WORKBOOK by pengxiang






                                                TABLE OF CONTENTS
Module 1: Feasibility — Why Bother?................................................................................................ 4
Module 2: You and Your Needs ........................................................................................................... 5
Module 3: Business Needs In Detail — Equipment ............................................................................ 6
Module 4: Target Net Profit ................................................................................................................. 8
Module 5: Operating Expenses in Detail — First Year........................................................................ 9
Module 6: Setting Your Prices ........................................................................................................... 11
Module 7: Gross Profit....................................................................................................................... 13
Module 8: Profit ................................................................................................................................. 14
Module 9: Cash Flow......................................................................................................................... 19
Module 10: Who are your customers? - Market Research ............................................................... 23
Module 11: Marketing and Promoting your business ...................................................................... 25
Module 12: E-Business Planning....................................................................................................... 27
Module 13: Business Structures and Strategies ................................................................................. 29
Module 14: Talking With a Lender .................................................................................................... 30
Module 15: Bring It Together In A Business Plan ............................................................................. 31
Module 1: Feasibility — Why Bother? 
You'd have to admit that 8 to 10 hours work thinking about a project must be better than risking
thousands of dollars and wasting 3 to 5 years of your life on a business that had no chance of
success from the start.

What is a Feasibility Study?

A Feasibility Study involves time and effort in talking, reading and gathering good information.
Further time is spent putting the information together in a systematic way so that it makes sense.
From there it will be possible to make sensible decisions on whether to start the business or not.

All the work can be done without spending very much money at all. In short, it's the first step.


This workbook can help you in two ways:—
1.   Provide a place where you can write down information collected about the business you would
     like to start.
2.   Provide a place to do some simple calculations which can help you decide whether or not it is
     worth going ahead to actually start your business.

You must be prepared to talk to many people and to read books, magazines and papers about
starting a business. There are many websites such as FlyingSolo ( that
provide information about starting a business. You may want to consider doing structured training
such as with a TAFE, R.T.O. or distance education program for example: Business Building Blocks The more you have written down, the easier it will be to get help
from others and this information can be the basis for a future business plan
Just a point . . . do all your writing in this book in pencil. It is certain that you will need to make

Thinking about starting in business can be a confusing process. Trying to assess the risks and
benefits of something which will become a major part of your life for a number of years into the
future is not easy. If your thinking is not guided and systematic, then the risks of business failure
will be increased dramatically.

Experience shows that there are several important decisions which need to be made before starting
in business and those decisions need to be made with some sound financial and market information.

This workbook leads you through the steps needed to make good decisions.
•    It may be that the decision is not to start the particular business.
•    It may be that the decision is to start the business when you have more money saved, or when
     you have more knowledge or skill in management.
•    It may be that the time is right now, the opportunities are there and the risks for you are at their
If the indications are to go ahead, the material in this workbook will provide the basis for the
development             of          a           comprehensive           business           plan.

SYOB workbook   edit G Bell 2011                `                                              Page 3 of 34
Module 2: You and Your Needs 

Suppose you are employed and receive a before tax salary or wages of $800 per week or $40,000
per annum. Suppose you will put $50,000 of your own money into a business. This amount would
earn say 6% interest at the bank or $3,000 per annum. To be no worse off in money terms your
business should return you $40,000 + $3,000 = $43,000 for the year.

      1. Annual Salary/Wages (before taxes)                        $
      2. Current Annual Earnings on Savings                        $
      3. Earnings from Other Sources                               $

     DESIRED INCOME BEFORE TAX                          TOTAL      $

If several people propose going into the same business, do the calculations for everyone and come
up with a grand total. Check and the relevant industry association' for further
information for more details about business structures.

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Module 3: Business Needs In Detail — Equipment 

This is the equipment you need to operate the business. You may already have some equipment that
you can use or you may need to purchase it. Also consider the likely value of this equipment should
you decide not to continue – the auction value will give a reasonable estimate to work on if you
allow for the auctioneers fees (approx 16%).

       ITEM                        SUPPLIER                 ESTIMATED           AUCTION
                                                               COST              VALUE
 Fax machine
 Cash Register
 Fittings/ displays
 Furniture desks

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Business Needs in Detail — Once‐Off, Establishment Costs 

Capital is for items where you would have no real hope of recovery of your funds if the business is
not successful. Ask a business Adviser for help should you be unsure.

                     ITEM                              SUPPLIER                   ESTIMATED
 Accounting Fees                                                                  
 Advertising – including artwork, sign                                            
 Business stationery (design and logo)                                            
 Cleaning materials and equipment                                                 
 Utilities, connection, transfer, bond                                            
 Fittings, furniture, display fixtures                                            
 Lease drawing up, stamp duty, registration                                       
 Legal Fees Pty Ltd Partnership Trust                                             
 Licences, planning application                                                   
 Loan fees – establishment, valuation,                                            
 stamp duty etc 
 Plant and equipment purchase, lease                                              
 (small items) 
 Rates, taxes and other outgoings                                                 
 Registration of Business Name, Trademark                                         
 Rental Bond and first month’s rent                                               
 Refurbishing, repainting premises                                                
 Staff recruitment, training                                                      
 Stock (3‐4 months)                                                               
 Storage systems                                                                  
 Communication equipment, installation,                                           
 Workplace regulations – Occupational                                             
 Health, fire regulations 
 Any others not listed above                                                      

Finance. As your planning progresses, you should speak to a financial organisation or an accountant
to discuss the various options of how you could finance capital equipment.

SYOB workbook    edit G Bell 2011                  `                                     Page 6 of 34
Module 4: Target Net Profit 

Profit is necessary for the survival of the business but what exactly are you going to do with the

If you want to upgrade your plant and equipment or expand the business– where will the money
come from? You could borrow it, lease the equipment or as many small businesses do – reinvest the

The repayment of business loans is made up of two components; the principal which is repaid from
profit and the interest cost which is an expense.

Consider — you are investing your time and $50,000 into a venture - is 15% return adequate for
your time, investment and risk or is the 6% bank rate acceptable?

