This is an extract from the ‘how to guide’ but is pulled out separately as many people have specific difficulty with income projection, being more comfortable with estimating costs. The exercise has 3 primary steps and is in simple terms. It can be downloaded from the ‘Resources’ page and is in pdf format.


I developed this guide to assist those on my ‘Start your own business’ programmes to help them get a handle on what and how to project. It covers:
• some simple rules on how to project figures,
• how to project turnover or sales figures
• The different types of costs: materials, set up, fixed and variable
• How to write a cash flow projection
• How to write an income statement
• How to work out your breakeven sales figure
• The contents of a balance sheet
• Practical exercises on much of the above

It can be downloaded from the ‘Resources’ page and is in pdf format.


December 31, 2010

I have added a new ‘Resources’ page to the blog. On this page I will gradually add a series of documents, exercises and links that are proffered as an aid for entrepreneurs and nascent entrepreneurs. As each document is posted I will put out a separate post.

May I take this opportunity to wish everybody a very Happy New Year and a very successful 2011. Even in an economic downturn there are winners and losers. Lets be the winners in the year to come!

I promise to get back to enterprise soon but with today’s Irish budget being the topic of the day I wanted to point out the futility of the exercise. The Irish government wishes to save €6 billion today; roughly €2 billion in tax hikes, €1.8 billion in reduced capital spending and €2.2 billion from reduced day-to-day spending. So how much will they actually save in real terms today: €722 million or less than three-quarters of a billion euros.

Don’t believe me, then let’s do the maths:

Expected government spending in 2011 €52 bn
Pre budget expected tax take €33 bn

Pre budget shortfall for day-to-day spending €19 bn

Government budget adjustment € 6 bn

Post budget borrowing for day-to-day spending €13 bn

So, how much is it going to cost to borrow €13 billion? Well, we now will borrow from the ECB/IMF fund at 5.8% over 7 years or a total interest to be paid of 40.6% over the time of the loan.

Interest payments on €13 bn from IMF/ECB Fund € 5.278 bn

Intended Government adjustment € 6 bn

Real saving from budget € 0.722 bn

Put another way, the interest payments on the money we still have to borrow almost makes up the amount of savings and tax increases made in the budget. It is a classic crowding out effect and demonstrates what happens when try to deal with serious fiscal and economic crises in a bit-piece manner rather than dealing with the real problems properly. All that the budget today will achieve is a short-term cash-flow benefit in 2011 as we will pay the loan back over 7 years but what appears completely lost on those advocating this piecemeal approach is that it will become a negative cash flow effect on the budgets in 2012, 2013, 2014, 2015, 2016 and 2017.

And we wonder why the bond markets are not taking the budget seriously?