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FINANCIAL PLAN A FEW WORDS OF INTRODUCTION Many telecenter coordinators or managers are not business people. They may be technologists, community activists or educators. Despite this, they will have to approach the running of their telecenters in a business-like way. The following explanations of the contents of the Telecenter Financial Planning Template are included to help you understand what each of the sections and categories of the Plan means and should include. TELECENTER FINANCIAL PLANNING TEMPLATE A Business Plan represents many elements. It includes plans for operations, organizational development, marketing, services and products and, of course, finances. Throughout the course of this workshop we have had a chance to work on many of the ingredients of a business plan (without actually ever calling it that!) In this full day of the workshop we now focus on completing the Financial Plan for our Telecenter. This Telecenter Financial Planning Template has been developed by a team of people who have been involved with telecenter developments for more than a decade. They have worked with telecenters on every continent. The Telecenter Financial Planning Template is provided for you in Microsoft Excel, as well as in hardcopy form. You simply have to enter your estimated costs and projected revenues for the first three years of your telecenter and the formulas that are running behind the spreadsheet will do the calculations for you. If you are using the hardcopy version of the Financial Planning Template a calculator or adding machine will do the same thing. THE CASH FLOWS SHEET Cash Inflows Every telecenter will receive inflows of revenue from at least 2 sources, Financing (or investment) revenue inflows and Operating Cash Inflows. Financing Cash Inflows Equity investment-this might include money that local stakeholders, staff or the telecenter manager invest to help get the service launched. It is money that may be invested with or without an anticipated periodic return on investment but, at a minimum, it is expected to be repaid at some point in time. Loan advances-some might decide to go to the credit union, the bank or some other organization or person to help start their telecenter. Different FINANCIAL PLAN from an equity investment, a loan always has to be repaid over a scheduled period and almost always carries interest. Start-up grants-some telecenters receive initial, one time only, start-up grants from “donors” or other agencies. Sustaining grants-some telecenters also receive contributions from “donors” over the initial span of a telecenter’s life. Sustaining grants generally don’t have to be repaid. Several telecenters in West Africa receive “sustaining” contributions from their organizational sponsors (NGOs, educational institutions, et. al.). Sale of assets- this line is for cash generated by the sale of assets, for example old equipment that has been replaced. Operating Cash Inflows Operating cash inflows are generally self-explanatory. For the purposes of this Telecenter Financial Planning template, it is important to calculate the revenue you expect to receive from different services, to anticipate how you expect that revenue to grow over time and, what new services and products you might add as your telecenter becomes more established and mature. This Template is just that, a form to begin using. There are many novel ways to generate revenue. One telecenter in West Africa found that designing and printing custom, color Christmas cards was an important source of revenue. Another telecenter in East Africa used its television set to invite the community in to watch the World Cup for a modest fee. Your imagination and the responsiveness of your local market are the only limitations here! Be certain to add other operating cash inflows for services that haven’t been included in the initial list and to ignore any of those included on the initial list which you don’t intend to offer! Cash Outflows In business we have to spend money to generate revenue. The idea of this Financial Planning Template is to make certain that you know whether or not your telecenter is receiving more revenue, or income, than it is spending! Purchase of Assets Most times telecenters purchase equipment (or assets) like computers and office equipment. You may either purchase or lease something like a photocopier. If you are purchasing it, include it as an asset. If you are leasing a photocopier or other equipment, then include it under operating costs-equipment leases. Operating Costs FINANCIAL PLAN Again, this should be self-explanatory. Be certain to add other operating costs that haven’t been included in the initial list and to ignore any of those included on the initial list which you don’t relate to your telecenter. An important operating cost is salaries and related expenses. The Financial Planning Template has a separate Personnel sheet to record this information. See below for notes on the Personnel sheet. Cumulative Net Cash Flow This value is calculated based on the information in the rest of the sheet. It is the total of your net cash flows since you began operation. Very often, it takes some time to build revenues to the point where they cover all of the monthly costs. In other words, for the first few months (possibly even longer) you will probably have to finance a revenue shortfall. In the Telecenter Financial Planning Template, a negative number for "Cumulative Net Cash Flow" means you either have to get more financing or cut some cash expenses, or you will run out of cash. Reserve for Capital Replacement Your assets (computers, vehicle, etc) will eventually need to be replaced. For assets that your Telecenter owns (i.e. they are not leased) you will need to save up for that day. Once your Telecenter is generating positive cash flow from operations, you should make an allocation to cover this eventuality. You should plan to have enough money on hand to replace a particular asset when it wears out. Estimate the life of your assets (not forgetting any that have been donated - these will need to be replaced too) and the likely cost to replace them, and plan accordingly. The Personnel Sheet Overhead percentage-Usually, there are personnel costs over and above salaries, for things such as employer's pension contributions, insurance, payroll taxes, etc. For convenience, these are expressed as a percentage of the payroll cost. If you have costs of this nature, enter the percentage of salary costs they represent. The In-Kind Contributions sheet In as much as they represent cash you don't have to spend, in-kinds help you conserve your vital cash. There are good reasons to take account of in-kind contributions. It highlights the very real assistance that has been provided. Also, in recognizing and placing a value on ongoing in-kind contributions (for example free space that you would otherwise have to rent), you become more aware of the additional costs you will have to defray if the contribution were to cease. Enter the market value of in-kind contributions in the In-Kind Contributions sheet. Make realistic estimates where necessary. FINANCIAL PLAN The Financial Summary Sheet This sheet is simply a snapshot summarizing the information from the other sheets.
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