Financial Planning

671 views
573 views

Published on

Published in: Economy & Finance, Business
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
671
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
0
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Financial Planning

  1. 1. Welcome to the World ofFinancial PlanningIP CRUSISTAPRIL 2013, SEIA, PORTUGALIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen1
  2. 2. A (wo)man with a plan?Setting up a ‘Project’ ?What is the project here ? e.g. …..− A sustainable cruise tourism company ?− A local cruise terminal ?− A cruise program on the ship or on location ?− A ???2IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  3. 3. • How to get ready to ‘run’ ?• What project ? What strategy ? …..− ‘Project’ description• What do you want to do ?− Strategy description• Who do you want to target ?• How big/small ? amplitude• Time frame ?3IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  4. 4. Not overnight !− Never without looking ahead:• a proper financial plan!− Never without looking back afterwards:• the plan versus reality!4IP Crusist April 2013, Financial Planningclass version, Marieke Van BeylenWelcome to theWorld of Financial Planning
  5. 5. • The contents of this presentation can provide ideas for:− Yourself as a project group …..• Will you manage to roll out your plan ?• Will you manage to cover your costs ?• What is your financial output for your plan ?− Your bank or other stakeholders, e.g. (potential) shareholders) …..• What are the financial requirements ?• What are the financial consequences ?5IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  6. 6. FINANCIAL PLANNING: OVERVIEW1. On your mark !2. Background for Financial Planning3. Financial Planning within Entire Business Plan Scope4. Financial Planning supporting Product/Market Strategy5. Your Costs6. Your Pricing7. Financial Resources8. Key figures to measure financial performance9. Budget10. QuestionsIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen6MATCHDETERMINECHECKUSE
  7. 7. 2. BACKGROUND FOR FINANCIAL PLANNING1. Why ?• Gives direction to the project: …..− Objectives ‘on paper’ give business frameworkfor:• Decisions• Evaluation• Professional image for projectenvironment:…..− Gives trust to shareholders and other equityprovidersIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen7
  8. 8. 2. BACKGROUND FOR FINANCIAL PLANNING2. How ?• Clear ! Measurable !• Structured !• Consistent !• Synthetic !• Truly provide information !IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen8
  9. 9. 3. When ?• Prior to startup− For the near future: first 3 to 5 years• Repeat/check every year at least:− Economic parameters change2. BACKGROUND FOR FINANCIAL PLANNINGIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen9
  10. 10. • But first:What is your present situation?Are you ready for your new project?How healthy is your situation for the moment?• How to judge? …..For techniques: see par. 8 in this presentation10IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen2. BACKGROUND FOR FINANCIAL PLANNING
  11. 11. 3. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE1. Mission2. Vision3. General StrategyBudget5 to 7 years or more2 to 5 years2 to 5 years1 to 3-5 yearsPlanningIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen11
  12. 12. 1. Missions: examples• http://www.microsoft.com/mscorp/mission/• http://discover.store.sony.com/sonyjobs/pages/about/life.html• http://ergo.human.cornell.edu/Ecotecture/Case%20Studies/Body%20Shop/Body%20Shop_home.htmlIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen123. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE
  13. 13. What is the MISSION ofyour project/project group ?3. FINANCIAL PLANNING WITHINENTIRE PROJECT SCOPE13IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  14. 14. 2. Visions: examples…..• 15 % market share of cold meat in theBenelux and Germany by 201X• Sell my company by 201Y for at leastZ EURWithin the Financial Plan (time) scope !IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen143. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE
  15. 15. Vision example: the biggest YYYdealer in Belgium by 201X byfocussing on the top 500-market.Direct competitors grow 15% per year. We need to grow 30% per year.3. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPEIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen15201X 201X+1 201X+2Turnover 1200 1560 2028Employees 100 120 145Customer 500 30 60 85% Profit Margin vs.Turnover4,5 4,8 5,4Other criteria xxx Xxx + Xxx ++