            1.    DESIRED INCOME BEFORE TAX from Module 2           $
            2.    Upgrading of plant and equipment                  $
            3.    Expansion                                         $
            4.    Repayment of loans/increase of equity
            5.    Return on investment
            6.    Other…

                                                          TOTAL $

SYOB workbook    edit G Bell 2011           `                                            Page 7 of 34
Module 5: Operating Expenses in Detail — First Year 

You will need to seek advice, gather information, obtain quotations and prices from suppliers. Try
to get as accurate a picture of your likely operating expenses as you can.
This is not a complete list. Talk to a Business Adviser specifically about your business idea. Use the
blank spaces for items specific to your business.
DO NOT include Stock Purchases, Depreciation or Loan Repayments in this list.
  1  Accountancy Fees                                                         $
  2  Administration/Office Expenses                                           $
  3  Advertising                                                              $
  4                                                                           $
  5                                                                           $
  6  Bank Charges                                                             $
  7  Bank Interest                                                            $
  8                                                                           $
  9                                                                           $
 10  Debt Collection                                                          $
 11  Donations                                                                $
 12                                                                           $
 13                                                                           $
 14                                                                           $
 15  Insurances                                                               $
 16                                                                           $
 17  Leased Equipment                                                         $
 18  Legal Expenses                                                           $
 19  Light and Power                                                          $
 20  Marketing                                                                $
 21  Maintenance Plant and Fixtures                                           $
 22  Motor Vehicle Registration and Running                                   $
 23                                                                           $
 24  Printing, Stationery, Postage                                            $
 25                                                                           $
 26  Rates and Property Taxes                                                 $
 27  Rent                                                                     $
 28  Salaries and Wages (not your own!)                                       $
.29  Security                                                                 $
 30  Staff Superannuation                                                     $
 31  Subscriptions                                                            $
 32                                                                           $
 33  Telephone                                                                $
 34                                                                           $
 35                                                                           $
 36                                                                           $
                                                                    TOTAL:    $
Now add 5% to the total figure to allow for some things you have forgotten    $
                            NEW TOTAL ESTIMATED OPERATING EXPENSES:           $
A Glossary and explanations of Operating Expenses is at the back of this workbook.
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NOTE: When you feel you have completed your best estimate of expenses, try to arrange to
compare your expected expenses with the average for your industry. Your accountant should have
industry benchmarks such as FMRC Profiles, IBIS Benchmarks, etc. Check and the
relevant industry association for further information.

If you have access to a Form 2* for a similar business that is for sale, it can also provide some
useful information. BUT remember – every business is unique and you should get accurate
quotations relevant to your own business for as many expenses as possible. * Form 2: Under the
Land and Business (Sale and Conveyancing) Act 1994 a Vendor's Statement for the sale of a small
business must be provided to the purchaser if the business is to be sold for a price of up to

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Module 6: Setting Your Prices 

The price at which you sell your goods or services, must be sufficient to do three things:

•   Cover the cost of the goods or raw materials (gather information on completing a break-even
    analysis from a detailed book, accountant or business adviser)
•   Make a sufficient contribution towards covering the Annual Operating Expenses of your
•   Make a sufficient contribution towards the Desired Net Profit you want from your business

You will need to research the price your competitors are charging as you will normally meet
resistance from customers if your price is noticeably higher or lower than your competitors. But,
you need to be sure that the mark-up on the wholesale price is sufficient to cover operating
expenses and provide an adequate profit.

Setting an Hourly Rate 

If you propose operating a service business —such as repairs, lawn mowing, contracting, etc. you
are really selling your time and some materials. When you quote a job you should have some idea
of how long it will take. Multiply the estimated hours by your hourly rate.

Remember you will work many more hours than you can charge to customers — quoting, getting
supplies, etc. But, if you want to work at weekends, have no holidays and put in extra hours you
will have an opportunity to get close to 1,650 hours chargeable or even exceed it.

Feasibility study for a service business

 SALES                                 EXPENSES                             PROFIT
 Turnover                 $118,000     Vehicle                  $8,000      Lifestyle                 $40,000 
                                       Utilities                $4,000                                      
 Total working                                                              Additional working 
 time                                                                       capital 
 50 weeks x 60          3000 hours                                           
 Productivity           50.00%         Accounting               $2,000                                     
 Productive hrs         1500           Memberships              $1,000      Machinery update           $2,000 
                                       Repairs & maint          $2,000                                     
 Income divided         118000/        Stationary        &                  Loan repayment 
                                                                $1,000                                 $5,000 
 by hours               1500           printing                             (20,000/4yrs) 
                                       Phone & Internet        $2,000                                     
                                       Advertising             $4,000       Long term                 $4,000 
                                       Insurance               $2,000       total                     $55,000 
                                       Contract labour         $15,000                                    
                                       Consumables                          TAXATION 
                                                                $2,000                                $20,000 
    Hourly rate              $78.00    Total                  $43,000.00    Net Profit                $75,000 

SYOB workbook      edit G Bell 2011                 `                                             Page 10 of 34
Therefore if we require $40,000 for ourselves in this example we would need to feel confident of
obtaining and completing 1,500 hours per year of work at $78 per hour.

Productivity is a key issue for a service business and will depend on the location of customers, size
of jobs and many other factors. It is important to address what level of efficiency is realistic for
your type of business but remember to factor in all of the back office duties as well.

You may calculate a price for your goods or services which is sufficient and yet you may be aware
the market will pay more. How would you resolve this dilemma? - In cases where you can charge
more, the extra profit may allow you to provide a better quality of service, where charging too little
may force you to reduce the quality of product or service.
Please note these figures are for demonstration purposes only

SYOB workbook   edit G Bell 2011              `                                            Page 11 of 34
Module 7: Gross Profit 

This is the term used in retailing to describe the dollar increase on the Wholesale Price to selling
price that covers Operating Expenses and to return a Profit to the Business Owner.

