How to Build the Economic-Financial Plan

Transcription

1 DOCS How to Build the Economic-Financial Plan How to access the program and download the calculation sheet Year and month of start of operation Purchase of initial stock Business expenses The company's own and borrowed funds Assessment of potential sales of each product and/or service and variable margin Calculation of monthly income forecast Expenses unrelated to the product or service Salaries of the business promoters Barcelona Activa SAU SPM,

2 10 11 Staff expenses Management of payments and collections 12 Taxation 13 How to upload the file when finished working 2 / 30

3 01. How to access the program and download the calculation sheet In order to access the On-line Business Plan, go to the website and click on the application Business Plan, one of the links highlighted in the lower left-hand corner: Next click on Access the On-line Business Plan : 3 / 30

4 Next, enter your user name and password, which you will have received by after attendance at an informative session: IMPORTANT: If you have forgotten your user name or password, the previous page contains a link to receive an reminder. 4 / 30

5 Once you have accessed the Barcelona Activa Online Business Plan, you will need to go to the Financial-Economic section of the business plan, and select Financial Economic Plan. This section has several different categories, Investment, "Funding" etc. Any category can be selected, since all of them are contained in the Excel file to be downloaded on the computer being used: When an option is selected the following screen will appear, on which Financial plan.xls should be selected : By default, the program offers the option to save the file in a computer file or directory. Click Accept. 5 / 30

6 : Enter the name and location of the Excel file in which you will save the file, and click Save : Once the file is saved, the program offers the option to open the file, click Open : The Excel programme will open automatically. Click on the option Disable macros before opening the file definitively: 6 / 30

7 The Data Input sheet will appear; this is the sheet into which the data will be entered. This is the correct view: IMPORTANT: The file contains an explanation of how to work with a version of the Financial Plan adjusted to the changes applied to the 2008 General Accounting Plan. Depending on the registration date of each entrepreneur, some users will find different items in the investment sections. IMPORTANT: Some users may experience a slight disconfiguration of the file. It is possible that the calculation sheet will not open on Data Input, but on another category, such as Annual results or Monthly treasuries. In such cases, it will be necessary to search for the data input sheet 7 / 30

8 02. Year and month of start of operation The first thing to be done is to enter the year and month of the start of operation. Once entered, the program will assume that the exercise will start in the month entered and finish 11 months later. For example, if our operation begins in October, the exercise of our business will be from that month until September of the following year. If the entrepreneur requires an office or commercial space, it is advisable to consider the start month very carefully, taking into account that finding a location for the business takes time, especially when it comes to searching for central locations. Additionally, once the office or commercial space has been located, it must be kept in mind that the conditions of the premises may not be ideal for opening, and it may be necessary to carry out renovations, construction or simple retouches to make it ready for opening. 8 / 30

9 03. Purchase of initial stock The second item of the program is input of the initial stock box, which means the amount of merchandise that is required to open the business to the public. These boxes should only be filled in if the business is selling or manufacturing products, rather than services. In the case of a fruit vendor for example, it will be necessary to purchase a certain quantity of apples, pears, oranges, etc., to fill the stands in order that customers can start buying. This information is essentially obtained from the suppliers; the entrepreneur needs to contact the suppliers to find out how much the merchandise will cost and the quantity that should be purchased. The boxes to be completed are in red, and correspond to the various types of Value Added Tax (VAT): - General (16%), - Reduced (7%) and - Super-reduced (4%). The entrepreneur must fill in the quantity of initial stock to be purchased for each VAT type, and the program will automatically calculate the TOTAL with the corresponding percentages. In the case shown below, the total will be 6,660 Euro: 9 / 30

10 04. Business expenses Once the purchase of initial stock is entered we need to estimate the business expenses for the first three exercises with VAT included. In other words, all the items which are not merchandise and which are necessary to start operating. The expenses are divided into 3 parts: Intangible property: - Industrial property (patents and brands): this includes everything that the business needs to obtain to be a proprietor and have the right to use an invention patent or the introduction of symbols which are different to the production or business, certificates for the protection of models, industrial and artistic drawings etc. - Transfer of rights: includes the total to be paid by the business owner when taking over a business which was already active, or the transfers charged for occupying local commercial spaces or for exercising an operation different to the previous one. - Computer applications: cost of ownership or right to use computer programs. Tangible property: - Land - Buildings - Machinery - Other installations whether planned or not - Property - Information processing equipment: computers, computerised cash registers, fax machines, printers, point of sale terminals, etc. - Transportation: vehicles used by the company for their operations - Other tangible property: tangible property not included in previous sections. 10 / 30

