KeywordsFinance, economics, finance plan, business idea
Author
SZGP
LanguagesEnglish
Objectives/goals
• Understanding of financial planning • Understanding of basic financial concepts • Knowledge of expense estimation • Knowledge of revenue estimation • Understanding the financial plan and developing a financial plan • Understanding possible sources of funding and fundraising • Presenting your own business idea to investors
Description
This module includes basic concepts and calculations that need to be mastered to understand the field of finance and economics. When thinking about starting their own business and making a decision, athletes need to know certain financial fundamentals. Therefore, this module includes three chapters: basic cost forecasting, financial plan and funding / fundraising options. Subchapters include more detailed calculations of personal budget for survival and start-up costs, introduction to basic financial concepts and development of own financial plan, as well as knowledge of possible financing methods and presentation of business ideas to investors / banks. All of the above is learned from specific personal examples.
Contents in bullet points
1. BASIC COST FORECASTING 1.1. Personal budget for survival 1.2. Initial costs - start up costs
2. FINANCIAL PLAN 2.1. Introduction to basic financial concepts - Revenue / Expenses, Receipt / Outlay, Profit / Loss / Financial result 2.2. Creating your own financial plan 3. METHODS OF FINANCING / COLLECTING FUNDS 3.1. Possible ways of financing and raising funds: own money, family and friends, crowdfunding, angel investors, banks / credit lines, grants 3.2. Presenting the business idea to investors / banks
Once an athlete has completed his or her sports career and wants to find out if he or she can afford to start his or her own business (and if the company can cover its own costs), he or she must calculate his or her survival budget. This is the amount a future entrepreneur needs to cover his personal expenses, not counting the inflow of money from sources other than his company over the next 12 months. The net result represents the amount he/she will have to earn from the job. He/she should do the household calculations first.
It is important that future entrepreneurs:
• Be honest with yourself, and don`t underestimate costs
• To include in the calculation "luxury" costs (outings, travel, restaurants)
PERSONAL BUDGET (PERSONAL COSTS)
TOTAL
HOUSING COSTS ( RENT, LOAN)
UTILITIES (WATER, ELECTRICITY,GARBAGE,…)
FOOD
HOUSEHOLD MAINTENANCE COSTS
INSURANCE COSTS ( PERSONAL AND HOUSEHOLD)
TELEPHONE COSTS ( PRIVATE)
CLOTHES, FOOTWEAR
COSTS OF TVAND INTERNET
GOING OUT (FOOD AND DRINK, CINEMA, THEATER, SPORTS EVENTS)
Start-up costs represent the amount that future entrepreneurs need to prepare before starting a business. Start-up costs may include necessary assets, equipment, tools and Start-up costs can be divided into: fixed and variable costs
Fixed costs: costs that the future entrepreneur has and do not depend on the products produced or services provided
Variable costs: costs directly related to the business
The most important question that a future entrepreneur must ask himself is:
How much money do I have to invest to start my own business?
COMPANY COSTS
INITIAL INVENTORY
RENT
INSTALLATION COSTS IN OFFICE SPACE (GAS, ELECTRICITY, WATER)
COSTS OF INTERNET AND TELEPHONE LINES
MAINTENANCE OF PROPERTY AND EQUIPMENT (RENOVATION)
INSURANCE
POSTAGE AND STATIONERY (MEMORANDUM, BUSINESS CARDS)
MARKETING
TRAVEL COSTS
PROFESSIONAL SERVICES (ACCOUNTANT, LAWYER)
CAPITAL EXPENDITURE (PURCHASE OF REAL ESTATE, EQUIPMENT, MACHINERY, FURNITURE)
The financial plan is a plan of business spending based on revenues and expenses for a certain period (month, quarter, year). Identifies available capital, estimates consumption, and helps predict revenue. It is an aid in planning business activities and serves to set financial goals. The components of the financial plan are: Estimated revenue, Fixed cost, Variable cost, One-time cost, Cash flow, Planned financial result.
