startup programme student - jayeapps.comshare.jayeapps.com/uploads/2b5c42b673bdf8d8980a4272e...an...

StartUp

Programme

Student

Company Name:

AN INVESTMENT IN THE FUTURE

By accepting the challenge of participating in Junior Achievement Portugal StartUp Programme, you are demonstrating the commitment, motivation and practical ability that is vital to the Portugal’s future success. The StartUp Programme experience will build your self- confidence and help you to understand the importance of teamwork and the responsibilities of running a business.

Many of the country’s leading organisations are helping to make this possible for you. They provide.the financial support needed to bring the StartUp Programme to students and they encourage members of their staff to volunteer as Business Consultants to StartUp Programme Companies, sharing their enthusiasm, knowledge, experience and ideas.

They make this investment on your behalf because they recognise the importance of understanding business and developing the skills and knowledge that will enable you to manage the Portugal’s industries, lead key organisations and create new businesses for the future.

They wish you every success. Enjoy your Junior Achievement Portugal year!


Welcome to the Junior Achievement

Portugal StartUp Programme

The Junior Achievement Portugal StartUp Programme is not a business game but a real business experience. Through the StartUp Programme you will discover for yourselves how a company functions. You will develop new skills such as; working as part of a team, leadership, influencing others, building relationships, business planning, financial management and control, taking responsibility for the actions you take and recognising the need for commitment to quality and customer satisfaction.

As a StartUp Programme participant you take a shareholding in your own company. You may also sell shares to others to raise the funding to start your venture. You will build your understanding of various models of business structure but will adopt the Junior Achievement Portugal “limited company” business model and become a company director. You and your fellow directors find a business opportunity and launch a new company to maximise the opportunity you have chosen. You then successfully wind up the company within the academic year. Your company will produce a final report and present your final results to a Shareholders Annual General Meeting at the end of the year.

Experience gained through the Junior Achievement Portugal StartUp Programme is valued by employers and universities. Your Student File guides you through the experience you are about to embark upon. Use the contents of this File and any other material that you feel is appropriate to assist you in your role in the company. The Junior Achievement Portugal philosophy is about ‘learning by doing’. This experience provides a unique opportunity for you to build your skills and knowledge in all areas of business. Use the opportunity to add strengths to your existing capabilities, and to share your experiences with other team members.

THE BENEFITS OF THE JUNIOR ACHIEVEMENT PORTUGAL EXPERIENCE

Whatever you decide to do in the future, being an active participant in the Junior Achievement Portugal StartUp Programme will give you invaluable practical experience on which to base your career choices. It will show you that no matter who you are or what you choose to do, “enterprise” is not merely a subject of study but can become an attitude to life.

Set out overleaf are some of the skills you can develop during your time in the StartUp Programme. It is expected that all StartUp Programme Students will have the opportunity to develop communication, decision-making, negotiation, organisation and time management skills. Some students will fill specialist roles within the company, such as Marketing Director or Company Secretary and will therefore have an opportunity to develop and demonstrate specific specialist skills. It is possible that each company member will have to take on a range of roles in order to cover all of the functions within your company.

KEEP THIS FOLDER

Your Student File is for you to keep. You should use it to hold all your papers and as a vital reference document for all meetings. Keep a record of all you do in your company.


Junior Achievement Portugal

StartUp Programme

Key SKills/ Experience Profile

Listed below is a range of skills and experiences that can be acquired through your experience in the Junior Achievement Portugal StartUp Programme.

TEAM WORKING •Take part in identifying and agreeing the team’s objectives. •Agree each team member’s task and report on own tasks. •Work effectively with others and support them to reach goals. •Plan to use own and colleagues’ time effectively.

PROBLEM SOLVING •Identify and analyse problems . •Choose solutions and implement procedures appropriately .

COMMUNICATION •To take an active part in meetings and discussions. •Negotiate with others effectively to agree objectives and procedures. •Interact successfully with customers and colleagues. •Produce clear and concise written work using ICT as appropriate. •Make presentations using appropriate techniques and ICT.

MARKETING AND SALES •Create and carry out a market research plan. •Identify customer target groups and develop the appropriate marketing approach. •Choose appropriate marketing and sales strategies to sell and distribute to target groups. •Maintain good public relations with suppliers and customers.

OPERATIONS •Define resource needs, quality standards, legal requirements and Health and Safety requirements. •Set up procedures to meet operational targets. •Develop evaluation systems. •Maintain systems to meet quality standards. •Evaluate environmental impact.

FINANCE •Identify financial resource needs and fund these from various sources. •Use budgetary information and justify expenditure on projects. •Record financial information using ICT as appropriate. •Select strategies to improve financial performance. •Carry out a financial audit.


HUMAN RESOURCES AND TRAINING •Understand Human Resources requirements and set up systems to meet them. •Identify training needs and solutions. •Seek and make use of feedback to improve performance and motivation. •Use self-assessment procedures and review personal objectives. •Develop a personal Learning Log.

DIRECTING AND MANAGING •Managing a complex set of tasks in an uncertain environment. •Managing colleagues, business consultants, stakeholders, customers and building effective relationships. •Managing information and data, interpreting its meaning and communicating to others such that they can act appropriately. •Directing individuals, teams and/or tasks to achieve agreed goals and targets. •Negotiating with others and influencing the outcomes of the company.

LEADERSHIP •Demonstrating the ability to lead at appropriate times and level within the company. •Encouraging colleagues to achieve their full potential in the way they contribute to the company’s overall performance. •Pulling the company together in times of crisis. •Never loosing sight of the ‘bigger picture’.

ENTREPRENEURSHIP AND NEW VENTURE CREATION •Understanding entrepreneurial approaches to business and applying them within the company. •Acting entrepreneurially and encouraging others to develop entrepreneurial attributes. •Understanding how the key business functions interrelate and impact on each other throughout the venture creation process. •Understanding and managing the important influences on a successful business start-up process.

LEARNING •Improving the ability to learn from everyday experiences. •Applying the process of reflective learning and thinking. •Understanding key learning preferences and how to engage in these more effectively. •ldentifying personal learning needs and solutions.


It’s in your hands how to run a

Junior Achievement Portugal Company

The StartUp Programme is designed to give post-secondary students the opportunity to experience the exhilaration of running their own company, giving them an insight into how their talents could be used to set up in business for themselves. StartUp Programme students gain real experience of the world of business: creating and researching a business plan, developing an Investment Proposal, taking responsibility and being accountable to their shareholders for the running of the company. Through this program students develop attitudes and skills necessary for personal success, Iifelong learning and employability, plus an understanding of how business works; gain an insight into self employment, business creation, risk taking and coping with adversity, with advice and support of business consultants available.

Although students may focus their work mainly on the Business Plan and the Investment Proposal, we encourage them to run a company in a “real life” situation to gain an understanding of the relationship between effort, good management and success.

Unlike the Company Programme for secondary schools, which emphasizes process and teamwork, this is a programme which focuses on developing viable and sustainable business ideas with real investment potential - it goes beyond the basics of doing business, and challenges participants to find a truly marketable product. The financing of the enterprise is Key. At the end of the school year the companies will participate at the National Competition, and the winner of this Competition will represent Portugal at the Junior Achievement European Competition. The students will present their companies as if they were trying to raise financing from investors and one of the evaluation criteria will be their Investment Proposal.


STUDENT FILE CONTENTS

Page

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Who can take part in the Junior Achievement

Portugal StartUp Programme?

The StartUp Programme Company explained

Running your StartUp Programme Company

Winding up your StartUp Programme Company

Financial Management

1

2

5

15

17

Appendix 1

Appendix 2

Appendix 3

Appendix 4

Appendix 5

Appendix 6

Glossary

The Function Director Roles in a Junior

Achievement Portugal Company

Responsabilities

StartUp Programme Learning Log

Key Calendar Dates

Operational Timetable

33

38

99

103

109

110


CHAPTER 1

Who Can Take Part in the

Junior Achievement Portugal

StartUp Programme?

The following conditions apply to membership of StartUp Programme companies

EQUAL OPPORTUNITIES

Participation in any Junior Achievement Portugal Programme is open to everyone regardless of race, culture, creed, gender or ability.

MEMBERSHIP

•

• •

•

•

Junior Achievement Portugal StartUp Programme Students shall normally be between 18 - 25+ years of age at the date of Registration. Each student must own one or more shares in their company. Each student shareholder is entitled to one vote on matters of company business irrespective of how many shares they hold. Other shareholders, such as parents, friends, lecturers etc, are only entitled to vote at the Annual General Meeting. Participation of students should be entirely voluntary.

ABSENCE

Any student who is absent from three successive meetings of the company shall automatically forfeit membership, but may be reinstated by a majority vote of the Board of Directors. Circumstances such as illness should be viewed sympathetically.

DISMISSAL

A student may be dismissed by a two-thirds majority vote of the Board of Directors.


1

CHAPTER 2

The StartUp Programme

Company Explained

Junior Achievement Portugal StartUp Programme companies are real enterprises. Taking calculated risks and responsibility for decisions and actions forms an essential part of the programme. When setting up a business you would typically have a choice of business structure and legal status. Many individuals starting a business would in fact become self employed as sole traders. For these types of businesses typical formats would be either partnerships or limited companies. Alternative ownership structures could also include co- operatives and some employee share-ownership schemes.

In developing the materials for StartUp Programme, Junior Achievement Portugal has considered carefully the form your business should take in order to provide you with the best practical business experience whilst still at University. At the end of the Programme, Junior Achievement Portugal wants the learning process to have been as comprehensive as possible. For this reason, it has adopted what is broadly a limited company business model, in which you become a director.

The key point to bear in mind, is that in running a business, whatever the scale, product or service, there are common functions which need to be understood. This limited company business model enables you best to appreciate the functions and the overriding need in business to work as a team and to understand how the various functional roles impact on each other and relate to people and organisations outside of the business.

IN SUMMARY THEREFORE, STARTUP PROGRAMME COMPANIES:

• •

•

are real enterprises; are organised broadly along the lines of a limited company, but are legally “Branches” of Junior Achievement Portugal; differ in structure to a limited company, in that there is no separate board of directors elected by shareholders. The company is given the dual responsibility of managing the business and directing the company.

In a limited company, liability is limited and directors and managers are not personally responsible for debt. In your StartUp Programme Company however, you are jointly responsible to Junior Achievement Portugal for any debts you might incur. Your business consultants are there to minimise any risks, but you are ultimately responsible!

2 © Junior Achievement Portugal

JUNIOR ACHIEVEMENT PORTUGAL SHARES

In order to finance the startup of your company you have the opportunity to sell shares in it.

You are not allowed to own shares in on amount superior to 40€. Only 2 members of your family are allowed to buy shares, and the total amount can not exceed 80€ Each company owns 100 shares that vary from 2 to 4 euros.

These shares may be sold to anyone, but all company members must own at least one share. Anyone can be a shareholder but it is usual to sell shares to friends, other students, relatives, lecturers, tutors and Business Consultants.

All students who are company members and form the Board of Directors are entitled to one vote, irrespective of the number of shares held. Shareholders from outside your company do not have a vote in company matters at regular weekly or monthly meetings. They are, however, entitled to vote at the Annual General Meeting (AGM) just prior to the winding up of the company. They are also entitled to receive the return of their initial investment plus any dividend agreed by the AGM.

MEMORANDUM AND ARTICLES OF ASSOCIATION

The Memorandum and Articles of Association of a Junior Achievement Portugal company do not have legal force, but must be treated by the participants as the formal documents which represent the company constitution and govern the conduct of its affairs. Students must subscribe to the Memorandum of Association by entering their signature on the appropriate page.

COMPANY SIZE

Junior Achievement Portugal Company operate with four to seven (4-7) students.

BOARD STRUCTURE

From within your group you need to elect a management team of “Function Directors”. The structure will depend on the number of students in your company but it is recommended that it will consist of: •Managing Director (Chairs meetings) •Operations Director •Company Secretary •Finance Director and Deputy •Sales Director •Human Resources Director •Marketing Director •Information Technology Director

It is possible that you will not have enough company members for one individual to take on each of these roles, so think about which are essential to your company and which you feel could be doubledup (i.e. one person takes on two or more roles).

Should the company wish, and numbers allow, additional directors may be appointed e.g. if you chose to produce a magazine you will probably require an Editor and Advertising Manager.

Each of the above may have a deputy and any remaining members of the company will then form part of the Sales, Marketing or Operations Teams and work with the appropriate Director.


3

All elected directors or deputies must offer themselves for re-election at an agreed stage in the company’s life and all company members are entitled to stand for election for any position at that time.

CONTRACTUAL LIABILITIES

All contracts, orders, cheques etc valued in excess of €200 must be countersigned by a Business Consultant or in his/her absence, an Enterprise Tutor.

FINANCIAL SUPPORT TO STARTUP PROGRAMME COMPANIES

The basic principle of the StartUp Programme is to encourage students to run a company in a “real Iife” situation to gain an understanding of the relationship between effort, good management and success.

While it is often tempting for corporate and other supporters of Junior Achievement Portugal to donate monies to students to help them start their company it may undermine our principle of a “real” experience.

The following points provide a guide to how financial support can or cannot be applied. •Straightforward sponsorship or donations to Junior Achievement Portugal companies are not allowed except as a contribution towards Junior Achievement Portugal. •Junior Achievement Portugal companies can of course enter into a commercial agreement with a company to carry their logo or advertising on a product at a price. •Sponsorship of special events or trips is actively encouraged, e.g. a team planning to take part in a Regional or European JÁ Trade Fair may seek sponsorship to cover the costs of taking part. This type of funding must be clearly indicated in the company’s accounts. •Corporate supporters may become a shareholder within the rules of Junior Achievement Portugal shareholding. •Donations by the university or by a previous year’s StartUp Programme Company must be treated in the same way as sponsoship or donations (see first bullet point above). •If a corporate supporter university or StartUp Programme Company is eager to fund Junior Achievement Portugal locally they should be encouraged to donate funds to the activities of the local Junior Achievement Portugal Boards as the most effective way of supporting more students.

If you have any queries about financial support which cannot be answered locally please do not hesitate to get in touch with Junior Achievement Portugal National Office.


CHAPTER 3

Running your StartUp

Programme Company

GETTING STARTED: THE FIRST FEW WEEKS

The StartUp Programme Business’s Support Team

You will be supported in running your company by a team made up of mentors from local business, who will act as Business Consultants, and an Enterprise Tutor who will act as the link between your work on the StartUp Programme and the university.

Business Consultants

A Business Consultant may lead the weekly meetings until the Managing Director and the rest of the Team feel they are ready to take on their full responsabilities. The Business Consultant then hands over the reins of the Company to the elected Managing Director.

