1. Budgets
Because a plan without numbers
is just a dream!

2. What do we want to know?
• What will it take to get to get started?
• When will we make profit?
• What should our products cost?
• What will we need to keep our business
running?
• How much money do we need to get?

3. …or in investor terms
• What do we have to invest?
• What will be the return on our
investment?
• When will we get our money back?
• How much cash do we need to keep it
running?

4. The budgets
• Establishing budget
• Operating budget / income statement
• Sales prices and calculations
• Cash flow budget
• Funding budget
• Budget assumptions

5. Why budgets?
• Banks and investors will ask for them – no
budget, no funding
• The vision becomes very real
• Understand how your business works
• Measurable goals

6. But how is it possible
to predict?

7. Forget about predicting…
… it is impossible to predict for
startups – and the ”getting it
corret” mindset is blocking!

8. A startup is always an
experiment…
… and the nature of an
experiment is to test whether
your assumptions are right!

9. …see budgets as
• A financial simulation model where you
can test different assumptions.
• A management tool for monitoring and
measuring whether your assumptions
were right.
• Goals to strive for.
• Creative obstructions: How do we
obtain…?

10. Establishing budget
A “shopping list”
• How big an investment will it take to get
started? (expenses before launch)
…or a development plan
• Phases of product- and business
development and costs of each phase

11. COSTS Kr.
Premises:
Rent 18.000
Deposit (3 months rent) 50.000
Goodwill 50.000
Decoration and renovation 0
Shop interior and equipment:
Pallet stacker 10.000
Stock:
Take over stock 50.000
Purchase new goods 50.000
Car:
Downpayment, car 40.000
Advisors:
Advice from accountant, lawyer etc. 10.000
Marketing:
Marketing materials 5.000
Total costs: 283.000

12. DKK Concept Technologial Proof of concept
development development
Wages 800.000 200.000 500.000
Softwaredevelopment 3.000.000
Videoproduction 200.000
Other external salaries 50.000 100.000 120.000
Premises and office 70.000
Travel and transport 40.000 60.000 80.000
Marketing and sales 500.000
Total costs 960.0000 3.360.000 1.400.000

14. Operating budget
• How big a profit do I expect to earn and
how soon?
• One or more years – at least until profit
• Monthly basis year 1
Extra
• Best/worst case or sensitivity analysis

15. Operating budget
(income statement)
• Sale / Turnover
- Variable costs / used goods
= Gross profit/Contribution margin
- Fixed costs
- Depreciation
- Interests
• Net profit

16. Ex: Small retail shop
Turnover 1.200.000
Goods sold -360.000
Staff -143.000
Premises -215.500
Sales costs -35.500
Administration costs -34.300
Operating costs, total -788.300
Earnings before depeciation 411.700
Depreciation -100.000
Earnings before interest 311.700
Interests -35.000
Net profit 276.700

17. 3 year budget
Note 2009 2010 2011
1 Turnover 6.750 9.960 12.660
2 Cost of sales -3.970 -5.830 -7.180
Gross profit / Contribution margin 2.780 4.130 5.480
3 Staff -1.743 -1.583 -2.245
4 Rent, electricity and heat -230 -243 -262
5 Marketing, sale and travel -456 -460 -470
6 Administration -359 -415 -475
9 Depreciation -245 -275 -275
Earnings before interest and tax -253 1.154 1.753
7 Interest on bank deposit 6 6 6
8 Interest on bank debt -141 -93 -32
Earnings before tax -388 1.067 1.727

18. Note 1: Sales budget
Net turnover
2009 2010 2011
Product A 3.460 5.260 7.960
Product B 3.290 4.700 4.700
Total 6.750 9.960 12.660

19. Monthly budget
For tiden 1 /9 2010 til 12 mdr. i
31 /8 2011 Sept. Okt. Nov. Dec. Jan. Febr. Marts April Maj Juni Juli Aug. alt
Varesalg 250.000 250.000 300.000 400.000 200.000 250.000 250.000 350.000 250.000 250.000 150.000 200.000 3.100.000
Vareforbrug 185.000 185.000 240.000 300.000 160.000 185.000 185.000 250.000 185.000 185.000 115.000 160.000 2.335.000
Dækningsbidrag (DB): 65.000 65.000 60.000 100.000 40.000 65.000 65.000 100.000 65.000 65.000 35.000 40.000 765.000
Faste omkostninger
Løn 0 0 0 0 0 0 0 0 0 0 0 0 0
Lokaleomkostninger 18.000 18.000 18.000 18.000 18.000 18.000 18.000 18.000 18.000 18.000 18.000 18.000 216.000
Drift af bil 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 24.000
Administrationsomkostninger 5.000 5.000 5.000 5.000 5.000 5.000 5.000 5.000 5.000 5.000 5.000 5.000 60.000
Markedsføring/annoncer/reklame 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 12.000
Uforudsete omkostninger 5% af
faste omkostninger 1.300 1.300 1.300 1.300 1.300 1.300 1.300 1.300 1.300 1.300 1.300 1.300 15.600
Fasteomkostninger i alt: 27.300 27.300 27.300 27.300 27.300 27.300 27.300 27.300 27.300 27.300 27.300 27.300 327.600
Resultat før renter og
afskrivninger 37.700 37.700 32.700 72.700 12.700 37.700 37.700 72.700 37.700 37.700 7.700 12.700 437.400
Renter 0 0 0 0 0 0 0 0 0 0 0 0 0
Afskrivning, driftsmidler 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 12.000
Faste omkostninger - renter og
afskriv. i alt: 28.300 28.300 28.300 28.300 28.300 28.300 28.300 28.300 28.300 28.300 28.300 28.300 339.600
Nettooverskud 36.700 36.700 31.700 71.700 11.700 36.700 36.700 71.700 36.700 36.700 6.700 11.700 425.400

20. Sensitivity analysis
Scenario 1 Scenario 2 Scenario 3
Turnover 950.000 1.200.000 1.550.000
Cost of goods sold -285.000 -360.000 -465.000
Wages -107.250 -143.000 -264.550
Premises -195.500 -215.500 -242.000
Marketing -29.000 -35.500 -43.000
Administration -32.750 -34.300 -36.350
Total costs -649.500 -788.300 -1.050.900
Earnings before interest and depreciation 300.500 411.700 499.100
Depreciation -95.000 -100.000 -105.000
Earnings before interest 205.500 311.700 394.100
Interest -35.000 -35.000 -35.000
Net profit 170.500 276.700 359.100

21. Estimating your costs
3 methods
• The hard way – estimate and calculate
cost by cost.
• The direct hands on way – speak to
experts – fx entrepreneurs or accountants.
• Rough estimates – based on statistical
data.

22. Assumptions about costs
• Price pr. m2 • Marketing plan
• Manhours • Depreciation rates
• Salary • Interest rates
• Other costs of staff • Etc.
• Travel activity

23. Reality check:
Average industery profitability
Industry Gross profit Net profit Return on
equity invest.
Hotels 76,7 6,9 7,3
Restaurants 62,7 3,6 24,4
Retail, clothing 44,3 8,3 28,9
Retail, food 37,3 3,1 18,6
Cardealers 16,3 2,5 18,9
Petrol stations 13 0,9 19,6

24. I just love to
build the
future…
BENDTSEN start og udvikling
Tel.: +45 4076 7559
Skype: jan-bendtsen
E-mail: jb@janbendtsen.dk
janbendtsen.dk
Forretningsplaner.dk
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