how to predict RETURN OF INVESTMENT

[Finona]

My boyfriend and I are planning to put up our little business. We've got lots of great ideas regarding what we want to do and how we're going to manage, we've thought of possible problems and all that stuff.

We were wondering if someone could help us out regarding how to predict our return of investment and how to project the monthly income? Is it enough just to make surveys and ask our target market how much they'd be willing to spend if such product/s were available to them, etc?

[KuyaDanny]

I really wish we knew more about the kind of products you will be selling, but I respect that you have your reasons for keeping things secret.

The approach you suggest might give you an indication of your business's potential revenue. To get an estimate of your actual revenue, you will need to deduct from the potential revenue a figure for "lost opportunities". These lost opportunities will arise from the following reasons, among others:
limitations on capital - if the demand is larger than what your capital can support, you will end up not serving all the potential market;
limitations on execution - your business is new and will most certainly go through a learning phase. During this phase you will be making mistakes and will not operate at top output. This means lost sales;
competitive responses - if you end up uncovering an unserved need, you will attract competition, which will take away some of your business.

[Finona]

Thanks for your help. We really appreciate it.

*sigh* starting a business, no matter how small is such hard work. I knew that, i just had NO IDEA it would be this hard. there are so many things to consider: planning, promotions, deals, legal stuff. its very overwhelming.

[KuyaDanny]

Yes, but you get a great feeling when the business succeeds. Good luck.

[Finona]

I know! :) That's why I'm really pushing for this to work out. Thanks so much again.

[KuyaDanny]

Fellow PExer mac_bolan00 has been kind enough to provide us with a template for preparing a business plan. It might be useful for you. Click on the link below to download.

http://www.qinet.net/user/dannyj/BPlan.zip

You may wish to contact mac_bolan00 by email. Let me know and I'll give you his address.

[aticus]

I think KuyaDanny's right, everything depends on things like your product, your target market, your strategy, your resources, etc. :) I know this isn't much help right now, but I really have no firm details to work with, so I can only give you general advice.

I will say, however, that ROI is about more than just getting profit. You may "earn" a profit of, say, P100 on the sale of a book, but this "profit" may or may not be accurate in determining whether you're maximizing your resources, whether your product can really sustain a full-fledged competitor-blitz, or even the needs and wants of a larger market.

For example:

Say the book you sold cost you P200 to buy. Say you sold it for P300 to your lola (shame on you! :) ). What does this mean? Does this mean you can really make P100 on every book? Does this truly represent your potential ROI per product sold?

I would say no, for a number of good reasons:

1) You may not have accurately assessed the demand for your products.

a) The book may be really popular (such as Harry Potter and the Goblet of Fire), but other books may not be, so if you're investing in a book store you can pretty much be assured that other books you carry won't be as popular and you may not be able to sell them as quickly.

b) People MAY want to buy your other books, but not at a price P100 higher than your own supplier. If you can find that person, so can they. And unless you purchase in bulk, you're actually buying something at retail prices and hoping to mark up that price, assuming no buyer recognizes how expensive your products are.

c) You only sold to a very small segment of your potential target market (your lola), and selling to small groups may not accurately reflect the conditions of the general target market you have. If other book-lovers are pretty mobile, have a good idea of where to buy cheap books, and aren't related to you, then you MAY have a harder time selling them a book P100 over the retail! :)

2) Other costs may not have been factored into your equation. For instance, if you rode with your dad to your lola's place, you didn't pay for gas (which may even amount to MORE than P100 in this day and age). You probably also didn't pay for your vehicle, and there are other costs to purchasing, maintaining and generally even owning it over time (depreciation costs). So that P100 may not even be true "net" profit after all. :)

I can actually list a whole host of other things, but right now I'm scheduled for a meeting so I have to beg off. I'll try to come back sometime later or tomorrow. If you have any kind of detail you can share with KuyaDanny, myself and others in this forum, pls. do so. :) We can help you better if we know even a little bit more about what you're trying to do. You don't have to give away your business "secrets," but you can share some general stuff like what industry you're focusing on, what resources are available to you, etc.

