SESSION 7: FINANCE

TOPICS COVERED

Participants will produce a formal business plan that will include a component of each of the following:

Week 1: IntroductionWeek 2: EntrepreneurshipWeek 3: Idea developmentWeek 4: MarketingWeek 5: Competitors and Organisational and legal structureWeek 6: Technical developments and Risk assessmentWeek 7: FinanceWeek 8: Integrating and controlWeek 9: Guest speakersWeek 10: Summary

CONTACT DETAILS

SURGERY HOURS

On Request

Mind stretcher

• I need to borrow 100k to make my business viable. Which options will I have and what will it costs me?

Money!• Need money, but how much and for what reason – will

determine sourceReasons:• Fixed Capital

– Buy fixed capital• Working Capital

– Buying stock, manufacturing product/service – running of business• Growth Capital

– When expanding or changes direction

Sources

My money!

Not my money!

Fixed and Variable Costs

• Fixed cost • Variable costs

Profit vs. Cash

• FormulaSales LessCost of sales = Gross profitLess Fixed cost = Net Profit

Break-even

Fixed

Total

Sales

Variable

Income

Time

Break-even

• Break-even: Sales Turnover Formula:– Fixed Cost/GP%

• Break-even: Units Formula:– Fixed Cost/GP per Unit

• Break-even with profit motive:– Fixed cost + Profit/GP%

Break-even

• Break-even: – Fixed Cost/GP%

• Break-even: Units Formula:– Fixed Cost/GP per Unit

• Break-even with profit motive:– Fixed cost + Profit/GP%

• You sell CD’s at £8 each. Cost price per CD is £3. Operating costs is £5000 per month. You would like to make £500 profit per month

Websites

• http://www.business.hsbc.co.uk/1/2/start-up-business;jsessionid=0000Mma9gKKqbyE_V5dVdB5lgUZ:12fhlq7db

• http://www.businesslink.gov.uk/bdotg/action/home?domain=www.businesslink.gov.uk&target=http://www.businesslink.gov.uk/

• http://www.advantagewm.co.uk/what-we-do/helping-business/finance-for-business.aspx

• http://www.princes-trust.org.uk/

Exercise

• Calculate the break-even point for your own business using the templates provided.

ANY QUESTIONS?