Financial Planning Salaries by Chad_Cataman

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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
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           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
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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.
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The Financial Summary Sheet

This sheet is simply a snapshot summarizing the information from the other sheets.

								
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