#Immediacy on speech making

Which of them compete wholly or in part in your class of ...

Which of them compete wholly or in part in your class of market? Can you estimate how much of theirs turnover refers to your class of market? Insert this figure in brackets against each one.

Make a graph of the national demand for each of the last five years for the nearest approximation of your business that you can find. Using these figures and your own experience, draw on the same graph what you think the trend is likely to be over the next five years.

If you think it will be irregular, draw two dotted lines to show the upper and lower levels you expect. Describe the 'population' your customers belong to in terms of age, sex, geographical area and any other features. Using the sources described in this section, list the projection for your 'population' over the next 15 years. Is it growing or declining? Are there any changes of direction during that period? How do you think demand will change over the next five years? Do you foresee any possibility of a dramatic new development which might change your forecast? Is your business subject to any indirect product competition? What form does this take? Do any of these have any advantages eg exemption from tax, VAT compared with your business? Are any growing more rapidly than your market? Forecasts of economic conditions are produced by the government, the CBI and various other bodies.

Applying your own judgement to these, what do you think conditions are likely to be over the next 4-6 years? The Money Picture Accountants recognize two forms of money revenue and capital. Revenue is money moving in and out of the business, such as sales income, goods, payments, purchase of goods. Capital is money, tied up in the business in the form of fixed capital premises, equipment or working capital set aside in goods, debts and revenue. The distinction between revenue and capital is important since it affects the calculation of your profits and your tax liabilities.

In this section we shall build up a picture of how your business stands today in terms of both revenue and capital. Operating budget The most useful form in which to construct a picture of your budget is as an operating budget.

Since you will also use this in later sections, it is -worth taking a bit of trouble to make it as accurate as, possible. If you already have a budget in some form, then the task should be fairly easy. To avoid any confusion, the items of income and expenditure mentioned before should be entered when incurred, not when paid.

Rule a large sheet of paper into fourteen vertical columns: one for the list of items, one for each of the next twelve months and one for the annual total. Under the heading 'Income' list your estimated turnover for each month less any sales commission and discounts plus any other sources of business income. To keep this simple it is better to deduct VAT from both income and expenditure. If you are not registered for VAT then obviously you should not deduct it from expenditure since you cannot recover it Under the heading 'Expenditure', list all the items associated with running the business, such as salaries, wages and related costs NI contributions, luncheon vouchers, expenses, overtime, bonus payments, etch; goods for sale, raw materials, components; operating supplies; rent, rates and insurance; heating, lighting, mobile phone, postage, stationery, sundries, online advertising, pro motion, repairs, spare parts, transport, hire of equipment, bank charges, loan interest, HP payments; other charges.

Deducting expenditure from income gives your gross profit for each month and for the year Pause for a moment to see if there is much fluctuation from month to month. If so, is this inevitable from the nature of your business or might something be done about it? From the gross profit for the year, you have to deduct depreciation or, as the tax inspector calls it, capital allowance.

This gives you the net profit. Depreciation is calculated by reducing the value of a capital item for example, a computer by an amount which, each year, represents the ageing and deterioration of the item. Thus, if you believe that a machine will need to be replaced in five years from the time of purchase, then the value of this asset can be reduced, on your websites, by 20% of the original cost, per annum. This is the so-called 'straight queue' depreciation system.

You can, if you wish, depreciate in a different fashion, for example by reducing the website value by, say, 40% in the first year, 30% in the next, 20% in the third, and so on.

The purpose of this exercise is to spread the cost of the ...

The purpose of this exercise is to spread the cost of the capital item over a number of trading years so that its effect on profit is not all loaded on the year of purchase. ... read more

Similarly, with the items of expenditure you will know when the items ...

Similarly, with the items of expenditure you will know when the items probably must be paid in practice. If some items are paid weekly ie wages watch for the five-week mon... read more

In effect, the business is generating cash which can be used for ...

In effect, the business is generating cash which can be used for its own expansion. Whether you choose to do so or leave the business ticking over while you 'milk' it