1 starting up your business: your business plan how to avoid problems and be reasonably sure of...
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Starting up your Starting up your business: business:
your business planyour business plan
How to avoid problems and be How to avoid problems and be reasonably sure of being reasonably sure of being
successfulsuccessful
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DIFFICULTIES in DIFFICULTIES in STARTING UP A STARTING UP A
BUSINESSBUSINESS
Registration and permitsRegistration and permits
Find clientsFind clients
Find creditFind credit
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Why a business plan?Why a business plan?
For the bank?For the bank?
No, for myself!No, for myself!
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Why a business plan?Why a business plan?
At an international level, At an international level, about 1/3 of new about 1/3 of new companies close down in 3 companies close down in 3 years timeyears time
We want to avoid opening We want to avoid opening and closingand closing
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Questions Questions I should ask myselfI should ask myself
Do I have the qualities to be an entrepreneur?Do I have the qualities to be an entrepreneur?
Do I meet all requirements requested by Do I meet all requirements requested by regulations to start up that type of business?regulations to start up that type of business?
Which legal type of company should I choose? Which legal type of company should I choose?
Is my business economically sustainable?Is my business economically sustainable?
Can I find grants? Can you obtain loans?Can I find grants? Can you obtain loans?
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Is my business Is my business economically economically sustainable?sustainable?
Which means:Which means:
–Will I make money?Will I make money?
–Or will I loose Or will I loose money?money?
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Writing a business plan Writing a business plan helps you answer this helps you answer this
question:question:will I make or loose will I make or loose
money?money?
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How to write a business How to write a business planplan
You do not need to be a You do not need to be a specialist in economicsspecialist in economics
You need to be honest You need to be honest with yourself and have a with yourself and have a lot of good senselot of good sense
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The parts of my business The parts of my business planplan
My businessMy business
The marketThe market
The futureThe future
The financesThe finances
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Description of my Description of my businessbusiness
Where it will be located, how it will Where it will be located, how it will be organized (who will do what), be organized (who will do what), the personnel and the ownershipthe personnel and the ownership
Products/servicesProducts/services Legal considerations Legal considerations
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The marketThe market
Market researchMarket research Market targetsMarket targets Your customersYour customers Your competitorsYour competitors Advertising and salesAdvertising and sales
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The futureThe future
Vision and missionVision and mission
Goals/objectivesGoals/objectives
Action planAction plan
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The financesThe finances
1.1. Set up investments Set up investments
2.2. Fixed costsFixed costs
3.3. Variable costsVariable costs
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8) OVERDRAFT FINANCING8) OVERDRAFT FINANCINGA problem that can be A problem that can be
foreseenforeseen
The enterprises who get paid from The enterprises who get paid from their clients at longer terms in their clients at longer terms in comparison to the terms they have comparison to the terms they have to pay their suppliersto pay their suppliers
And the companies who must keep And the companies who must keep a stock of goods for several a stock of goods for several months. For example if the goods months. For example if the goods that are bought to be sold, remain that are bought to be sold, remain unsold for 12 months it means I unsold for 12 months it means I have to finance this stock of unsold have to finance this stock of unsold goods. goods.
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Overdraft financingOverdraft financing
A simple example: if I get payed A simple example: if I get payed after 120 days I issue my invoice after 120 days I issue my invoice and I have to pay after 60 days, it and I have to pay after 60 days, it is evident I’ve got a problem. is evident I’ve got a problem.
Another example: if I buy some Another example: if I buy some goods and I resell them after an goods and I resell them after an average time of 12 months, this average time of 12 months, this fact has a strong impact on the fact has a strong impact on the necessity of financing for my necessity of financing for my enterprise.enterprise.
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XX== number of days after which my clients number of days after which my clients pay mepay me
YY== number of days my stock stays unsoldnumber of days my stock stays unsold ZZ==number of days after which I pay my number of days after which I pay my
supplierssuppliers
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Break even point Break even point calculationcalculation
Fixed costsFixed costs________________________________________________
Revenues per unit – variable expenses per unitRevenues per unit – variable expenses per unit
(Notice: revenues – variable expenses is an (Notice: revenues – variable expenses is an amount called “contribution margin” per unit)amount called “contribution margin” per unit)