Years one and two - Working out what to charge

Due to the distinct lack of Bank funding available We are looking to grow this business organically which means borrowing no money initially.  This way we can establish a reputation and an order book before we think about approaching any investors or banks for funding to grow the business at a faster pace in year 2 to 3.


We are realistic about the time it will take to establish ourselves and the aim would be to start finding live briefs and entering competitions whilst still at University.  We have also discussed the fact we each may have to get another part time job to support ourselves in year one and two.


  
Year one is based on using the Virtual Office support at The Unit in Leeds and also working from home. This would provide us with a city address, 10 hours meeting room a month, business mentoring and hot desking facilities as well as use of the City college facilities. We would supply all our own equipment and only buying one Mac Book as a spare.  


Year two is based on us upgrading our Virtual office rental to an actual office space in the Unit.  this would avoid the need for costly upheaval and keep continuity with our customers.

So in Year one to break even and pay each team member £20,000 each we would have to achieve a turnover of £99,516.  Even if we did not pay our salaries in the first year we would have overheads of £ 11,756to cover.


In year two to break-even, rent in Leeds (on a shoe string) and earn £25,000 we would have to achieve sales of £123,750.  Our overheads included in this are £14,050.


These figures are quite sobering especially as this is cutting the budget to the bone and relying on us using our own equipment initially.