The role of the Business Consultant is to counsel and guide, not to lead and direct. You need to understand this, as your Business Consultants are not there to run your business for you. They will allow you to make mistakes and to learn to cope with difficulties as they occur. This is all part of the learning process. They will, however intervene if things are going badly wrong or safety is at risk.

The most powerful learning often comes from failure. It is important to understand how failure occurs, so that it is not repeat, and how success can sometimes be achieved from what at first sight looks Iike disaster.

It is vital that Business Consultants are involved in all stages of the life of your StartUp Programme Company.

If it happens that your Business Consultants do not attend regularly, you and/or your Enterprise Tutor should contact your Junior Achievement Portugal Area Board.

Enterprise Tutor

The role of the Enterprise Tutor is complementary to that of the Business Consultant and important to the successful running of the StartUp Programme. However, it is a different role. It is a facilitating rather then an advisory role.

The Enterprise Tutor will raise the awareness of university colleagues of the work of the StartUp Programme, provide a link between the Business Consultants and the university, support and encourage the students and identify links between their work on the StartUp Programme and other aspects of the curriculum.


5

STAGE ONE: FINDING OUT AND REGISTRATION

The Business Consultants

At the first meeting the Business Consultants and Enterprise Tutor introduce themselves, and say a little about their own jobs and their roles in the StartUp Programme. It is important that good communication is established swiftly, and that a close relationship is formed between students and the support team.

The Students

You are asked to introduce yourselves, and say a few words about your interests, ambitions and what you hope to get out of your involvement in the StartUp Programme.

The Basic Guide to starting your Junior Achievement Portugal Company

You are issued with copies of “The Basic Guide” which you should read through carefully. It is a useful guide to the first week or two of running your company. The guide assumes little or no knowledge across all aspects of creating and managing a new company.

The Basic Guide fills the time gap between your first meeting, where you consider forming a Junior Achievement Portugal StartUp Programme Company, and the point at which your company receives its full StartUp Programme Kit including a copy of this file for every registered student. If you have not already registered (and this is not your own copy of the Student File) do not delay registration of your company! All registered companies have access to the Junior Achievement Portugal Student web site and the StartUp Programme web site www.japortugal.org.

Function Directors’ Duties and Skills

Your Business Consultants discuss with you the Junior Achievement Portugal StartUp Programme Company structure, and will explain the roles and duties of company Function Directors. You are also issued with the “Create an Innovative Junior Achievement Portugal Company” leaflet. You should study this with a view to deciding which student should take on which role(s) in your company, and the role(s) you would like to undertake. Descriptions of each of the Function Director roles are in Appendix 2 of this Student File.

Name and Registration

You need to decide on a company name. For legal reasons you must use the name of the company followed by the letters JAP.

You will register through the Junior Achievement Portugal web site at www.japortugal.org.


It is important to realise that: •no event can Company run for more than 12 months from the date of registration; •trading should not commence untiI receipt of the formal Certificate of Incorporation;

Receiving the Junior Achievement Portugal StartUp Programme Company Kit

You will receive your StartUp Programme Company Kit. This contains resources to help you with ideas for your company as well as documents and forms to help you run it efficiently and to record the progress you are making:

The StartUp Programme Kit includes: •A Student file •Enterprise tutor’s and Business Consultant’s file •Binder

Junior Achievement Portugal Taxes

Junior Achievement Portugal VAT and Junior Achievement Portugal Corporation Tax serves two purposes: •It reinforces the reality of your experience so that you deal with the kind of taxes a company pays. Check for the actual values in Portugal •It is also an important part of the funding of Junior Achievement Portugal used to provide the StartUp Programme experience to students in future years. These payments can be donations to charity after winding up the company.

STAGE TWO: ELECTIONS AND DECISIONS

This is the first Company Board meeting. The Business Consultants lead this meeting until the Managing Director has been elected.

(1) Elect Function Directors

It is important to get the right people into the right roles! Students offering themselves for a functional role should be asked to explain how they would undertake the position and why they are the most appropriate person to fulfil the role.

The first post to be considered is Managing Director. The most popular student is not necessarily the best suited to this job. The post entails a lot of responsibility and requires a person who can lead a team effectively.

The Company Secretary is the next function to be elected. The student who takes on this role must be prepared to record minutes of this meeting.

Responsibility for the remaining functional roles are then agreed (Appendix 2). If numbers allow it is helpful to appoint a deputy to each of these roles, especially for Finance.

Every student has responsibility for the company’s success. The functional roles of the elected directors is clear from their titles. If there are additional members of your company, please remember that everyone in the company is just as important as the directors and should understand their individual tasks within the team.


7

(2) Select possible product(s) or service(s)

Refer to the “Create an Innovative Junior Achievement Portugal Company” document.

Deciding on your product or service is very important. You should explore all the possibilities. “Brainstorming” is a useful technique to draw together everyone’s ideas. You may decide to use this as a starting point from which to chose the idea that provides the most viable opportunity for your company.

Making and producing your product or service is part of the fun of the StartUp Programme. Simply retailing (i.e. buying and selling products) is discouraged. Try to find a product or service that is going to offer a challenge for the team and an experience that provides learning opportunities.

(3) Draw up a Business Plan/Investment Proposal

(4) Produce a Mission Statement

Start to draw together the information that you will need to write your business plan.

Having decided on a product or service your next step is to produce a Mission Statement. This is an important process and opportunity for everyone in the Company to get involved in helping to develop and agree a Company Mission Statement that describes the kind of company you plan to be.

You could use terms such as “we will be recognised as first choice provider of ‘widgets’ in the markets we serve” or select your own phrases which describe the vision you have for your company.

The next step is to agree on a series of appropriate customer and quality objectives which will help you achieve your Mission. Your Business Consultant can provide valuable help to your company in establishing a clear and achievable set of objectives for your company.

(5) Capitalisation

This refers to the process of raising the money you will need to start your company.

In order to pay your preliminary expenses, and to produce something to sell, you will require working capital. You need to estimate your immediate needs and decide how you propose to finance them. Remember that it may be some time before you are able to sell to customers and receive income.

You will raise the money by selling some or all of the shares in your company. If necessary, you could arrange for credit terms with your suppliers, or overdraft facilities with your bank, but remember that you will have to repay any debts.

Careful consideration of the initial amount of capitalisation is crucial. Too little can cause cash flow problems, and too much will be inefficient use of shareholders’ funds. Remember too that shareholders will expect to be repaid when your Company closes down.

Issue of share books

The Company Secretary issues “share books”, keeping a careful record of the serial numbers of the “shares” issued to each student.


Junior Achievement Portugal companies raise capital by issuing “ordinary shares”, as with standard practice for limited companies. There is a ruling on the maximum capital to be raised by selling shares. Please ensure that you are aware of the limit and stay within it unless you make a request to exceed it to your Area Board and this request is authorised. You will find the current maximum limit and rate per share in Appendix 3 - Responsibilities.

Note the following points carefully (see also “Shares” section): •The sale of shares will normally be to friends, relatives and acquaintances (including lecturers, tutors and business consultants). •Each student must be a shareholder. •You must take great care of the books of shares, and must be prepared to hand them over for recording purposes when required. Any unsold shares must be returned to the Company Secretary. •As you sell shares, carefully record details of each transaction on each share counterfoil. This information will form the basis of the share register which the Company Secretary will maintain.

(6) Memorandum and Articles of Association

The Company Secretary will supervise the completion of the Memorandum and Articles of Association.

These documents have no legal force, but should be seen as a formal agreement, which represents the company constitution, and governs the conduct of its affairs. They are kept by the company and should be read by all students. To ensure that everyone understands their commitment, the Company Secretary should read them out to a meeting before everyone signs.

The documents should be kept safely by the Company Secretary.

(7) Open a Bank Account (optional)

The Finance Director is responsible for opening a bank account. He or she will obtain from the bank and fill in all the required details on a bank mandate form, arranging for cheques to be signed by two authorised signatories. (Remember you are spending shareholders’ money and are accountable for your decisions). Typically this will be the Finance Director and either the Managing Director or assistant Finance Director. Remember to inform the bank of changes in signatories.

Note: All cheques over €200 must be countersigned by a Business Consultant or Enterprise Tutor.

The Finance Director then takes the mandate to the bank, and opens the account, arranging for bank correspondence to be sent to a secure address (if this is a university, make sure the appropriate person at the receiving address knows about your StartUp Programme Company).

The bank may require to see and retain a copy of your Memorandum and Articles of Association, and Certificate of Incorporation.

The bank will be able to advise you when you will be issued with a company cheque book and a paying-in book.


9

STAGE THREE: PLANS INTO ACTION

(1) The prototype

The production of a prototype or the piloting of a service should uncover any practical difficulties and give some idea of what can realistically be achieved within a given time.

The Operations Team makes the operational plans for the production and assembly of the component parts of your product, or for the performance of the service.

The Operations Director and Business Consultants must carry out the Five point risk assessment (see Operations Planning Record form, available through the StartUp Programme web site at www.japortugal.org to ensure that all production and service delivery processes are totally safe.

You are strongly advised, where appropriate, to check product safety legislation with your local Trading Standards Office.

(2) Business Plan/Investment Proposal

Every new enterprise can benefit from producing a Business Plan. The planning process will clarify your whole project for you. More importantly, however, it will provide your company with a document you can use when approaching prospective investors and lenders. It also helps to clarify the amount of capital you will need to raise.

You could ask your Business Consultants to play the role of prospective financiers whilst you practice a short presentation to them.

The Managing Director, with support from your Business Consultants, should co-ordinate the production of the Business Plan.

The following sections are likely to be the most important features of such a plan:

The prospective venture Include the name of the business and the main proposed activities. State the mission, the short and long term objectives, together with an indication of the resources required in terms of human resources and assets. Mention any professional advice obtained.

The key people List the key people in the company. Indicate how you intend to structure your company.

The product(s) or service(s) These should be briefly described together with an indication of unique or strong selling points. The product/service castings and break-even calculations should be indicated, together with a short description of any manufacturing or delivery processes. Include some indication of the potential sales for the product(s) or service(s).

The market and strategy Draw up a picture of your market in terms of geographical location and type of customer, giving brief details of your market research. Explain how you are going to reach your customers to sell them your product(s)/service(s).

Financial requirements Include how you plan to finance the purchase of raw materials, stock and other inputs.


Training Detail the numbers of people included in operations and sales and how they are to be organised and trained, with special attention to Health and Safety.

(3) Operations Plan

Health and Safety The Health and Safety of your staff and customers is paramount. The Personnel Director and the Operations Director will draw up plans to ensure the safety of the workforce. Students should always act responsibly with regard to their own, and to other students’ safety.

Equipment and tools list Once operations processes are finalised, the Operations Director should list equipment and tools needed.

Negotiate tenancy and equipment rental The Company Secretary is responsible for negotiating both a tenancy agreement for the premises you use for company business, and a rental agreement for equipment you need to hire. Details must be filled in on form SEC7 available through the site at www.japortugal.org.

Purchase materials and obtain tools and equipment The Operations Director will now organise the purchase of any materials or other inputs needed, and will locate any tools and equipment necessary for the production and delivery processes.

(4) Salaries

It is Junior Achievement Portugal policy that students are entitled to receive payment for their work in their Junior Achievement Portugal Company. The Board should agree the level and timing of pay and rewards. While you may be keen to obtain some reward for your effort, you must not forget that, the amounts you pay yourselves will have to be reflected in the price of your product or service.

Hourly rates, production bonuses and piecework schemes are permissible, as are sales commissions. Salaries are normally paid monthly in arrears.

STAGE FOUR: UP AND RUNNING

At this stage your company should be in full production and following a regular routine of both weekly team sessions and monthly Board meetings. Your Business Consultants can guide you in understanding the running of properly structured meetings, and can also give feedback to the chair.

(1) Weekly Company Sessions

Most of the time at your weekly company sessions is likely to be spent on production. However, other brief meetings held at the beginning and end of each session, as explained over the page, are invaluable.

Opening the Session It is suggested that you begin with a brief meeting to check and update the company diary, to plan and co-ordinate administration and operations activity for the current session, and to consider sales plans for the coming week. The Function Directors present their weekly verbal reports.


11

It is good practice for the Company Secretary and Managing Director to draw up an agenda prior to the meeting, so the Company Secretary will need to be informed beforehand of any item which a student wishes to discuss.

The meeting should be conducted in a formal manner, with the Company Secretary taking brief minutes.

Production/Planning Most of the session should be used for production/ service planning.

It is important that all students are present, are fully occupied and participate effectively during the session.

When Function Directors have completed their planning and administrative tasks they should join in the operations activity of the Company.

Closing the Session At the end of the weekly session, it is advisable to consider the tasks completed and to compare this with the original plan agreed at the opening of the session.

Any problems that remain will have to be discussed, and possible solutions considered.

Once again it is preferable for this meeting to be formally administered and documented to ensure continuity.

(2) Monthly Board Meetings

Dates for meetings A regular date should be agreed in advance.

Attendance All students should attend these meetings. Remember, you are all Directors, not just the Function Directors. A quorum, the minimum number of members needed to make a meeting valid, consists of 2/3 of the total number of students.

Matters for discussion Company business is controlled by the Board of Directors. The monthly Board meeting is an opportunity to review progress against your Mission and objectives and make decisions for the future. The Board discusses business strategy and decide business policy to safeguard the shareholders’ investment, and to further the development of the company.

Agenda items Agenda items should be notified to the Company Secretary in good time for their inclusion to be discussed with the Managing Director before the agenda is published.

The agenda should be posted on the company noticeboard (probably electronically) together with the notice of the meeting.

Conduct of meetings The Managing Director Chairs the meeting and is responsible for the orderly conduct of meetings, and for ensuring agenda items are covered effectively.


Meetings should be conducted in a “business-like” manner. You will establish a style for your meetings to suit the size and structure of your company. Don’t forget that even successful companies that appear to be relaxed and informal from the outside have to have effective processes for communications and decision making.

Ultimately, the Managing Director’s rulings must be accepted.

The Agenda The following is the usual format:

The Opening - The Managing Director calls the meeting to order. The Company Secretary records the names of those present. (i)Apologies for Absence - The Company Secretary records the names of those absent and whether apologies have been received. (Including Business Consultants). (ii)Minutes of the last meeting - The Company Secretary checks that everyone has received the minutes of the previous meeting. The Managing Director asks those who were present to confirm that they are a true record, and if they are, signs and dates them. (iii)Matters arising - The Managing Director asks if there are any matters arising from the minutes which are not covered in the agenda. If so the matter has to be dealt with either by an immediate decision or by an agreement to defer the problems for investigation and discussion at a later date. (iv)Reports - The Function Directors’ reports are presented and discussed. They should be brief and to the point. The reports will normally include the following: - a general statement from the Managing Director regarding overall position against objectives; - a written report of profitability and financial position from the Finance Director; - reports on sales performance and outlook from the Sales and Marketing Directors; - a report on operations achievements and prospects from the Operations Director; - a report on the use of IT and the any on-going support/training & help from the IT Director; - other reports as and when required, which may cover such items as student attendance, training, motivation, safety, disputes, etc. After each report the Managing Director invites comment and questions.

