The Meaning . . .
- Economics is the key to business. Business economics is all about the useful deployment of wealth and other resources. An entrepreneur must study the best ways for wealth and resource allocation, their deployment and the management of the same across functions like production, distribution, sales, and services. In other words, the economics of the business needs to be well planned to achieve business objectives in the most efficient ways. An entrepreneur requires to meticulously working the details of every aspect of the business from fund mobilization, business valuation, and risk mitigation to financial planning developing a robust business capable of generating higher returns.
- A mentor at this juncture proves very vital. He helps to explore and take cognizance of all the factors responsible to make the business operational.
Our Mentoring Envisages . . .
- Predictive Cash Flow Analysis
- Predictive cash flow analysis is part of the business plan and projections. Predictive cash flow analysis is the guiding force of the everyday function of the business. Predictive cash flow analysis is the conservative figures, which ascertains definite growth of a business.
- Current Cash Flow Analysis
- To keep a tab on the health of a business, it is important to closely monitor the current cash flows analysis, and re-track / correct the current cash to the predictive cash flow on a weekly basis and/or monthly basis, based on the working capital strengths. A positive cash flow indicates that the business has enough liquid assets to take care of expenses, debts, reinvestment needs etc. negative cash flow indicates that the business does not have enough liquid assets. Hence, cash flow analysis is very important factor to be considered.
- A mentor helps to ascertain the cash flow into the business spread over the years.
- 1-year plan
- 3-year plan
- 5-year plan
- Business economics is driven by numbers. It could be related to cash flow, revenue, expenditure, sales or growth – numbers depict the health of the business. A financial model is a mathematical representation or a spreadsheet model of the real world financial situation of the business. It depicts the future performance expected from the business or its portfolio. Basically, it involves capturing the variables of the business, quantify them and create formulas for those variables. The purpose of financial modeling is to help entrepreneurs take informed decisions based on the outputs of those calculations which are representations of the ‘what if’ scenarios of the future.
- A mentor, through his vast experience and knowledge, will enable the entrepreneur to build a financial model to
- Calculate the cost of capital expenditure
- Enable capital budgeting decisions
- Allocation of business resources
- Creation of business forecasts and
- Competitor mapping.
- Industry comparisons etc.
- Every financial aspect of a business falls within the gamut of financial planning. The sole purpose of financial planning is to the maximize growth of the business, in the long run, taking small steps at a time. It is based on the comprehensive evaluation of the current financial situation and the estimation of the future financial state of the business. Financial planning helps in assessing the adequate fund requirements for the business, monitor cash outflow and inflow, facilitate expansion plans and reduce business uncertainties influenced by market trends.
- A mentor and team, with his insightful projections, will help the entrepreneur do the financial planning and address the following objectives
- Short-term and long-term capital requirements
- Determine the debt-equity ratio – capital structure
- Establish financial policies cash flows
- Ensure the optimal deployment of financial resources for greater returns – maximize return on investment
- Business valuation is the key to the funding of any business. The business plan, substantiated by the strong predictive/current cash flow, ensures the intrinsic value of the share price of the venture. But business valuation ensures the market value of the venture and market value of the share price of the venture (even though the share may not be publicly traded on stock exchanges). Based on the current and share valuation of the share price of the venture, an entrepreneur markets and/or decides the negotiation with every level of investors.
- A mentor will guide an entrepreneur through the industry specific valuation, and the mentor’s team is equipped to transparently evaluate the business. One of the key parameters of one’s business is the share value of the business. Intrinsic and Market value of the business is thumb rule parameter to judge the health of the business.
- Mentor and team also helps the entrepreneur in
- Trademark Registration
- Intellectual Property Registration
- Copyright Registration
- Fund infusion at the right time is another key to business success. In most of the cases, lack of proper and timely funding has led to the failure of businesses in the very first year of their operation. Right from idea generation to transforming the business into a revenue generation entity, funds must be infused into the business regularly to keep the business buoyant. Hence, entrepreneurs are constantly plagued with the question “how do get scale-up funds for the business!”
- Depending on the nature and type of the business, a Mentor helps the entrepreneur to explore the most viable fund option(s).
- The conventional sources are funding are usually
- Bootstrapping (using own funds)
- Friends and family
- Bank loans
- The unconventional sources of funding include
- Crowd funding
- Angel investment
- Venture capital
- Risks are the unexpected events of the business. However, to achieve business success, it is very crucial to anticipate and circumvent or navigate through the risks which may possibly occur in the future. Proper planning and preparation empowers the entrepreneur mitigate business risks. Hence, it is important to identify potential risks, their frequency and the ways in which the entrepreneur proposes to handle those risks.
- To ensure the business runs smoothly, a mentor will help the entrepreneur mitigate business risks by guiding to
- Identify both internal and external risks
- Assess the probability of occurrence of these risks
- Evaluate their potential impact on the business and
- Mitigate those risk with the proposed actions
- Business Internal Asset Management
- Tangible Asset
- Plant & Machinery
- Mentor team will bring in a best practices policy for all tangible assets like machinery.
- Plan out phasing and purchasing, as per the business plan.
- Financial Asset
- Sometimes businesses sit on profit, and does not utilize the profit for best returns, with an in-secured thinking. Mentor team will guide the business, in case deemed fit, to invest in short term and long term returns financial instruments of different nature e.g. shares, mutual funds etc. Thus, generating larger profitability for the business.
- In-tangible Asset
- Intellectual Property
- IPR asset management policy and economics in the following circumstances:
- Completed asset.
- Upgrading asset.
- ‘Work in progress’ asset.
- Market / Business Valuation
- Market and intrinsic business valuation management, policies and economics.
- Mentor team enables a business to bring parity in intrinsic valuation and market valuation.
- Copyrights
- Mentor team will help companies get copyrights from the sanctioning authority.
- Loyalty Rights
- Business either charge or pay loyalty rights to use their name or brand. For example – Franchisee model.
- Management, policies and economics of loyalty rights add to the asset value of a business.
- IPR asset management policy and economics in the following circumstances:
- Intellectual Property
- Plant & Machinery
- Tangible Asset