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"Creating Your Own Destiny"
Mission Statement - Business Operations & Management
To develop successful entrepreneurs who have a clear-cut sense of purpose and realistic, meaningful, achievable goals.
Let's review what we've done thus far. You are building marketing plan based on an understanding of your strengths, weaknesses, and opportunities. The marketing plan looks at your target market and maps out the ways you'll penetrate it.
You have researched the characteristics of your target market, the products they are buying, and the priced the are willing to spend for them. After analyzing your strengths, you have determined the
products you can offer that your target market is likely to buy and how you can set your products apart from your competitors.
As an entrepreneur, you need to foresee the financial benefits of your marketing plan before you spend a dime. The plan must be grounded in reality:
How many session will you need to book to capture the local market? How much do you need to charge on average for your products?
You need specific data for your calculations, beginning with your overhead and operating costs. This brings us to the Financial Plan.
Financial Plan
Financial issues tend to be unpopular among entrepreneurs.
Some find the subject tedious. Others find it intimidating.
The result is that many entrepreneurs do nothing.
Finances in many businesses become "the state of the checkbook"
each morning. If there's cash, the business is still around and
if there's no cash, the business has major problems. For your business to succeed, it is essential that you ensure a
steady income, not only to pay business expenses and to buy material
and equipment, but also to provide you with an adequate personal
income.
Cash flow shortages ultimately doom a
business to failure. To avoid this, the starting photographer-entrepreneur
should maintain enough "cash reserves", whether through outside income, savings,
or personal loans, to provide minimum subsistence for at least
one year. Furthermore, there should be sufficient "cash on hand" to operate
your business for at least six months (plus start up costs).
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Forecasting Income and Expenses
At this point, you know how much money you have available for your
enterprise, you have an idea of what your start-up expenses will be.
The next step is to make a realistic estimate of the income and
expenses for the first year of operation. This information allows
you to answer the following questions:
- How much cash does my business have?
- How much cash does my business need to operate?
- Where does my business get and spend its cash?
- How do my income and expenses affect the amount of cash I need to expand my business?
To get an accurate idea of how much money you'll need to keep your
business running for the first year, you'll need to figure out
how much income your business will produce in that first year.
Step 1
Determine your projected operating expenses (i.e., overhead) for the first year of operation. Review the following to help understand the "real costs" of being in business each day.
Step 2
Any financial plan must begin with a forecast of sales/income
to pay the for the operating expenses of the business. Estimating your sales will not be an exact science.
If you are going to err, err on the conservative side in predicting
how much business you'll need the first year.
Step 3
A lot of new business owners who plan their cash flow needs consider
only the cash flow needs up to the day they open for business.
They forget to consider their cash flow needs after they are in
operation. Having enough cash for the first year of the new
business is just as important as having enough startup cash.
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Assignment
Download the following from the Docs Sharing section of your eCompanion class site:
- Session & Income Projection spreadsheet
- Marketing, 3-Year Cash Flow and Break Even Point Projection spreadsheet
Read the following:
Complete the following:
- Financial Plan Assignment (Class handout)
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