Good luck! :D

[KuyaDanny]

The business plan template by mac_bolan00 has been updated. It now includes a short guide to help you use it.

mac_bolan00 has also provided a guide to basic financial planning and management, now also available for free download. Click the link below:

http://www.qinet.net/user/dannyj/FinPlan.zip

[GARFIELD M]

Originally posted by Finona
My boyfriend and I are planning to put up our little business. We've got lots of great ideas regarding what we want to do and how we're going to manage, we've thought of possible problems and all that stuff.

We were wondering if someone could help us out regarding how to predict our return of investment and how to project the monthly income? Is it enough just to make surveys and ask our target market how much they'd be willing to spend if such product/s were available to them, etc?

Return in investment is simply what you get in return from your investment. This is nothing if you will not have measuring stick as to how profitable you are...
Sabi nga nila pag may tinanim aanihin,,,wag lang bagyo...

Say you put up a sa lugawan ...(mababaw lang ang kaligayahan ni Garfield....

In order to know the ROI(hindi Vinzon) Return on investment...kailangan alam mo ang iyong investment (natural)

Get kayo ng abacus and let us start e---counting...

Kitchen utensils, etc... pati tabo... P 50,000.00
Renovation of the place tables, chairs 75,000.00
Rental deposit for the three months 30,000.00
Miscellaneous..licenses...etc.. 15,000.00
Total 170,000.00

Afer a month of operation...at dahil maraming nagoyong kumain ng inyong lugaw...you average P7,000 a day...ooops uwag muna kaoyng magsaya..hindi pa yan ang kinita ninyo...

Sa 7,000 a day..that is 210,000 a month...alleluya....
huwag munang ngumiti
Pero..may mga expenses kayo....

Siguro may cook kayo...o kung wala man
at kayo ang cook, may suweldo rin kayo ..
dafat lang si va mama...puwede na ba ang ..
15,000
Mga katulong, etc. sabihin mo ng lima at
5,000 AVERAGE..PUWEDE NA BA ? 25,000
tUBIG, KORYENTE 10,000
TRANSPORT ... 15,000
FOOD, SPICE..kahit na ba tubong lugaw yan eh
sabihin nating 50 per cent ng sales (panay
sabaw kasi... 105,000
Rent for one month 10,000

Total 180,000

Ibawas sainyong gross revenue na 210,000
belat...natira lang ay 30,000

hindi na masama tssk tssssk pero hindi pa puwedeng bumili ng chedeng....

Ano kamo ang ang roi ninyo...

eh di 30,000/170,000 o kaya mga 11 per cent///round off na lang ha kasi kulang ang pitsa ng aking abacus...

Ibig sabihin niyan ay kumita ang inyong investment ng 11 per cent sa unang buwan...at kung magpapatuloy itong kita ninyo..sa loob lang ng 6 na buwan...bawi na ang inyong investment na 170,000....ito ang tinatawag na payback ng mga corporate nerd..na binabayaran ng thousand thousand na consultancy fees....

Kung naliliitan kayo sa 11 per cent na balik kada buwan..eh di maging usurero na lang kayo at magpautang at 20 per cent a month..o di alam ninyo kung alin ang inyong pipillin...yong kukuyakoy na lang at naghihintay ng mga pinagpawisan ng mga nangutang sainyo at usurious interest..
pero magbabarbecue naman kao sa impiyerno pag dating ng araw..sabi ng lola ko (sumalangit nawa)o magpawis na kayong magsilbi ng lugaw na mainit at kumita ng 11 per cent...

kayo rin...

siyanga pala kanino ko ipadadala ang bill...
kung may tanong pa kayo..tawagan ako sa aking telepono...

1-800-mag-kano ? :bookish:
:cat:

[GARFIELD M]

Originally posted by Finona
Thanks for your help. We really appreciate it.

