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Getting Investment, Key Factor: Initial Valuation

Last night we were talking about getting angel investment, and valuation, which is one of if not the most important points in the discussion. Valuation is essentially price.
Say you want to bring in $150,000 from an angel investor. The immediate question from the investor will be something like: “at what valuation?” Sometimes that’s called “pre-money [...]

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International Business Planning

Note: The following is an excerpt from CPA’s Guide to Developing Effective Business Plans by Tim Berry, originally published by Harcourt Brace Professional Publishers, and reprinted and revised several times. It was subsequently published by Aspen Law and Business. Copyright © Timothy J. Berry. All rights reserved.
A rainy day in Rio
I looked out the window [...]

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Break-even analysis

The Break-even Analysis lets you determine what you need to sell, monthly or annually, to cover your costs of doing business—your break-even point. Illustration 1 shows the Break-even Analysis table:
Illustration 1: Break-even analysis

The Break-even Analysis table calculates a break-even point based on fixed costs, variable costs per unit of sales, and revenue per unit of [...]

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Cash Flow: About Business Numbers, Part 1

While we are trained to think of business as sales minus costs and expenses, which is profits, we have to manage cash as well.
Although cash is critical, people think in profits instead of cash. We all do. When you imagine a new business, you think of what it would cost to make the product, what [...]

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Cash Flow: About Business Numbers, Part 2

Although cash is critical, people think in terms of profits instead of cash. We all do. When you and your friends imagine a new business, you think of what it would cost to make the product, what you could sell it for, and what the profits per unit might be. We are trained to think [...]

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Forecasting Your Sales

Developing your sales forecast isn’t as hard as most people think. Think of your sales forecast as an educated guess. Forecasting takes good working knowledge of your business, which is much more important than advanced degrees or complex mathematics. It is much more art than science.
Whether you have business training or not, don’t think you [...]

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Estimating Unknown Expenses

How do you estimate specific costs for a new business? How do you predict expenses? Normally you need some experience. If you have no idea, then you might think again about starting this business. Maybe your team should add somebody who does have experience, and can make estimates. Here is why.
In the real world, there [...]

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Simplify Your Business Plan Sales Forecast

Forecasting is usually easier when you break your forecast down into components. As an example, consider a forecast that simply projects $1,000 in sales for the month, compared to one that projects 100 units at $10 each for the month. In the second case, when the forecast is price x units, as soon as you [...]

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