SVD 5 Finance
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This document contains information about Paul Sturrock including his contact information and links to his website and Flickr page. It then provides an overview of key aspects of running a business including developing a business model, implementing strategies through iterative testing and learning, setting smart and measurable goals, and understanding basic financial concepts like balance sheets, income statements, cash flow statements and managing costs, cash and finances. Tools for goals and project management are also listed. Overall the document provides a high-level overview of starting and managing a small business.
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SVD 5 Finance
- 1. Paul Sturrock paul.sturrock@gmail.com @PSturrock www.simpleventuredesign.com ! http://www.flickr.com/photos/13902049@N00/5652405755/ el bidule cbdn Simple Venture Design
- 2. Image from “Business Model Generation” Osterwalder & Pigneur
- 5. • Modular adaptation and iteration • Accelerated learning • Risk reduction • Evidence based funding Davide Casli, http://intenseminimalism.com/2010/the-dot-loop-the-simplest-process-possible/
- 6. W H AT ’ S Y O U R B I G G E S T L E A P O F FA I T H ?
- 7. SMART GOALS
- 9. Focus: Less is More
- 10. Time Based
- 11. Specific: 6 Ws
- 12. Attainable: How?
- 13. Measurable
- 14. What should you measure? • Sales Drivers • Leads (clicks) • Conversion • Discount • Repeat customers • Customer acquisition • Design your own!
- 15. What should you measure? • Profitability Drivers • Yield and spoilage • Returns • Margins • Return on assets & equity • Revenue per employee • Design your own! • Customer profitability
- 16. Goal Double Sales Positive Cashflow from Operations Measure Revenue Net cash from operations Strategy Expand Awareness Change payment terms Tactics 1. Identify Target Segment 2. Identify Awareness Channel 3. Position Value Proposition and Differentiation 4. Develop Elevator Pitch 5. Clear Branding 1. Incentives for cash payment 2. Require deposit 3. Credit control system 4. Negotiate credit with suppliers Start/End Dates Time Allocation
- 17. Some Tools • Subjective • Teamly.com • Max 5 goals : Year, Quarter, Month, Week, Today • Trello.com • Card based system based on agile practices
- 18. What are your next steps?
- 19. Finance in 8 Slides
- 20. Simple Questions • How much money do I have? • How much money do I really have? • How much do you make on each sale? • How much do you make on each customer? • What is your break even point? • How much money do you have now? • How did that happen?
- 21. Costs • Product Costs • Direct • Indirect • Fixed vs. variable • Overhead
- 22. What are your major costs?
- 23. Assets (what you have) Liabilities (what you owe) Cash £10,000 Accounts Payable £5,000 Accounts Receivable £15,000 Accrued Expenses £1,500 Inventory £20,000 Provision for Taxes £2,000 Current Assets £45,000 Current Liabilities £8,500 Equipment £50,000 Long-Term Loan £20,000 Property £100,000 Total Liabilities £28,500 Owner’s Equity £166,500 Total Assets £195,000 Liabilities + Equity £195,000 A Balance Sheet always BalancesBalance Sheet: How much money do I have?
- 24. Balance Sheet Basics • Balance sheet is a snapshot • Assets valued at lower of cost or market • Working Capital = Current Assets - Current Liabilities • Equipment is depreciated • Owner’s Equity = Assets - Liabilities • Assets= Liabilities + Owner’s Equity (Balance)
- 25. Turnover £150,000 Cost of Sales £60,000 Gross Profit £90,000 Salaries £10,000 Premises £12,000 Marketing £15,000 Admin £5,000 Overhead Expenses £42,000 Operating Profit £48,000 Interest £1,000 Profit before tax £47,000 Tax £9,400 Net Profit after tax £37,600 Income StatementIncome Statement: How did that happen?
- 26. Payments Received from Debtors £20,000 Funds from Investors £50,000 Loans Received £25,000 Sources of Funds £95,000 Expenses paid in cash £10,000 Debt payments £10,000 Dividends £5,000 Uses of Funds £25,000 Net change in Cash (Cash Flow) £70,000 Cash Cash Flow: What really happened? Statement
- 27. Cash Flow Management • Get paid as soon as possible • Incentives for paying cash • Upfront deposits • Credit control • Chase payments • Pay as slowly as legally and ethically possible • Don’t let success bankrupt you! • The more successful you are, the more working capital you need! • Cash is King! Keep your eye on it!
- 28. Good Habits • Cash management! • Monthly books • Budget vs. actual • Reforecast • Credit collection • 80/20 rule (don’t be penny wise and pound foolish) • Use advisor but understand the numbers
- 29. Questions
- 30. Homework: What’s the Story? Photo Credit:www.flickr.com/ Nicolò Paternoster creativecommons.org/licenses/by-nc-sa/2.0/