The film has case studies of two very different types of business, explaining how they manage their finances.
CASE STUDY 1 TOSSED:
Tossed is a salad bar chain specialising in "healthy eating". It was founded by twenty-something entrepreneur Vincent McKevitt, who's determined on a course of speedy expansion
SOURCES OF FINANCE: Before you can do anything you need money. So where did Vincent get the money to start Tossed? He avoided selling equity in his business, relying instead on loans from wherever he could get them.
CASH FLOW: Tossed has to estimate how much money they'll get in and, vitally, when they think they'll get it - the essence of cash-flow. They also have to predict what they're going to have to pay out, their fixed and variable costs.
BREAKEVEN: Breakeven is when you're getting enough money in to your business to cover money going out - the point beyond which you'll go into profit. There's a breakeven figure for Tossed as a whole, of course, but there also breakeven figures for each outlet, too - essential to Vincent's plans for expansions.
PROFIT & LOSS: Vincent wants to do more than just survive - he wants to make a profit, and to know how much profit he's making. There are two main kinds of profit - the gross profit and the net profit. The balance sheet and the profit and loss account provide a guide to the financial health of the business.
| | CASE STUDY 2 SRA:
The Southside Rehabilitation Association is a social enterprise. It helps people with mental health problems to get jobs. To do this, SRA runs a number of small businesses, including a print shop and a café.
SOURCES OF FINANCE: As a social enterprise, SRA's sources of finance are a bit different from your average business. It gets money from undertaking contract work for primary care trusts as well as income from its businesses.
THE BUDGET: A budget is basically a list of things you want to spend money on, together with the money you plan to spend on them. It includes estimates of both the money SRA will need to spend and the money it thinks it'll get in, and it's important to be as realistic as possible.
CREDIT CONTROL: Making sure it gets its money in on time is vital to SRA's cash flow. But not every one pays on time. Some don't pay at all! That's why it has to have an efficient system of credit control. SRA's computer system has a standard feature to track down those slow-paying customers, also known as "aged debtors".
THE NEED FOR CONTROL: The most important thing a good financial system gives you is control of the business. SRA's general manager Stephanie Correia says she couldn't run the business without their financial system. |