(v) Specific Agenda Items - This is the main part of the meeting. These items, which are listed separately on the Agenda, include topics submitted by any Director (student). Discussions should lead to firm decisions and actions to be undertaken by specific team members, and the Company Secretary must note these for the Minutes of the Meeting. Any other business - The Managing Director enquires if there is any other business which requires attention. Date of next meeting - Confirm the time, date and place of the next weekly team session and monthly Board meeting.

(vi)

(vii)

(3) How does the Board arrive at decisions?

Decisions of the Board are normally arrived at by consensus, i.e. after discussion everyone agrees on a certain course of action. If this is not possible and the Board is divided the Managing Director takes a vote with a simple majority of those present deciding the issue. In the case of a split decision, the Managing Director has the casting vote.


13

(4) Minutes

The Minutes are the official record of what happened at a meeting. Decisions and action points, including the names of people who have agreed to do specific things must be recorded.

The Minutes should be distributed to all members as soon as possible after the meeting.

(5) Half year Board Meeting

This is a special Board Meeting and is the opportun ity to change jobs. This meeting is usually held half way through the programme, to this end, two special agenda items are required: •The resignation of all Function Directors •The election of new Function Directors

All participating registered students, including the retiring Function Directors are eligible for election to the various positions.

At this meeting it would be helpful to obtain some indication as to the future commitments of students, so that thought can be given to the efficient winding up of the company without disruption to either academic or company matters.

Remember that you need to start winding up your company six to eight weeks before liquidation.

TRAINING OPPORTUNITIES

Look out for details of any local training events and seminars organised by your Junior Achievement Portugal Board. These are a great opportunity to develop your skills and knowledge.

Your company could consider inviting an expert speaker or a local entrepreneur to talk about their experiences in business.

LEARNING LOG REVIEW SESSIONS

Your Business Consultants plan four learning review sessions across your time on the Junior Achievement Portugal StartUp Programme. These are usually part of a Monthly Directors Meeting. Refer to your Learning Log for details (Appendix 4).

TRADE FAIRS

During the year there may be trade fairs organised by your local Junior Achievement Portugal Board. They may provide an opportunity for you to exhibit and sell your goods to the public, and to compare your performance with that of other Junior Achievement Portugal companies. You should find out about these trade fairs, and discuss participation in them.

There are also opportunities to attend European Trade Fairs and other international events.


CHAPTER 4

Winding up your StartUp

Programme Company

STEP ONE: WORKING TOWARDS FINAL ACCOUNTS

Experience shows that winding up a StartUp Programme company takes much longer than you might imagine. At the half year Board Meeting you should decide the date for Company liquidation.

Remember to consider other activities such as examinations, holidays, etc. You should begin the winding-up of the company at least six weeks before your planned liquidation.

Over a planned period of time: •Review stock of all surplus materials and any other inputs and attempt to clear these by making into products to sell, using within service delivery or by selling off •Run down operations •Complete all outstanding orders •Return all tools and equipment in good order •Collect all outstanding monies •Pay students wages •Pay off all debts (wages and rewards) •Ensure that Junior Achievement Portugal VAT has been calculated prepare draft final accounts: - draft Profit an Loss Account (form FD6, available at www.japortugal.org) - Trial Balance Sheet (form FD3, available at www.japortugal.org) - calculate Junior Achievement Portugal Corporation Tax - prepare proposals for allocation of dividends to Shareholders.

STEP TWO: WINDING UP BOARD MEETING

• • • •

Agree the Draft Report and Accounts. Resolve any outstanding issues. Agree the final distribution of profits to be approved at the AGM. Liquidation Report (form FD9, available at www.japortugal.org) together with Junior Achievement Portugal Corporation Tax and Junior Achievement Portugal VAT payment to be sent to Junior Achievement Portugal National Office.

STEP THREE: JUNIOR ACHIEVEMENT PORTUGAL COMPANY FINAL REPORT & ACCOUNTS

All companies must produce a final written Report and Accounts.

This must be prepared in time for your Annual General Meeting of shareholders and invited guests. A draft Report and Accounts should be presented and discussed at the Winding up Board Meeting.


15

STEP FOUR: ANNUAL GENERAL MEETING

All shareholders must be invited to your AGM. You may also wish to invite other guests to hear about your company’s results (Faculty Deans or Heads of Departments or representatives from the local business networks, etc.)

You should prepare a team presentation based on your company report.

You should have copies of your report available for inspection by shareholders at the meeting.

Remember to use this opportunity to thank everyone who has helped your company during the year.

Letters of thanks should be sent to the supporting organisations, Business Consultants, Enterprise Tutors and anyone else who has assisted your company.

STEP FIVE: FINAL LIQUIDATION

You need to arrange a final Board Meeting with your Business Consultants and Enterprise Tutor to complete all the required procedures; ensure that all your taxes and debts have been paid and your Bank Account, if you opened one, has been closed.

The winding up process must be complete by end of June at the latest or by any other date by special arrangement with JAP. However in no circumstances may any StartUp Programme Company operate more than 1 year after the date of registration. Insurance cover ends at this date.

STEP SIX: THE FUTURE

We hope you will have enjoyed the experience of running your own StartUp Programme Company and we have one last task for you.

Using the experience you have gained, prepare a Marketing Plan for your University to publicise and encourage students who will be eligible next term to think about participating in the StartUp Programme.


CHAPTER 5

Financial Management

Financial management in any company is critical. Crucial decisions affecting the future performance of the company are made on the understanding of the current and past financial performance of the company and estimates of its future requirements. Cash is the lifeblood of the company - run out of it and the company dies. Many small new firms have collapsed not because they did not have orders but because they ran out of cash to pay the invoices and overheads. It is difficult to run a company without the basic inputs you need and the people to undertake key tasks.

Similarly, running a very active and busy company that is growing does not necessarily mean that the company is profitable as may be stated in the year-end profit and loss statement. Waiting till the year-end to frnd out about profitability may be too late. Without profit there is no surplus funds to reinvest in the company for supporting its future growth. Knowing when the company is or is likely to be in profit is therefore critical for decision- making and also for forward planning, particularly in determining price and volume issues.

In brief then, cashflow, profit and loss and break-even points, are important factors to monitor actual performance against target, enabling appropriate actions to be taken to exploit successes and avoid disasters.

Collecting the right, data, recording them and analysing them correctly are therefore tasks that have to be undertaken with due care and diligence. The Junior Achievement Portugal Financial Management System, described in detail below, offers you a comprehensive mechanism for managing and reporting the finances of your StartUp Programme Company. Your Business Consultant can help you through learning how to operate the system effectively if this is unfamiliar to you. You will need Excel in order to use this system.

Available to download from the StartUp Programme site (www.japortugal.org), the Financial Management System (forms FD1 - FD9) is comprehensive and thorough. The purpose is to ensure you understand the principles of double-entry book-keeping, which will help you to gain deeper insights of what financial data actually mean. Take your time to work through it step by step, particularly if you are unfamiliar with this approach to financial accounting.

In the early stages you probably only need to use the first two forms.

Ask one of your Business Consultants to work through the “Finance Director Step by Step Guide”.

The information in this chapter of the Student File provides more detailed instruction and an example of a set of accounts.


17

THE JUNIOR ACHIEVEMENT PORTUGAL FINANCIAL MANAGEMENT SYSTEM

Regular Transactions

Optional Forms

Monthly Task

Final Accounts

Liquidation

Receipts FD1

Debtors FD4

Payments FD2

Creditors FD5

Extended Trial Balance FD3

Profit and Loss Account FD6

Statement of Taxation Liabilities FD8

Balance Sheet FD7

Liquidation Report FD9

DON’T FORGET TO PRINT OUT NEW FORMS EACH TIME YOU USE THEM, AND SAVE A NEW VERSION TO DISC AFTER EACH SESSION.

REGULAR TRANSACTIONS

1. General Introduction

Before we start dealing with the detailed accounting guidelines, the following paragraphs will help give an understanding of some of the important principles underlying the system. This text assumes little or no prior knowledge of financial management systems in business, in particular double-entry book-keeping.

Record all money transactions Each and every transaction must be recorded somewhere in the receipts and payment forms which, in book-keeping terms, will be by means of entries referred to as debits (DR) or credits (CR). Two simple rules to help you in the preparation of the accounts, using the system of double entry, follow: (a) Debit the account that receives and credit the account that gives. (b) Every debit must have a corresponding credit. In other words, for every debit there must be an equal and opposite credit.

For example: if you pay €10 cash to buy stationery the entries in the accounts would be: DR. Stationery (the account that received) €10 CR. Cash payments (the account that gave) €10

There are only three forms that you should use to record day to day transactions: FD1 Receipts FD2 Payments FD3 Extended trial balance


If these templates are unfamiliar to you, how to complete them is explained further on. They are the only forms that are essential. In addition the system contains optional forms that you may wish to use (FD4,5) and also forms that you will require at the time you wind up the company (FD6,7,8,9) these can be put away safely until that time.

Banking your cash Each week when you receive cash, pay it into the bank, if you have an account, right away. This is good business practice. It also makes book-keeping easier.

Record all credit transactions Occasionally you may buy or sell on credit. However it is expected that the majority of your transactions will be for cash, and that you will only buy or sell on credit rarely.

There are two forms that you will use - FD4 Debtors (money owed to us) and FD5 Creditors (money we owe others).

Credit transactions should use the optional forms FD4 and FD5 referred to above. Credit sales should be entered on form FD4 and credit purchases on form FD5. When cash is received or paid the date should be noted in the end column. At this stage the sale or purchase is treated as a cash transaction and accounted for in the manner described above.

Self checking systems Any good accounting system incorporates a number of controls so that each step can be self-checking. It is most important for you to carry out these checkss as described so that you can be confident that your work up to that point is accurate. No accountant ignores these controls because, when the trial balance stage (form FD3 - to be explained later) is reached and the books do not “balance”, then there must be an error in the records.

Reporting of transactions One of your challenges as Finance Director will be to ensure that all members of the company report to you all transactions they make. It is all too easy to find, for example, that someone sells some products or services on credit and forgets to report this to you. Then if the person to whom the goods have been sold does not pay, you have no record of the transaction and the money due is lost.

Junior Achievement Portugal VAT (Value Added Tax) Background - It is important that you understand the implications of Junior Achievement Portugal VAT.

It is one of the rules of Junior Achievement Portugal that you calculate Junior Achievement Portugal VAT on all your sales and purchases so that, like other VAT-registered businesses, you pay VAT. The difference is that you pay it to Junior Achievement Portugal rather than to Customs & Excise. However, in the unlikely event of purchases exceeding sales, Junior Achievement Portugal will not make any refunds of Junior Achievement Portugal VAT. These payments, plus your Junior Achievement Portugal Corporation Tax serve two purposes: firstly to make your company affairs as realistic as possible and secondly to provide some of the income Junior Achievement Portugal needs in order to offer you and your successors with this experience.

On no account must any Junior Achievement Portugal Company attempt to register with Customs & Excise for VAT, nor show any VAT on invoices sent to customers.

Calculating and recording - Junior Achievement Portugal VAT on your receipts (FD1) and payments (FD2) and debtors (FD4) and creditors (FD5) forms is calculated and recorded as follows:


19

Sales - The selling price to your customers must include Junior Achievement Portugal VAT (for example 17,5%). Therefore once you have carried out your market research and determined the selling price you must divide this figure by 1,175 to obtain the true sales price you will receive. For example if you think the market price of your product should be €2,35 then your sales will be credited with €2,00 and the €0,35 credited to Junior Achievement Portugal VAT.

Each time you make an entry for sales in one of your forms (FD1 or FD4) you need to divide it by 1,175 to obtain the amount to be entered in the sales column. You can then calculate the Junior Achievement Portugal VAT by multiplying this figure by 0,175. Having entered that in the VAT column, check that this, plus the amount entered under sales equals the total amount.

NB: Prizes are not subject to Junior Achievement Portugal VAT as shown at the foot of form FD1.

Purchases - Certain purchases will include VAT. This may be shown on the invoice. If not, you need to calculate the split in cost of your purchases in the same way as for sales for all those items shown on form FD2.

(2) Recording your Receipts and Payments Transactions

Receipts (Form FD1) All money lodged in the bank and all cash received must be entered in the appropriate debit (DR) column and then again credited (CR) in the appropriate analysis column, as illustrated below. 1 Sept - €280 cash received for the sale of shares (DR. Cash and CR. Shares). 21 Sept - Cheque for €246-75 received from A. Scott for sale of 12 sets of company products (DR. Bank and CR. VAT on Sales and also CR. Sales). 30 Sept - €90 paid into the bank from the cash balance (DR. Bank and CR. Cash Payments on FD/2). Balancing entries are required in columns 8 and 20. 10 Oct - Withdraw €25 cash from the bank for cash float (DR. Cash and CR. Bank Payments on FD/2). Balancing entries are required in columns 8 and 20. 15 Oct - €11, 75 cash received from an outstanding debtor, H. Jones, for sale of company products (DR. Cash and CR. VAT on Sales and also Sales). See also entry on Debtors form (pg 24).

Form FD1

Receipts

Company Name:

Sheet No:

A Branch of Junior Achievement Portugal

1 Bank 2

Cash 3 AE IVA 4

Sales 5 Misc. Income*

6 Shares 7

Loans 8 Bank & Cash Transfers

Should equal column 20 on FD2

Date Where From DR

01-Sep-04 21-Sep-04 30-Sep-04 10-Oct-04 15-Oct-04

Brought Forward X number of shares at Y each Sales A. Scott Banking of Cash Cash withdrawal from Bank Receipt from Debtor H. Jones

DR

€ 280.00

CR CR CR CR

€ 280.00

CR

€ 246.75 € 90.00 € 36.75 € 210.00

€ 25.00 € 11.75 € 1.75 € 10.00

€ 90.00 € 25.00

Total Carried Forward € 336.75 € 316.75 € 653.50

€ 38.50 € 220.00 € 0.00 € 280.00 € 0.00 € 115.00 € 653.50 Total 1&2

DOES THIS SHEET BALANCE? Totals 3-8

FD/1


Payments (Form FD2) All cash and cheque payments and withdrawals of cash from the Bank must be entered in the appropriate credit (CR) column and then again debited (DR) in the appropriate analysis column as illustrated below. 15 Sept - Cheque to pay Junior Achievement Portugal Registration Fee (CR. Bank and DR. Registration Fee). 16 Sept - Paid €58,75 cash for materials (CR. Cash and DR. VAT on purchases and also DR. purchases). 24 Sept - Paid €11,75 cash for stationery (CR. Cash and DR. VAT on purchases and also DR. Stationery). 30 Sept - Banked €90 cash (CR. Cash and DR. Bank receipts on FD/1. Balancing entries are required in columns 8 and 20). 10 Oct - Withdraw €25 cash from the bank for cash float (CR. Bank and DR. Cash Receipts on FD/1. Balancing entries are required in columns 8 and 20). 21 Oct - Paid €23,50 cheque to outstanding creditor J Smith (CR. Bank and DR. VAT on purchases and also DR. purchases. See also entry on Creditors form on page 25). 24 Oct - Paid €15 wages in cash (CR. cash and DR. production wages).

