1. Welcome to the World of
Financial Planning
IP CRUSIST
APRIL 2013, SEIA, PORTUGAL
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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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 ???
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

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 ?
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

4. Not overnight !
− Never without looking ahead:
• a proper financial plan!
− Never without looking back afterwards:
• the plan versus reality!
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
Welcome to the
World of Financial Planning

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 ?
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

6. FINANCIAL PLANNING: OVERVIEW
1. On your mark !
2. Background for Financial Planning
3. Financial Planning within Entire Business Plan Scope
4. Financial Planning supporting Product/Market Strategy
5. Your Costs
6. Your Pricing
7. Financial Resources
8. Key figures to measure financial performance
9. Budget
10. Questions
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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MATCH
DETERMINE
CHECK
USE

7. 2. BACKGROUND FOR FINANCIAL PLANNING
1. Why ?
• Gives direction to the project: …..
− Objectives ‘on paper’ give business framework
for:
• Decisions
• Evaluation
• Professional image for project
environment:…..
− Gives trust to shareholders and other equity
providers
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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8. 2. BACKGROUND FOR FINANCIAL PLANNING
2. How ?
• Clear ! Measurable !
• Structured !
• Consistent !
• Synthetic !
• Truly provide information !
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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9. 3. When ?
• Prior to startup
− For the near future: first 3 to 5 years
• Repeat/check every year at least:
− Economic parameters change
2. BACKGROUND FOR FINANCIAL PLANNING
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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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 presentation
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
2. BACKGROUND FOR FINANCIAL PLANNING

11. 3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE
1. Mission
2. Vision
3. General Strategy
Budget
5 to 7 years or more
2 to 5 years
2 to 5 years
1 to 3-5 years
Planning
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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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/Ca
se%20Studies/Body%20Shop/Body%20Shop_hom
e.html
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE

13. What is the MISSION of
your project/project group ?
3. FINANCIAL PLANNING WITHIN
ENTIRE PROJECT SCOPE
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

14. 2. Visions: examples…..
• 15 % market share of cold meat in the
Benelux and Germany by 201X
• Sell my company by 201Y for at least
Z EUR
Within the Financial Plan (time) scope !
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE

15. Vision example: the biggest YYYdealer in Belgium by 201X by
focussing on the top 500-market.
Direct competitors grow 15% per year. We need to grow 30% per year.
3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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201X 201X+1 201X+2
Turnover 1200 1560 2028
Employees 100 120 145
Customer 500 30 60 85
% Profit Margin vs.
Turnover
4,5 4,8 5,4
Other criteria xxx Xxx + Xxx ++

16. What is the VISION of
your project/project group ?
3. FINANCIAL PLANNING WITHIN
ENTIRE PROJECT SCOPE
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

17. Partial vision: on particular issue
Example:
Sony Environmental Plan: take a look!
http://www.sony.net/SonyInfo/csr/eco/Roa
dToZero/index.html
Within the Financial Plan (time) scope !
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE

18. 3. A General Strategy is needed to meet the
mission and vision: e.g. …..
1. Staff training
2. Quality control reference
Make sure to plan your finances to match such
strategy !
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE

19. 1. Staff training
− motivation
− customer satisfaction
− productivity
− costs
− profit
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE

20. 2. Quality Control
− Financial resources to be partly reinvested in
R&D
− Include follow up in your business concept even
before starting:
• Who, by whom
• Frequency
• What etc.
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE

21. 2. Quality Control
Quality services/certificates (e.g. ISO)
http://www.iso.org/iso/home.html
How to go about? …..
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE

22. 2. Quality Control
Good to know: …..
− You are not certified BY ISO
− You can be certified
• According to ISO standards
• By private institutes, accredited by the International
Accreditation Forum
− The cheapest one is not always the best bargain !
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE

23. Besides supporting the
Also ask yourself
some questions
about your project.
3. FINANCIAL PLANNING WITHIN
ENTIRE PROJECT SCOPE
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
Mission Vision
General
Strategy

24. INTERNAL EXTERNAL
What am I good in?
What is good for me?
What am I weak in?
What is bad for me?
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3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE

25. INTERNAL EXTERNAL
Strengths + Opportunities +
Weaknesses - Threats -
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= SWOT Analysis
3. FINANCIAL PLANNING WITHIN ENTIRE
PROJECT SCOPE

26. What are the financial
• Requirements
• Consequences
of what I found in the SWOT Analysis ?
Now ready for a more precise product/market
strategy choice ?
3. FINANCIAL PLANNING WITHIN
ENTIRE PROJECT SCOPE
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

27. 4. FINANCIAL PLANNING SUPPORTING
PRODUCT/MARKET STRATEGY
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

28. • What are my plans?
• What is my present position ?
• What will I need to spend to bridge the gap ?
4. FINANCIAL PLANNING SUPPORTING
PRODUCT/MARKET STRATEGY
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

29. 29
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
4. FINANCIAL PLANNING SUPPORTING
PRODUCT/MARKET STRATEGY
What are the plans ?.....

