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[BP] Financials: Budgeting & Forecasting

Financials: Budgeting & Forecasting
How much does it cost you to produce one of your products? How much do your products cost, how many of them will you sell this year, and how will you make a profit?

Budget and sales goals: How much do you think you will sell and how much is it going to cost you to make your product or deliver your service? What other key expenses will you have when your business is up and running? What sales goals do you need to reach for your business to be a success? Don’t sweat the details to start and just think in broad strokes to get a rough idea of how your business will work financially. You can refine the details later.

Revenue Streams
For what value are our customers really willing to pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to overall revenues?

Types
Asset sale
Usage fee
Subscription fees
Lending/Renting/Leasing
Licensing
Brokerage fees
Advertising

Fixed Pricing
List Price
Customer feature dependant
Customer segment dependant

Dynamic Pricing
Negotiation (bargaining)
Yield Management
Real-time-Market

Cost Structure
What are the most important cost inherent in our business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?

Is your business more
Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing)
Value Driven (focussed on value creation, premium value creation)

Sample Characteristics
Fixed Costs (salaries, rent, utilities)
Variable costs
Economies of scale
Economies of scope

Budgeting
Where you determine how much it is going to cost to launch your business.

In this section you’re going to take all of the elements of the resources you need and the staff you need, do a little research and place monetary value next to each of those items.

Find out what is the cost-effective way to launch a business, scrutinise and interrogate your needs and wants again if you have to.

Put a monetary value on resources and people. The resources you need and the people you need are the essential elements to start your business.

Then we’ll move those elements out of your journal into a spreadsheet. So that you can start to see your business ledger take shape.

Forecasting

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Tip
Your budgeting, forecasting, resources and people will partly determine your funding needs. Make sure you know the difference between a need and a want.