Many industries have an ‘Average Mark-up’ as a kind of benchmark. It is usually referred to as a
Percentage Mark-up. You should be aware of this percentage figure for the industry you intend to

The Margin is the Percentage of the Retail Selling Price which contributes to the Gross Profit made
on sale. It is a kind of ‘reverse mark-up’. Some suppliers quote their prices as Average Retail Prices
with a percentage discount to the retailer.
Feasibility study for a retail business

SALES                                EXPENSES                            PROFIT

Turnover                 $270,000    Vehicle                  $8,000     Lifestyle                 $40,000 
                                     Utilities                $4,000                            
Opening stock        $10,000         Rent                     $15,000                           
+Purchases           $140,000        Outgoings                $2,000     expansion             $4,000 
‐Closing stock       $15,000         Accounting               $2,000                            
Cost of sales        $135,000        Memberships              $1,000     Machinery update      $2,000 
                                     Repairs & maint          $2,000                            
                                     Stationary & printing    $1,000     Loan repayment        $5,000 
                                     Phone & Internet         $2,000                            
                                     Advertising              $4,000     Long term             $4,000 
                           50%              Insurance         $2,000              total            $55,000 
                                     Wages                    $15,000                           
                                     Super w/cover            $2,000                               $20,000 
Gross Profit             $135,000               Total         $60,000    Net Profit                $75,000 

Therefore if we require $270,000 sales per year; we can look at weekly sales (divide by 52) to get
$5,192 or daily (divide by 6) gives $865 per day.

If your average sale was $10, you would need 86 sales per day on average.

Please note these figures are for demonstration purposes only.

SYOB workbook     edit G Bell 2011                       `                                   Page 12 of 34
Module 8: Profit 

From the profit you make in running your business you will want to take out money to live on. But
there are other things which must be taken from the profit before you can have your slice.

•   If the business is profitable then Income Tax will be payable, regardless of what you do with the
    profit (e.g. re-invest). Check the ATO website for taxation information (
•   If you have established the business using borrowed funds, then you will need to repay the
    lender in accordance with your contract.

Once you have dealt with these commitments, you should then put aside funds for future
replacement of worn equipment, future expansion of your business, cover for bad debts, updating of
equipment to keep pace with current technology and allowance for inflation.

Finally, you can consider some reward for your own time and effort in the business, reward for the
funds you have invested, and you should also make some allowance for the risk of investment.

This section of your Feasibility Study aims to set an adequate profit target and then determine the
level of sales you will need to achieve it.

In normal accounting practice a Profit and Loss budget can look like this:

(We have put in some figures to help you read it easily)

                   Sales:                                                           $          80,000
                   Less: Cost Of Goods Sold:                                           
                          Value of Opening Stock                 $          10,000     
                          + Purchases of Stock                   $          40,000     
                          ‐ Value of Closing Stock               $          11,000    $        39,000

                                                    Gross Profit:                   $          41,000
                   Less: Operating Expenses:                                           
                          Accountancy Fees                       $           2,000     
                          + Administration/Office                $           1,600     
                          + Advertising                          $           3,000     
                          +                                      $             800     
                          +                                      $             200     
                          + Bank Charges                         $             600     
                          + etc, etc.                            $          12,800    $        21,000

                                                     Net Profit:                    $          20,000

We want to turn the Profit and Loss Budget up-side-down.
                       Target Net Profit

                       Plus: Operating Expenses Budget              =    GROSS PROFIT 

                       Plus: Estimated Cost of Goods Sold           =    TARGET SALES 

SYOB workbook   edit G Bell 2011                        `                                               Page 13 of 34
Let’s start work on a Target Net Profit.

On the worksheet PROFIT STUDY, set out your desired outcomes and contracted commitments.

1.   How much income do you need to cover your present personal and family financial
     commitments? You will recall earlier that you have already written your annual income after
     deduction of income tax. Now write that Net Salary After Income Tax in the space provided on
     the worksheet.

2.   How much of your own money will you put into the business? Where is it now? Probably in a
     bank or building society earning interest. If you are going to invest in the business, you would
     surely want your funds to earn at least as much as they would in the bank. Calculate the interest
     using the best interest rate you can get at the bank.

3.   You appreciate that an investment in a business is much more risky than making a deposit in a
     bank. Your funds are not so liquid and not easily available. There is a much higher chance of
     not being able to get the money from your business when you need it. You should allow a factor
     for risk. Make this at least 5% greater than the current bank interest rate and even more if you
     feel there is a high level of risk in your business.

4.   How much do you want to borrow? Over what period of time? How much of the principal of
     the loan will you be required to repay in the first year of business operation? You may have to
     ask your bank to help you calculate the amount. Your Accountant or Business Adviser will also
     be able to help.

5.   What is the effective operating life of your equipment? What is the value of your equipment,
     machinery, motor vehicles, etc. If, at the end of their effective operating life, they have little or
     no resale value, then you should plan to have funds for replacement at that time.

     Say you have an item of machinery that is worth $1,000 and it will be reduced in value to $200
     over five years, then you should aim to put aside $800 over that period. Or, $160 per year.

6.   What plans do you have to purchase new plant or machinery next year? This applies to
     equipment additional to the basic start-up and operating machinery. How much will it cost? You
     need to accumulate funds this year to pay next year.

7.   Don’t forget to allow that the price for replacement equipment and new equipment may be
     higher than those currently applying. This requires building in an inflation factor.

     Add up the amounts in the worksheet. The total is your Target Net Profit after Income Tax. You
     need to calculate the Target Net Profit before Income Tax.

8.   Determining the level of Income Tax may best be done with advice from your Accountant or
     Business Adviser. You can also get help from the Small Business Advisory Service of the
     Australian Taxation Office. Add the amount of tax to the total so far and write in the Target Net
     Profit before Income Tax.

     Earlier in the Feasibility Study, you prepared a budget for Operating Expenses In Detail —
     First Full Year. Write the Total Estimated Operating Expenses into the worksheet space.
     Add the Target Net Profit before Income Tax and the Estimated Operating Expenses to

SYOB workbook   edit G Bell 2011                `                                              Page 14 of 34
    calculate the Gross Profit needed.

    What stock purchases will you make during the year?

    For a Retail Firm … Ask your Accountant or Business Adviser for any information they may
    have on the average number of ‘stock turns’ in the particular sector of retailing. For example —
    greengrocers will buy-in and sell-out the wholesale value of their stock about twice per week,
    on average. That is, they have about 104 ‘stock turns’ per year. In a fashion boutique, the
    number may be four.

