‘Business Beat 7

The cost of start- -up

The owner of a proposed new retail
venture, having analyzed the market,
chosen a product line, and settled ona.
location, now moves on to the most _

his store: what it is going to cost.

A qualified accountant can help deter-.
mine financial needs as well as plan the’
setting up of a practical accounting —

-.by Phil Hart
Manager, Terrace
Federal Business |

_ Development Bank

keep track of how the business is doing.

The first step, however, is to determine
starting costs for the new venture, which
fall into five. general classifications:

@ Capital expenditures include painting and decorating, parti-

tions, electrical and plumbing work, lighting fixtures, counters

and shelves, a sign and such equipment as a cash register.

@ Opening costs involve a lease deposit, licenses, utilities, taxes,

other deposits, accounting and legal fees, business and accounting

forms, stationery and office supplies, advertising and publicity,

insurance:and wrapping materials for goods sold.

@ Inventory is the initial stock of products and a reorder reserve.

@ Contingencies involve the unplanned expenses that always

arise; 10 - 20 percent of planned expenses. should be set aside.

@ Reserve funds is two to three months minimum of overhead

costs and salaries to cover a possible lack of profitability during
the initial period.

Other factors would be purchase of a location instead of leas- «
ing; leasing instead of. buying of equipment; and the possibility
that suppliers might insist on a C.O.D, or deposit basis for all
purchases of inventory.

To make the compilation of starting costs meaningful, a
forecast must be prepared, usually for the first year of operation
of a new business. This will test the viability of the venture and
show up any weaknesses or shortcomings. Foreseeing problems
and adjusting for them is far wiser than suddenly being forced to

| Teact when alternatives or capital may be limited.
_ A new business must make realistic estimates of sales, expenses
and profit. Errors, if any, should be on the conservative side

since it is better to be under when estimating sales and over when

estimating expenses. Ct ey fa oer eR

A sales forecast depends on pricing strategy, which normally
will be influenced by what the competition is charging for the
same or a similar product. It also will include such factors as cost
plus mark-up, market demand, psychological pricing, and units
required to break even. Cost of sales must be figured.

Operating expenses are those incurred in the daily running of
the business.

The difference in estimates between sales on the one hand and
cost of sales and operating expenses on the other will be the pro-—
fit expected.

One further step should be preparation of a cash flow chart to”
show, on a month-by-month basis, estimates of money to be
received and paid out when there will be cash surpluses or short-

- ages. Qualified assistance i in preparing this budget is recommend- .
ed. :

After the proposed proprietor of a new retail business deter-
mines financial needs, the next step is to find the money. Sources
— include personal savings, loans from family or friends, partner’s
investment or share-capital if incorporated, loans from financial
institutions, and trade credit from suppliers. . .

Careful planning — knowledge of financial limitations and
realistic goals — is necessary. Careful presentation based on .
realistic research when seeking outside financial assistance is
equally necessary to prove that the venture is viable. —

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crucial exercise in planning the start-up of

system which will enable the proprietor to .

DICK EVANS: We're out to
help ourselves and other

group members learn
communication skills.

The Terrace Toastmasters
Club’s overall aim for the next
session starting this fall is to
strengthen the club through in-
creased membership, adminis-

. trative vice-president Dick

Evans said.

As a wrap up to last year’s
season, members of the Terrace
and Kitimat Toastmasters Clubs

held a tall tales contest at the

Hotsprings, where exaggeration
was the key ingredient.
(Kitimat’s Walter McLennon
won.) Vocal variety is the focus
of another speech, Robert’s

Rules of Order and parliamen-.

tary procedure another, and

“show what you mean’’ exer-_
cises the members’ ability to use.

props and diagrams in their
presentations.

“We stress positive rein-
forcement,’? Evans explained.
“We're out to help ourselves
and other group members learn
communication skills.”’ This in-
cludes not only standing up in
front of a group to speak, but
also the art of listening. —

The Terrace Club’s 26
members, both female and male,
range from high school to retire-
ment age. The most common
problem is fear of the unknown
— when a person has never
spoken in public and has always
feared it. Members are not
pressured, but work at their own
speed through a series of ten

Terrace Review — Wednesday, August 10, 1988 13

gs Local Toastmasters go
for bigger membership |

speeches, starting with: “The
Icebreaker’. ‘‘When a person is
standing up to speak for the first
time, they speak on the subject .
they know best — themselves,”
Evans said. ‘‘Some people talk
about where they went to
school, their work, or how they
came to live in Terrace,”’

Toastmasters originated in
California, and the non-profit,
educational organization now
has over 6000 clubs in 51 coun-
tries. In Canada, there are over .
7000 members in 400 clubs. The
Terrace group will be starting its
fourth year this fall, and is ac-
tively seeking new members.

‘‘We can pet more feedback
and share the responsibility.
more with a larger, stronger
club,” Evans explained. Mem-
bers’ duties include timing and
evaluating each other’s speeches
and delivering educational talks.
Meetings are held the first and
third Tuesday of the month,
from 7:30 to 9:30 p.m., and the
semi-annual membership fee is
$30. ‘We're hoping to start hav-
ing dinner meetings if we can get
over 20 members.’’ Persons in-
terested can phone Dick Evans
at 635-7068.

5130A HIGHWAY 16 WEST 635-7383"

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@ Automatic Document Feeder-up
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® Convenlent Last Number Redial.-

~ INTRODUCTORY

~ SPECIAL?

Sugg. Retail:
Intro. Special

Leasing Plans: —
24 month lease
30 month lease
36 month lease
48 month lease

Payments are payable monthly plus
6% sales tax. Purchase option for
the 24 and 30 month leases is *10.°°
plus tax. Purchase option for the 36
and 48 month leases is 15% in the
33rd and 45th months respectively.
Leases are subject to credit approval.

% *LIMFTED QUANTITIES *

Canon
FAXPHONE’8

$1795.

* $7,995,
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"BUSINESS MACHINES

Terrace 638-8585

4552 Lakelse Ave., V8G 1P8
FAX 635-4071

Prince Rupert 624-5714

737 Fraser St., V8J 1R1
FAX 624-5549

Kitimat 632-5037