Estimate Sales for the First Year
Base your estimate on the size of your market, level of competition, your
price, your plans for promotion, and trends in your industry. Create a
pessimistic, an optimistic, and a conservative forecast.
There may be some extensive or expensive regulations involved with your
type of business. Bizpal ( www.bcbizpal.ca ) can assist you with determining
municipal, provincial, and federal regulations and licensing requirements
affecting your business.
Manufacturing, Purchasing, or Production
State how you will make or acquire the goods, or produce and deliver the
services, you plan to sell. Use your sales forecast to help you plan this part of
your operation. Think about potential growth in future years.
How does your customer get their order and how do you get paid?
Capacity of Your Operation in the First Year
How big will your operation be? What is the limit of what you can produce,
stock, service, and sell. Can you meet your sales forecasts? Have you taken
future growth into consideration?
Your concept may rely heavily on the reliability of your raw material suppliers
and/or your subcontractors. How dependent will you be? Figure out who
your suppliers will likely be and try to find back-up suppliers.
Resources You Will Require
List the employees, floor space, leasehold improvements, equipment,
vehicles, inventory, suppliers, and services you will require to open your
business. Estimate the costs of each item on your list. You will need this list
to determine your start up costs.
Resources You Will Finance, Lease, or Rent
You will probably not pay for large purchases outright, but will instead lease,
rent, or finance these items. You will need to estimate your monthly
payments to help you prepare a cash flow worksheet.
Evaluate Your Business Idea
How much of your own money do you have for this business? What assets
can you use as collateral to secure a loan? Do you already own the vehicles,
computer equipment, or tools needed to start your business? Do you have
family, friends or others who are prepared to invest in your business? Do you
have a strong personal credit rating?
Monthly Cash Flow Forecast for Your First Year
A cash flow forecast shows the critical “whens” of cash coming in and cash
going out during a certain month. Preparing a monthly cash flow forecast
provides you with the opportunity to show dollar figures, representing
revenues and expenses, in the month the business expects to collect and
spend the cash. Cash flow can demonstrate the need for cash injections at
critical periods when sales are lower in seasonal businesses.