Form FD2

Payments

Company Name:

Sheet No:


Bank (Cheques)

9 Date Where To Cash 10

AE IVA 11 Purchases* 12

Production Wages

13 Salaries Commissions and Bonuses

14 Stationery* 15

Rent and Hire

16 Misc. Expenses*

17 Registration fee

18 Loans 19 Bank and

Cash Transfers

Should equal column 8 on FD1 Does it? YES

20

CR

Brought Forward

CR DR DR DR DR DR DR DR DR DR

31-Sep-04 Registration 24-Sep-04 Stationery 16-Sep-04 Raw Materials 30-Oct-04 Cash Banking

€ 200.00 € 58.75 € 11.75 € 90.00

€ 8.75 € 1.75

€ 50.00 € 200.00

€ 10.00 10-Oct-04 Cash Withdrawal 21-Oct-04 Creditor J. Smith 24-Oct-04 Wages

€ 90.00 € 25.00 € 23.50

€ 15.00 € 3.50 € 3.50

€ 25.00 € 15.00

Total Carried Forward € 248.50 € 175.50 € 14.00 € 70.00 € 15.00 € 0.00 € 10.00 € 0.00 € 0.00 € 200.00 € 0.00 € 115.00 € 424.00 Total 9&10 € 424.00

DOES THIS SHEET BALANCE? Totals 11-20

FD/2

(3) Checking Accuracy

Whenever either form FD1 or FD2 is completed, or at least monthly, you should carry out the following procedures to double check the accuracy of your entries: •Total all columns entering the total at “Total Carried Forward”. Check One ü - Add across the totals of columns 3 to 8 (FD1), and 11 to 20 (FD2). This should equal the total of 1 and 2 (FD1), and 9 and 10 (FD2). Check Two ü - Reconcile (agree) the Bank Balance with the amount shown on your Bank Statement as shown below.


21

The most common reason why your balance might be different from that shown on the statement is due to uncleared cheques or from an unrecorded receipt. Finally, if you are overdrawn the statement may show interest and/or bank charges which you need to enter on your payments form (FD2) before preparing the extended trial balance (FD3).

Agreeing the bank statements (Bank Reconciliation)

Bank receipts less: Bank payments Bank balance Balance per bank statement Difference Represented by: Uncleared cheques Unrecorded receipts Other Difference as above

(

€

)

Check Three ü - You should also check the cash totals to the amounts actually held, which will need to be counted, as shown below:

Agreeing the cash balance (Cash Reconciliation)

Cash receipts (FD1) Less: Cash payments (FD2) Cash balance Cash counted Difference to be investigated

(

€

)

Having carried out all these checks and gained the satisfaction of “balancing” everything, you can now start a new sheet Carry forward the balances from the bottom of your forms to the top of the next form. Carry forward the individual totals. It is a good idea to check this has been done accurately by adding across your new receipt and payment analysis totals. You can then be confident your new sheet is starting off correctly.

OPTIONAL FORMS

(1) Debtors (money owed to us) Form FD4

Goods or services on credit to customers The Debtors form is used only if you make any sales on credit. Naturally you will try to avoid that, if at all possible, as it affects your cash flow.

The Sales Director and other students will inform you of these transactions and you should enter the amounts as soon as you know the goods have been sent to the customer.

These are entered on the Debtors form (FD4) but they do not form part of the formal double entry bookkeeping system. This is in order to keep this system simple (most companies do record credit sales as part of their formal double entry bookkeeping system). Once the cash has been received, this fact is noted in the “date cash received” column on form FD4.


At this point you should also record the cash receipt on form FD1 as if it had been any other cash transaction. For example, using the transaction described on page 20 (Receipts 15 Oct), and adding one other to illustrate the point the entries would appear thus:

Form FD4

Debtors (money owed to us)

Company Name: A Branch of Junior Achievement Portugal

Amount Name

H. Jones G. Brown

Date 29-Sep-04 29-Sep-04

Total DR € 11.75 € 35.25

IVA CR € 1.75 € 2.25 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00

NET CR € 10.00 € 10.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00

€ 30.00

Date Cash Received 5-Oct-04

PAID? PAID

UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID

OUTSTANDING MONEY OWED TO US € 35.25 € 5.25 This schedule is for your information only and does not form part of the bank and cash receipts analysis. Total unpaid debtors (those for which cash not yet received) should be entered in the transfers column in the Extended Trial Balance (FD3) as described in the Director File.

FD/4

At each month end the outstanding debtors are recorded on the Extended Trial Balance in the transfer column (see page 25).

2. Creditors (money we owe to others) Form FDS

Goods or services obtained on credit from suppliers You may occasionally wish to arrange credit terms with your suppliers. The Operations Director and other students will inform you of these transactions and you should enter the details of the goods received for which payment has not yet been made.

These are entered on the Creditors form (FD5) but they do not form part of the formal double entry book-keeping system. This is in order to keep this system simple (most companies do record credit purchases as part of their formal double entry book-keeping system). Once payment is made, this fact is noted in the end column (date cash paid) on form FD5.

At this point you should also record the cash payment on form FD2 as if it had been any other cash transaction. For example, using the transaction described on page 21 (Payments 21 Oct), and adding one other to illustrate the point the entry would appear thus:


23

Form FD5

Creditors (money we owe others)


Amount Name

J. Smith M. Simpson

Date 01-Sep-04 26-Oct-04

Total CR

€ 11.75

IVA DR € 3.50 € 1.75 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00

NET DR € 20.00 € 10.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00 € 0.00

€ 10.00

Date Cash Paid 21/10/2004

PAID? PAID

UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID UNPAID

OUTSTANDING MONEY WE OWE € 11.75 € 1.75 This schedule is for your information only and does not form part of the bank and cash payments analysis. Total unpaid creditors (those which have not yet been paid) should be entered in the transfers column in the Extended Trial Balance as described in the Director File.

FD/5

At each month end the outstanding creditors are recorded on the Extended Trial Balance in the transfer column (see page 25).

MONTHLY TASK

(1) Monthly Summary - Extended Trial Balance (Form FD3)

Purpose This form is the trial balance and serves to: a)indicate the numerical accuracy of your book-keeping b)summarise activity to date c)assist with the preparation of Profit and Loss Accounts and Balance Sheets if required.

The totals of the columns in FD1 and FD2 should be transferred to the appropriate columns in the first section “Trial Balance” of the Extended Trial Balance Sheet (FD3). If you have followed all the instructions so far, the first two columns of the trial balance should add up to the same amount. If they do not you have made a mistake.

Each time you prepare a trial balance (ideally monthly) you need to cover your complete trading results to date commencing from the day you first started trading.


Form FD3

Monthly Summary Extended Trial Balance

Company Name:

Month:


Transfers CR

€ 220.00 € 70.00 € 15.00

€ 0.00 € 10.00 € 0.00 € 0.00

€ 200.00 € 0.00

€ 338.75 € 248.50 € 316.75 € 175.50

€ 280.00 €0.00

€ 40.00 € 35.25

€ 14.00 € 38.50 € 1.75 €87.00

€ 23.50

€ 10.00

Receipts and Payments Totals

Sales (4)

Profit & Loss Account DR

€ 83.00 € 15.00

€ 40.00 € 0.00

€ 10.00 € 0.00 € 0.00

€ 200.00 € 0.00

€ 0.00 € 15.00

Balance Sheet DR CR Description DR DR

Purchases (12)

Closing Stock

€ 30.00 Debit to Debtors CR Other Entry CR

€ 250.00

Production wages (13)

Salaries etc (14) Stationery (15) Rent & Hire (16)

Credit to Creditors Credit to Creditors

Credit to Creditors Credit to Creditors Credit to Creditors Credit to Creditors Credit to Creditors Debit to Debtors Profit/ Loss

€ 40.00 Debit to Stock

Miscellaneous Expenditure (17) Registration Fee (18)

Profit/ Loss Bank (1,9)

Miscellaneous Income (5) € 15.00

€ 141.25 € 88.25

€ 0.00 € 0.00 *

€ 280.00 Cash (2,10) Share Capital (6) Loans (7,19) Stock Debtors

*

Credit to Closing Stock

€ 11.75 Credit to Purchases/ Expenses

€ 87.00

€ 0.00 € 40.00 € 35.25

€ 11.75 € 0.00

€ 305.00 € 305.00 € 319.75 € 28.00 * € 319.75

Creditors Credit to Sales

AE IVA (11,3) € 5.25 From Outstanding Debtors and Creditors Totals € 962.50 € 962.50

* Show Net Balance

FD/3

(2) Entering Additional Information

Transfers Closing stock (materials, work in progress and finished goods), as notified to the Finance Director by the Operations Director, can be entered in the transfers column each time you are required to produce an extended trial balance. To do this, the cost value of the stock, which has been estimated at €40 in the example above, is entered in the debit column on the stock line, and in total on the credit column of the closing stock line. This will ensure that only the cost of goods/services actually sold will be deducted from the sales for the period.

Stockcounting It is good business practice to count stock regularly, which for StartUp Programme purposes should be monthly at the time that the extended trial balance is completed. This should be the responsibility of the Operations Director. To keep matters simple, it is suggested that unused materials and materials in, “work in progress”, are valued at purchase price, and finished goods for sale are valued at their total variable cost as calculated on the single product break even forecast sheet. (MD3).

The Operations Director should carry out a fresh stock count at the end of every month, as the closing stock value is likely to be different each time. Documentation of the count results can be simple but it should be formal and capable of standing up to scrutiny.

Collating Information The trial balance is “extended” by adding across the figures in the receipts, payments and transfers columns and placing the net debit or credit amount into either the profit and loss account section or the balance sheet section as appropriate.


25

In the profit and loss account section itself, you will have to calculate the profit or loss by comparing the totals of the debit and credit columns.

You must enter your profit on the debit side of the profit & loss account section; the same amount should then be entered on the credit side of the balance sheet section (or the other way round if a loss).

If you have been accurate, the balance sheet columns will agree in total. You may if you wish at this stage produce a separate profit & loss account and balance sheet using forms FD6 and FD7.

Please note that this is not essential until the end of your company’s trading. The example shows a loss, which is normal for a company at this early stage.

For illustration purposes, the transactions described hitherto have been recorded in the extended trial balance (p 25).

Money and Profit In preparing your extended trial balances, in the profit & loss account sections, you compare the sales of your product or service with all the costs incurred in producing it.

When you sell shares or take out loans you have to pay back to your shareholders or lenders the money they gave you. It would therefore be wrong to show such transactions in a Profit & Loss Account as they do not represent a cost to your company (although any interest on the loan is, of course). Instead they appear on the Balance Sheet, which is a statement of your company’s Assets (such as cash, stocks of products and debtors) and Liabilities (such as bank loans, shares, creditors etc.) The difference between assets and liabilities represents the theoretical value of the company at a given point in time.

You should be careful not to confuse profit with cash. This may sound blindingly obvious but there are many examples of companies that have made erroneous decisions resulting in inappropriate actions due to lack of clarity of the difference between profit and cash in the business. For this reason it is important to prepare monthly trial balances to identify the true profit of your company so that informed management decisions can be taken.

FINAL ACCOUNTS AND LIQUIDATION

(1) Profit and Loss Account (Form FD6)

Entering Information This may be completed monthly, and must be completed at the end of your trading period. The figures will be taken from the columns of the extended trial balance.

As you might expect, this document is a record of your trading success in terms of profit or loss and accordingly needs to be presented to the full Board of Directors for consideration.

Allocating Profit Before the meeting held to decide the allocation of profit you should prepare a draft Profit and Loss Account and Balance Sheet to ensure everything balances. Before you can complete your final Profit and Loss Account, however, your Board of Directors needs to decide how to allocate your profit among the following: a) dividends to shareholders


b) c) d)

bonus to students donations to charities (perhaps including Junior Achievement Portugal) Junior Achievement Portugal Corporation Tax

Bonuses, like other expenses, are deducted in arriving at the net profit of the company, on which you pay Junior Achievement Portugal Corporation Tax. For the purpose of this example, let’s say this is at the rate of 10%. And because, unlike most companies, no profit can be retained in your company for future growth and expansion, all the net profit after tax must be paid as dividend or given to charity.

Form FD/6

Profit and Loss Account


For Period Ended:

Current Rate of Corporation Tax

€

B A Sales

Purchases € 80.00 € 15.00 € 40.00

Gross Profit

€ € 250.00

C D E

Production Wages Closing Stock Cost of Sales (B + C - D) (A - E) € 55.00

€ 195.00

G H

J I

F Salaries, commissions and Bonuses Stationery Rent & Hire

€ 10.00 € 0.00 € 0.00

€ 0.00

Miscellaneous Expenditure Resgistration Fee Total Expenses (F + G + H + I + J) Gross Profit Less Total Expenses

Miscellaneous Income Net Profit (or Loss)

€ 200.00 € 210.00 € 15.00 € 0.00 € 15.00

Operating Profit (or Loss)

For Final Period Only €

Net Profit Brought Down

Profit after Tax Appropriations of Profit:

LESS Corporation Tax Payable to Junior Achievement Portugal

Dividends Donations: (a) Junior Achievement Portugal (b) Other

Balance (should be nil)

FD/6

Some examples Suppose your trading profit is €100 and your capital is €150. If you were to pay a 20% dividend, it would be: 20% of €150 = €30

You have to decide how much of your profit you may wish to pay as a bonus to students and how much you may wish to give to charity.


27

For example:

Trading Profit Bonus to students Net Profit Junior Achievement Portugal Corporation Tax (10%) Profit After Tax Payable to Charity Dividend at 20% Balance

€ 100.00 (30.00) 70.00 7.00 63.00 (33.00) (30.00) 0.00

You can, of course, work out several more rates of dividend all of which will give different totals available for distribution. You should consider how to calculate any bonus payable to students. It might be as a percentage of salary, or perhaps on the basis of hours worked, or meetings attended etc. Once this Directors’ meeting is held you can complete your final Profit and Loss Account and Balance Sheet.

