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Sage Green Minimalist Business Proposal Presentation

This document provides guidance on forecasting revenue and costs for a business. It begins by defining key terms like forecasting, revenue, cost, earned, and incurred. It then explains that forecasting relies on past and present data to make meaningful estimates of future revenues and costs. The document provides formulas for calculating revenue for product-based and service-based businesses by multiplying units/customers by price. It advises starting the financial forecast with estimated expenses before projecting revenues conservatively and aggressively. It stresses the importance of checking key ratios to ensure financial projections are sound.

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Alvin Negrillo
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50 views29 pages

Sage Green Minimalist Business Proposal Presentation

This document provides guidance on forecasting revenue and costs for a business. It begins by defining key terms like forecasting, revenue, cost, earned, and incurred. It then explains that forecasting relies on past and present data to make meaningful estimates of future revenues and costs. The document provides formulas for calculating revenue for product-based and service-based businesses by multiplying units/customers by price. It advises starting the financial forecast with estimated expenses before projecting revenues conservatively and aggressively. It stresses the importance of checking key ratios to ensure financial projections are sound.

Uploaded by

Alvin Negrillo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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FORECAST THE

REVENUE OF THE
BUSINESS AND
THE COST TO BE
INCURRED
Prepared by:
Mr. Alvin J. Negrillo
AT THE END OF THE
LESSON THE STUDENTS
SHOULD BE ABLE TO:

Forecast the revenues of the business;


(CS_EP11/12ENTREP-0h-j-14)
Forecast the costs to be incurred.
(CS_EP11/12ENTREP-0h-j-15)
UNLOCKING TERMINOLOGIES:

• FORECASTING
• REVENUE
• COST
• EARNED
• INCUR/INCURRED
FORECASTING
is an act of predicting the future economic conditions on the basis of
past and present information. It refers to the technique of taking a
prospective view of things likely to shape the turn of things in
foreseeable future. As future is always uncertain, there is a need of
organized system of forecasting in a business.
REVENUE
(NOUN)
income, especially when of a company or
organization and of a substantial nature.
COST
(VERB)
(of an object or action) require the payment of (a specified sum of money)
before it can be acquired or done.

(NOUN) an amount that has to be paid or spent to buy or obtain


Something
EARNED
(NOUN)
money derived from paid work. Often
contrasted w with unearned income.
INCUR/INCURRED
(VERB)
incurred (past tense) · incurred (past participle)
To use a resource and record it in accounting system.
FORECASTING
is a tool used in planning that aims to support
management or a business owner in its desire
to adjust and cope up with uncertainties of the
future.

Forecasting depend on data from the past and


present and make meaningful estimates on
revenues and costs.
REVENUE
is a result when sales
exceed the cost to produce
goods or render the
services.
COST
refers to the amount of money used
to produce or manufacture
goods/merchandise as well as costs
incurred in selling the
goods/merchandise.
Understanding revenue = understanding your business = growing your
business
REVENUE
Revenue is the most fundamental metric for any
company, and yet it is seldom understood
perfectly. First, there is more than one type of
revenue. Second, recording it and calculating it
get progressively more complex as your
business scales. And third, after you’ve
calculated it, you must know what to do with it.
REVENUE
Revenue (sometimes referred to as sales revenue) is
the amount of gross income produced through sales
of products or services. A simple way to solve for
revenue is by multiplying the number of sales and
the sales price or average service price (Revenue=
Sales x Average Price of Service or Sales).
REVENUE
Not all revenues are equal, being able
to differentiate between net and gross
revenue is so vital.
Gross Revenue vs Net Revenue

concerns all income from a sale, with no subtracts the cost of goods sold from gross revenue.
consideration for any expenditures from any Fees for production, shipping, and storage, as well as
source. any discounts, allowances, and returns, can all
If a store owner sells a limited edition of iPhone potentially contribute toward this cost. Net Revenue
worth P50,000.00, the gross revenue would be from an item worth P50,000.00 that cost P10,000.00 to
P50,000.00 make it P40,000.00.
• GROSS REVENUE = P50,000.00
• Less Cost of goods Sold = 10,000.00
• Net Revenue = P40,000.00
NET
REVENUE
is often listed on an income statement
at the bottom, hence the term “the
bottom line.
HOW TO CALCULATE THE REVENUE

The Sales Revenue formula calculates revenue


by multiplying the number of units sold by the
average unit price. Service-based business
calculates the formula slightly differently: by
multiplying the number of customers by the
average service price.
PRODUCT-BASED BUSINESS FORMULA

Revenue = Number of Units sold x Average Price of Product

Products x Price = Revenue


SERVICE-BASED BUSINESSFORMULA

Revenue = Number of Customers x Average Price of Services

Customers x Price = Revenue


FINANCIAL FORECAST
• Here's some detail on how to go about building
financial forecasts when you're just getting your
business off the ground and don't have the luxury of
experience.
1. Start with expenses, not
revenues.
• When you're in the startup stage, it's much easier to
forecast expenses than revenues. So start with estimates
for the most common categories of expenses as follows:
FIXED COSTS/OVERHEAD

• Rent
• Utility bills
• Phone bills/communication costs
• Accounting/bookkeeping
Legal/insurance/licensing fees
• Postage
• Technology
• Advertising & marketing
• Salaries
VARIABLE COST

• Cost of Goods Sold


• Materials and supplies
• Packaging
• Direct Labor Costs
• Customer service
• Direct sales
• Direct marketing
2. Forecast revenues using both a conservative
case and an aggressive case.

• If you're like most entrepreneurs, you'll constantly fluctuate between


conservative reality and an aggressive dream state which keeps you
motivated and helps you inspire others. I call this dream state
"audacious optimism."
3. Check the key ratios to make sure your
projections are sound.

• After making aggressive revenue forecasts, it's easy to forget about


expenses. Many entrepreneurs will optimistically focus on reaching revenue
goals and assume the expenses can be adjusted to accommodate reality if
revenue doesn't materialize. The power of positive thinking might help you
grow sales, but it's not enough to pay your bills!
THANKYOU!
• Sir Alvin J. Negrillo, LPT

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