2. SESSION 7: FINANCE

3. TOPICS COVERED Participants will produce a formal business plan that will include a component of each of the following: Week 1: Introduction Week 2: Entrepreneurship Week 3: Idea development Week 4: Marketing Week 5: Competitors and Organisational and legal structure Week 6: Technical developments and Risk assessment Week 7: Finance Week 8: Integrating and control Week 9: Guest speakers Week 10: Summary

4. CONTACT DETAILS SURGERY HOURS On Request

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

6. Money! Need money, but how much and for what reason – will determine source Reasons: Fixed Capital – Buy fixed capital Working Capital – Buying stock, manufacturing product/service – running of business Growth Capital – When expanding or changes direction

7. Sources My money! Not my money!

8. Fixed and Variable Costs Fixed cost Variable costs

9. Profit vs. Cash Formula Sales Less Cost of sales = Gross profit Less Fixed cost = Net Profit

10. Break-even Fixed Total Sales Variable Income Time

11. 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%

12. 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

13. Websites http://www.business.hsbc.co.uk/1/2/start-up- business;jsessionid=0000Mma9gKKqbyE_V5dVdB5lgUZ:12fhlq 7db http://www.business.hsbc.co.uk/1/2/start-up- business;jsessionid=0000Mma9gKKqbyE_V5dVdB5lgUZ:12fhlq 7db http://www.businesslink.gov.uk/bdotg/action/home?domain =www.businesslink.gov.uk&target=http://www.businesslink.g ov.uk/ http://www.businesslink.gov.uk/bdotg/action/home?domain =www.businesslink.gov.uk&target=http://www.businesslink.g ov.uk/ http://www.advantagewm.co.uk/what-we-do/helping- business/finance-for-business.aspx http://www.advantagewm.co.uk/what-we-do/helping- business/finance-for-business.aspx http://www.princes-trust.org.uk/

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

15. ANY QUESTIONS?