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## Christian Papworth

on 19 March 2013

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#### Transcript of Business plan (simple start-up)

By Christianpapworth@gmail.com THE BUSINESS PLAN THE IDEA wedding singer... market customer 1) Costs 2) Sales price Legal structure ideas research financial other... competitors 241,000 weddings each year 4,650 each weekend... GROWING at 3% p.a. > 50% between 25-34yrs old music types... (rock/ indie/ grunge/ dance/ hip-hop/ swing...) many fragmented few professionals... difficult to differentiate rely on recommendations 1) Is it profitable? 2) Sustainable? 3) How money much do I need to setup? 4) Who do I get the money from? 3) sales volume Costs Machinery Labour Light/ heat/ water/ electricity Premises
(rent & rates) Materials Royalties Licences Insurance setup costs
(incurred once to get business started) fixed costs
(cost that don't vary with output or sales) variable costs
(increase as we produce more) There is no correct answer here... BUT to make sure we make a profit we need a price that... at least covers our
VARIABLE COSTS will eventually cover
our FIXED COSTS will turn a profit to ensure
the business is sustainable Variable costs £400 PROFIT MARGIN £250 Sales price £650 + = Check against
competitors Will customers
accept? Check the BREAKEVEN POINT The number of sales which takes the business from profit to loss. 1) Calculate what's left of the sales price after the variable costs have been paid - this is known as the CONTRIBUTION from each sale. £650 - = £250 £400 2) Divide your fixed costs by the contribution. This calculates HOW MANY times you need to sell something to pay off your fixed costs. Total setup & annual fixed costs = £1,750 + £1,050 £250 No. of gigs until profitable = 11.2, or 12 gigs! How can we possibly know how much we'll sell...! We guess... using assumptions but there's things that can help make it more accurate! Trials Surveys Historic sales of competitors Profit
& Loss Cash
flow Tax Sources of finance P&L rules 1) Record sales and expenses when the events happen
- e.g. if you have performed a gig then you record the revenue
- e.g. if you have taken transport, you record the expense
n.b. it DOESNT matter if you've rec'd/ paid cash. 2) Spread the costs of machines/ buildings/ equipment over their period of use
This is called DEPRECIATION.
-e.g. bought new amp for £1,500, expect it to last 5 years. Record depreciation of £300 each year. Cash flow rules VERY SIMPLE:

- Record cash receipts when you expect to receive them!

- Record cash payment when you expect to pay them! Sole trader Partnership Company Good BAD Simple