BZUPAGES.COM 10-1 BZUPAGES.COM 10-2 Presented To: Sir Ghulam Abbas sb Presented By: M.Sheraz Anjum Bukhtyar Ali Khurram Shahzad Muhammad Arqum BS(IT)7th BZUPAGES.COM 07-16 07-18 07-32 06-24 10-3
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Transcript BZUPAGES.COM 10-1 BZUPAGES.COM 10-2 Presented To: Sir Ghulam Abbas sb Presented By: M.Sheraz Anjum Bukhtyar Ali Khurram Shahzad Muhammad Arqum BS(IT)7th BZUPAGES.COM 07-16 07-18 07-32 06-24 10-3
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10-1
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10-2
Presented To:
Sir Ghulam Abbas sb
Presented By:
M.Sheraz Anjum
Bukhtyar Ali
Khurram Shahzad
Muhammad Arqum
BS(IT)7th
BZUPAGES.COM
07-16
07-18
07-32
06-24
10-3
Is a person a born Entrepreneur?
THINK!!!
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10-4
Case Study
BIG
IDEA
Businesses Started by Young
What’s the
Entrepreneurs
The idea:
From the
minds of:
The
business:
Online shoe
sales
Tony Hsieh
Nick
Swinmurn
Zappos.com,
1999
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Mind Your Own Business
Start it . . . Grow it . . . Own it!
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10-6
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10-7
Khurram Shahzad
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Financial Plan
Provides with complete picture of how much & when
funds are coming into the Organization- Where
funds are going- How much cash is available &
projected financial position of the firm
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Helps new venture with most common problem- lack of
cash
Explain to potential investor
Plans to meet financial obligations
How would he pay off debt or provide good ROI
3 Years of projected financial data to satisfy any
outside investors
First year should reflect Monthly data
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10-10
Operating and Capital Budgets (1 of 2)
Developed before the pro forma income statement.
Sales budget: estimate of the expected volume of sales
by month.
Cost of sales can be determined from the sales forecasts.
In manufacturing ventures:
costs of internal production or subcontracting are compared.
Budgets reflects seasonal demand or Marketing
programs than can increase demand & inventory
Ventures in which high level of inventory are necessary
or where demand fluctuates significantly because of
seasonality ----This Budget is valuable tool to asses cash
needs
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Example of a Manufacturing Budget
<<Insert Table 10.1>>
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Operating and Capital Budgets (2 of 2)
Operating costs:
List of fixed expenses gained regardless of sales volume.
Rent, Utilities, Salaries, Interest, depreciation, insurance
Variable expenses which may change from month to
month depending on sales volume, seasonality or
opportunities for new businesses
Advertising & selling expense
Capital budgets provide a basis for evaluating
expenditures that will impact the business for more
than one year. CB may project expenditure for new
Equipment, vehicles, computers etc
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Example of an Operating Budget
<<Insert Table 10.2>>
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Bukhtyar Ali
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Pro Forma Income Statements (1 of 2)
Pro forma income: projected net profit calculated from
projected revenue minus projected costs and expenses.
Sales by month is calculated first.
Basis of the figures: marketing research, industry sales,
and some trial experience.
Forecasting techniques may be used.
New ventures take time to build up sales.
Projections of all operating expenses for each of the
months during the first year should be made.
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Pro Forma Income Statements (2 of 2)
Increasing selling expenses as sales increase should be
taken into account.
Changes in expenses during the first year can require
month-by-month illustration.
Projections should be made for years 2 and 3 as well.
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Example of a Pro Forma Income Statement
<<Insert Table 10.3>>
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Pro Forma Cash Flow (1 of 2)
Projected cash available calculated from projected cash
accumulations minus projected cash disbursements.
Cash & profit are not the same(Difference
between a Company’s total revenue & its total expense)
Cash is the money that is free & readily available
to use in a business
Sales may not be regarded as cash.
Use of profit as a measure of success for a
new venture may be deceiving.
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Pro Forma Cash Flow
If disbursements are greater than receipts in any time
period the entrepreneur must either borrow funds or
have cash in bank account to cover the higher
disbursements
Cash flow statement is based on best estimates.
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Example of a Pro Forma Cash Flow
<<Insert Table 10.6>>
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Muhammad Sheraz Anjum
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Pro Forma Balance Sheet
Pro forma balance sheet: summarizes the projected
assets, liabilities, and net worth of the new venture.
A picture of the business at a certain moment in time.
Does not cover a period of time.
Consists of:
Assets: items that are owned or available to be used in
the venture operations.
Liabilities: money that is owed to creditors.
Owner’s equity: amount owners have invested and/or
retained from the venture operations.
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Example of a Balance Sheet
<<Insert table 10.7>>
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Break-Even Analysis
Break-even: volume of sales where the venture neither
makes a profit nor incurs a loss.
Break-even sales point indicates the volume of sales
needed to cover total variable and fixed expenses.
The break-even formula:
TFC
B/E(Q) =
SP – VC/Unit (Marginal Contribution)
Major weakness in calculating the breakeven lies in
determining if a cost is a fixed or variable.
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Graphic Illustration of Breakeven
<<Insert Figure 10.1>>
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Questions Please…..
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