(2) Balance Sheet (FD7)

The Balance Sheet may be completed monthly and must be completed at the end of your trading period. The figures will be taken from the columns of the Extended Trial Balance, FD3. The purpose of the balance sheet is to show the financial position of your company.

The figures on the balance sheet below have been extracted from the extended trial balance on p25.

Form FD7

Balance Sheet


As at: (Date)

€ Current Assets:

Stock Debtors

€ 40.00 € 35.25 € 88.25 € 141.25 € 304.75

Cash at Bank

TOTAL A Less: Current Liabilities:

Cash in Hand

€ € 0.00

€ 11.75

€ 28.00 € 39.75

€ 0.00

€ 0.00 Bank Overdraft Loans Creditors YE Corporation Tax YE VAT Due

TOTAL B BALANCE (C)

Represented by: Issued Share Capital: shares at 50p Profit & Loss Account

Shareholders’ Funds

Note: The total at C should equal the total at D

€ 265.00 C (A - B)

€ 280.00 € 15.00 € 265.00 D

If the company as not liquidated at the time of the Company Report, this document must be signed by a third party, such as an Adviser, certifying the accuracy of the figures I have examined the accounts of the company and agree that the above figures are an accurate representation of the company’s position. Signed:

Print Name:

(Adviser) Date:

FD/7


(3) Statement of Taxation Liabilities (FD8)

Junior Achievement Portugal Corporation Tax is a tax on the company’s profits and is calculated at the actual rate on the net profit of the company, as indicated in the final Profit & Loss Account. As in the case of Junior Achievement Portugal VAT, the payments must be made to Junior Achievement Portugal and sent with the Statement of Taxation Liabilities (FD8) which should be sent to the AJunior Achievement Portugal National Office when trading ends.

One of your Business Consultants or an independent “Accountant” should be requested to verify the accuracy of the statement and sign it.

Your Junior Achievement Portugal Corporation Tax and VAT payments are very necessary to Junior Achievement Portugal as part of their funds to provide students next year with the experience you have (hopefully) enjoyed.

(4) Liquidation Report (FD9)

The Liquidation Report covers transactions arising from the time that trading ceases, to the time of final winding up, and deals with the disposal of the company’s assets, stock, equipment and cash. Cash received from the sale of assets must equal cash paid for expenses, contributions and distributions. An independent and responsible person (for example a Business Consultant) should be requested to verify the accuracy of the statement, and sign the auditor’s report at the bottom of FD9.

It is usual to explain the figures by means of a brief narrative statement, indicating the price obtained for the assets of the company that have been sold and the reasons for the distributions made. A failure to make a profit should be explained in detail.

OTHER FORMS (1) Human Resources Director

Attendance Record (H1) This is not part of financial management but is listed here for completeness. The form is selfexplanatory.

Time Keeping Record (HR2) Form HR2 is a monthly time keeping record which needs to be accurately filled in so that the payroll form HR3 can be dealt with. There is a column for each week of the month and a total column for summary purposes.

There is a temptation to delay payments to students until the profitability of the company is established. This, however, is unrealistic as employees would not normally work without pay, and so it is strongly recommended that such payments are made throughout the life of the company. Decision not to pay regular wages and salaries ought to be properly discussed and minuted.

Payroll Record (HR3) Form HR3 is the payroll record which enables the Human Resources Director to calculate and the Finance Director to arrange payment of operations wages, salaries, commissions and bonuses. Note the Finance, Operations and Personnel functions need to liaise in order for the form to be completed accurately.

These forms are available through the StartUp Programme web site at www.japortugal.org.


29

(2) Managing Director

Forms MD1, MD2 and MD3 need to be completed early in the company’s existence. As they require the input of a number of Function Directors, the Managing Director should be responsible for the collection of the information. The Business Consultants ought to be consulted during the preparation of these forms. The forms are available through the StartUp Programme web site at www.japortugal.org.

Budgeted Profit and Loss Statements (MD1) Form MD1 is included for you to plan your estimated income, expenditure and profit or loss on a month by month basis. All new companies will do this exercise both for their business plan and also to serve as a control when trading starts. Ongoing companies will adopt budgetary control procedures in a similar manner. You should note that when you fill in this form you are concerned about when sales are made and when costs are incurred. For the purposes of filling in this form, the cash settlement dates of the transactions are irrelevant, and all your figures must exclude Junior Achievement Portugal VAT, as this is not actually a cost to your company.

Budgeted Cash Flow Statement (MD2) Form MD2 is included for you to project your future cash flows. Again all new companies will do this exercise both for their business plans, and also to serve as a check when trading starts. Budgeting for cash is possibly the key to financial control required by all companies. In this case, when you fill in this form you are concerned with the cash settlement dates of the various transactions. Also, the various cash receipts and payments must include Junior Achievement Portugal VAT at this time, as this is actually paid and received. It is only at the end of trading that it is accounted for to Junior Achievement Portugal. The line headed Junior Achievement Portugal VAT and Junior Achievement Portugal Corporation Tax refers to this final payment of taxation liabilities.

Break Even Forecast (MD3) (pricing of products/services) Arriving at a price - When deciding on a selling price, you need to consider two factors: (i) What the customer is prepared to pay - Market research will be carried out by the Marketing Director to determine the price at which your proposed products or services could be sold. (ii) The cost to you of the product or service - You will need to calculate the required selling price to cover your costs and provide a profit margin.

You now need to reconcile these factors by comparing the price arrived at by the Marketing Director to the required selling price calculated on MD3.

If the market price cannot provide a suitable level of profitability when compared to the required selling price then further considerations will be necessary: (a)Can costs be reduced in any way? (e.g. by purchasing lower cost materials; by producing and selling more products/services and so reducing fixed costs per item etc.). (b)Can the market bear a higher price? (c)Are your proposed methods of operations cost effective? (d)Would contracting out certain work be cheaper? (e)If no improvement in the projected figures can be made then perhaps this product/ service is not suitable and another product/service should be made.


Notes on completion of MD3 Fixed costs and variable costs - It is vital, before completing this form, that you separate your future estimated costs into “Fixed” costs and “Variable” costs. Fixed costs:are those which you incur regardless of the level of operations, e.g. your Junior Achievement Portugal salaries remains the same whether you sell 10 or 1000 products or services. Variable costs:are those which depend on the level of operations. Material costs, for example, should double if you double output and it should be possible to calculate how much each unit made will cost.

Calculating ‘’Break Even” point Material costs:Your first step is to calculate the cost of materials of your product/ service. In doing so remember to include the cost for some wastage of some inputs, e.g. materials or time. Also the amount to be shown should not include Junior Achievement Portugal VAT, so if you are paying €11,75 gross for your input material which will make 10 units, then the cost per unit is €1,00. Labour costs:You can also calculate how long it is going to take to produce each unit and so what the direct labour cost will be.

Now look at the worked example on page (p32). (i)Selling Price - The Marketing Director has suggested a selling price of €14,10. This, of course, includes Junior Achievement Portugal VAT so you have to deduct the Junior Achievement Portugal VAT to find the net selling price of €12,00. (ii)Variable costs and fixed costs - The form is self-explanatory. The difference between the selling price and the variable costs is €8,75. This is not the profit. You have all your fixed expenses to pay. Most StartUp Programme companies have fewer fixed expenses than those in the example, but all will have some. (iii)Break Even and Profit - From the example form you can deduce that you have to sell 50 units before you break even. After that you make €8,75 per unit sold. So if you were to sell 200 units your estimated profit would be: (200- 50) multiplied by €8,75 = €1.312,50

This allows you to calculate very quickly what would happen with different levels of sales and different prices.

Suppose, for example, you had already sold 70 units, and the Marketing Director says (as the main selling season for your product/service has passed) “if we keep the price at €14,10 we will only sell another 20, but if we drop the price to €9,40 we can sell 40, is it worthwhile?” You could answer: The contribution at the new net price of €9,40 would be€6,15 So if we sold 40 our extra profit would be 40 at €6,15€246,00 At the present price 20 units at €8,75 gives(€175,00) Gain from selling at reduced price€71,00


31

Form MD3


NOTE: All costs must exclude any input VAT (the VAT you will charge customers)

Calculation of “Contribution”:

Estimated Unit Selling Price

Estimated Variable Costs of Production Per Unit: Purchases (Materials) Production Wages Total Variable Costs

A. Unit Contribution towards fixed costs (selling Price Less Variable Costs)

€ € 12,00

€ 3,00 € 0,25 € 3,25

€ 8,75

Estimated Total Fixed Costs for the Year

Salaries, commissions and Bonuses Stationery Rent and Hire Miscellaneous Expenses Registration Fee B. Total Fixed Costs

€ € 79,00 € 24,00 € 85,00 € 50,00 € 200,00 € 438,00

Break Even (Total Fixed Costs (B) divided by Unit Contribution (A)) 50

MD/3


APPENDIX 1

GLOSSARY

Administration

Accountability

Agenda

The management of the affairs of an organisation.

Liability to give reasons and a rationale for your actions.

The business to be done at a meeting listed in the order in which it is to be handled. The agenda must include: 1. Apologies for absence 2. Minutes of last meeting 3. Matters arising 4. Function Directors’ Reports 5. Specific Agenda items 6. Any other business 7. Date of next meeting

To share out resources for particular purposes.

All that the company owns. In a balance sheet these are divided into: Fixed Assets:Permanent items, like property, equipment and machinery. Current Assets:Items which are normally changing in the course of business e.g.: stocks:materials you need to deliver your service or to make your finished goods, as well as any finished goods themselves until they are sold. debtors:people who owe you money. cash in bank:the balance in your bank. cash in hand:any cash which you hold not yet banked.

This is a snapshot of the company’s assets and liabilities at a particular time. The assets less the liabilities show the “book” or “theoretical” value of the company to its shareholders.

Instructions given to the bank regarding the running of your account.

Free discussion to solve problems or generate ideas.

The point at which your sales cover all your fixed costs and your variable costs. After this amount of sales has been reached you start earning a profit.

(Noun) A summary of expenditure and receipts over a period of time; a list of permitted expenditure. (Verb) To prepare a budget.

A description of the aims and strategy of the company incorporating a budget and projected financial position at the end of the period.

33

Allocate

Assets

Balance Sheet

Bank Mandate

Brainstorming

Break Even Point

Budget

Business Plan


Cash Balance

Cash Flow

The amount of cash held by the company on a particular date.

The pattern of cash you receive and pay out over a period of time. Be alert to the danger of more cash going out than coming in.

If a motion is put to the vote, and the votes cast on both sides are equal in number, then the Managing Director, in the Chair will have the deciding vote. This will determine which way the decision goes.

To accept the responsibility for the running, conduct and decision making process of a meeting.

Getting your customer to buy.

To act in accordance with rules.

One part of an overall product/service which consists of several parts or elements.

To call people together for a meeting.

Copyright is the legal recognition of the ownership of a product/service.

A number of factors work together to give a company its own unique identity. The factors the general public are most aware of are brand slogans (e.g. “it’s the real thing”) and images and brand names.

Something is cost effective if the returns justify what you spend on it.

The part of the cheque, ticket, receipt, or in our case, shareholder’s certificate, that is kept as a record by the person issuing it.

People to whom you owe money.

People who owe you money.

The sales person sells direct to the customer, person to person.

Ending someone’s employment.

How and where the product or service reaches the customer.

A distribution from the net profits of a company to its shareholders.

A preliminary written version of a document which can be amended before the final version is produced. There may be several drafts before the final copy is accepted.


Casting Vote

Chair, to take the chair

Closing the Sale

Comply

Component

Convene

Copyright

Corporate Identity

Cost-effectiveness

Counterfoil

Creditors

Debtors

Direct Selling

Dismissal

Distribution Channels

Dividend

Draft

Estimate

Feasibility Study

Fixed Costs

Incentive Scheme

Liabilities

An approximate judgement, e.g. of cost, value, size etc.

A study designed to determine whether a plan is practicable.

These are costs incurred regardless of the level of operations e.g. Junior Achievement Portugal, equipment hire and rent.

An additional payment made to employees to increase operational outputs or sales.

What the company owes. These include: Creditors:People outside the company to whom you owe money, for instance who supply you with raw materials, other inputs and services. Dividend:The proposed dividend which has been shown in the profit and loss account but not yet paid to your shareholders. Tax:Corporation Tax (in the case of StartUp Programme companies Corporation Tax at the current rate on profits), shown in the Profit and Loss Account but not yet paid. Similarly, Junior Achievement Portugal VAT at the current VAT rate (on sales less purchases) not yet paid to Junior Achievement Portugal. Check always the current rates. Loans:The amount due to anyone in addition to your shareholders who have lent money to provide capital for your business.

To communicate and maintain contact with.

The process of terminating the affairs of a Business.

You make a loss when you spend more than you earn.

The means of communication that reach large amounts of people such as television, newspapers, magazines and radio.

The written report the proceedings of a meeting.

To maintain a regular check e.g. to see whether the business plan goals and targets are being attained.

A proposal put to a meeting.

An atitude of wanting to achieve, do well, be successful.

A business’ general expenses, but not the direct costs of producing an article or operating a service. They include administrative costs, management salaries, heat and Iight, rent and rates, depreciation of your assets, and all “fixed costs”.

35

Liaise

Liquidation

Loss

Media

Minutes

Monitor

Motion

Motivation

Overheads


Overdraft

Patent

Policy

Potential Customer

Product or Service Feasibility

Operation Levels

The balance with your bank is negative i.e. you owe the bank money because you have withdrawn more than you have paid in.

An official document granting an inventor the sole right to make, use and sell her or his invention for a limited period.

The broad principle of action agreed.

Someone who may become a customer if you can persuade them to do so.

A product or service is feasible if it is possible to produce and then sell it making a profit.

The quantity of units produced. A business plan will refer to operation levels to meet the needs of the market; you want to aim to operate at producing the amount of units you can sell in the market, neither more nor less.

You make profit when you earn more than you spend: Gross profit: is what you earn from sales less what it costs to produce the goods or services that achieved your sales (variable costs). Net profit:is gross profit less your fixed expenses (rent, salaries etc). Net profit after tax is your net profit less Junior Achievement Portugal Corporation Tax.

(Verb) To plan; to work out the future implications of an action or idea.

A plan to make your potential customers aware of your product or service.

The first sample of a product, or testing of a service to be undertaken. Design and operation methods can then be altered as necessary before commercial operations begin.

The way the general public sees your company. Is it sophisticated, down-to-earth, honest, trendy?