    For a Service Firm … What is the average value of materials used for each hour you can
    charge out? For example — industry experience may show that for the average plumber the
    average materials are worth about $15 per hour. For the painter it may be $10. Check and the relevant industry association for further information.

    Multiply the figure by the number of hours you anticipate charging out for the year.

    (For a Service Firm where the selling price of materials is only a fraction more than the
    wholesale/trade price, you might ignore materials costs and stop your calculations at this point
    as your customer will be paying you for materials. That is, the Gross Profit is the basic level of
    Target Sales for the year.)

    Add the Cost of Goods Sold to the Gross Profit figure and determine the Target Sales for the
    first year of business (for a retail business).

    Review the Sales Target. At the selling price you set, how many units will you now have to sell
    in the year? Do you think that will be possible? What if you can’t sell that number of units?
    Where will the customers come from?

    For a new business, your purchases will be lower. With lower sales and lower purchases you
    will probably have a lower Gross Profit. Will your Operating Expenses be much lower?
    Probably not. The rent will not fall. You will still have lights on in the shop. Your insurance
    premium will remain the same.

    If the Gross Profit falls below target and the Operating Expenses remain on budget then the Net
    Profit before Income Tax will fall. Great, you say! Less Income Tax to pay. But the real dent
    will be made in the profit available to you for living. You will not get an adequate return on
    your invested funds. The bank will still want to be repaid the agreed principal on the loan. You
    will not be able to make adequate provision for replacement of equipment.

SYOB workbook   edit G Bell 2011             `                                             Page 15 of 34


GROSS PROFIT [Target net profit plus Expenses]

TURNOVER/TARGET SALES [gross profit divided by the gross profit margin]

No. OF SALES/UNITS [target sales divided by average selling price]


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Profit in Summary 

Many people starting in business will say, “I know my business will not make a profit for several
years, but I am prepared to work long hours for very modest personal income because it will all be
worth it in the end.”

How long are you prepared and able to work in your own business for less than you currently need
for personal living? Be realistic and allow for increases in the cost of living.

It is important to set a Desired Profit Target and to extend that figure into the daily operations of the
business. For example — ‘service 5 machines every working day’. It is the daily sales you make —
number and profitability — which ultimately sums together as the Net Profit. Profit does not just
appear as a dollar amount at the bottom of a Profit and Loss Account. It is worked at every day. If
you cannot get the sales you will not get the profit

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Module 9: Cash Flow 

Cash Flow forecasting and management are the most critical skills needed to maintain the life of a
business. Growth comes from profits. Survival comes from cash flow. You must be able to pay your
bills on the days expected or contracted with your suppliers. This means that every cent and every
dollar in the cash register is not available for your personal use.

Preparation of a Cash Flow Forecast is quite easy once you collect a few important pieces of
information. It is critical that you spend time on trying to get those pieces of information and on
trying to ensure they are as accurate as possible. From that point it is just a matter of setting out
some figures in columns.

Cash Flow Forecasting is about three things:

•   Forecasting the volumes of cash which will flow into and out of the business.
•   Forecasting the timings of cash flow into and out of the business.
•   Determining the ‘cash at bank’ on set dates, based on those volumes and timings.

Cash Flow into the business will come from the following sources:

•   Cash from Sales.
•   Cash from the Initial Owners Equity.
•   Cash from Bank Loans.

Cash will flow out of the business at commencement to:

•   Buy Plant, Equipment and Stock.
•   Pay One-off Establishment Costs.
•   Pay Operating Expense items in Advance — insurance, rent etc.

And, once the business is running, cash will flow out to:

•   Pay Operating Expenses.
•   Buy replacement stock.
•   Repay the bank loan.
•   Provide cash to the owners for personal living.

It is easy to see that if more cash flows in than out over a given period, then the cash at bank will
increase. And, of course, the reverse can happen — more cash out than in will reduce the cash at

If the cash at bank falls below ‘zero’ — into overdraft — that is really extending your bank loan.
You cannot run an overdraft without making an arrangement with the bank. If your Cash Flow
Forecast shows a negative bank balance, then it will be necessary to borrow more than you
originally planned in your Capital Budget.

SYOB workbook   edit G Bell 2011              `                                           Page 18 of 34
Let’s get started.

The Worksheet, in this case, is a ‘blank’ Cash Flow Chart. There are some blank sections for you to
insert any additional material particular to your proposed business.

You should discuss the preparation of the CASH FLOW FORECAST with your Accountant or
Business Adviser. Your Accountant may be able to put the details into an already prepared computer
spread-sheet. This will make the routine calculations easier. The Accountant will not provide the
information — that will come from you.

Here are some notes to help you think about your Cash Flow Forecast.

1.   Business Seasonality
     Most business activity follows seasons. Sales of the product may relate to the weather — winter or
     summer, or to the holiday season — Christmas or Easter. It may relate to gift-giving time. When would
     you be thinking of starting your business? Before the season in order to be well established when the
     season breaks? Just at the beginning of the season? In the first instance you will have low cash in-flows
     from sales for a period of time.

2.   Monthly Sales Estimate
     What total sales do you estimate for each month? Allow that the business is just starting and will have
     few, if any, customers in the early months — and a lower level of sales in its first year than later in its
     life. Discuss this with your Accountant or Business Adviser. A starting point may be the sales from your
     sales target ÷ 12 for an “average”, then revise how long it may take to get to that “average” level.

3.   Credit Accounts
     If you sell your products or services on credit, how long will people take to pay? Be careful to estimate
     when they will actually pay — not when you say they should pay. If you offer 30 days credit, will it be
     45 days before you have the cash in hand? Credit card purchases by customers are generally treated as
     cash sales.

4.   Capital Contributions
     Initial capital will be contributed from the business owners and from loan funds and come into your
     business bank account in the first month of operations.

5.   Capital Purchases and Payments
     These will probably be made in the first and second months of the life of your business.

6.   Regular Monthly Payments
     Some payments like Rent, Leases, Bank Charges, Motor Running, etc., will be made every month.

7.   Regular Quarterly Payments
     Some payments like Telephone, Light and Power, etc., will be made every quarter. Try to estimate in
     which particular months the payments will be made.

