By Hoge at July 23 2019 09:33:25
There is quite a bit of calculations and you should know a little about business principles but it isn't that complicated. So first let's look at figuring out your future needed sales with this formula: Projected sales = fixed expenses divided by Ƒ_(var exp % of existing sales + mat cost % of existing sales + lab cost % of existing sales + desired net prof %)) So, let's say you existing sales is 迲ꯠ annually, your fixed expenses are 足ꯠ, variable expenses is ็ꯠ or 6Ǒ% of the 迲ꯠ, material cost is 趌ꯠ or 27ǔ%, labor cost is 贍ꯠ or 12ǔ%, and your existing profit margin is 赏ꯠ or 20ǒ%. Now let's say next year you want to have a profit margin of 25% so what would your sales need to be to give you that profit margin? Now you might think you would simply tack on 4ǐ% more to sales ྐྵ% _ 20ǒ%) and you would have it. Well not quiet. it doesn't work that way because you are going to have the additional variable expenses, material cost, and labor cost too. Remember, the more sales the more each of these expenses and cost will be.
Production Operation _ If a product must be manufactured, what is the process? Will the work be done on_site or subcontracted? Who are the subcontractor(s)? If on_site, what space, equipment, machinery, production employees are needed? What suppliers are needed? Who are they? How will quality be assured? What is the anticipated production output? What established credit lines do you have? Possible Data Sources: local Chamber of Commerce; yellow pages; trade associations.