N4 Entrepreneurship & Business Management 3 Leasing


Certain companies allow you to “lease” equipment and vehicles from them. It means that you pay a fixed amount per month to use it for a particular period. The assets are returned to this company once the lease expires.


4 Hire purchasing Your business enjoys the immediate use of the asset, while monthly payments are made and after a determined period you receive ownership. A deposit is usually required.


PAUSE FOR THOUGHT


Both leasing and hire purchase costs are part of your monthly fixed costs.


5 Trade credit Trade credit is a very popular method of financing your stock. Your suppliers allow you to buy stock while they require payment only after 30 or 60 days. It gives you time to sell the stock before paying them. This is a cheap way of financing your business since they will only charge you interest if you are late with your payments.


Determining the sales figure (turnover) is one of the most difficult aspects that any business has to contend with. You cannot calculate this accurately because you are dealing with the future which is an unknown quantity.


5. Sale forecasting and sale scenarios


What you have done this far is: • You have completed your market feasibility and calculated your potential market share. This tells you what should happen.


• You have calculated your break-even point. This tells you what your minimum sales should be to make a success.


What you still can do:


A forecast is a prediction that you make about the future. The question is whether other factors might influence your sales forecast. In other words, you predict future possibilities. Possibilities that might influence your sales are: • Cost price of your product or service • Have you costed your product correctly Your selling price is partly determined by this, which in turn will affect your sales.


• Suppliers Will your future suppliers supply you with the right kind of products and will they be on time? If not, then you might lose some sales. Your sales forecast will again be wrong.


• Competition


Is the competition going to be tougher than what you expected or are there more than what you were aware of? This will definitely affect your market share.


• Selling price


Do your customers (target market) accept your selling price? Maybe it is too low or too high. Your sales will be affected both ways.


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