When starting a new business, making your first financial plan could be a challenge, but it’s a good learning experience and a good way to understand your business. Here are the basic components of such a plan.
1. Estimated revenue
This is the money you expect your business to make from selling goods and services. There are two main components to estimated revenue: the sales forecast and the estimated cost of goods sold or services provided. It is important to remain realistic to avoid overestimating revenue.
2. Fixed cost
When your company regularly pays the same amount for a certain cost, it is a fixed cost. Some examples of fixed costs are building rent, utility fees, employee salaries, online services, accounting services and insurance premiums. Including these costs in the financial plan is important so that you can set aside the exact amount of money needed to cover them.
3. Variable costs
These are the costs of goods or services that can vary depending on your business success. For example, suppose you have a product on the market that is becoming more and more popular. The next thing you would like to do is produce more of that product. The cost of raw materials needed for production, the distribution channels used to supply the product, and the workforce in production will change as you increase production, so they will all be considered variable costs.
4. One-time costs
These are one-time, unexpected costs that your business could incur in any year. Because these costs are difficult to predict, there is no specific way to estimate them. But it is wise to set aside some money for this category to be prepared.
5. Cash flow
Systematized presentation of receipts and outlays of money in a certain period of time. Receipt means the inflow of money from goods sold or services rendered that arises at the time of receipt of money in the giro account. Outlays means the outflow of money from purchased goods or ordered services that occurs at the time of outflow of money from the giro account.
6. Planned financial result
The last component of the financial plan is the figure you get by subtracting the estimated costs from revenues.
A financial plan is a roadmap for your business. It helps you predict cash flow, identify areas that need improvement and run your business smoothly. Successful companies invest a lot of time and effort in realistic financial planning because it is an effective way to track how well a company has achieved its goals. So be realistic in your assessment!
Creating a financial plan can be a big challenge for new companies because there are no previous figures, but with some estimates based on competitors' performance and understanding of plan components, the first financial plan can be completed and have a good roadmap for the future. Therefore, explore the competition!
Watch the video 5 reasons why you need a financial plan:
Fill in the table of planned revenues and expenditures!
DESCRIPTION
AMOUNT
ESTIMATED REVENUES
Revenues from sales of products and / or services rendered
Revenues from grants, subsidies, grants
Add other revenues
TOTAL REVENUES
FIXED COSTS
Business space rent
Employee salaries
Gas / electricity / water
Phone / Internet
Postage and office supplies
Fee for professional services
Bank fees / interest rates
Add other costs
II. A TOTAL FIXED COSTS
VARIABLE COSTS
Costs of raw materials and supplies
Energy costs incurred by increasing production
Labor costs incurred by increasing production
Add other costs
II. B TOTAL VARIABLE COSTS
ONE-TIME COSTS
Add one-time unexpected costs
II. C TOTAL ONE-TIME COSTS
II. EXPENSES TOTAL (II. A + II. B + II. C)
FINANCIAL RESULT (REVENUES – EXPENSES (I.-II.))
It is certainly important to include in the financial plan a systematic presentation of cash receipts and outlays, ie cash flow. Therefore, it is necessary to determine the difference between revenue and receipts and expenditures and expenses.
What is the difference between revenue and receipt? Revenue is the value of goods sold or services rendered that arise when goods or services are sold. Receipt is the inflow of money from goods sold or services rendered that arises at the time the money is received on the giro account. So, the basic difference is the moment, and they don't have to happen at the same time.
What is the difference between expense and outlay? Expense is any expenditure related to the performance of an activity. Outlay is the outflow of money from purchased goods or ordered services that occurs at the time of outflow of money from the giro account. So, the basic difference is the moment, and they don't have to happen at the same time.
Watch a video on cash flow: https://www.investopedia.com/terms/o/operatingcashflow.asp
Create cash flow!
Estimation of collection from invoiced goods or services (receipts)
Billing month
Amount
month
month
month
month
month
month
Take into account the above costs and determine the monthly cost amounts.