The practice of creating, promoting, or maintaining goodwill and a favourable image among the public towards the company.

Striving for excellence in all aspects of your company’s activities.

The minimum number of members who must be present before a binding decision can be taken by a meeting.

Any materials or inputs to operations in the state in which they have been brought into the, company, before they are altered in any way.


Profit

Project

Promotional Strategy

Prototype

Public Image

Public Relations (PR)

Quality Management

Quorum

Raw Materials or Inputs

Reserves

Royalty

Sales Forecast

Sales Target

Selection and Recruitment

Seminar

Share

That part of profits not distributed by a company but held as part of shareholders’ funds to meet future development needs.

A percentage of the revenue from the sale of a product or service, that is paid to the inventor or proprietor.

An estimate from available data of the number of items you will sell in a given period.

A target in terms of the number of items to be sold at a given price which your sales team will try to meet.

Identifying and employing individuals who will fit the role and tasks to be undertaken.

A meeting held to discuss and exchange information.

Ordinary share - The capital stock of a company is divided into equal parts, known as shares. These shares are sold to raise capital. Preference share - These are shares issued by a company at fixed interest rates, which gives their holders a prior right over ordinary shareholders to payment of dividend and to repayment of capital if the company is liquidated.

Authorised Share Capital - the maximum amount of money which can be brought into a company by the sale of shares in accordance with the company’s memorandum. Issued Share Capital - the amount of money actually brought into the company by the sale of shares.

Raw materials and inputs, work in progress and finished goods/services owned by the company.

The steps you must take to implement a plan.

A short term plan of action to make progress towards an objective.

An objective which its team will try to achieve.

The name, or other symbol, used by a Company to distinguish its products/services from those of its competitors.

The income from sales during a specific period.

These are costs which vary according to your level of operations e.g. cost of raw materials and other inputs (not salaries, these are always fixed expenses).

A warning which is given by word of mouth, not in writing.

This is the same as current assets less current liabilities.

Share Capital

Stock

Strategy

Tactics

Target Figures

Trademark

Turnover

Variable Costs

Verbal Warning

Working Capital


37

APPENDIX 2

FUNCTION DIRECTOR ROLES

All StartUp Programme companies adopt a team-centred limited company model. As such, all Functional Roles in the company are taken up by Directors.

LEADERSHIP

As Managing Director, you are ultimately responsible for your staff, and shareholders, so you need to exercise all of your leadership skills as well as diplomacy, fairness and strength. You must draw your different teams together, and along with them, you should identify the mission, direction and goals of your company. As Managing Director you should encourage teamwork whilst drawing the best ideas and input from your company members.

ADMINISTRATION

As Company Secretary you are responsible for the coordination, communication and organisation of issues relating to the company. Specific elements of your role include completing registration documents and keeping the share register. You will also need to look after the filing for your company and keep records and documentation. You will also be responsible for administering Company Meetings through organising agendas and minutes. And it is your duty to enforce the Memorandum and Articles of Association. You will be expected to advise the company of its legal responsibilities, you will be expected to advise the company of its legal responsabiliies. These can be found on page 99 of the Student file.

FINANCE

As Finance Director you are responsible for financial and resource management. It’s your job to keep track of the money: You need to plan, know and record where it’s coming from, who’s got it and where it’s going. You should record all financial transactions and communicate financial progress to members of your team. Your role also includes doing the banking. And you will need to work with the Company Secretary on your Company’s shares and responsibilities to shareholders. You are also responsible for calculating and paying the Junior Achievement Portugal VAT and Corporation Tax.

MARKETING

As Marketing Director you will need to use your innovation and creative skills to take a key role in identifying markets and opportunities as well as defining product or service characteristics and pricing strategy. You will need to plan your marketing, and work with the Sales Director to get your product or service to market. Your responsibilities include PR and advertising for your company, as well as carrying out market research and customer observation to help you in maintaining customer satisfaction.

OPERATIONS

As Operations Director you are responsible for product/service development, along with your team. You must ensure that a method of operation is devised and organise the production of your company’s products or services. As part of this, you should work with the


Personnel Director to plan training where appropriate. You are responsible for purchasing raw materials, keeping stock records and managing the stock of raw materials, as well as the stock, supply and demand of finished items. You should also think about ways of reducing costs and making your product or service cost effective. In addition, the Health & Safety of your staff and customers should be one of your key concerns.

HUMAN RESOURCES

As Human Resources Director you are responsible for looking after the members of you company. You should consider how you will motivate staff, what sort of reward and recognition your company can offer, and what sort of training should be given. You should interview and counsel staff whilst tracking and recording individual progress, skills development and performance. Your role also covers recording student attendance and working hours. Ultimately you should make recommendations from your findings, and where necessary, manage disciplinary proceedings.

SALES

As Sales Director, you will use your interactive and personal skills to develop an understanding of your customers and your competition, monitoring both, and making recommendations on the basis of your results. You will identify the unique selling point and value of your products or services, and work with the Finance Director on pricing as well as on credit and cash collection. You will need to work with the Operations Director to control stock. You will also work with the Marketing Director on the promotion of your products, and ultimately you will train, monitor and motivate your sales force or Trade Stand team.

INFORMATION TECHNOLOGY (IT)

As IT Director you need to begin by working out the IT needs of your company. Along with the Finance Director you will need to establish the available budget for IT. You will need to work with the appropriate directors to identify and implement ways of exploiting the available technology to assist with the Marketing and Sales of products or services as well as with communication & internal Company needs. You should review IT progress, maintain systems and report to your company on a regular basis.

BUSINESS CONSULTANT/ENTERPRISE TUTOR

As Business Consultant your role is that of a facilitator. It is important that you don’t run the company for the students, but that instead you give the company motivation, focus and guidance. You should make surte that there is consistency so that at least one consultant attends each meeting with the right information to hand.

Speoific elements of the Enterprise Tutor role include being an on-site point of reference and advice available day-to day when the Business Consultant is not available, and also sorting out the practicalities such as a room and equipment as well as other essential support.


39

The Managing Director

IT’S ABOUT LEADERSHIP

Every organisation needs someone to lead it; to show the way forward, to encourage its members and to motivate them into greater effort. This is your task as Managing Director and by definition it is the most important and difficult task in any company.

YOUR RESPONSIBILITIES INCLUDE:

• • • • • • •

• •

•

•

Setting Company objectives and ensuring a sound business plan is made; Making sure this plan is achieved; Developing good teamwork; Motivating the team; Making sure tasks are delegated so that everyone has a job; Communicating to everyone so that they know what they are doing; Doing everything in your power to ensure the Company retains delighted customers. This will include playing an active part in reviewing Company progress and the part each Company member plays in achieving customer delight; Representing your Company where required; In a Junior Achievement Portugal Company you will normally assume, another role: that of chairing the Board of Directors; This is fairly normal in small companies but you should be aware that it is not regarded as good practice in large or medium sized companies; Seek advice - particularly from Advisers but also from any other appropriate source.

HOW DO YOU RELATE TO OTHER MEMBERS OF YOUR COMPANY?

It is important to distinguish between “leading” and ‘bossing” - they are quite different! As a leader you set a good example by being punctual, pIanning in advance, keeping cool in difficulties, listening to other people’s comments.

In a meeting of directors (and all Achievers are directors) all directors are equal. Each should have a say in reaching policy decisions. You have to abide by the majority decision just like everyone else. Once that decision has been reached, however, then it is your job to ensure that it is carried out. Outside the Boardroom the team must take their directions from you.

Normally, you will deal with your management team of “Function Directors”. You would not normally tell someone on production what to do. This would be done by the Operations Director.

You will have to work very closely with the Finance Director, especially in the early stages, when you will be putting together your Business Plan. This will include important financial information. The three Managing Director forms, accessible through the Junior Achievement Portugal website, will help you with this. Ask your Advisers to work through them with you.

For words or ideas you don’t understand, the “Glossary” in Appendix 1 of the student file will probably have the answer.


WHAT THE MANAGING DIRECTOR DOES

At the Beginning...

COORDINATION AND MOTIVATION When you first set up your Company, all the members, with guidance from your advisers, will work together to draw up the following: •A Mission Statement: clearly stating the main aims and purpose of the Company; •A set of Objectives: a clear set of goals with agreed measurements to achieve the mission statement.

GET THE COMPANY STARTED •It is up to you, by your leadership to get your Company moving! •Many Junior Achievement Portugal Companies run out of time, because they did not come to decisions quickly enough. •Conduct of meetings is up to you and the sooner they become business like the better. You are in the chair - it’s your responsibility! •Prepare a timetable for the year ahead.

TIMETABLE •It is important that you plan ahead. •Your Adviser will have a timetable of the year’s activity. •Check out dates for: Trade Fairs, Training Sessions, Presentation Events, The Examination, Conferences, National dates (& list these). •Carefully consider your manufacturing and sales schedule.

THE BUSINESS PLAN Prepare your plan together with your Functional Directors. It should be as brief as possible while still covering the essential poins. These include: •Company Detail - Name, Share Capital, Function Directors. •Product/Service - Description and how it is to be made/provided. •Marketingj tra egy - Where and to whom you will be selling. •Market Research, Competition, Promotion. •Forecast Sales - Estimate of likely sales and value. •Staffing - Number of Achievers, pay and rewards. •Finance - Product costings and break-even forecast (Form MD3) - Capitalisation - Profit estimate (Form MD1) - Cash Flow (Form MD2) This plan must be presented to and agreed by the Board (all Achievers). It may also be used outside the Company, e.g. for a Bank Loan, convincing potential shareholders. Most high street banks can provide excellent business planning guideIines.

Ongoing...

OVERALL RESPONSIBILITY You are the main person who will represent your Company when dealing with: •outside organisations •the media •other companies •the general public etc.


41

You are the figurehead. You are also the person who, in the final analysis, is held responsible for the Company’s activities. Your responsibility is threefold, to the: •shareholders, for their investment in the Company; •employees, for their working conditions, job prospects and job satisfaction; •customers, suppliers, advisers etc, for the way the Company’s activities may affect them. It is also your duty to ensure that: •your team coordinates its activities; •the different departments co-operate with each other to fulfil the objectives of the business plan; •everyone recognises that all tasks are interrelated and interdependent. No one section of the Company is more important than another. Everyone must work together as a team to ensure we have and retain “delighted customers”; •the Company money is managed responsibly and allocated effectively.

RUNNING MEETINGS You are responsible for ensuring: •that an agenda has been prepared; •that people stick to the subject under discussion; •that all members wishing to speak obtain your permission first; •that you allow everyone a say in turn; •that members do not hold their own conversations but remain quiet until you signal that they may address the meeting; •that a clear decision is made on each subject and that it is recorded. (This is very important even if the decision is one of postponement!); •that points for action and the people responsible are recorded and highlighted; •that personalities are not al lowed to intrude and verbal abuse is stopped.

THE CONTENTS OF MEETINGS •Apologies given for absence. •Minutes read, if not previously circulated. Ask if they are a true record, and if so sign them. •Go over the action points from the last meeting and consider any other outstanding matters not on the current agenda. •Go through the items on the agenda, with reports from Function Directors discussed and decisions taken. Check that all understand the decisions taken and who is responsible for action. •Deal with any other relevant business members wish to raise. •Agree the time, date and place of the next meeting.

MONITOR PROGRESS AND GIVE HELP •You need to have a general understanding of the roles of all Function Directors. •Liaise regularly with each Functional Director. •Avoid doing their work for them or interfering. •Monitor targets regularly and take corrective action when necessary. See forms MD1 and MD2.

At the End...

PREPARE TO WIND UP THE COMPANY These dates have to be agreed early in the New Year; •date of cessation of trading - the date for your final accounts; •date of Board meeting to allocate profit; •date of the Shareholders Meeting;


date by which Function Directors hand their Reports to the Secretary for inclusion in the Company Report. (Take into account Junior Achievement Portugal Area Board requirements). Bear in mind the following points: •how long will it take, after production ceases, to sell off your stock? •how long will your Financial Director need to produce draft accounts? •consider what needs to be done to prepare for your Shareholders meeting (AGM); •are Sales and Production liaising in the running down of stocks?

WINDING UP THE COMPANY The Annual Report is most important. It will take some time to produce and is required for Shareholders and the Company. Reports are produced by each Function Director and yourself. It is up to you and the Secretary to make sure that it is well written, accurate and not repetitive.

Involve everyone. Someone may have a talent for layout, another for its production. You should read and edit the final document. Make arrangements for the Shareholders Meeting (AGM) with your Advisers. Agree date, time, place, format and who is to be invited. This should be a key event and requires careful planning. Seek advice. Normally you will be in the Chair.

(Remember to thank all who helped.)

Consult with the Finance Director and Secretary before the Board meeting is held to allocate profit. Study the financial aspects of liquidation so that you are fully briefed.

SOME SKILLS AND QUALITIES YOU WILL NEED TO DEVELOP •The ability to set clear objectives for the Company, yourself and colleagues. •Understand how the business works. •Draw different departments together to work effectively. •Recognise key issues and focus Company attention on them. •Be able to formulate alternative solutions to problems. •Be aware of implications of Company activity. •Leadership and delegation. •Be willing to accept responsibility. •Be able to command respect and exert authority. •Be able to motivate people and develop team spirit. •Be diplomatic, able to handle people sensitively and tactfully. •Demonstrate fairness and strength, especially where conflict is apparent.

WHAT KIND OF COMPANY DO YOU WANT TO BE? It is important for you and your colleagues to share a vision for your Company. You will develop a Mission Statement, which summarises this shared vision. You will also develop clear objectives against at least five key criteria: •Customer satisfaction. •Use of resources. •The Environment. •ProfitabiIity. •Quality. Your aim will be to run your Company innovatively, coming up with new ways in which to overcome problems and continuously improve your Company.

•


43

The Company Secretary

THE ROLE OF THE COMPANY SECRETARY Under company law, each limited company must appoint a Company Secretary, to deal with the company’s administration. In your Junior Achievement Portugal Company the Company Secretary is elected directly after the Managing Director, at the first general meeting, and is expected to start work immediately by recording the minutes of the meeting. (See form SEC6.)

THE IMPORTANCE OF YOUR ROLE IN THE COMPANY

Being a Company Secretary means that:

You are responsible for making sure that the Board and the Company operate within the rules and regulations applicable to a Junior Achievement Portugal Company. Your responsibility as Company Secretary is to the Company as a whole, not just to the Board or individual members. In addition: 1 You will be expected to advise the Company on legal matters. 2 You will need to be familiar with the Junior Achievement Portugal Legal Responsibilities. 3 You must discuss all legal issues with your Advisers. 4 You must ensure that company members are kept fully informed at all times. 5 You are the main liaison between the board members, shareholders, and suppliers. 6 You are responsible for maintaining an accurate record of all meetings and decisions taken, along with the names of individuals who have accepted responsibility for each action.