  16. 16. What is the VISION ofyour project/project group ?3. FINANCIAL PLANNING WITHINENTIRE PROJECT SCOPE16IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  17. 17. Partial vision: on particular issueExample:Sony Environmental Plan: take a look!http://www.sony.net/SonyInfo/csr/eco/RoadToZero/index.htmlWithin the Financial Plan (time) scope !IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen173. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE
  18. 18. 3. A General Strategy is needed to meet themission and vision: e.g. …..1. Staff training2. Quality control referenceMake sure to plan your finances to match suchstrategy !18IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen3. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE
  19. 19. 1. Staff training− motivation− customer satisfaction− productivity− costs− profitIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen193. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE
  20. 20. 2. Quality Control− Financial resources to be partly reinvested inR&D− Include follow up in your business concept evenbefore starting:• Who, by whom• Frequency• What etc.IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen203. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE
  21. 21. 2. Quality ControlQuality services/certificates (e.g. ISO)http://www.iso.org/iso/home.htmlHow to go about? …..IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen213. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE
  22. 22. 2. Quality ControlGood to know: …..− You are not certified BY ISO− You can be certified• According to ISO standards• By private institutes, accredited by the InternationalAccreditation Forum− The cheapest one is not always the best bargain !22IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen3. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE
  23. 23. Besides supporting theAlso ask yourselfsome questionsabout your project.3. FINANCIAL PLANNING WITHINENTIRE PROJECT SCOPE23IP Crusist April 2013, Financial Planningclass version, Marieke Van BeylenMission VisionGeneralStrategy
  24. 24. INTERNAL EXTERNALWhat am I good in?What is good for me?What am I weak in?What is bad for me?IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen243. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE
  25. 25. INTERNAL EXTERNALStrengths + Opportunities +Weaknesses - Threats -IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen25= SWOT Analysis3. FINANCIAL PLANNING WITHIN ENTIREPROJECT SCOPE
  26. 26. What are the financial• Requirements• Consequencesof what I found in the SWOT Analysis ?Now ready for a more precise product/marketstrategy choice ?3. FINANCIAL PLANNING WITHINENTIRE PROJECT SCOPE26IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  27. 27. 4. FINANCIAL PLANNING SUPPORTINGPRODUCT/MARKET STRATEGY27IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  28. 28. • What are my plans?• What is my present position ?• What will I need to spend to bridge the gap ?4. FINANCIAL PLANNING SUPPORTINGPRODUCT/MARKET STRATEGY28IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  29. 29. 29IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen4. FINANCIAL PLANNING SUPPORTINGPRODUCT/MARKET STRATEGYWhat are the plans ?.....
  30. 30. IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen304. FINANCIAL PLANNING SUPPORTINGPRODUCT/MARKET STRATEGYWhat stage am I in ? …..
  31. 31. • More precise criteria to define yourproduct/market strategy• Be precise so that you can− Provide the necessary finances− Evaluate afterwards how well you performed !31IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen4. FINANCIAL PLANNING SUPPORTINGPRODUCT/MARKET STRATEGY!A lot of ideas/topics for you in thenext slide
  32. 32. IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen32RANKING SENIORITY & MARKET KNOWLEDGESIZE, LEADER, FOLLOWER MARKET SHARE, NUMBER OF CUSTOMERSIMAGE NAME, BRAND RECOGNITIONINNOVATOR CAPABILITY TO LAUNCH NEW PRODUCTS/SERVICESADVERTISING EFFORTS MESSAGE , MARKET PENETRATION,PRICING POLICY EXPENSIVE, CHEAPER, DISCOUNTS & PROMOTIONSESTABLISHMENT LOCATION, BUILDINGDISTRIBUTION POINTS OF SALES FRANCHISING, OWNERSHIPCOSTS COSTPRICE STRUCTURE, COSTING METHODOLOGYSUPPLIERS SAME / DIFFERENTFINANCIAL STRENGTHS OWNERS’ EQUITY, FINACIAL INDEPENDENCEORGANISATION FLEXIBLE OR HEAVYVALUES BUSINESS ETICS, ISO-CERTIFIED4. FINANCIAL PLANNING SUPPORTINGPRODUCT/MARKET STRATEGYAppraise the ambitions ! Estimate the finances !
  33. 33. • But …..NO OMELETS WITHOUT BREAKING EGGS !Question: …..How do costs behave ?5. YOUR COSTS33IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  34. 34. • Fixed costs5. YOUR COSTS34IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen05000100001500010 units 20 units 30 units 40 unitsEUR
  35. 35. • Semi-Fixed costs5. YOUR COSTS35IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen050001000015000200002500030000350000 un. 10 un. 20 un. 30 un. 40 un.