Cost name
Monthly amount
Employee salaries
Rent
Phone and Internet
Postage and office supplies
Fee for professional services
Bank fees
Fill in the cash flow table
DESCRIPTION
Before starting a business
1.mth
2.mth
3.mth
4.mth
5.mth
6.mth
1.RECEIPTS
Charged sales
Share capital
Other revenues – grants…
1.TOTAL RECEIPTS
2.OUTLAY
2.1.Variable costs
Material / supplies
Employee salaries
Other
2.1.Total variable costs
2.2.Fixed costs
Business start-up fee
Employee salaries
Rent
Phone and Internet
Postage and office supplies
Fee for professional services
Bank fees
Advertising and marketing
Insurance
2.2.Total fixed costs
2.3. Personal survival budget (table at the beginning)
What are the possible ways of financing and raising funds?
OWN MONEY - if future entrepreneur has invested a significant amount in his business before starting by purchasing equipment or similar, this investment should be recorded in the business books
FAMILY AND FRIENDS - a future entrepreneur can be helped by family and friends by borrowing or investing in a business
CROWDFUNDING - this is a great tool for raising funds to start new business through groups of small investors with fewer restrictions. Many crowdfunding platforms are available such as kickstarter.com, indiegogo.com, funderbeam.com, crowdcube.com
Crowfunding in sport: https://makeachamp.com/, https://www.impactguru.com/sports-crowdfunding (revolutionizing sponsorship in sports; for entrepreneurs which activities are related to organizing sport activities, representing athletes… like main activity of firm Sportspot – more details you can find in Endurance Case Study Finland Sportspot or Sonogrupa d.o.o. – more details you can find in Endurance Case Study Croatia Sonogrupa d.o.o.)
ANGEL INVESTORS - at a stage where the future entrepreneur predicts a solid income he can access angel investors who as individuals or groups of individuals can provide capital to start his business in exchange for ownership or a capital share.
BANKS / CREDIT LINES - the bank may grant an overdraft to a prospective entrepreneur which should not be used to finance or purchase equipment or business premises, but should be used to cover any working capital costs. Therefore, the overdraft is usually given for a certain period, and the future entrepreneur should carefully monitor their daily financial needs.
A bank loan can also be used to purchase capital equipment, business premises, and less for working capital. The loan is considered a long-term investment in the business, is repaid in monthly agreed repayment terms and is paid interest on the repayment period and the fee for processing the loan application.
GRANTS (GOVERNMENT, CITY, MUNICIPAL SUPPORT) - certain countries, cities and municipalities have programs to help entrepreneurs who can co-finance the costs of equipment, business premises, contributions, marketing or allocate funds for self-employment. This source of funding is not standardized and depends on the state, city, municipality.
Presenting a business idea to investors / banks is the transmission of information and it must be clear and simply structured depending on who the entrepreneur is presenting and in what way. In this presentation, the emphasis is on the information on the basis of which investors should make an investment decision. It can be in the form of a presentation or in writing, it describes the entrepreneur and gives a detailed overview of the entrepreneur's business.
Key parts:
• Problem, problem solving and added value
• Mission and vision
• Market size and market opportunities
• Business model and financial projections
• Market entry strategy and planned market share
• Team members, their qualifications and motivation
• Money invest plan within the time frame
Task: make a presentation of your business idea to the investor in ppt. slides
Take care to present the business idea to the investor and answer the important question: why do investors need to invest money in the realization of your idea? Consider conveying important information (follow the key sections above), and keep the presentation clear and carefully structured.
