1. Entrepreneurship Delivered in: Islamia University Bahawalpur Presented By: Tasawar Javed

2. Today’s talk includes: Cash flow and Death Valley The Flow of Money Break-even Decision making

3. Cash flow & Death Valley Cash Flow: – Life blood of your Business – If Cash flow disturbs then your business will get Heart-Attack – Cash flow pays the bills & wages – You spent cash on Premises Equipment Stock and so on – Unless the first customer comes in

4. Cash Flow & Death Valley Death Valley – May be your first sale is on Credit and it will take some to time before debts are collected – This time your business have Negative Cash Flow – It is Called Death Valley curve Death Valley may not be a problem if You have sufficient capital (owned or borrowed) so that you can trade if no cash is coming in But you need to map this that what you going to face Work out; how much cash you need, how long it will take Death valley could be deeper or longer than expectation

5. Death Valley Curve The Death Valley Curve Positive Max Capital or borrowing First Sale Negative Sales Cash Flow Time £

6. The Flow of Money Flow of money indeed is extremely important Obtain Finance Capital Share cap, loan Money leaving The business With-drawals Of individual Taxation Day to day Operating costs Loan interest & other non Routine costs Retained Profit Net Profit Operating profit Sales Buy assets Fixed assets Current Assets

7. Financial Drivers Cash Sales Profit Margin Margin of safety or break even Productivity Debtor or stock turnover

8. Margin of Safety or Break-even Total sales-Breakeven sales * 100 Total Sales If your fixed overheads increases then your breakeven will not remain same it will increase as well

9. Debtor or stock turnover Debtors turnover: sales/debtors Stock turnover: sales/stocks

10. Break-even What it is?? What about your Business Plan???

11. Break-even Keep fixed overheads as low as possible – The lower the fixed cost, the lower the break-even point and therefore the lower the Risk Keep contribution margins as high as possible – Businesses with low contribution margins cannot afford to cut their prices, they must control their high variable costs

12. Decision Making How well the business is doing? Questions What if? Questions Which product or service is more profitable? Questions Where should I focus limited resources? Questions

13. Thank You!!!! Q&A