For words or ideas you don’t understand, the “Glossary” in Appendix 1 in the student file will probably have the answer.

At the Beginning...

REGISTRATION •Make sure that the Company Registration is sent to Junior Achievement Portugal.

MEMORANDUM AND ARTICLES OF ASSOCIATION (as soon as possible on formation of Company) •Complete the Memorandum and Articles of Association. •This document must be kept safe by the company with the Company Records. A copy may be required by the bank.

TENANCY AND EQUIPMENT RENTAL AGREEMENT •Negotiate tenancy agreement with your landlord. •Agree charges for the lease of any equipment. See form SEC7 on JAP website

COMPANY STATIONERY AND FILING SYSTEM •Establish a safe location in which to keep your Company Records. •Ensure that all records are available for every Company meeting. •Ensure that any Company stationery meets the JAP legal requirement.


ISSUING SHARES (after achievers have completed their identity cards) •Ensure all Achievers have an identity card. •Issue Achievers with “Share” books. (SEC2) •You must record the name of each Achiever, and the serial number of the “shares” issued onto the Record of Share books. (Form SEC3) •As the Achievers sell the “shares” they will carefully and legibly fill in the counterfoils. You will then transfer these details to the Share Register (Form SEC4). Any cash must be handed to the Financial Director for recording and banking. •Every Achiever must purchase at least one share.

Ongoing ...

BEFORE EACH MEETING •Liaise with the Managing Director to prepare and draw up an agenda. •Post the notice of the company meeting, together with the agenda, on the company notice board before any meeting. (Form SEC5) •Distribute minutes of the last meeting to all achievers. (Form SEC6) Forms SEC5 and SEC6 are available through JAP website.

DURING EACH MEETING •Record the names of those present. •Agree the minutes of the last meeting. •Record the minutes of the meeting. These include: • decisions; • agreed actions; • important areas of discuss; • who is doing what; • ensure that the Board keeps within its powers and responsibilities See Memorandum and Articles of Association

BETWEEN EACH MEETING •Write up the minutes clearly. (Form SEC6) •Circulate copies of the Minutes to all Company members as soon as possible after the meeting. (As a courtesy provide copies for your Advisors and Link Teacher.) •Liaise/communicate with Board members and Shareholders as appropriate. Form SEC6 is available through JAP website.

COMPANY REPORT (in time for Annual General Meeting) •You will have to assemble a draft Company Report for approval at a time agreed by the Board. •You will administer the completion, production and duplication of this Report. •Reports must be available for the AGM for the information of shareholders.

At the end ...

ORGANISE THE TEAM •Send out notices to shareholders, detailing time, date, place. •Invite guests. •Plan how each company member will contribute to the AGM.


45

ON LIQUIDATION (three weeks before the liquidation date) •Check that the number of Shares issued and Dividends paid agrees with the records held by the Finance Director. •On completion of all financial transactions check that the Finance Director has arranged to close the Company Bank Account. •Ensure the Liquidation Report, prepared by the Finance Director, is completed and forwarded to JAP.

SOME SKILLS AND QUALITIES YOU WILL NEED TO DEVELOP •An ability to grasp and summarise the key points and decisions at meetings. •A logical and organised approach to the business of keeping books and records, and of drafting and presenting notices, minutes and reports. •An ability to co-ordinate, communicate and organise. •An appreciation of and interest in legal matters.

WHAT KIND OF COMPANY DO YOU WANT TO BE? It is important for you and your colleagues to share a vision for your Company. You will develop a Mission Statement, which summarises this shared vision. You will also develop clear objectives against at least five key criteria: •Customer satisfaction. •Use of resources. •The Environment. •Profitability. •Quality. Your aim will be to run your Company innovatively, coming up with new ways in which to overcome problems and continuously improve your Company.


The Finance Director

WHAT IS FINANCIAL MANAGEMENT? Money to your Company is like blood to your body. Just as the body can bleed to death, so can your Company if the flow of money is not maintained.

So the money must be there. And it’s your job to know how much there is, and where it is. Then, when you know all this, you can tell the Board, so that they can do their job of: •making informed decisions; •ensuring that the Company’s activities are profitable; •ensuring that sufficient funds are available to pay the bills.

THE IMPORTANCE OF YOUR ROLE IN THE COMPANY You are the custodian of the Company’s money. The Company relies upon you for the accurate recording of all transactions.

It is your job to know and understand the financial implications of all the Company’s activities.

Your financial information will govern all of the key decisions of the Company.

At any time you should be able to report accurately on the Company’s financial position.

You should ensure that people owing money to the Company (debtors) pay their bills, and ensure that people owed money by the Company (creditors) are paid by the due date.

You can use this document as your ready reference for what you should be doing, and how you should be doing it. A more detailed explanation of your duties can be found in your Director File.

To get started in your role work through the Finance Director Step by Step Guide.

WHAT THE FINANCE DIRECTOR DOES

At the Beginning...

BEFORE YOU START •Visit a bank and discuss opening your Bank Account. Banks vary in the documents they require and their rules for loans. •Policy decisions to be made: • is your Company going to buy on credit? • is your Company going to sell on credit? •Complete the Case Study in the Finance Director Step by Step Guide

SETTING UP THE COMPANY FINANCES •Open a Bank Account (optional). •Liaise with the Company Secretary on selling shares. •All monies received from sale of shares should be entered on the Receipts form immediately. •Make sure you understand about JAP VAT - there are no exemptions. You pay JAP VAT to Junior Achievement Portugal and not to Customs and Excise. See form FD1.


47

ESTABLISH SALARY LEVELS •Liaise with the Personnel Director to work out what the Company should and can pay out in salaries, wages and commission. •Calculate the figures and work out what this is going to cost the Company in future months (as soon as possible). •Agree the rates of all salaries at a Board meeting as soon as possible and record the outcome for your own records. •Establish a system whereby the Operations and Personnel Directors inform you of hours worked and/or production/sales achieved so you know what to pay. See form HR3.

PRICING •Work out and record the “fixed and variable costs”, liaising with the Operations Director. Don’t include VAT when you cost this - you need the net figure. •Meet with the Sales and Marketing Directors to discuss prices of your product or service and calculate how many items you have to sell to meet these costs or break even. •Agree with them a price to recommend to the Board. Note again - this is the price before JAP VAT. Add VAT to get the customer selling price. See form MD3.

BUDGET STATEMENTS •Liaise with the Marketing Director to estimate level of sales. (Production and Sales will have contributed information.) •Complete the Budgeted Profit and Loss Statement. •Complete a Budgeted Cash Flow Statement. See forms MD1 and MD2.

Ongoing...

REGULAR TRANSACTIONS AND OPTIONAL FORMS •Lodge all money in the Bank immediately and record in the Receipts Form FD1. •Cash received (e.g. cheques cashed for payment of wages) enter on FD1. •Cash payments, including cash paid to bank, enter on the Payments Form FD2. •To pay accounts, prepare cheques, have them correctly signed and enter in FD2. •Enter goods purchased which do not have to be paid till later (purchases on credit) on Form FD5. When you have paid for them and entered the cheque in FD2 also enter date paid on FD5. •Similarly any goods sold (sales on credit) are entered on FD4. When you are paid enter on FD1 and date on FD4. See forms FD1, FD2, FD4, and FD5.

CHECKING It is essential that you carry out checks on the accuracy of the Books of Original Entry as follows: •On a monthly basis check that co lumns on Form FD1 add up correctly. •On a monthly basis check that columns on Form FD2 add up correctly. •On a monthly basis check that unpaid creditors on Form FD5 agree. •On a monthly basis check that unpaid debtors on Form FD4 agree. Provided you do this regularly it will be simple. If you leave it, you will find the accounts difficult to balance. See forms FD1, FD2, FD4, and FD5.


MONTHLY TASK •It is advisable to prepare the extended trial balance FD3 monthly, and you must prepare it before liquidation. •Your job as Finance Director is to advise the Board and you will find this difficult if you do not have accounts. •The totals from the Receipts Payments and Optional Forms are carried to the extended trial balance. •Check corresponding DR and CR totals agree. See form FD3.

PROFIT AND LOSS ACCOUNT AND BALANCE SHEET •These should be prepared monthly, and must be prepared prior to liquidation. •The totals from the extended trial balance are carried to the Profit and Loss Account FD6 and Balance Sheet FD7 as appropriate. •Your job is to guide the Board. Be factual and explain possible cash flow problems while at the same time avoiding being over cautious. See form FD6 and FD7.

At the end...

PREPARATION FOR LIQUIDATION •The Board should decide on a date when trading ceases and fix a Board Meeting to decide where the profit goes. Inform them of stocks which need to be sold. •Draw up a draft Profit and Loss Account showing the net profit. •Provide the Board with various choices profit allocation, taking into account JAP Corporation Tax, various levels of dividend and so on. •Be prepared at the Board Meeting to explain the four ways in which profit may be allocated: • bonus to Achievers (which then alters the net profit as it increases wages); • JAP Corporation Tax (25% or current rate if different); • dividend to shareholders; • allocation to charities. It is not permitted to carry forward any surplus for next year’s Junior Achievement Portugal Company. See form FD6 and PD7.

FINAL ACCOUNTS •Prepare your final Profit and Loss Account and Balance Sheet. Incorporate JAP Corporation Tax, Dividends, Bonuses and any donations you may have decided to make to charity. •Prepare your own Financial Report to the Shareholders. Include Liquidation Report (FD9) after final work completed. •If not yet paid, pay AE VAT to the Junior Achievement Portugal Office. •Ensure forms FD7 and FD9, are signed by an Auditor/Advisor. See form FD6, FD7, FD8 and FD9.


49

LIQUIDATION •Pay JAP Corporation Tax (form FD8). •Liaise with the Company Secretary to repay share capital and agreed dividend to shareholders. •Pay any Bonuses and Charitable Donations. •Record sale of any stock or equipment and continue to record these and any other transactions. •Prepare Liquidation Report (form FD9) and add to Company Report. •Close Bank Account once all cheques are cleared. See form FD6, FD7, FD8 and FD9.

YOU WILL NEED TO DEVELOP SKILLS AND QUALITIES WHICH WILL HELP YOU BECOME: •A communicator who can make complicated things understandable. •Accurate and tidy in presenting reports. •Organised and good with numbers. •A problem solver. •An analyst and forecaster - someone who can work out what the financial future will bring. •Trusted to deal with other people’s money. •Knowledgeable about the business.



FINANCE DIRECTOR

STEP BY STEP GUIDE

Congratulations on your appointment as your company’s Finance Director. Although everyone in your company will have an important role to play, your job is vital, as you will be able to provide the information and guidance that the Board of Directors will need to enable them to make important decisions.

At first glance the paperwork in this pack may look rather complicated but please don’t panic, there is plenty of help on hand.

Firstly this Step by Step Guide has been written to try and make things as easy as possible.

Secondly you should not have to face this task alone. Ask the Board to appoint a Deputy Finance Director. This person should work with you and be able to take over if for some reason you are not able to attend a meeting.

Thirdly, and probably most important, your Advisers will be there to help and guide you. They will not of course do the job for you but hopefully at least one of them will have a financial background. Try and identify this person now. Go and introduce yourself. Try and book some time with this Adviser as soon as possible so that you can go through the pack together. If that is not possible, please make the effort yourself.

You will of course be aware that most businesses these days make full use of technology for accounting purposes and use computer based systems to keep their accounts. However Junior Achievement Portugal is all about “Learning by Doing”, and we believe that it is much more important for you to understand right from the very beginning the basic principles of book-keeping, and that you are able to produce final accounts using your own knowledge rather than just knowing which key to press on a keyboard. There is an enormous amount of satisfaction to be gained from producing a balance sheet and understanding what each figure represents. You will need a working knowledge of Excel, and you will need to understand how the figures are calculated, because it is your job to report on the Company’s finances and explain them to your fellow Directors. You can, of course, print out the forms from the JAP website and do the calculations yourself, writing them in on the form.

These notes have been arranged in a sequence which you should find logical and deals with each form in turn. The first part of each STAGE sets out what the form is used for and how information should be recorded. The next part is an example for you to work through based on the activities of a fictitious company. Throughout the example useful information that you may need to refer to again when writing up your own accounts is in bold type.

PRACTICE SESSION

We will now start to look at the forms that need to be completed. Don’t forget to print out new forms each time you use them.

Now print out a new set of forms, or save a new version to your hard drive or a disk, to do this exercise.

The object of this practice session is to build up a sample set of accounts so that you will have a set to refer to should you run into problems later on.


51

You will need to allow at least one and a half hours for this exercise but you don’t have to do it all in one go. Do “Receipts” (FD1) and “Payments” (FD2) as a first step and then follow up with the rest later.

You would find it helpful to involve your Deputy and one of your Advisers.

Do not move on to the next stage until you are entirely satisfied that you have mastered all aspects of the form you are completing.

TIMEWISE

In the example the company is called TIMEWISE. A brainstorming session by the company members has revealed that one of the members has access to a cheap supply of CDs and the group have decided that they will convert these to clocks. They will mount electric movements on one side of the disc, clock hands on the other and add numbers in different styles to the clock face.

A bank account has been opened at the local branch of HSBC and an overdraft facility has been agreed.

For the purposes of this example the JAP Registration Fee that you don‘t have pay is €73, the share price is 50 cênt. per share, JAP VAT is set at 17,5%, and JAP Corporation Tax is set at 10%. In reality these rates may vary from one year to the next. When you come to do the Accounts for your JAP Company, you must check the current rates.


THE JUNIOR ACHIEVEMENT PORTUGAL FINANCIAL MANAGEMENT SYSTEM

Regular Transactions

Optional Forms

Monthly Task

Final Accounts

Liquidation

Receipts FD1

Debtors FD4

Payments FD2

Creditors FD5

Extended Trial Balance FD3

Profit and Loss Account FD6

Statement of Taxation Liabilities FD8

Balance Sheet FD7

Liquidation Report FD9

STAGE 1: REGULAR TRANSACTIONS

“Receipts” Form FD/1

THIS FORM IS USED TO: •Record all income received. [CS1] received

YOU SHOULD: •Enter the name of your company. •Enter the Date for each transaction. •Complete the Where From column. This indicates the source of the money received. •Fill in the total amount received in either the Bank or Cash columns. •Use the Bank column when the money is going straight into the Bank (usually a cheque). Use the Cash column if you receive notes and coins that you will retain. •‘Analyse’ the income received in columns 3 to 8. The totals of columns 1 and 2 must always equal the totals of columns 3 to 8. •Pay particular attention to JAP VAT requirements. Refer to the example if necessary.