Title
Finance and Economics
Keywords
Finance, economics, finance plan, business idea
Author
SZGP
Languages
English
• Understanding of basic financial concepts
• Knowledge of expense estimation
• Knowledge of revenue estimation
• Understanding the financial plan and developing a financial plan
• Understanding possible sources of funding and fundraising
• Presenting your own business idea to investors
Description
1. BASIC COST FORECASTING
1.1. Personal budget for survival
1.2. Initial costs - start up costs
2. FINANCIAL PLAN
2.1. Introduction to basic financial concepts - Revenue / Expenses, Receipt / Outlay, Profit / Loss / Financial result
2.2. Creating your own financial plan
3. METHODS OF FINANCING / COLLECTING FUNDS
3.1. Possible ways of financing and raising funds: own money, family and friends, crowdfunding, angel investors, banks / credit lines, grants
3.2. Presenting the business idea to investors / banks
Contents
Finance and Economics
BASIC COSTS FORECASTING
Personal budget for survival
Personal budget for survival
Once an athlete has completed his or her sports career and wants to find out if he or she can afford to start his or her own business (and if the company can cover its own costs), he or she must calculate his or her survival budget. This is the amount a future entrepreneur needs to cover his personal expenses, not counting the inflow of money from sources other than his company over the next 12 months. The net result represents the amount he/she will have to earn from the job. He/she should do the household calculations first.
It is important that future entrepreneurs:
• Be honest with yourself, and don`t underestimate costs
• To include in the calculation "luxury" costs (outings, travel, restaurants)
PERSONAL BUDGET (PERSONAL COSTS)
TOTAL
HOUSING COSTS ( RENT, LOAN)
UTILITIES (WATER, ELECTRICITY,GARBAGE,…)
FOOD
HOUSEHOLD MAINTENANCE COSTS
INSURANCE COSTS ( PERSONAL AND HOUSEHOLD)
TELEPHONE COSTS ( PRIVATE)
CLOTHES, FOOTWEAR
COSTS OF TVAND INTERNET
GOING OUT (FOOD AND DRINK, CINEMA, THEATER, SPORTS EVENTS)
CAR COSTS (FUEL, MAINTENANCE)
GIFTS
SAVINGS
OTHER COSTS
REVENUE ( EXPECTED, NOT FROM BUSINESS)
REVENUE OF PARTNERS
OTHER REVENUE
TOTAL REVENUE
TOTAL HOUSE REVENUE ( A-B)
Initial costs - start up costs
Start-up costs represent the amount that future entrepreneurs need to prepare before starting a business. Start-up costs may include necessary assets, equipment, tools and Start-up costs can be divided into: fixed and variable costs
Fixed costs: costs that the future entrepreneur has and do not depend on the products produced or services provided
Variable costs: costs directly related to the business
The most important question that a future entrepreneur must ask himself is:
How much money do I have to invest to start my own business?
COMPANY COSTS
INITIAL INVENTORY
RENT
INSTALLATION COSTS IN OFFICE SPACE (GAS, ELECTRICITY, WATER)
COSTS OF INTERNET AND TELEPHONE LINES
MAINTENANCE OF PROPERTY AND EQUIPMENT (RENOVATION)
INSURANCE
POSTAGE AND STATIONERY (MEMORANDUM, BUSINESS CARDS)
MARKETING
TRAVEL COSTS
PROFESSIONAL SERVICES (ACCOUNTANT, LAWYER)
CAPITAL EXPENDITURE (PURCHASE OF REAL ESTATE, EQUIPMENT, MACHINERY, FURNITURE)
BANKS FEES
LOAN / LEASE REPAYMENTS
TOTAL NEEDED
FINANCIAL PLAN
Introduction to basic financial concepts - Revenue / Expenses, Receipt / Outlay, Profit / Loss / Financial result
The financial plan is a plan of business spending based on revenues and expenses for a certain period (month, quarter, year). Identifies available capital, estimates consumption, and helps predict revenue. It is an aid in planning business activities and serves to set financial goals. The components of the financial plan are: Estimated revenue, Fixed cost, Variable cost, One-time cost, Cash flow, Planned financial result.
When starting a new business, making your first financial plan could be a challenge, but it’s a good learning experience and a good way to understand your business. Here are the basic components of such a plan.
