The plan: finance and operations

Finance

The finance section answers: what will it cost, where does the money come from, and how much do we need before we start?

Costs

• Start-up costs — everything paid before the first sale: ingredients or materials for the first run, equipment, printing, permits.
• Fixed costs — costs that do not change with how much you produce: a stall fee, a hireage charge, printing the posters.
• Variable costs — costs that rise with each unit: ingredients, packaging, per-item materials.

Unit cost

$$\text{unit cost} = \frac{\text{total fixed costs}}{\text{units produced}} + \text{variable cost per unit}$$

• You need this figure to set a price deliberately, and you need it again in the review to explain what happened.

Revenue and surplus

• Revenue = price × units sold.
• Surplus = revenue − total costs. Community activities often use "surplus" rather than "profit", because the money is usually going to a purpose rather than to owners.

Start-up funding

• Something must be paid for before any revenue arrives. State where it comes from: a school float, sponsorship, a member contribution repaid from revenue, pre-orders.
• Pre-orders are the single most useful funding technique available to a student activity — customers pay before production, so the activity funds itself and you know the quantity to make.

Cash flow

• A simple week-by-week table of money in and money out, showing the lowest point. Profitable activities fail when they run out of cash before the revenue arrives.

Records

• Decide before cycle one: who records each sale and each cost, and where. Reconstructing figures afterwards from memory is how a review turns into guesswork.

Operations

The operations section answers: how is the good or service actually produced and delivered?

The production process

• Step by step, in order, with who does each step and how long it takes.
• Choose the process deliberately: batch production for a run of identical items, job production for made-to-order.

Schedule

• A timeline with dates: preparation, production, delivery, and — critically — the cut-off for each decision. When is the last moment you can change the quantity?

Suppliers and materials

• Who you are buying from, at what price, with what lead time, and what the alternative is if they let you down.
• Ask about a community or bulk discount. Local businesses supporting a community activity frequently give one, and it is the fastest way to lower unit cost.

Quality

• The standard the product must meet, and who checks before it goes to the customer. In a food activity this is not optional.

Health, safety and compliance

• Food handling requirements, safe use of equipment, supervision, site access and permission, and insurance if required.
• Under kaitiakitanga, plan waste as well: packaging, leftovers, and disposal.

Contingency

• The three or four most likely disruptions with a stated response. Late supplier, low turnout, weather, absence.