8.   Single Annual Payments

     Some payments like Insurance, Rates and Property Taxes, etc., will be made only once each year. In
     which month?

     Write all your numbers in pencil and try to be fully satisfied with what you have written before you start
     adding the columns and rows. If you alter any figure, then the total for every column to the right of the
     alteration will be affected.

SYOB workbook   edit G Bell 2011                  `                                                 Page 19 of 34
     Remember, the Cash at Bank Month Beginning for the following month is exactly the same
     figure as the Cash at Bank Month End from the previous month.

     Detailed is an example of a brief Cash Flow forecast for information.

                                              February         March         April 
       Estimated Cash In                                                              
       Cash from Sales                           4200.00         4000.00      4500.00 
       Other cash in                              200.00               –            – 
       Total Estimated Cash In (A)               4400.00         4000.00      4500.00 
       Estimated Cash Out                                                             
       Payments for Purchases                    2300.00         2600.00      2800.00 
       Drawings by Owner                         1500.00         1500.00      1500.00 
       Repayment to Bank                          500.00          500.00       500.00 
       Total Estimated Cash Out (B)              4300.00           4600       4800.00 
       Cash In ‐ Cash Out                                                             
       (Cash Flow) A ‐ B                             100.00       ‐600.00     ‐300.00 
       Cash at Bank Month Start                      200.00        300.00     ‐300.00 
       Cash at Bank Month End D ‐ C                  300.00       ‐300.00     ‐600.00 

Notes On Your Cash Flow Forecast 

Are there any months in which the bottom row — Cash At Bank Month End —
is negative?

This means you anticipate over-drawing your bank account. As mentioned earlier, an overdrawn
account is really a loan. You cannot overdraw your account without prior arrangement with your

Go back to your figures. Check the following:

1.   Have you placed all the payments in the correct months?

2.   Is it possible that you have under-estimated your sales?

3.   Would you be able to make some Purchases of Plant several months after the start of the

4.   Can you make some Single Annual Payments — half yearly, quarterly, monthly?

5.   Are your Drawings by Owners too high? In most instances you will not be able to draw cash
     from the business for your own needs for a number of months. If you try to draw cash from
     your business too early in its life, you will be withdrawing the working capital from the

You should discuss your finished Cash Flow Forecast with your Accountant or Business Adviser.

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                               Cash Flow Projection           Month       Month   Month   Month   Month   Month   Month    Month   Month   Month   Month   Month

                         Sales Budget
                                            Cash Sales
                                            Credit Sales

                                            Total Sales

                         Cash Receipts
                                       Cash Sales
                Payments Received from Credit Sales
                                      Other Income

                                Total Cash Receipts

                                    - Other Admin Costs
                                                - Postage
                         - Stationery & Office Supplies
                                             - Telephone
                                  Accountancy Charges
                       Interest & Other Bank Charges
                                 Cash Flow Projection         Month       Month   Month   Month   Month   Month   Month    Month   Month   Month   Month   Month
                                             Legal Costs
                                       Loan Repayments
                                Motor Vehicle Expenses
                                         Other Expenses
                            Plant & Equipment - Lease
                        Plant & Equipment - Purchase
                                   Proprietor's Drawings
                           Purchase of Other Materials
                                      Purchase of Stock
                                 Property Rates & Taxes
                            Rent of Business Premises
                                 Repairs & Maintenance
                                       Statutory Charges
                          Utilities (Gas, Electricity, etc)
                                        Wages / Salaries

            Goods & Services Tax
            Pay as you go taxation

                               Total Cash Payments

                  Bank Bal. at Beginning of Month
                Cash Increase/Decrease for Month
                        Bank Bal. at end of Month
SYOB workbook    edit G Bell 2011                                     `                                            Page 21 of 34
Module 10: Who are your customers? ‐ Market Research   

Market research is a key aspect to business planning that gives you the confidence that your future
may have potential. Without it you will be guessing about customer expectations and may be
making many wrong decisions... in short you should base your business mostly around customer
requirements and not your own personal preferences. You need to know what products/services
people buy, what they think is reasonable value for money, where they buy from at the moment and
how they found their current supplier. Additionally you need to assess resistance to change – will
they buy from you in the future.

Basic market research can be accomplished for a small amount of money relative to the rewards it
can give. Ideally you would engage professionals in this field but much of the ground work can be
done yourself. For example a survey may start as simply as using 5 questions to gain feedback.

Demographics; These are facts and figures of your research and a lot of this can be gained from
your local library or Australian Bureau of Statistics ( Look for publications from
ABS such as a Social Atlas and the Regional Profiles. This can be very beneficial in researching a
possible location for your business or places to advertise after factoring in the level of competition
in those areas.

Customer profile; Businesses benefit from having a customer profile that identifies the key
characteristics of the client group they want to attract – For example a hairdresser may be targeting
Females 25-45 years old in the 5045 Postcode, this is not to say they will refuse to serve any one
else but as the saying goes – you can't be all things to all people.

Knowing this profile, set about finding the total market size. Having a clearly defined demographic
also makes it much easier to decide on colour and language to use on brochures and websites as you
know who you are “talking to”. When you are assessing different advertising and promotion
methods, you can evaluate them relative to the market you want to attract. When selecting an
advertising medium, consider that if the people can’t give you a defined number of your
demographic that you can get to – then the effectiveness of that medium cannot be evaluated.
Ideally you want to refine all your advertising to the point where you can estimate the “readership”
of a new advert and predict the conversion rate into new customers.

Psychographics; These are personal preferences that people make product choices based on. As
these preferences vary widely, surveys are the ideal way of analysing lots of information. Surveys
can be based on demographic information above, but most businesses want to know more about
consumer preferences such as why do they choose one product over another. The 4 P's of marketing
(Product, Price, Place and Promotion) can be used as the basis for your research.

