1. Understanding Feasibility & Accessing Information
Mile Markers 3 & 4 (4.02)

2. Making Money $$$$
In order to determine if a product or service is needed, a feasibility analysis should be completed.
After deciding that it is viable, a prototype ( a working model or product) should be developed

3. Sales Projections Also called a forecast
An estimate of sales for a specific period
Can be a yearly, quarterly, monthly, daily projection

4. Pricing Fixed Costs Variable Costs
Expenses that don’t change with number of products produced
Examples:
Rent
Insurance
Variable Costs
Expenses that change with each unit produced
Utilities
Wages
Materials

5. Pricing
Liabilities
Money owed to others
Examples:
Bills
Wages
Taxes

6. Pricing Odd/Even Pricing Markup Odd ($19.99) suggests bargains
Even ($20.00) suggests higher quality
Part of psychological pricing
Markup
The amount added to the cost of a product to cover expenses & ensure a profit
Cost + Markup = Price
$5 + $2 = $7

7. Break Even Point
When the money from product sales equals the costs of making and distributing the product
Can be used to figure out how many dollars in sales it will take for a product to break even
Formula:
Fixed expenses/ unit sales price – variable expenses (cost to make product) = Break even point (units needed to sell)
Example:
$7000/$10 - $6.50 = 2000 units

8. Cash-flow Statement
Describes the flow of cash into & out of a business
Needs to be created at the end of each month
Helps with estimate sales and operating expenses
Formula:
Cash receipts (inflow) – Disbursements (outflow) = Net cash flow

10. Balance Sheet Tells what a business is worth Formula:
Assets = Liabilities + Owner’s equity
Assets- things of value that belong to a company
Owner’s equity- the amount left over after the liabilities are subtracted from assets

12. Income Statement Also called a profit-and-loss statement
Compares revenues & expenses over a specific period
Prepared monthly
Formula:
Revenues – Expenses = Net Income (Loss)