11 Long term guarantees and deposits: - Long term guarantees: any deposit which guarantees the payment of a bond, such as the two month lease paid in advance when signing a lease contract for a shop unit, office or business premises. - Long term deposits: these include payments which are made in certain sectors in order to sell a product or service, for example, payments to publishing houses in order to sell newspapers and magazines in kiosks, money paid for the right to exercise certain tourism-related activities, etc. 11 / 30

12 05. The company's own and borrowed funds Once the initial stocks and investments for the first three exercises have been accounted for, we will need to specify where the business funds are from. This can be: - The company's own resources which are provided by the promoters of the business project (these are divided accountably into Share Capital - registered funds - and contributions by partners - money owed to business partners) or, - Funding, which can be loans, unemployment capitalisation, subsidies or credit In the case of entering information on loans or credit, the programme will request the payment term, interest period and interest rate for each one, in order to calculate the monthly quota. In the screen shot below, it is possible to view the information corresponding to a loan of 20,000 Euro at an interest rate of 6%, paid on a monthly basis, and with an interest period of 5 years with a one year grace period. 12 / 30

13 06. Assessment of potential sales of each product and / or service and variable margin This step is one of the most important parts of the economic-financial plan. The program first requests assessment of the potential monthly income. In the first column on the left, up to 12 products or services can be listed. It is recommended that they are grouped by category to simplify the assessment of future sales. In the case that the categories exceed twelve, it is possible to categorise products and services by area with the same margin. Thus, for example, if an entrepreneur sets up a bicycle shop, the products and services could be categorised in the following way: In the first column, starting on the left, the entrepreneur has made a list of the products and services which he or she plans to sell, grouped by category. In this case, the categories are various types of bicycle: mountain, racing, trial, as well as items related to cycling: clothing and spare parts. In addition, he or she could include workshop services for repairing bicycles, courses for training young people in trial techniques and, finally, memberships for a club offering excursions and weekend outings on predetermined routes. The entrepreneur opts for the combined strategy of offering products and services, which permits the attraction and creation of loyalty of more customers. 13 / 30

14 Let's analyse the first category of products. The entrepreneur plans to sell a maximum of 20 mountain bikes per month (UNITS column), at an average price of 500 Euro (PRICE column). This means that some units below this price will be sold, as well as higher quality units at prices over 500 Euro, but in order to simplify this, all bicycles of this type are categorised in the same price range, which will enable a better assessment of the sales value. In the MARGIN column the percentage (%) is reflected, which represents the variable cost of the product over the sale price of the product, and is calculated as follows: Sales margin = Sale Price - Cost of the product Sale Price Sales margin = = 0,4 x 100 = 40% 500 The variable cost per unit does not mean that bicycles which the entrepreneur sells at 500 will be free of charge, but rather, that a supplier will have to buy them for a specific price. This price is lower than the price of sale to the public (500 Euro), and this must be kept in mind. Once the margin is established, the program will automatically calculate how much of the bill is allocated to purchases. Finally, in the columns VAT TYPE and VAT TYPE FOR PURCHASES/WORK, it is necessary to input the rates of Value Added Tax that will be charged for each category of product or service when selling and purchasing. These rates can be 16, 7 or 4%. 14 / 30

15 07. Calculation of the monthly income forecast Once the calculations of potential monthly sales have been made, a month to month income calculation has to be made for the first three exercises. In accordance with the scenario selected in step 6, we need to calculate the percentages generated monthly for each product or service. Staying with the mountain bikes example, the entrepreneur must calculate the percentage of the 20 monthly bicycles established as the objective can actually be sold. If the estimate is optimistic, the percentages will need to be below 100%, if it is very reasonable, it will be necessary to place a certain number of percentages close to 100% and if the forecast is pessimistic, the percentages could be over 100%. However, the percentages may rise significantly during certain months (sales of ice creams at an ice cream parlour for example, or sales of roses in April by a florist, or sales of cava in December by wine shops). They can also rise considerably from one year to the next if, for example, there are plans to expand the business, hire more staff, etc. Let's go back to the example of the bicycle shop and comment on it: We will need to input the percentages for each category of product or service for the first three exercises. In this example, mountain bikes start at business opening with sales of just 25% of the monthly forecast, which was 20 units. This means that during the first two months after opening, only 5 bicycles will be sold, since the business is starting up and there needs to be a consolidation period. On the other hand, sales tend to increase to a maximum in the spring and start of the summer of the first year, with 60% in July, a month when the warm weather is proportional to the sale of mountain bikes. On the other hand, sales of trial bicycles are completely seasonal (concentrated in 2 months of the year). In this example, the entrepreneur forecasts achievement of the sales estimate during the first year, with 2 units in the 2 peak months (100% in April and September). 15 / 30

