables
2. stakeholders accept and utilize deliverables
3. project reports are prepared
4. measure efficiency
5. identify area for improvement

1. Logistics
• processes and activites that enable the transfer of a product or delivery of a service from its origins to its destination
2. Supply Chain
• Interdependent business processes and activities (Channels) that extend from sourcing raw materials, to delivering the product to its ultimate destination

ABC's of Signage

Attracting new customers - you need to "restock" customers who move away or change their buying habits

Branding your business - your sign is a promise that tells customers what to expect. Remember, first impressions count!

Creating impulse buys - impulse buys make up 68% of total sales!

Four standards of Effective Signage

1. Readership
2. Reach
3. Frequency
4. Cost per 1,000 exposures

1. Traffic Safety Codes
2. Zoning Codes
3. Aesthetic Codes

1. Visibility
2. Conspicuity
3. Legibility
4. Interest

• Size
• Angles
• Cone of Vision
• Fonts
• Colors
• Contrast
• Amount of text
• Height of letters
• Lighting
• Shapes

Tips  regarding signage

1. Budget for sign
2. Traffic flow
3. Cost per 1,000 exposure
4. psycho and demographics affect your signage decision
5. what signage fits your branding
6. brand identity in signage
7. weather or temperature extremes effect your sign
8. size, material, and style for your sign
9. Colors work best for content
10. Watch competitors - is it working for them

1. First Amendment: Freedom of Expression
• restraints on commercial and non communications
• Content Control
• Censorship
2. Fifth Amendment: Just Compensation
• Amortization
• Abatement
• Takings
3. 14th Amendment: Due Process, Equal treatment
• Discriminatory Code Administration, interpretation, and application
  

Business Plan

Section IV. The Financial Plan

A Worksheets go in Appendix

1. Sales Forecast
2. Cost of Projected Product Units Sold
3. Fixed Assts
4. Growth (or Start-up) Expenses
5. Existing Debt
6. Miscellaneous Expenses

Business Plan

Appendix

1. Action Log
2. Exhibits
3. Supporting documentation needed for business plan

1. historical financial statements
2. historical tax returns
3. business credit report
4. resumes of owners
5. resumes of key employees
6. Organizational chart
7. Job Descriptions
8. Property Layout
9. Photos of business or equipment
10. Map showing location
11. Photos of products

Business Plan

Section I.

Executive Summary

An executive summary, sometimes known as a management summary, is a short document or section of a document, produced for business purposes, that summarizes a longer report or proposal or a group of related reports, in such a way that readers can rapidly become acquainted with a large body of material without having to read it all. It will usually contain a brief statement of the problem or proposal covered in the major document(s), background information, concise analysis and main conclusions. It is intended as an aid to decision making by managers^[1][2] and has been described as possibly the most important part of a business plan.^[3]

Business Plan

Section IV. The Financial Plan

B, C, D Finacial worksheets go in Business Plan

B. - Cash Flow Projections

Break Even Analysis

Monthly Cash Flow Projections - Year One

Annual Cash Flow Projections - Years Two & Three

C. - Finanical Statements

Projected Income statements

Balance Sheet

Statement of Owner's Equity

D. - Additional Financial Statements

Summary of Financial Needs

Personal Financial Statement (don't believe should be in here)

3. Channels
• Business processes and activities extending from one end of the supply chain to the other. (Marketing is an channel within the supply chain.)
4. Subchannels
• Functional areas within channels, which do not extend from one end of the supply chain to the other (Market research is a subchannel of the marketing channel.)

B. Operating Controls

Recordkeeping Functions

Other Operating Controls

Accounts Receivable

Cash

Accounts Payable

Payroll

Other

Personnel

Purchasing

Inventory Control

Customer Service

Customer Credit

Pricing

Quality control

Employee Training

Other

• Financial info
• Financial Statement
• Tax preperation
• Borrowing info
• Pay or collect bills
• Control cash flow

• Watch costs and budgets
• Prevent theft

• Document events in case of lawsuits

• Provide planning info
• Monitor business progress

• Record revenue and expenses when work is done, even though cash may not have been collected
• Usually preferred by accountants and the IRS

• Record revenue and expenses when cash is reveived, even though work may not be complete
• Usually preferred by business owners

1. Liquity Ratios

2. Captial Structure ratios

Refers to a business's short-term ability to pay current and unexpected debts.

1.Current Ratio

Current assets _divided Current liabilities

2:1 ratio is perferred

2. Quick Ratio

(Cash _plus Market securities _plus receivables) _divided Current Liabilities

1:1 ratio is preferred

Debt to Equity Ratio

Total Debt _divided Total Equity

Debt to Total Assets

Total Debt _divided Total Assets

1. It works for you
2. Right info at the right cost
3. Simple
4. Business owner is involved
5. Good internal Controls

1. Sales Journal
2. Purchase Journal
3. Cash Receipts Journal
4. Cash Disbursements Journal
5. General Journal

EI - Quickbooks, Peachtree

Sole Proprietorship

• The owner pays taxes
• Schedule C

Partnership

• The partners pay tax
• Form 1065

Corporation

• The Corporation pays the tax
• Form 1120

LLC

• Taxes as a partnership