1 Starting up your business: your business plan How to avoid problems and be reasonably sure of being successful

2 DIFFICULTIES in STARTING UP A BUSINESS n Registration and permits n Find clients n Find credit

3 Why a business plan? n For the bank? n No, for myself!

4 Why a business plan? n At an international level, about 1/3 of new companies close down in 3 years time n We want to avoid opening and closing

5 Questions I should ask myself n Do I have the qualities to be an entrepreneur? n Do I meet all requirements requested by regulations to start up that type of business? n Which legal type of company should I choose? n Is my business economically sustainable? n Can I find grants? Can you obtain loans?

6 Is my business economically sustainable? nWhich means: –Will I make money? –Or will I loose money?

7 Writing a business plan helps you answer this question: will I make or loose money?

8 How to write a business plan n You do not need to be a specialist in economics n You need to be honest with yourself and have a lot of good sense

9 Business Plan n Not only calculations!

10 The parts of my business plan n My business n The market n The future n The finances

11 Description of my business n Where it will be located, how it will be organized (who will do what), the personnel and the ownership n Products/services n Legal considerations

12 The market n Market research n Market targets n Your customers n Your competitors n Advertising and sales

13 The future n Vision and mission n Goals/objectives n Action plan

14 The finances 1. Set up investments 2. Fixed costs 3. Variable costs

15 The finances 4. revenues

16 The finances 5) Will I make or loose money?

17 6) The first 3 months!!

18 7) Cash flow forecast-first 12 months

19 8) OVERDRAFT FINANCING A problem that can be foreseen n The enterprises who get paid from their clients at longer terms in comparison to the terms they have to pay their suppliers n And the companies who must keep a stock of goods for several months. For example if the goods that are bought to be sold, remain unsold for 12 months it means I have to finance this stock of unsold goods.

20 Overdraft financing n A simple example: if I get payed after 120 days I issue my invoice and I have to pay after 60 days, it is evident I’ve got a problem. n Another example: if I buy some goods and I resell them after an average time of 12 months, this fact has a strong impact on the necessity of financing for my enterprise.

21 n X= number of days after which my clients pay me n Y= number of days my stock stays unsold n Z= number of days after which I pay my suppliers

22 Now some practice!!

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24 Break even point calculation Fixed costs ________________________ Revenues per unit – variable expenses per unit (Notice: revenues – variable expenses is an amount called “contribution margin” per unit)

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