16 Meanwhile, clothing sales remain stable throughout the year and become a product line which guarantees recurrent and consistent income, fundamental for any business. The same is the case with spare parts, although in the first few months, sales of this category of product are zero, as it is expected that they are aimed at bicycles sold in the shop rather than old bicycles. 16 / 30

17 08. Expenses unrelated to the product or service In this section the program requests itemisation of the fixed expenses which the company will have. Let's look at the costs we need to consider. Firstly, in the case of having a lease contract, we will need to input the conditions relative to the total operation, interest rate and duration of contract. The resulting quota will be included in the current expenses of the business, for example, rent. We also need to input the setting-up expenses, which are the expenses generated only once, in the first year of life of the business. Specifically, setting up expenses are all those related to the constitution of legal status (cost of negative name certificate, notary fees, inheritance tax for transfers and documented legal acts, corresponding registry fees, etc.) and other expenses, such as accountancy fees. Next, we need to input the percentage of income which the company plans to pay in commission to third parties, and the rate of commission to be paid. The screen shot shows an example of a business which has forecast that ¼ of the income will be subject to commission (for example, due to sales made by a sales agent) and that the third party will be paid 3% commission on these sales. In addition, 100 Euro will be allocated per month to fixed advertising expenses, plus 1% of income as variable. Finally, the entrepreneur will need to apply a safety measure, and calculate a PROVISION FOR INSOLVENCIES from 2% of sales. This means that it is estimated that 2% of customers will not pay. In the specific case of retail businesses selling to end consumers, in this column it is presumed that part of the sales will be stolen goods. Next, we need to input a series of fixed expenses for the first three exercises that every business has to deal with: rent, insurance, water, electricity, phone, etc., whether for the office or the commercial space. These should be input before VAT, since the program will calculate this afterwards. Expenses which can be included are: 17 / 30

18 - Rent - Repairs: these could be for machinery, transportation vehicles, etc. - Services of external professionals: cleaning service, home delivery service, subcontracted from a courier company for specific orders, etc. - Transportation: Promoters can include in their business expenses the daily commute to the office or commercial space, which could be petrol for their own car, taxi receipts, public transport tickets, etc. We can also include commuting expenses generated by commercial visits to potential customers in this column. - Insurance premiums: policies required by the business. As a minimum of social responsibility and in certain companies, some of these are derived from the operation. In this case, it is advisable to enter the quantity which is actually paid each month, in order to have the most accurate possible estimate of the monthly treasury. In the example shown in the screen shot, a single annual payment of 2,400 Euro is made, and the other months are accounted for at zero cost. It is possible to put a monthly cost of 200 Euro per month on the policy, which is the result of dividing 2,400 Euro into the 12 months of the year, although this would not be accurate from the point of view of money remaining in the cash register. - Supplies: with these expenses, it is advisable to follow the same criteria as with insurance. If the supplies are normally paid every two or three months, it is better to calculate them based on this rather than on a monthly basis, as shown in the example. Various Expenses: - Taxation: accountancy fees for the business year (accountancy, VAT returns, shareholder board meetings, etc.) - Office: supplies which are consumed on a regular basis, such as sheets, pens, paperclips, folders etc., - Dining expenses: this includes, for example, restaurant expenses with potential clients in order to close a sale, restaurant receipts for the promoters and employees. - Various: any other expense not included in the previous categories. 18 / 30

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20 09. Salaries of the business promoters The next step is to determine the remuneration which the business promoters will have to pay in the Self-Employed Worker Scheme (R.E.T.A.) in the first three exercises. The program allows input of the salary of up to 10 promoters, always following the same structure. The first thing it will ask for is input of the month of liquidation and payment of each salary. This means the program applies the start of the amount due, which is differentiated between the month when the payment obligation of a salary is generated by the company, and the month when the salary is actually paid. This will affect the results and treasury plan of the financial economic plan. The months of liquidation and payment may coincide, depending on each case. The example shows how they coincide in the case of Promoter 1 and not in that of Promoter 2: After that, we need to calculate whether the salary is a gross quantity, fixed monthly and /or variable salary. If it is a variable salary, we will need to indicate the percentage of the payments of the business on which the variable remuneration is calculated, and the commission that will be applied to these payments. In the screen shot, the case of two promoters is shown. The first promoter will make 1,200 Euro per month gross and fixed, while the second will make half of the fixed salary, but with incentives of 2% on half of the income obtained by the company: 20 / 30

