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The Magic Cafe Forum Index » » Tricky business » » Business expenses (0 Likes) Printer Friendly Version

xxxRoyxxx
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218 Posts

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When figuring ones expenses per month, is it a good idea to use prices from a group of ones current suppliers (assuming their prices or business wont change) or should one figure the average price from many suppliers on the market? ROY
Paddy
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Milford OH
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Use the prices you actually pay to figure expenses. Remeber that the "Inland Revenue Service" (UK) or IRS (U.S.) or whatever Canada calls its tax dept. looks askance at anything that might get the "Pulitzer Prize for fiction." They only want what YOU paid out in expenses.

Peter (Who has had this discussion with the IRS before and did not come close to winning)
Non Impediti Ratione Cogitationis

I reject your reality & substitute my own

http://www.Scho-Lan.com
xxxRoyxxx
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Actually, I mean when I am trying to make a plan for expenses in the future, as opposed to expenses I've already made. You know, for a business plan. ROY
Chrystal
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Canada/France
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Hi Roy,

I once was fortunate enough to be one of those selected for an business grant by the Canadian Federal Government. It allowed me to go to business college and also have the financial support for an entire year while taking part in the program. One of the requirements was to have a five year business plan. I found this a bit difficult as it's hard in my estimation to quess future income and expenses. Ironically, it required a potential applicant to have the business plan completed BEFORE admittance in the program...and not during when those of us chosen would be more knowlegable about them.

If I remember correctly, (as this was in 1999) , the advisors of the program asked that we just make a fair estimate based on our current market prices. You also have to take into consideration that your shows will increase but that in turn means so will your expenses. As this was my weakest point and one that I had the most trouble with, I ended up hiring someone to just help me with that portion of the business plan and completed the rest myself to cut down on cost. I think it was one of the best things that I did. Sometimes it pays to hire an expert consultant.

My business plan was 33 pages, and again if I remember correctly, it covered all my inventory, strategic aliances, potential future customers, pages on knowing my competitive market ( for example how many other entertainers that did something similar in my area), 17 letters of reference from well known organizations (I think this helped enormously in convincing the commitee that I should be chosen, and a future 5 year forecast. I searched at the library on Stats Canada and found out how many people with families lived in the three municipalities closest to me, how many schools, libraries, community centers ..ect..were in those areas and based on estimation how many functions those organizations held yearly - (potentially to show my future market). Banks look favorably at those with business plans that show a need for the service one is providing and letters of intent from future clients.

Once you've estimated how many shows you are likely to do and have an idea on how much cost to you is involved per show, gas, and other expenses for example, then you can make a better estimation on future income and expenses. I based this on how much increase I had in business my first year compared to my second..as long as you don't have an outlandish number and it sounds reasonable to the bank or Revenue Canada it should be okay. Revenue Canada also allows you to be in the RED either your first 3 or five years of a new business. The first year of operation for my new business I made 17,500.....lol but paid out 17,000 in expenses! This however included sometimes one time purchases...like business equiptment..phones, computer, desk, props, business cards,costumes...etc...and not necessarily yearly purchases but start up cost.

Hope that helped and good luck!

Chrystal
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