  36. 36. • Variable costs (theoretical)5. YOUR COSTS36IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen05000100000units10units20units30units40unitsEUR
  37. 37. • Total cost (theoretical)5. YOUR COSTS37IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  38. 38. 5. YOUR COSTSIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen38• Variable costs (realistic path)Gaining efficiencyLosing efficiencyAdvantages of scaleDisadvantages of scale
  39. 39. • Need help ?http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=total+variable+costhttp://www.ehow.com/search2.html?utm_source=Bing&channel=ehowsearch15&utm_medium=ehowcontent15&q=total+variable+cost}5. YOUR COSTS39IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  40. 40. 5. YOUR COSTS: HANDY DATA:AVERAGE MONTHLY WAGES IN EUROPEIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen40http://en.wikipedia.org/wiki/List_of_countries_in_Europe_by_monthly_average_wage
  41. 41. 5. YOUR COSTS: HANDY DATA: OFFICERENTAL DATA41IP Crusist April 2013, Financial Planningclass version, Marieke Van BeylenSelect a locationCorresponding datahttp://www.joneslanglasalle.eu/EMEA/EN-GB/Pages/EuropeanOfficePropertyClock.aspx
  42. 42. • Estimate all the costs involved• Estimate the profitHard? Certainly ! …..Will you make ends meet ? (= make a profit)Will it be worth the risk ?How can you set your PRICE ?6. YOUR PRICING42IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  43. 43. • What comes into consideration in price-setting ? ….− Your target group behavior(clients, customers, potential customers)− Competition− Cost patterns and expectations6. YOUR PRICING43IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  44. 44. • Mostly 3 price setting ‘systems’: …..1. Cost oriented2. Demand oriented3. Competition oriented6. YOUR PRICING44IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  45. 45. 1. Cost oriented pricing = …..− ‘Markup pricing’= per unit : cost price per unit + profit margin− ‘Target pricing’= total turnover (sales) + targeted compensationfor ‘doing business and making it worth the while’6. YOUR PRICING45IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  46. 46. 2. Demand oriented pricing =− In times/cases of low (high) demand for yourproductand target group is (not very) sensitive to pricechanges6. YOUR PRICING46IP Crusist April 2013, Financial Planningclass version, Marieke Van BeylenConsider a low (high) price
  47. 47. ‘Price discrimination’: …..= different prices for the same product todifferent target groups• Under what condition only can that work ?6. YOUR PRICING47IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  48. 48. 3. Competition oriented pricing == price determined according to competitors’ pricing• about the same price as competitors• Markup price (competitors + a margin for ‘reputation’)In reality:• Going rate price: usually the average of the business branch• Competitive bidding: often in public tender contracts6. YOUR PRICING48IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  49. 49. Tools to support your decisions:− What minimum price do you need to charge for yourservices ?6. YOUR PRICING49IP Crusist April 2013, Financial Planningclass version, Marieke Van BeylenBreakeven
  50. 50. • Breakeven is the turnover (sales) level with− NO LOSS− NO PROFIT6. YOUR PRICING50IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  51. 51. • Breakeven is the turnover (sales) level with− NO LOSS− NO PROFITQ = TFKp – VK/unit6. YOUR PRICING51IP Crusist April 2013, Financial Planningclass version, Marieke Van BeylenQ = Breakeven quantity ofsales unitsTFK = Total Fixed CostsP = unit priceVK = Variable Costs
  52. 52. • Exceeding your break even? …..− Do you like the profit your are making ?− Check if the resulting price matchesyour desired product/market strategy!6. YOUR PRICING52IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  53. 53. • Happy with your ideas ?• But: …..− Is the company healthy enough to even start?− Is this project/proposal healthy ?− With what resources will your team finance itsactivities?53IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen7. FINANCIAL RESOURCES
  54. 54. How?…..Own money:• your own investments• or those of other owners of your company/institute =your shareholders= Capital EquityIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen547. FINANCIAL RESOURCES
  55. 55. How?…..• Your long term (+ 1 year) loans from your bank= Long Term Liabilities• Your short term ‘loans’ from suppliers you can pay later, fromoutstanding debts with the government or elsewhere= Current or Short Term LiabilitiesIP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen557. FINANCIAL RESOURCES
  56. 56. Left Side Right SideAll the assets (possessions) Owner’s EquityLong term and current Liabilities7. FINANCIAL RESOURCES56IP Crusist April 2013, Financial Planningclass version, Marieke Van BeylenThe Balance Sheet compares two sides :WhatwehaveHow wefinancedourassets
  57. 57. IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen577. FINANCIAL RESOURCESAssetsLiabilitiesLong Term = >1 yearCurrent = ShortTerm =< 1 year
  58. 58. Term DescriptionFixed Assets E.g. BuildingsCurrent Assets E.g. Stocks, money you are toreceive from your customers, moneyin the bankOwners’ Equity Resources provided by yourinvestorsLong TermLiabilitiesResources provided by your bank for> 1 year (long term loans)Current or ShortTerm LiabilitiesResources < 1 year (e.g. money youstill owe your suppliers, short termbank loans)IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen587. FINANCIAL RESOURCES
  59. 59. IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen597. FINANCIAL RESOURCESSituation 1 Situation 2Compare !