21 Thirdly, the program will request the Social Security contribution for promoters who have to declare in the Self-Employed Worker Scheme (R.E.T.A.). The minimum base of contribution is 817 Euro per month. Let's look at an example: The column INCOME TAX RETENTION RATE is for the input of income tax rates, depending on whether the promoter receives a monthly salary from the company or not. IMPORTANT: Promoters who are contracted by the company in the General Social Security Scheme rather than the R.E.T.A must input their retribution in the staff expenses section next. 21 / 30

22 10. Staff expenses For businesses planning on hiring workers, the program requests similar information to that of the previous section. Whereas before, the program permitted the input of data for up to 10 promoters, it now permits the division of the company payroll into five professional categories, making it possible to establish how many people will work in each category during the first three exercises of operation. Thus, for example, a restaurant might have only one person from category A (kitchen manager), two from category B (kitchen helpers) and three from category C (waiters). For each category, the program requires input of the first month of liquidation and salary payment, the gross salary to be received each month as fixed or variable, and the income tax rate applied. The only difference in relation to the previous step, is that the page numbers (12, 14, etc.) and months when bonuses will be paid (normally in June and December) can be entered, as shown in the example: 22 / 30

23 11. Management of payments and collections Once the salaries of the promoters and workers have been specified, the tool requests quantification of the percentage of payments and collections which will have to be accounted for in the first three exercises. Payments are almost always included in the case of businesses whose clients are the end customers, while payments to suppliers can be made in terms of 30, 60 or 90 days. The program allows the input of payments for up to 330 days. To complete this section, it is only necessary to calculate the percentage. The following screen shot shows an example of charges related to various sums of payments to suppliers (30% one month, 40% at 60 days and the remainder at the end of the quarter). It is important to keep in mind that the percentages in bold, together with the columns CREDIT and DEBIT, should always add up to 100: 23 / 30

24 Next, we will need to calculate the percentage of sales that will be made with credit cards, and the commissions that the bank will charge for this service. Let's assume half of the sales have a commission of 1.5% during the first exercise, with an increase of 10% every year: 24 / 30

25 12. Taxation When all of the information has been entered in the data input sheet, we will need to fill in the taxation sheet so that the program can complete the financial economic simulation successfully (these sheets are shown in grey in the lower part of the screen). The program will request that the system specifies whether the benefits are for Income or Corporate Tax. To select Income Tax, enter 1 in the corresponding box, to select Corporate Tax, enter 2. If the business has the legal status of Individual Business or Civil Society, option 1 is selected, and if it is a Limited Company (goods or services), Limited Liability Company (goods or services) or Trading Company, option 2 is selected. After one of the two options has been selected, the program will ask for more information such as the Income Tax system chosen, as well as the VAT Scheme. If option 2 is selected, it will also ask whether the company is a cooperative or an SME and either yes or no should be selected. Let's take a look at a few examples: 25 / 30

26 Once all the required information has been entered, the results of the financial economic simulation can be viewed in the final sheets of the file, by clicking on the tabs at the bottom of the screen, Investments and funding plan, annual results, etc. 26 / 30

27 Important: to receive a technical evaluation of the results, it is possible to request an assessment by Barcelona Activa counsellors. To obtain this, simply go to the Entrepreneurship Centre at Calle Llacuna 162 (without prior appointment) Opening hours of the Entrepreneurship Centre: Monday to Thursday from 9:00 to 18:30 Friday from 9:00 to 14:00 To supplement this information, you can consult the report The four figures every business owner should know about their business. ( C1256EDF00246CCF?OpenDocument) 27 / 30

28 13. How to upload the file when finished working Once you have finished working you will need to upload the Excel file used, in order to save it in the On-line Business Plan. First, you need to go back to the On-line Business Plan, to the same section from which the file was previously downloaded, and click on the option upload archive : Next, select the button Search to locate the Excel file where it was saved: 28 / 30

29 Next, select the file and click on the Accept button: Finally, click on the attach tab to upload the file, a message will appear on the screen which says file uploaded correctly. If this message does not appear, the process will need to be repeated again: 29 / 30

30 Written by the Barcelonanetactiva team from the following sources of information: - Analysis of the financial states. Ed. Gestión Oriol Amat Understanding accounting and finances. Ed. Gestión Oriol Amat Barcelona Activa SAU SPM, Last Update: 20/10/2014 Barcelona Activa SAU SPM will ensure that this information and the data contained in the reports are accurate and faithful. These reports are published to provide general information. Barcelona Activa SAU SPM will not accept under any circumstance any responsibility for losses, damages or theft, or for any other business decisions based on data or pieces of information that can be extracted from this report. 30 / 30