Business Conditions – Worst Since ?

Records Began ? The Great Depression ? The Founding of the State ? The 1970’s We last won a ‘Grand Slam’ ?

Getting Started – What are my costs?

‘Need Good Business Management Information’ Turnover v Bottom Line – Change of Focus How do I get this information? Get Last Years Accounts – either 2007 or 2008 List all Income & Expenses on Spreadsheet Jan & Feb 2009 input estimate

1. Accounting System eg Sage2. Cheque Stubs

Produce Monthly Income & Expenditure >

XYZ TOOLSMonthly Income & Expenditure Account

Last Years Jan Feb MarAccounts

Sales 250,000 16,667 13,333

Cost of Sales 145,000 9,667 7,733

Gross Profit 105,000 7,000 5,60042% 42% 42%

Less Expenses

Wages & Salaries 22,296 1,858 1,858Rent 30,000 2,500 2,500Rates 5,000 417 417Insurance 4,000 333 333Light & Heat 5,200 400 300Repairs 2,000 200 100Computer Costs 2,000 0 150Printing & Postage 2,500 368 250Telephone 3,000 275 300Motor Expenses 5,000 350 200Accountancy 1,500 125 125Bank Charges 2,500 267 213Depreciation 3,750 313 313

88,746 7,405 7,059

Profit / (Loss) 16,254 (405) (1,459) 0

Cost Control -General Tips

Becoming an Expert on each cost Line by Line – One at a time Mind Set – Intolerant of losses ‘What am I getting for spending this Money? Owner must sign every cheque Watch Bank Balance Constantly – Weak Cash

Flow is greatest source of business failure in recession

Working Capital – Cash is King

Reduce Stocks to absolute minimum Stock Disposal Programme for old Stock –

Turn into cash Accounts Receivable – proactively manage

to reduce - offer early payment discounts Obtain cash discounts for payments Vital – Produce a Cashflow Statement

XYZ TOOLS Projected Cash Flow

March April May June JulyActual

Sales Receipts 8,000 4,500 5000

Less Expenses Purchases 4,000 7,734 5000Wages & Salaries 700 1,858 1858Rent 0 2,500 2500Rates 0 500 500Light & Heat 400 300 300Repairs 200 100 100Computer Costs 0 150 0Printing & Postage 368 250 250Telephone 275 300 300Motor Expenses 350 200 200Bank Charges 267 213 213Purchase PC 0 0 1000

6,560 6,371 7,221

Net Inflow / ( Outflow ) 1,440 (1,871) (2,221) 0

Opening Bank Balance 26/03/09 1,250 2,690 819 (1,402)Net Inflow / Outflow 1,440 (1,871) (2,221) 0Closing Bank Balance 2,690 819 (1,402) (1,402)

Control Cost of Sales

2008 Projected ProjectedA B

€ € €Sales 250,000 180,000 180,000

Cost of Sales 145,000 116,000 98,600

Gross Profit 105,000 64,000 81,40042% 36% 45%

Decline in Gross Profit (41,000) (23,600)

Sales Units down 20% Sales Price down 10%

Banking Costs

Banking On-line – Watch Balance Pay on-line Credit Card Charges- Negotiate fee Promote Laser Cards Referral Fees €4.44 per item – Try & work

within Agreed limits – eg 18% unapproved overdrafts – v 1.5% ECB rate

Light & Heat Costs

Consider Other Suppliers BordGais/Airtricity/Energia – 10% to 12%

Understand bills- Wattage – What are you paying for?

Energy Saving Bulbs – 95%

Telecomm. Costs

Become an expert – (Again) Understand Tarriffs Mobile to Mobile – Yes Landline to Mobile - ? Number of Phone Lines – Rental of 1

Phone line €21 per month = €764 gross sales at 42% margin

Marketing / Advertising Costs

Print v On-Line E- Shots Consider outside help – Marketing

expertise What am I Getting for spending this

money

Insurance Costs

Business Insurance to trend upwards again

Watch Valuation of Buildings Watch Stock Valuations Watch Turnover levels Watch Employee Levels Talk to Broker and become Expert

Rents - Premises

Sub-let part of unutilised premises Try to renegotiate existing leases

even if some way to go - 20% reductions becoming commonplace

Good tenant paying reduced rent better than no rent - Landlord costs down

Accountancy Costs

Get Quote each Year Move to Audit Exempt if company Discuss what info you can provide to keep fees

down for upcoming year

Drawings / Directors Salary Costs

Apply same techniques at home to drive down one of your businesses biggest expenses - Yourself

Conclusion

Don’t Panic Put in Place Estimated Monthly P&L Know Your Costs – Review Line by line Know your Break even Know your Cash flow Become lean, mean and ready for the

upswing