Surveys; To start your market research, use the 4 P's to survey people who fit your customer
profile, tell them what industry you are talking about and ask them … what Products they buy at the
moment, what they think is a reasonable Price, where they buy it from (Place) and where they
found out about the current business they go to (Promotion). This is the initial 4 questions – the
fifth is – will they buy from you? Hopefully they reply with a qualifier such as “ yes, if you fine
tune your offering to suit my needs” This could cover a wide range or things that may or may not be
practical but it will give you a gauge of resistance to change (RTC) It is important to evaluate
these unsatisfied needs and wants to see if they provide a substantial opportunity for your business.
If your survey shows that they are all very satisfied customers and not looking for new suppliers;
you may need to re-address your business offering. The greatest opportunity will come from

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satisfying unfulfilled needs and wants (so long as there is enough customers). New opportunities are
a safer strategy than trying to compete directly with existing suppliers with the same products which
could result in a price war.

Steps in deciding if there is a market:

1. Define the Demographics of the target market you are aiming for. Get the total size of this
   market from ABS or your local council.

2. Decide on a research methodology to interact with potential customers to gain information. A
   Range of tools exist that can be accessed for free or low cost in the initial research phase such as and questions. The methodology should be appropriate for
   your target market – this may sometimes require you to use telephone or a face to face survey

3. Select initial questions (possibly based on above 4 P's & RTC or input from professionals).

4. Trial the questions on a small group and refine them before conducting a larger program.

5. Conduct research of a reasonable sample size and collate the data.

6. Analyse the data to decide if there is sufficient market potential. Review you business plans to
   maximise the opportunities.

If you do not feel confident with any of the above, seek expert help – under no circumstances
should you start a new venture without being confident of the potential market.

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Module 11: Marketing and Promoting your business   

Market research is about ensuring there is a sufficient number of people who will buy your product.
A Marketing Plan is about structuring your business which can deliver, and letting people know
about your product or service in a competitive market place.

1.      Identify your product or service
        Write as clear a statement as you can of what your product or service will be. Try to keep it
        simple. For example — "a maintenance and cleaning service for home swimming pool
        owners". A clear understanding now will help define potential customers, competition, and an
        advertising strategy.
2.      Define your customers
        Try and write a brief, clear description of the average customer for your product.
        Is it everyone? Is it males or females only? Is it families? Is it a product which is bought by
        people grouped as households — fridges, washing machines, lawnmowers? Is it people in

As a planning tool consider drawing up a chart with the 4 P’s (Product, Price, Place and Promotion)
at the top with the months for the first year down the left hand side. Then, identify what you will do
under each of the four headings in those particular months and write the activity in.

This can be a very useful tool as a basis for a marketing plan. An example is below

                          Product               Price               Place             Promotion 
    Month 1         Launch item 1         Opening specials    Location 1          Sign writing on 
    Month 2         Increase product      Discounts for bulk  Look for other      Local paper 
                    range                 purchases           distributors/       opening press 
                                                              Outlets             release 
    Month 3         Survey customers      Offer extended      Establish web site  Interview on local 
                    for other products    warranty                                radio 
    Month 4         Launch new range      2 for 1 old stock   Travel to next      Yellow pages 
                                                              town                comes out 
    Etc….           Summer products       Gift vouchers       Join buying group  Sponsorship 

This matrix can be expanded to have extra columns that allow you to seasonal considerations,
record cost, response rate and actions needed.

Low and no-cost advertising ideas.

Also analyse the business to the competitors
                              Product              Price             Place              Promotion 
    US                   Small range         Medium            Main road            Yellow pages 
    Competitor 1         Large range         Medium            Shopping cntr        TV 
    Competitor 2         Specialist          High              Suburb               Yellow pages 
    Competitor 3         Low quality         Discounter        Industrial pk        Local press 

SYOB workbook       edit G Bell 2011                 `                                               Page 24 of 34
In Summary 

There is a good deal more detailed work which must be done on Marketing to refine your plans and
focus your attention. The rough calculations you have made are designed to look at the broad
feasibility. The work which you have done really only covers the first year of a business. Any
proposal to enter a market should only be undertaken if the prospects of the product or service will
deliver a profit over a reasonable period of time — a period sufficient to justify setting up the
business structure and making the investment of time and capital. See and the
relevant industry association' for further information for more detail.


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Module 12: E‐Business Planning 

An E business strategy should be an integral part of any new business.

Domain Names. It is best to secure a Domain name registration and your own Email address before
starting a new venture so that you can be certain of cementing your own digital space and save on
printing costs down the track. Do an initial search for any conflicting ownership of names and logos
at If your customers are International – you may consider registering
domain names in other countries.

If you use a web hosting company or other IT service provider to register your domain, ensure that
you are the listed owner of the domain. This can be checked by doing a "WhoIs" search – this will
tell you who the owner is of any domain name. (

Websites. Decide on the look and feel you want for your business bearing in mind your target
market. Consider engaging the services of a graphic designer to decide on a common theme that
will work throughout the business from website to business cards. Electronically this can be
developed as a Cascading Style Sheet (CSS) that can be used on most software platforms.

Social Media. Decide on an E-business “Posturing” strategy. This is crucial for a service business
but equally can help all by creating an information outlet that allows people to understand more of
what you do and what problems you solve. Social media is good outlet for this (depending on your
customer demographic). Consider Facebook for a younger customer group or LinkedIn for business
professionals. Additionally, consider having a BLOG (free through Wordpress and Google's Blogger
etc) as a repository for articles and knowledge you want to share to demonstrate your knowledge.
These avenues allow customers to follow your “conversation” and eventually become customers. It
is also an avenue for competitors to track your activity and many businesses monitor twitter using
@ and # searches using their competitors names to see what the public are saying.

Promotion. There are a wide range of Internet directories that may be useful for you to promote
your new business venture so carefully plan a consistent description and keywords that relate to
your business. Most of these will be free but will take some time to list in. Concentrate on the ones
that relate most closely to you either geographically or your area of specialisation.

Software. The design of your website should be carefully thought about, both in the customer
experience (front end) and programming (back end). Choose a software platform that allows
flexibility to change to another web developer and to change content yourself.

Online sales can be a great way of increasing your potential market. Many online classified
directories and auction sites exist to facilitate the process for you in exchange for a small fee.

If Online sales are a key part of your business strategy, a “shopping cart” can manage stock, provide
invoices and reporting systems to help manage the business. If you also sell products in person you
will have to decide if you use your shopping cart for all sales or choose one that integrates with
your invoicing software to effectively manage the paperwork in one place rather than two.