  60. 60. IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen607. FINANCIAL RESOURCES
  61. 61. The sky is NOT the limit for your• Shareholders and yourself : owners’ equity• bank.Every invested EUR has to generate ‘sufficient’profit or keep your project group going• What is ‘sufficient’?• BE REALISTIC !!!• THINK HEALTHY !!!IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen617. FINANCIAL RESOURCES
  62. 62. • Is it always bad to borrow money?.....62IP Crusist April 2013, Financial Planningclass version, Marieke Van BeylenLet us comparetwo scenario’s Aand B8. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE
  63. 63. To finance 1000 EUR Assets you have:• Scenario A− 1000 EUR Capital Equity (‘own money’)• Scenario B− 600 EUR Capital Equity− 400 EUR Liabilities (‘other people’s money’)63IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen8. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE
  64. 64. • In each scenario we compare two differentsales levels:− 2000 units− 3000 units• So it looks like this:64IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen8. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE
  65. 65. • But− loans mean paying interest costs− All profits are subject to corporate taxes: e.g. 38%65IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen8. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE
  66. 66. • Which of these will made us richer? …• That depends on what you call ‘RICH’ ! …..Return on sales ?Return on (all) ‘capital employed’ (own and otherpeople’s) ?Return on ‘net equity’ = (only your own) moneyinvested66IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen8. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE
  67. 67. IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen678. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE
  68. 68. IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen688. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE
  69. 69. IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen698. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE
  70. 70. IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen708. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE
  71. 71. • Which of these do you like best?71IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen8. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE
  72. 72. • How well can I pay my debts in the SHORT run(- 1 year) ? …..= Liquidity …..= Current assets MINUSshort term Liabilities …..> 08. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE72IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  73. 73. • How well can I pay my debts in the LONG run (- 1year) ? …..= how many times does my own money cover my liabilities toothers ?= Solvability…..E.g.= Owners’ EquityTotal Liabilitiese.g. 1/28. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE73IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  74. 74. • How long will you have to wait for your money?…..− Usually expressed in ‘days’− In tourism:• Longer than for just local trade• Very different per region: enquire before you start !» The norm in the EU is 30-60 days, outside EU often longerA good debt collection strategy ! See next slide.8. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE74IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  75. 75. • Your concern− To get your money at all !− To quickly get your money !• Ways of claiming payment− Complete or partial prepayment? Then you need to be the strongest of the partners• Choosing a technique− Depending on• the degree of certainty you want• The expenses involved• Local regulations• Type of service• The amount involvedTo learn more: http://wikieducator.org/International_Finance/Payment_Methods8. KEY FIGURES TO MEASUREFINANCIAL PERFORMANCE75IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  76. 76. IP Crusist April 2013, Financial Planning classversion, Marieke Van Beylen768. A LOT OF IT IS IN YOUR HANDS:MAKE A BUDGET
  77. 77. 8. BUDGET• Come prepared!• Make a budget for the next 3 years (or more)!See template: 2 tabs:− Profit/Loss Account• Am I pleased?− Cash position• How much money do I have at the start?• Do I need a loan ? How much ?IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen77
  78. 78. • We now know it is important− to MATCH the budget with your• Mission, vision, general strategy• Specific product/market strategy• Swot outcome− to DETERMINE:• your costs and their behaviour• your price strategy− to CHECK• your financial resources• your key performance figures8. BUDGET78IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen
  79. 79. Obrigado9. QUESTIONS ?79IP Crusist April 2013, Financial Planningclass version, Marieke Van Beylen

×