ENDURANCE
Entrepreneurial Capacity-building for Sport

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.

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?

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!

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)

Take into account the above costs and determine the monthly cost amounts.

Fill in the cash flow table

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.