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Business Budgeting Small Business Accounting

Feasibility Study: Everything You Should Know About Creating One

When it comes to entering an industry with an original business concept, all that matters is how the execution of the research will be conducted. One of the factors that enormously influences the success of the new business is the way the feasibility studies are done. If you haven’t studied economics or industry-related courses, it will be hard to do it by yourself. Fortunately, there are a lot of ways to equip yourself with knowledge and try to finish it on your own. One of those ways is reading and self-educating about the feasibility studies and then creating one. You can always consult an expert but, doing the deed yourself is by far more convenient for you in terms of costs and being on top of it.

What Is a Feasibility Study?

The feasibility study ensures the economic viability of the project in a specific market. It is a document that ascertains a quality mandate accepted by financial institutions or investors and operators and private equity firms as well. Inside the document should be included a decision basis for the development, financing, or operation of the business within the selected industry. The segments are executive summary, market analysis, positioning, supply and demand analysis, POS revenue stream, forecasting, expenses, the return of investment, cash flows, financial ratios, and investment appraisal.

How to Create a Feasibility Study Template?

There are several steps you need to follow in order to create a feasibility study template by yourself. However, it is always a good idea to have the feasibility study template checked by a consultant who has experience in the industry. Now, let’s see the steps. 

1. Conduct a Preliminary Analysis

In this step, you need to outline the plan. Look where on the market the demand is greater than the supply and make sure that the service or product you intend to sell has a distinctive value. Then, observe if the challenges are too hard to overcome by yourself, or you would need investors or partners in your business endeavor. 


2. Compile a Projected Income Statement

To do this step think backwards – what is your expectation of the income from the project and what investment do you need to get there. This is the basics of the income statement – how much money you will need in order to make a profit as expected. 

3. Do a Market Research

You need to dive deep into the market and thoroughly inspect the demographics, the location, the competitors, the value of the market, and how expansive the market is. This step is crucial for your attempt in positioning your business on the market. 

4. Plan How the Bussiness Will Function

The next step is figuring out the business operations. What will be your start-up costs, operation costs, and fixed investments? What kind of equipment you will need as well as the advertising methods that will bring your brand in front of the target audience. 

5. Prepare a Balance Sheet

Evaluate your assets and liabilities and do this as accurately as possible. Create a list and categorize items, sources, costs, and available financing. Think about how you will lease or purchase land, facilities, and equipment and how you will finance the assets. 

6. Review All Data

In the end, make sure you carefully review everything you have compiled. Don’t skip steps and go over every information you have collected. This will prompt you the reassurance that everything is achievable and nothing requires changes. Ask yourself – Is the plan realistic? Can you carry it out without spending more money than you have planned?

Conclusion

The feasibility study template is a crucial step towards success in the launching of your new business. Once again, it is recommended that an expert in the field takes a look at the document just to make sure you haven’t done anything wrong. Plus, it will cost much less than hiring them to do one for you. However, keep in mind that the studies and analyses you do before the launch of the business are what will set you apart from the crowd and make you beat the competition.

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Business Budgeting

What is Business Budgeting, why every business needs one?

You may have heard it many a times to earn money, you need to invest some. And, when your business is in the early start-up phase, there would be many initial costs that oblige business owners to spend ahead of earning payments. So, it is imperative for a business owner to create a budget because it boosts financial capacity so they can afford the things needed to grow.

A business budget outlines a financial blueprint for the future related to the dividends and costs of a business. But, a budget is far greater than just financial numbers. Why do businesses need budgeting? A business that outlines short and long-term goals by establishing a thorough plan can build a road map for a successful business and open opportunities to expand. Similar to a household, a business has a few debt obligations and expenses. For example the inability to meet payroll, means employees will look for another job. A venture which is unaware of the cash flow is in no position to expand, seize investment opportunities or commit long term to suppliers or clients. Often in a startup, there is limited information to create an intelligent budget for a year. Business owners can start with pursuing monthly budgets and further moving to quarters. Once finances have been established business owners can pursue by building intelligent yearly budgets.

5 key steps for small business budgeting.

Step 1: Keep Score of Income from all sources

The top priority facet of a wholesome business budget is to comprehend the amount of money a business brings in monthly.

Small start-up owners can do themselves by analyzing the sales figures and then adding other income sources used to run the business. Established business owners can use technology tools for small business budgeting.

Step 2: Analyze the Fixed Costs.

There exist some expenses that are constant each month, such fixed costs should be determined.

Such fixed costs are easily calculated by deciding your bank statements or ledger.

Step 3: Take account of variable expenses

The facets which don’t have a fixed price falls into the category of variable expenses. The purchase of variable cost items can be scaled up or down subjected to a state of business (profit). The monthly business profit is calculated by the earnings business owner is left after paying all the expenses.

Step 4: Predict one-time spends

The biggest perk of creating small business budgeting is the ability to determine one-time purchases in a refined way.

Step 5: Combine it all

The first four steps of the post feature the aspects of a decent business budget, so the last step is to combine it all together. Business owners can use the below mentioned handy checklist with special examples.

Sources of monthly income

  • Hourly earning
  • Savings interest
  • Investment Income
  • Earnings related to product sale

Fixed Costs

  • Rent
  • Utilities
  • Salary of employees
  • Insurance
  • Internet

Variable Costs

  • Advertising
  • Travelling expenses
  • Raw material
  • Printing services

One-Time Expenses

  • Office Supplies
  • Software
  • Computer
  • Furniture

To ease small business budgeting there is a multitude of tools to streamline financial management processes.