*sigh* starting a business, no matter how small is such hard work. I knew that, i just had NO IDEA it would be this hard. there are so many things to consider: planning, promotions, deals, legal stuff. its very overwhelming.
Talagang mahirap magtayo ng business..maraming tanong sa sarili :

unang tanong :ano ba ang produkto mo ?
sagot : lugaw :
ikalawang tanong : sino ba ang papanain mong palengke (target market...stooopid..sabi ng prof ..ko noon...)
sino nga ba ?
aba lintek ang laki pala ng palengke ?

unang palengke :
income bracket...yong mga conyo, mga semi conyo o conyo conyo...

bakit kamo kailangan ito...siyempre para malaman mo kung saan ang pipiliin mong lugar...ala eh..kung ang mga target mo ay mga conyo...hindi mo ilalagay ang iyong lugawan sa 'lugar' ayaw ko ng masikip...ayaw ko ng maputik' na lugar..ito ang tinatawag na "PLACE"...

dahil alam ninyo ang financial capacity ng inyong prospective victims eheste..customers...alamn ninyo kung ano ang lugaw na puwede sa kanilang panglasa...

yong lugaw na may egg ? may logaw na may beeeeycon...may logaw na lumalangoy sa sabaw...ngeekkk etc. etc...

age bracket...mga teenager ba ? mga working pipol ba oo kaya mix...
dahil kung mga teenager...siyempre ang design mo sa eating place mo ay yong mga pang cool people....

lagyan ng ice...eheek....

studenttt ba ? o di siyempre ang pricing ninyo yong can afford ng kanilang kinupit na allowance ni mommy...

hayy naku inaantok na ako...:zzz:

kakain muna ako ng porridge...English yon..

pag sinipag ako..the next p...(product, place, pricing, promotion..pangeeeet...ang di magbasa nito.

:cat:

[Panibago]

:lily: hello!

this thread is very informative.. since i myself is venturing in a new business right now. so, thanks GARFIELD M, KuyaDanny and aticus!! :lovesigh:

*paw* *paw* *paw* *paw* *paw*

[KuyaDanny]

Panibago, don't forget to download mac_bolan00's Financial Planning guide.

[manabs]

I like this thread. It's very informative. I already downloaded the business plan template and the financial planning document (although still have to read them in detail).

Garfield: Dapat magturo ka. Tingin ko magiging "cool" na business prof ka. Literally, lay man na lay man ang style mo e. Galing! :)

[GARFIELD M]

Originally posted by manabs
I like this thread. It's very informative. I already downloaded the business plan template and the financial planning document (although still have to read them in detail).

Garfield: Dapat magturo ka. Tingin ko magiging "cool" na business prof ka. Literally, lay man na lay man ang style mo e. Galing! :)



Salamat Manabs..actually sasabihin ko sikreto ko saiyo...huwag mong sasabihin sa iba...

Triny ko ang paggiging prof.noong nandiyan ako sa Pinas..absent minded nga lang ....
Kaya lang madalas akong taasan ng kilay ng mga beteranong mga prof..dahil sa approach ko...

Isa ayaw kong dinadasalan ako ng mga istudeyante ko ng mga theories galing sa libro...na pareho pareho lang naming binasa...Isa pa ayaw kong magterm paper ng mga topic na nakukuha lang sa libro..

Ikalawa ..pinagtinda ko ang mga istudyante ko ..madalas akong wala sa klase (konsultant kuno)...dahil wala rin ang mga istudyante ko sa klase...dahil hindi ko sila pinapapasok dahil pinagawa ko sila ng producto na puwede nilang ipagbili (actual ha..sa mga bookstore...restaurant...etc.) at bago matapos ang semestre...pinagreport ko sila sa kanilang sindikato...at yan ang naging dahil...

Inimbita ko yong mga tumataas ang kilay at panay ang sumbong sa dean na wala raw natutuhan ang aking mga istudyent...para umupo sa panel at iterrorize ang aking mga istudyent...Noong tumayo sila may libre pa silang promotional items...

Sayang papunta na ako rito sa IStets noon ...and guess what..dalwang istudyent ko rito ang kasama kong nagtayo ng negosyo...hindi lugawan ha...

[Panibago]

:angelwings:

tama ka dyan, manabs. *okay*okay nga ang approach ni GARFIELD M.. kahit na yun tambay sa kanto na nagtitinda ng yosi e maiintindihan sya.:blowsmoke:

but op course, galing din ni KuyaDanny and aticus!! :*)

*paw**paw**paw*