Hint: You will use the amounts you calculate in the costs and revenues questions in this section in the accounting statements, so be as realistic as you can.
Hint: Insert the costs associated with doing business in the table on the following page. The following list provides some hints as to where you can get this information. Note that these are estimates; try your best to include accurate costs for the expenses you think will be a part of doing business.
Hints for each expense in the following table:
Rent: What is the “going rate” per square foot for office space in your community? A real estate agent or a local SBA representative (www.sba.gov) can also be helpful in answering this question.
Salaries and Wages: Refer to the organizational chart. How much will each employee earn? How many hours will each employee be needed on a weekly basis? Once you’ve determined the weekly cost, then expand it to a monthly cost and a yearly cost.
Supplies: How much will all the computers, equipment, and furniture cost? What kinds of general office supplies will you need? Most prices for this information can be found on an office supply Web site, such as Staples.com.
Advertising and Other Promotions: Refer to your marketing section. You have described how you wish to reach your customers; now you need to decide how much it will cost. If you’re using television, contact the sales department at a local station. If you’re using newspapers, contact their advertising department. Salespeople are usually happy to answer your questions.
Utilities: These amounts will vary depending on your business and what utilities you will pay. If your business looks like an office, this cost may be similar to what a homeowner pays. However, if your business involves making a product, then the costs will be significant. An SBA representative can be a good resource.
Insurance: This value will be affected by the nature of the business. More equipment will usually mean higher insurance costs. Again, contact an SBA representative for feedback.
Expenses | Expected Monthly Cost | Expected Yearly Cost |
---|---|---|
Rent | ||
Salaries and Wages | ||
Supplies: technological, equipment, furniture, other (computers, software, copy machine, desks, chairs, etc.) | ||
Advertising and Other Promotions | ||
Utilities: heat, electricity, etc. | ||
Utilities: telephone, Internet | ||
Insurance | ||
Other (specify) | ||
Other (specify) |
Hint: Refer back to where you analyzed the costs involved in running your business. Approximately how much will you need to get your business started?
Hint: Refer to Chapter 15 for information on sources of short-term and long-term funds. Refer to Chapter 16 for information on securities, such as stocks and bonds.
Hint: You have two options for creating these reports. The first option is to create your own financial statements using the guides provided on the next pages.
The second option is to use the specific Microsoft Word or Excel templates created for each statement. You’ll find these templates online in this text’s MyBizLab. The Excel files are handy because all the calculations are preset; all you have to do is “plug in” the numbers. The calculations are performed automatically. If you make adjustments to the values in the Excel worksheets, you’ll automatically see how changes to expenses, for example, can improve the “bottom line.”
Assets | |
Current Assets | |
Cash in Bank | |
Cash Value of Inventory | |
Prepaid Expenses (insurance) | |
Total Current Assets | |
Fixed Assets | |
Machinery & Equipment | |
Furniture & Fixtures | |
Real Estate/Buildings | |
Total Fixed Assets | |
Total Assets | |
Liabilities & Net Worth | |
Current Liabilities | |
Accounts Payable | |
Taxes Payable | |
Notes Payable (due within 12 months) | |
Total Current Liabilities | |
Long-Term Liabilities | |
Bank Loans Payable (greater than 12 months) | |
Less: Short-Term Portion | |
Total Long-Term Liabilities | |
Total Liabilities | |
Owners’ Equity (Net Worth) | |
Total Liabilities & Net Worth |
3.133.133.61