1. Estimated revenue
This is the money you expect your business to make from selling goods and services. There are two main components to estimated revenue: the sales forecast and the estimated cost of goods sold or services provided. It is important to remain realistic to avoid overestimating revenue.
2. Fixed cost
When your company regularly pays the same amount for a certain cost, it is a fixed cost. Some examples of fixed costs are building rent, utility fees, employee salaries, online services, accounting services and insurance premiums. Including these costs in the financial plan is important so that you can set aside the exact amount of money needed to cover them.
3. Variable costs
These are the costs of goods or services that can vary depending on your business success. For example, suppose you have a product on the market that is becoming more and more popular. The next thing you would like to do is produce more of that product. The cost of raw materials needed for production, the distribution channels used to supply the product, and the workforce in production will change as you increase production, so they will all be considered variable costs.
4. One-time costs
These are one-time, unexpected costs that your business could incur in any year. Because these costs are difficult to predict, there is no specific way to estimate them. But it is wise to set aside some money for this category to be prepared.
5. Cash flow
Systematized presentation of receipts and outlays of money in a certain period of time. Receipt means the inflow of money from goods sold or services rendered that arises at the time of receipt of money in the giro account. Outlays means the outflow of money from purchased goods or ordered services that occurs at the time of outflow of money from the giro account.
6. Planned financial result
The last component of the financial plan is the figure you get by subtracting the estimated costs from revenues.
Creating your own financial plan
A financial plan is a roadmap for your business. It helps you predict cash flow, identify areas that need improvement and run your business smoothly. Successful companies invest a lot of time and effort in realistic financial planning because it is an effective way to track how well a company has achieved its goals. So be realistic in your assessment!
Creating a financial plan can be a big challenge for new companies because there are no previous figures, but with some estimates based on competitors' performance and understanding of plan components, the first financial plan can be completed and have a good roadmap for the future. Therefore, explore the competition!
Watch the video 5 reasons why you need a financial plan:
Fill in the table of planned revenues and expenditures!
DESCRIPTION
AMOUNT
ESTIMATED REVENUES
Revenues from sales of products and / or services rendered
Revenues from grants, subsidies, grants
Add other revenues
FIXED COSTS
Business space rent
Employee salaries
Gas / electricity / water
Phone / Internet
Postage and office supplies
Fee for professional services
Bank fees / interest rates
Add other costs
II. A TOTAL FIXED COSTS
VARIABLE COSTS
Costs of raw materials and supplies
Energy costs incurred by increasing production
Labor costs incurred by increasing production
Add other costs
II. B TOTAL VARIABLE COSTS
ONE-TIME COSTS
Add one-time unexpected costs
II. C TOTAL ONE-TIME COSTS
II. EXPENSES TOTAL (II. A + II. B + II. C)
FINANCIAL RESULT (REVENUES – EXPENSES (I.-II.))
It is certainly important to include in the financial plan a systematic presentation of cash receipts and outlays, ie cash flow. Therefore, it is necessary to determine the difference between revenue and receipts and expenditures and expenses.
What is the difference between revenue and receipt? Revenue is the value of goods sold or services rendered that arise when goods or services are sold. Receipt is the inflow of money from goods sold or services rendered that arises at the time the money is received on the giro account. So, the basic difference is the moment, and they don't have to happen at the same time.
What is the difference between expense and outlay? Expense is any expenditure related to the performance of an activity. Outlay is the outflow of money from purchased goods or ordered services that occurs at the time of outflow of money from the giro account. So, the basic difference is the moment, and they don't have to happen at the same time.
Watch a video on cash flow: https://www.investopedia.com/terms/o/operatingcashflow.asp
Create cash flow!
Estimation of collection from invoiced goods or services (receipts)
Billing month
Amount
Take into account the above costs and determine the monthly cost amounts.