There are four main ways of completing payments through a shopping cart; 1. Once the sale is
completed you can allow customers to pay directly into your bank account, 2. You can use an
external Credit Card processing company (such as PayPal) 3. You can collect credit card numbers

SYOB workbook   edit G Bell 2011             `                                            Page 26 of 34
yourself for manual processing through an EFTPOS terminal (security restrictions apply) or 4. you
can arrange for a secure gateway with your bank for the transaction to occur directly through to
your bank account from their Credit Card Centre (most secure but most costly to set up). Websites
that collect payment or payment details should be protected by a “Digital Certificate” to provide a
secure sockets layer (SSL) for transactions. This needs to be purchased and installed into the

Other ways of getting new customers:
PayPerClick (PPC) Advertising is a useful tool for generating new customers and understanding the
buying process. Because you are paying based on the action of potential customers it allows you to
fine tune the words that are a call to action. Careful choice of words is essential to ensure that the
cost per click is relative to the number of actual sales it generates. If your advert “over promises”
then you will get charged for lots of clicks but not many of them will convert into sales. In the
reverse situation, if you “under promise” you will not get many customers either.

A recent growth area is “Affiliate Marketing” where others promote your business in exchange for a
commission. As with any business relationship, time should be spent evaluating the relationship.

Outsourcing is often needed for a small business to assemble a wide range of skills. More recently
the concept of “Crowd Sourcing” as a way of gaining skills through an intermediary website means
that you can access a wide range of expertise. Crowd sourcing provides many opportunities but it
should be remembered that any outsourced tasks need to be project managed for them to be useful.

Currently, Google provides many free opportunities to promote your business for free. Consider
Google Places, YouTube and Picasa.

SYOB workbook   edit G Bell 2011              `                                            Page 27 of 34
Module 13: Business Structures and Strategies 

Below are two major considerations in planning your approach to the business opportunity.
Strategic Planning – Consider doing a S.W.O.T. Analysis to identify your current position
A SWOT analysis is a useful planning tool to categorise relative strengths and weaknesses (issues
internal to the business) with Opportunities and Threats that exist in the business environment. It
also is a good communication tool to get other people (such as business advisers) to contribute to
your business planning.

Strengths                                           Weaknesses 
Opportunities                                       Threats 

If you find you have too many items on your SWOT or the same issue arising in more than one
quadrant – consider assigning a value of between 1 and 10 to indicate the significance of the issue,
this may allow you to put it more into context and decide if an issue should be on the left or right
hand side.
Business Structures 
When you are starting out in business, you need to choose which business structure is the best for
you. The three main structures used are Sole Trader, Partnership and Proprietary Company. Your
accountant, financial or legal adviser may also talk to you about a Trust or nominee company which
are more relative to your long term financial plans rather than business operations.

Sole Trader own and manage a business on their own, either under a business name or their own

A Partnership is an agreement between at least two and up to twenty people to contribute time,
money and talent to make a profit from a continuing venture. They may trade under a business
name or under the names of the partners.

A Proprietary Company is set up under a formal legal agreement and provides the company with a
separate identity (legal entity) from the people who own and manage the business.

An Australian Business Number is required for any of the above structures and you should contact
the Australian Taxation Office ( for more details.

If you want more information on Choosing a Business Structure, Partnerships or Proprietary
Companies you should refer to and the relevant industry association' for further
information. You can also seek advice from an accountant or adviser about the appropriate business
structure for your business. Look for information on Business names, Trademarks and domain
names also.

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Module 14: Talking With a Lender 

The Feasibility Study Workbook, filled out, is the basis of your discussion with a lender if you
require loan funds to start and operate your business.

Don’t think that, just because the figures ‘stack-up’, your lender will have no questions or that the
granting of a loan will be automatic.

You still have a few steps to go yet. But you should be confident that you can answer questions on
how you propose to operate the business and what targets you have set.

The lender is looking for two things:

1.   Confidence that you have a clear understanding of what may lie ahead in owning your own
     business. You have a well prepared plan and you are committed to making it work. Confidence
     in your resilience (how committed to the project are you?).

2.   Confidence that the business will work — a market, profitable with no likelihood of a serious
     cash crisis.

Once you have had initial discussions, it is likely the lender will want to see your cash flow forecast
and at least a draft of your business plan (discussed in the next section)

SYOB workbook   edit G Bell 2011              `                                             Page 29 of 34
Module 15: Bring It Together In A Business Plan 

A business plan can be a productive way of refining your planning and creating a useful
communication tool. By now you have assembled most of the information needed to complete a
business plan, however as you start to write it up, you may need to reconsider some of the previous
issues covered. Business planning is an ongoing process of fine tuning until you feel confident that
you have fully assessed the risks and opportunities.
The Essentials 
There are five important things you must understand before you start your business.

1.   How much CAPITAL is needed to launch and sustain the business?

2. Is there a MARKET of sufficient size and 'life expectancy' to sustain your business?

3.   Can you operate the business and deliver an adequate PROFIT?

4. CASH FLOW is critical to business survival.

5. What MANAGEMENT SKILLS are needed?

Each requires a good deal of work. Once you have done some of the work you may find that the
questions raised throughout the workbook need further enquiry.

At every point we are looking to help you assess the risks in your business proposal. The risks are
reduced by every piece of additional information and advice you can gather. Please read widely and
talk to a lot of people. Ask questions. There are no absolutely set answers, but there is a wealth of
good experience about.

Capital, Market, Profit and Cash Flow are all equally important. In this workbook we will examine
each in order. You need to be aware that each is dependent on the other.
Inadequate Capital will impact on Profit and Cash Flow. An inadequate Market will impact on
Profit and Cash Flow and then, ultimately, on Capital. Inadequate Profit will have Cash and Capital
consequences and insufficient cash availability at critical times will impact on Capital and Profits.

And you need the skills to manage your business — financial, management, marketing, sales.
What now? 
You have spent considerable time gathering information and putting together the four basic parts of
your Feasibility study.

You should now have filled out each section of the workbook.

•    How much do you need?
•    How much will the owners contribute?
•    How much will you need to borrow?