30. IP Crusist April 2013, Financial Planning class
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4. FINANCIAL PLANNING SUPPORTING
PRODUCT/MARKET STRATEGY
What stage am I in ? …..

31. • More precise criteria to define your
product/market strategy
• Be precise so that you can
− Provide the necessary finances
− Evaluate afterwards how well you performed !
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
4. FINANCIAL PLANNING SUPPORTING
PRODUCT/MARKET STRATEGY
!
A lot of ideas/topics for you in the
next slide

32. IP Crusist April 2013, Financial Planning class
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RANKING SENIORITY & MARKET KNOWLEDGE
SIZE, LEADER, FOLLOWER MARKET SHARE, NUMBER OF CUSTOMERS
IMAGE NAME, BRAND RECOGNITION
INNOVATOR CAPABILITY TO LAUNCH NEW PRODUCTS/SERVICES
ADVERTISING EFFORTS MESSAGE , MARKET PENETRATION,
PRICING POLICY EXPENSIVE, CHEAPER, DISCOUNTS & PROMOTIONS
ESTABLISHMENT LOCATION, BUILDING
DISTRIBUTION POINTS OF SALES FRANCHISING, OWNERSHIP
COSTS COSTPRICE STRUCTURE, COSTING METHODOLOGY
SUPPLIERS SAME / DIFFERENT
FINANCIAL STRENGTHS OWNERS’ EQUITY, FINACIAL INDEPENDENCE
ORGANISATION FLEXIBLE OR HEAVY
VALUES BUSINESS ETICS, ISO-CERTIFIED
4. FINANCIAL PLANNING SUPPORTING
PRODUCT/MARKET STRATEGY
Appraise the ambitions ! Estimate the finances !

33. • But …..
NO OMELETS WITHOUT BREAKING EGGS !
Question: …..
How do costs behave ?
5. YOUR COSTS
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

34. • Fixed costs
5. YOUR COSTS
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
0
5000
10000
15000
10 units 20 units 30 units 40 units
EUR

35. • Semi-Fixed costs
5. YOUR COSTS
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
0
5000
10000
15000
20000
25000
30000
35000
0 un. 10 un. 20 un. 30 un. 40 un.

36. • Variable costs (theoretical)
5. YOUR COSTS
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
0
5000
10000
0
units
10
units
20
units
30
units
40
units
EUR

37. • Total cost (theoretical)
5. YOUR COSTS
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

38. 5. YOUR COSTS
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class version, Marieke Van Beylen
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• Variable costs (realistic path)
Gaining efficiency
Losing efficiency
Advantages of scale
Disadvantages of scale

39. • Need help ?
http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=total+variable+cost
http://www.ehow.com/search2.html?utm_source=Bing&channel=ehowsearch15&utm_medium=ehowco
ntent15&q=total+variable+cost}
5. YOUR COSTS
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

40. 5. YOUR COSTS: HANDY DATA:
AVERAGE MONTHLY WAGES IN EUROPE
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class version, Marieke Van Beylen
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http://en.wikipedia.org/wiki/List_of_countries_in_Europe_by_monthly_average_wage

41. 5. YOUR COSTS: HANDY DATA: OFFICE
RENTAL DATA
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
Select a location
Corresponding data
http://www.joneslanglasalle.eu/EMEA/EN-
GB/Pages/EuropeanOfficePropertyClock.aspx

42. • Estimate all the costs involved
• Estimate the profit
Hard? Certainly ! …..
Will you make ends meet ? (= make a profit)
Will it be worth the risk ?
How can you set your PRICE ?
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

43. • What comes into consideration in price-
setting ? ….
− Your target group behavior
(clients, customers, potential customers)
− Competition
− Cost patterns and expectations
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

44. • Mostly 3 price setting ‘systems’: …..
1. Cost oriented
2. Demand oriented
3. Competition oriented
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

45. 1. Cost oriented pricing = …..
− ‘Markup pricing’
= per unit : cost price per unit + profit margin
− ‘Target pricing’
= total turnover (sales) + targeted compensation
for ‘doing business and making it worth the while’
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