Cost name
Monthly amount
Employee salaries
Rent
Phone and Internet
Postage and office supplies
Fee for professional services
Bank fees
Fill in the cash flow table
DESCRIPTION
Before starting a business
1.mth
2.mth
3.mth
4.mth
5.mth
6.mth
1.RECEIPTS
Charged sales
Share capital
Other revenues – grants…
1.TOTAL RECEIPTS
2.OUTLAY
2.1.Variable costs
Material / supplies
Employee salaries
Other
2.1.Total variable costs
2.2.Fixed costs
Business start-up fee
Employee salaries
Rent
Phone and Internet
Postage and office supplies
Fee for professional services
Bank fees
Advertising and marketing
Insurance
2.2.Total fixed costs
2.3. Personal survival budget (table at the beginning)
2.TOTAL OUTLAYS (2.1.+.2.2.+2.3.)
CASH FLOW ANALYSIS
Net cash flow(1-2)
METHODS OF FINANCING / COLLECTING FUNDS
Possible ways of financing and raising funds: own money, family and friends, crowdfunding, angel investors, banks / credit lines, grants
What are the possible ways of financing and raising funds?
OWN MONEY - if future entrepreneur has invested a significant amount in his business before starting by purchasing equipment or similar, this investment should be recorded in the business books
FAMILY AND FRIENDS - a future entrepreneur can be helped by family and friends by borrowing or investing in a business
CROWDFUNDING - this is a great tool for raising funds to start new business through groups of small investors with fewer restrictions. Many crowdfunding platforms are available such as kickstarter.com, indiegogo.com, funderbeam.com, crowdcube.com
Crowfunding in sport: https://makeachamp.com/, https://www.impactguru.com/sports-crowdfunding (revolutionizing sponsorship in sports; for entrepreneurs which activities are related to organizing sport activities, representing athletes… like main activity of firm Sportspot – more details you can find in Endurance Case Study Finland Sportspot or Sonogrupa d.o.o. – more details you can find in Endurance Case Study Croatia Sonogrupa d.o.o.)
ANGEL INVESTORS - at a stage where the future entrepreneur predicts a solid income he can access angel investors who as individuals or groups of individuals can provide capital to start his business in exchange for ownership or a capital share.
BANKS / CREDIT LINES - the bank may grant an overdraft to a prospective entrepreneur which should not be used to finance or purchase equipment or business premises, but should be used to cover any working capital costs. Therefore, the overdraft is usually given for a certain period, and the future entrepreneur should carefully monitor their daily financial needs.
A bank loan can also be used to purchase capital equipment, business premises, and less for working capital. The loan is considered a long-term investment in the business, is repaid in monthly agreed repayment terms and is paid interest on the repayment period and the fee for processing the loan application.
GRANTS (GOVERNMENT, CITY, MUNICIPAL SUPPORT) - certain countries, cities and municipalities have programs to help entrepreneurs who can co-finance the costs of equipment, business premises, contributions, marketing or allocate funds for self-employment. This source of funding is not standardized and depends on the state, city, municipality.
SOURCE OF FUNDING
YES / NO
EXPLANATION
OWN MONEY
FAMILY AND FRIENDS
CROWDFUNDING
ANGEL INVESTORS
BANKS / CREDIT LINES
GRANTS (GOVERNMENT, CITY, MUNICIPAL SUPPORT)
Presenting the business idea to investors / banks
Presenting a business idea to investors / banks is the transmission of information and it must be clear and simply structured depending on who the entrepreneur is presenting and in what way. In this presentation, the emphasis is on the information on the basis of which investors should make an investment decision. It can be in the form of a presentation or in writing, it describes the entrepreneur and gives a detailed overview of the entrepreneur's business.
Key parts:
• Problem, problem solving and added value
• Mission and vision
• Market size and market opportunities
• Business model and financial projections
• Market entry strategy and planned market share
• Team members, their qualifications and motivation
• Money invest plan within the time frame
Task: make a presentation of your business idea to the investor in ppt. slides
Take care to present the business idea to the investor and answer the important question: why do investors need to invest money in the realization of your idea? Consider conveying important information (follow the key sections above), and keep the presentation clear and carefully structured.