SYOB workbook   edit G Bell 2011             `                                            Page 30 of 34

•   Are there enough opportunities to sell?
•   Can you sell your product or service at a price which will return a profit?
•   What daily, weekly and monthly sales targets must be achieved?
•   What are your marketing plans, production and sales plans to actually achieve your targets?


Does your Profit Budget show an adequate return for the hours the owners will work?
Does it show an adequate return for the investment of the owners?
Does it provide sufficient funds to repay your loan principal?

Cash Flow Forecast   

Will you have cash in the bank at all times to cover the operations of the business — buy stock, pay
expenses, allow you to take out your own reward?

Management Skills 

There is a wide range of skills needed to run a small business with the difficulty that there are
limited people to provide them. In the planning process; write a list of the skills that will be
required and consider where they will come from. It may be that you already have the skills
yourself or within other partners in the business. It may be that you can gain the skills through
training. Many businesses outsource for highly technical areas such as Accounting, Legal and IT.
Also consider if some of the processes in the business can be streamlined or automated (such as
barcoding in retail requires initial effort to set up but improves stock management and reporting). It
is important to consider these skills at the planning stage so that as the business grows you have a
solid foundation in place.

Go for it!

SYOB workbook   edit G Bell 2011              `                                            Page 31 of 34
Glossary and explanations of Operating Expenses — 

1.    Accountancy Fees
      These will be fees payable to your accountant for advice, information, preparation of accounting
      reports and lodgement of taxation returns.

      You should aim to consult regularly with your accountant — preferably every month, but at least every
      three months. Ask for an estimate of the fees for a total year's work and get a bill from the accountant
      each quarter.

2.    Administration/Office Expenses
      This item covers the general administration and office expenses and should not be a very high

3.    Advertising
      Elsewhere in the workbook you will consider your Marketing plan and this will include how you
      intend to advertise. If you have a clear understanding already of what you will do, then get prices —
      space rates, production costs and use those figures. If you do not have a clear idea at the moment,
      allow a conservative figure which might cover a simple brochure, some Internet advertising and,
      possibly, an entry in Yellow Pages — say $2,000. This figure can be amended later when you study the
      market more closely.

4.    Bank Charges
      Allow the initial account and loan establishment charges and the continuing bank fees, state
      and federal duties.

5.    Bank Interest
      This will depend on how much you intend to borrow and under what terms and conditions.
      You probably have a rough idea and can ask the bank for some indication as to how much
      interest would be payable over a full year. Take a 'simple interest' approach — borrow
      $10,000 for these three years at 15%. That is, $1,500 interest for a year. Do your own sums.
      Don't forget to allow interest on an Overdraft if that will be part of your finance package.
      When you calculate your loan more accurately, get definite information from a lender and
      alter the amount allowed for bank interest in the Operating Expenses.

6.    Debt Collection
      Hopefully you will manage credit very well. You will need to implement strategies to manage

7.    Insurances
      First of all you must identify the types of insurance which will apply to your intended
      business. Then you should phone several companies and brokers to get an indication of
      premium rates.
      Common types of insurance are Fire and Burglary, Public Risk, Professional Indemnity, Loss
      of Profits, Partnership Insurance, Cash in Transit.

SYOB workbook   edit G Bell 2011                 `                                                Page 32 of 34
      Don't forget Worker’s Compensation Insurance if you will be employing staff. Remember you
      must carry Worker’s Compensation Insurance if you intend trading as a Pty Ltd company —
      even if you are the only employee.

8.    Leased Equipment
      If you will need to lease any production equipment or motor vehicles, get costs for these and
      estimates of leasing fees from several banks or financiers.

9.    Legal Expenses
      Once you have the establishment phase of the business out of the way, you should not have
      much cause for extensive and on-going legal expenses. Don't include the 'once-off' legal costs
      here. You should have already put them under another expense heading.

10.   Light and Power
      Try to get as clear an estimate of these from your electricity authority. If you intend operating
      your business from home, you should estimate how much more you think your home power
      bill will be.

11.   Maintenance Plant and Fixtures
      Estimate repair costs — especially if you intend buying second-hand equipment. Don't forget
      to allow for regular servicing of equipment.

12.   Motor Vehicle Registration and Running
      Estimate as best possible of running costs that include fuel and maintenance. Registration and
      insurance can be quite an accurate part of this figure.

      If you will be using your own family car for business purposes — how much more will it
      cost? Apportion the total cost between personal and business expenses and just put the
      business part into your figures.

13.   Printing, Stationery, Postage
      This should not be a significant expense, but it depends on the type of business.

14.   Rates and Property Taxes
      Where you intend to rent premises, commercial tenancies do not include Council, Water Rates
      and Land Taxes in the monthly rental.

      Try to get an accurate cost for these based upon a typical property in the area where you
      propose to trade.

      If you operate at home this item may not apply. Check the local council regulations for
      permitted home activities.

15.   Rent
      Get an accurate cost based on a typical property in the area where you propose to trade.

SYOB workbook   edit G Bell 2011              `                                             Page 33 of 34
16.   Salaries and Wages (not your own!)
      You may not intend to employ anyone in business. Maybe you might employ someone
      towards the end of the first year. Allow their full cost for that period — wages, taxes, holiday
      loadings etc. The Trade Association for your line of business can tell you current wage rates.

      Alternatively consider the use of subcontractors or casual employees.

      Why not your own salary? If you trade as a sole trader or partnership, then your reward will
      come out of the profit after income taxes. (If you will trade as a Pty Ltd company, then
      include your own salary at this point — check with your business adviser)

17.   Staff Superannuation
      If you intend employing someone, make sure you know the award superannuation conditions
      which may apply. Calculate the superannuation entitlement. Check and the
      Australian Taxation Office or relevant industry association' for further information

18.   Subscriptions
      Obtain membership of a Trade Association. Magazines and other printed material which keep
      you up-to-date in your business. Opt in to mailing lists on relevant business websites.

19.   Telephone and Internet
      Your best estimate of the rental and cost of calls for the year. Installation of special telephone
      equipment is a capital cost not an operating expense.

      If you intend operating your business from home, you should estimate how much more you
      think your home phone bill will be.

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