46. 2. Demand oriented pricing =
− In times/cases of low (high) demand for your
product
and target group is (not very) sensitive to price
changes
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
Consider a low (high) price

47. ‘Price discrimination’: …..
= different prices for the same product to
different target groups
• Under what condition only can that work ?
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

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 contracts
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

49. Tools to support your decisions:
− What minimum price do you need to charge for your
services ?
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
Breakeven

50. • Breakeven is the turnover (sales) level with
− NO LOSS
− NO PROFIT
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

51. • Breakeven is the turnover (sales) level with
− NO LOSS
− NO PROFIT
Q = TFK
p – VK/unit
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
Q = Breakeven quantity of
sales units
TFK = Total Fixed Costs
P = unit price
VK = Variable Costs

52. • Exceeding your break even? …..
− Do you like the profit your are making ?
− Check if the resulting price matches
your desired product/market strategy!
6. YOUR PRICING
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

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 its
activities?
53
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
7. FINANCIAL RESOURCES

54. How?…..
Own money:
• your own investments
• or those of other owners of your company/institute =
your shareholders
= Capital Equity
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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7. FINANCIAL RESOURCES

55. How?…..
• Your long term (+ 1 year) loans from your bank
= Long Term Liabilities
• Your short term ‘loans’ from suppliers you can pay later, from
outstanding debts with the government or elsewhere
= Current or Short Term Liabilities
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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7. FINANCIAL RESOURCES

56. Left Side Right Side
All the assets (possessions) Owner’s Equity
Long term and current Liabilities
7. FINANCIAL RESOURCES
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
The Balance Sheet compares two sides :
What
we
have
How we
financed
our
assets

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7. FINANCIAL RESOURCES
Assets
Liabilities
Long Term = >
1 year
Current = Short
Term =
< 1 year

58. Term Description
Fixed Assets E.g. Buildings
Current Assets E.g. Stocks, money you are to
receive from your customers, money
in the bank
Owners’ Equity Resources provided by your
investors
Long Term
Liabilities
Resources provided by your bank for
> 1 year (long term loans)
Current or Short
Term Liabilities
Resources < 1 year (e.g. money you
still owe your suppliers, short term
bank loans)
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
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7. FINANCIAL RESOURCES

59. IP Crusist April 2013, Financial Planning class
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7. FINANCIAL RESOURCES
Situation 1 Situation 2
Compare !

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7. FINANCIAL RESOURCES

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 !!!
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class version, Marieke Van Beylen
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7. FINANCIAL RESOURCES

62. • Is it always bad to borrow money?.....
62
IP Crusist April 2013, Financial Planning
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Let us compare
two scenario’s A
and B
8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE

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’)
63
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE

64. • In each scenario we compare two different
sales levels:
− 2000 units
− 3000 units
• So it looks like this:
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE

65. • But
− loans mean paying interest costs
− All profits are subject to corporate taxes: e.g. 38%
65
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE

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 other
people’s) ?
Return on ‘net equity’ = (only your own) money
invested
66
IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen
8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE

67. IP Crusist April 2013, Financial Planning class
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8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE

68. IP Crusist April 2013, Financial Planning class
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8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE

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8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE

70. IP Crusist April 2013, Financial Planning class
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8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE

71. • Which of these do you like best?
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IP Crusist April 2013, Financial Planning
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8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE

72. • How well can I pay my debts in the SHORT run
(- 1 year) ? …..
= Liquidity …..
= Current assets MINUS
short term Liabilities …..
> 0
8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE
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class version, Marieke Van Beylen

73. • How well can I pay my debts in the LONG run (- 1
year) ? …..
= how many times does my own money cover my liabilities to
others ?
= Solvability…..
E.g.
= Owners’ Equity
Total Liabilities
e.g. 1/2
8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE
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IP Crusist April 2013, Financial Planning
class version, Marieke Van Beylen

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 longer
A good debt collection strategy ! See next slide.
8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE
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class version, Marieke Van Beylen

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 involved
To learn more: http://wikieducator.org/International_Finance/Payment_Methods
8. KEY FIGURES TO MEASURE
FINANCIAL PERFORMANCE
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76. IP Crusist April 2013, Financial Planning class
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8. A LOT OF IT IS IN YOUR HANDS:
MAKE A BUDGET

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 Planning
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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 figures
8. BUDGET
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79. Obrigado
9. QUESTIONS ?
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IP Crusist April 2013, Financial Planning
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