Getting Started
Choose your company name.- Check your online Cash Flow Statement to make sure your startup capital is included in the first month ($1,000 + $1,500).
- Fill in your cash flow (using the online Cash Flow model) for your first 3 months of operations – make sure you stay within your budget (remember to put aside money to order inventory!).
Choose your company name.Overheads and Loans
Review your company’s overhead costs. Your “overheads” are costs that are not related to product costs: this includes rent, internet, telephone, and supplies cost, as well as transportation. Look at your Cost Analysis Sheet for this information.
Review your loan repayment terms by looking at your Cost Analysis Sheet. Next, check the online Cash Flow Statement to make sure that your repayment costs are correct for your first 3 months.
Marketing Activities
Now it’s time to think about marketing costs. Choose your marketing activities using the Marketing Activities Sheet. Decide which marketing activities your company will use to attract customers and boost sales. Be careful – don’t spend all your money on this! Add these costs to the online model.
IMPORTANT NOTE: These days a website is not really an option, it’s a must-have, so this is already entered into the model.
Pricing and Sales Forecasting
Choose a price for your shirts. It’ll cost you $10 per shirt to order them from KleanTech, so how much more will you sell them for? You want to price your product high enough to make some money, but low enough to attract a lot of sales. Remember, the higher you price it, the fewer people will be able to afford it. A normal polo shirt is around $15, but yours is so much better! How much will you charge for your product?
Forecast your sales. Using what you know from the Riseville Market Report, and the types of marketing activities that you’re going to undertake, what kinds of sales do you think you can make over the first 3 months in business? Add this to your online Cash Flow Statement.
Ordering Your Inventory
Order your inventory. Looking at your sales forecasts and the available cash in your Cash Flow Statement, how many shirts should you order and when should you order them? Fill this in online. Remember, you’re entering the cost of ordering the inventory; you work this out by taking the number of shirts x $10 each.
IMPORTANT NOTE: If you don’t order enough polo shirts and you wind up running out, then you’ll have to order more with an extra “Rush Delivery” charge of $12.50. The online model will do this for you automatically.
Lastly, check the values for total cash in, total cash out, and net cash flow to check for any errors.
How much money did you make for your business?