TIMEWISE EXAMPLE Please select Form FD/1 and have it in front of you.

You are now the Finance Director of TIMEWISE.

This is the form that you will use to record all money received by TIMEWISE. You should fill in the name at the top of the form.


53

You will see that the form is split into two sections. In the first section there is a column for the date, a wider column where you will record what the money you have received was for and if appropriate where it has come from. When you start making entries you should ignore the Brought Forward line. This Iine is used for recording totals from previous pages.

The Bank column is used when money that you have received goes straight into the company bank account (usually cheques) and the Cash column when you have received money, normally notes and coins which must be held under your control in a secure place. This cash may be used to make minor purchases but as soon as the amount of cash being held becomes excessive it should be paid into the bank account.

Columns 3 to 8 are used to ‘analyse’ payments received so that everything entered in columns 1 and 2 must always equal items entered in columns 3 to 8. This will become clearer as we proceed with the entries.

SOME INFORMATION ABOUT JAP VAT (VALUE ADDED TAX) It is important that you understand the implications of JAP VAT

It is one of the rules of Junior Achievement Portugal that you calculate JAP VAT on everything that you sell (Sales) and on everything that you buy (Purchases), so that, like a company, you pay VAT. The difference is that you pay it to Junior Achievement Portugal rather than to Customs & Excise. You should also calculate JAP VAT on all items of miscellaneous income, for example donations. The only exception is prizes. However, in the unlikely event that purchases amount to more than your sales, Junior Achievement Portugal will not make any refunds of JAP VAT. These payments, plus your registration fee and JAP Corporation Tax serve two purposes: firstly to make your company affairs as realistic as possible and, secondly, to provide some of the income Junior Achievement Portugal needs in order to provide you and your successors with this experience.

The recording of JAP VAT In your Receipts, Payments, Debtors and Creditors forms is as follows:

• SALES The selling price to your customers must include JAP VAT at the current rate (assumed to be 17,5%). Therefore once you have carried out your market research and determined the selling price you must divide this figure by 1,175 to obtain the true sales price you will receive. For example if you think the market price of your product should be €2,35 then your actual sales will be worth €2,00 and the 35 cent. attributable to JAP VAT.

Each time you make an entry for sales in one of your forms (FD/1 or FD/4) you need to divide it by 1,175 to obtain the amount to be entered in the sales column. You can then calculate the JAP VAT by multiplying this figure by 0,175. Having entered that in the JAP VAT column, check that this, plus the amount entered under sales equals the total amount.

NB: Prizes are not subject to JAP VAT as shown at the foot of Form FD/1.

• PURCHASES Certain purchases will include VAT. This may be shown on the invoice. If not, you need to calculate the split in cost of your purchases in the same way as for sales for all those items shown on form FD/2.


Let us now start to fill in some entries on the form.

The members of TIMEWISE have sold 300 euros 50 cent. shares. Together with the Company Secretary you have checked the Share Book counterfoils and collected in the money. It is now time to enter this on form FD/1. 1. Fill in the Date, say 15th September. 2. Fill in the Where From column - ‘Sale of 300 shares’. 3. Fill in the Cash column (2) with the amount received - €150. 4. Now decide how this should be split between columns 3 and 8. In this instance the money was simply for the sale of shares. No JAP VAT is involved and so the €150 is repeated in column 6. You will see that the amount of money received appears on the form twice. Once on the left hand side of the form and again on the analysis side, columns 3 to 8. This will be true for all amounts you enter in your accounting forms whether they are payments or receipts. You will have noticed that all the Cash columns are headed DR (debit) or CR (credit). Any item that you enter in a debit column must have an equal or corresponding credit and every credit item must always have an equal or corresponding debit. This is known as double entry book-keeping.

Let us move on to the next entry.

By early October the first batch of clocks is ready for sale. It had been decided that clocks would be sold for €5 each but when you reminded the Board that JAP VAT must be charged on each sale it was decided to charge €6 per clock and this would include the JAP VAT element.

The Sales Team sells 6 clocks and you have received €36 in cash for payment.

The first thing you will need to do is to calculate the JAP VAT. If you think about this, JAP VAT is not simply 17,5% of €36 because the sale price includes VAT. So, the calculation is as follows:

The total money received must be divided by 1,175 to obtain the true sale price before JAP VAT. So, divide €36 by 1,175 and you get €30,64, which is the true selling price due to the company. The remainder is the JAP VAT of €5,36. You can check this by then finding 17,5% of €30,64 (€5,36). Add the two together and you get back to €36.

Now enter this transaction on form FD/1 1. Fill in the Date 5th October. 2. Fill in the Where From column ‘Sale of Clocks’. 3. Fill in the total amount received in the Cash Column (2): €36. 4. ‘Analyse’ this receipt by filling in the JAP VAT element in column 3: €5,36 and the amount due to the company in column 4 (Sales): €30,64. Check that the total of entries in the DR (debit) columns (€36) equals the total of entries in the CR (credit) columns (€5,36 + €30,64).

Try one more. On 12th October more clocks have been sold and you have received €42 in cash. Before reading the next paragraph make the appropriate entries on form FD/1.

You should have: Date:12th October Where From: Sale of Clocks


55

Column 2: Column 3: Column 4:

€42,00 €6,26 €35,74

On 13th October you sell a clock to a friend and he gives you a cheque for €6 in settlement. Because this is a cheque it will need to be paid straight in to the Bank Account and you should enter it immediately in the bank paying-in book which you will receive once you have opened your Bank Account. Record this transaction as before but as the money is going into the bank and not in with the other cash you must use the Bank column (1) instead of the Cash column (2).

You should have: Date:13th October Where From: Sale of Clock Column 1:€6,00 Column 3:€0,89 Column 4:€5,11

Before going any further make sure that you understand and are confident with the above.


“ Payments” Form FD/2

THIS FORM IS USED TO: •Record all payments made.

YOU SHOULD: •Enter the name of your company. •Enter the Date for each transaction. •Complete the Where To column. This indicates where the money is being paid to. •Enter the total amount paid out in either the Cash or the Bank column. •Use the Bank column if you pay by cheque. •Use the Cash column if you pay by cash. •“Analyse’ the payment in columns 11 to 20. The totals of columns 9 and 10 must always equal the totals of columns 11 to 20. •Pay particular attention to JAP VAT requirements. Refer to the example if necessary.

TIMEWISE EXAMPLE Please select form FD/2 and have it in front of you.

We now need to consider money which has to be paid out by TIMEWISE.

You will see that it is similar in style to form FD/1. This form is also divided into two sections. The first part consists of a column for the date, a Where To column and columns for Bank and Cash. Similarly the second part consists of ‘analysis’ columns and once again every entry made on one side of the form in columns 9 and 10 must have equal and balancing items in columns 11 to 20.

Let’s try filling in some entries. Don’t forget to complete the name of the company, TIMEWISE, at the top of the form.


In their Welcome Pack TIMEWISE will have received an invoice for the Company Registration Fee wich you didn’t have to pay of €73. You are now to issue a cheque for this sum making use of the agreed overdraft facility. (You will receive a cheque book and agree any overdraft facility when you open your Bank Account). 1. Fill in the Date: 12th September. 2. Fill in the Where To column: Junior Achievement Portugal. 3. Fill in the Bank column: €73. Fill in the ‘analysis’ side of the page. In this instance column 18 is there specifically for the registration fee. No JAP VAT is involved.

To manufacture the clocks the Operations Director has said that she would like to buy 25 CDs which she can obtain for €10. She will also need €20 for 25 clock movements at 80p each and €5 for an assortment of hands and numbers. Any other materials or tools needed can be provided at no cost. Therefore out of the cash you hold, received from the sale of shares, you hand €35 to the Operations Director for which she signs a receipt.

You must never hand any cash to anyone without obtaining a receipt. A simple written note signed by the person receiving the payment is usually sufficient to keep a record until the transaction is completed. That is the time to enter the transaction on the forms.

This must now be entered in the books.

Although these are simple cash payments for basic materials you MUST calculate the JAP VAT you are deemed to have paid on these items. It will pay you to do so as you will see later on when you deduct this amount from the JAP VAT that you will have to pay to Junior Achievement Portugal.

The calculation is exactly the same as before ie, the total amount paid divided by 1,175.

€35 divided by 1,175 = €29,79 Therefore JAP VAT = €5,21

Enter this on form FD/2 1. Fill in the Date: 15th September. 2. Fill in the Where To column: Purchases. 3. FilI in the Cash column (10) with the total amount: €35. Analyse this payment by filling in the appropriate columns 11 to 20. In this instance €5,21 will go in the JAP VAT column (11) and €29,79 will be entered in the Purchases column (12).

Again check to ensure that the total of items in columns 9 and 10 equals the totals of all items in columns 11 to 20.

Try another entry.

On 20th September the Operations Director’s assistant presents you with a receipt for €5,30 plus 93 cent. VAT for batteries purchased for the clock movements. You duly hand him the cash and enter this in the books. Try this yourself now before reading the next paragraph.


57

You should have: Date:20th September Where To:Purchases Column 10: €6,23 Column 11: €0,93 Column 12: €5,30

Before going any further make sure that you understand and are confident with the above.

Very Important By now you will have collected two extra pieces of paper. The receipt from the Operations Director and the receipted invoice from her assistant. You must file and retain these documents very carefully. They are an important part of the Company’s financial records. Always keep all documents which provide evidence of money received or paid out.


Agreeing the amount of cash held and paying money in to the bank This stage involves both forms FD/1 and FD/2

On form FD/2 you will record that you have withdrawn your cash to pay into your Bank Account.

On form FD/1 you will record that your Bank Account has received the money.

ON FORM FD/2 (PAYMENTS) YOU SHOULD: •Enter the Date for each transaction. •Enter ‘Bank’ in the Where To column. •Enter the amount in column 10 - Cash. •Enter the amount in column 20 - Bank Cash Transfers.

ON FORM FD/1 (PAYMENTS) YOU SHOULD: •Enter the Date for each transaction. •Enter ‘Cash’ in the Where From column. •Enter the amount in column 1 - Bank. •Enter the amount in column 8 - Bank and Cash Transfers.

Don’t forget that any cash that you are holding must be kept in a safe place. Try to borrow a cash box or even buy one if funds will allow. We recommend that when it is not being used the box is locked away in a secure place. Before you leave a meeting always ensure that you have personally handed the box over to whoever is going to be responsible and ensure that that person is going to be available at your next meeting or when you will need cash. However, all cash which is not currently needed should be banked as soon as possible. This is good business practice.

KEEP YOUR CASH SECURE!

TIMEWISE EXAMPLE It is time to check and agree the amount of cash being held by TIMEWISE and pay any surplus into the bank. The first thing you will need to do is to count the cash in the box. For security and accuracy, this should always be done by two people working together. TIMEWISE has €186,77 in the cash box. We need to check to see if this agrees with our account books.


First, add up the items in the Cash column (2) on form FD/1 Receipts. You will find that this comes to €228. (Do not enter on the form. Keep a note.)

Next add up the items in the Cash column (10) on form FD/2 Payments. This comes to €41,23

The difference between the two totals should equal the amount of cash held. €228,00 - €41,23 = €186,77

You would probably agree that under normal circumstances this would be far too much to hold in cash and having discussed your immediate requirements you have decided to pay €140 in to the bank. A slip in the Bank Paying-In Book is completed ready for you and your assistant to go to the bank to pay in.

Now we need to record this in our books. Even for a simple transaction this involves a great deal of care. Go slowly one stage at a time.

Paying surplus cash into the bank involves both handing money out (a payment), because you are reducing the amount of cash you hold, and receiving money into the Bank Account (a receipt). Consequently this transaction needs to be recorded on both forms FD/1 and FD/2

Consider form FD/2 first:

You now understand that the difference between the two cash columns will tell you the amount of cash you are holding. Having paid cash out of the cash box you will need to record this in the Cash column 10. Remember however you must always have an equivalent entry in the analysis columns. You will see that a Bank and Cash Transfers column has been provided specifically for this purpose. Record the entry in column 20.

We now need to record this money going into the Bank Account. This is done on form FD/1. Therefore on the same day you should record €140 in the Bank column 1 and a similar figure in column 8.

Assume that it is 15th October and record this transaction. Try this yourself before reading the next paragraph.

You should have: On form FD/1 Date: 15th October Where From: Cash Column 1: €140 Column 8: €140

On form FD/2 Date: 15th October Where To: Bank Column 10: €140 Column 20: €140

Drawing cash out from the bank

Should you ever need to draw cash out of the bank (for example you may need to draw out some change as a float for a Trade Fair) the entries are similar but opposite. On form FD/1 you record the amount in columns 2 and 8, and on form FD/2 in columns 9 and 20.


59

THE BANK ACCOUNT (OPTIONAL)

One regular job you will need to undertake is to ‘reconcile’ the balance shown on your bank statement with the balance recorded in your books. In other words you must ensure that the money that your accounts tell you that you have in the bank agrees with the balance on your bank statement. You should arrange for the bank to send you a monthly statement and you should carry out this task every time a statement arrives.

Calculate the bank balance from your books by subtracting the Bank column 9 from Bank column 1 on forms FD/2 and FD/1. If you have money in your account then the total of column 1 will be the larger. If you are overdrawn, i.e. more money has been drawn out than you have put in, then the total of column 9 will be the larger. Find your bank balance by subtracting the smaller total from the larger. Agree this figure with your bank statement. There are, however, several reasons why they may not agree.

CHECKING ACCURACY If you have a difference, start by adding all the columns on forms FD/1 and FD/2, complete the totals boxes at the bottom and make sure that they agree. This will ensure that your arithmetic is correct and that your forms have been filled in correctly.

Next have a look at the bank statement and see if you can identify any entries which do not appear in your books.

The most common reason why your balance might be different from that shown on the statement is that when you draw (issue) a cheque you enter it in your bank payments column <FD/2) immediately, but it takes some time to go through the banking system. These are called uncleared cheques. Therefore, the bank statement shows a higher balance untiI these entries reach your bank account. Sometimes you may have recorded a receipt (FD/1) which is not yet on the bank statement. This would be an unrecorded receipt. Finally, if you are overdrawn the statement may show interest and/or bank charges which you need to enter on your payments form (FD/2), before preparing the extended trial balance (FD/3).

Bank Reconciliation (agreeing your bank statement).

Bank receipts less: Bank payments Bank balance Balance per bank statement Difference Represented by: Uncleared cheques Unrecorded receipts Other Difference as above

(

€

)

The bank reconciliation may be either photocopied or handwritten.

Because the entries on a Junior Achievement Portugal Company Bank Account are not usually very numerous you should have no difficulty in spotting where any differences lie. If you find you have a problem you should discuss this with your Advisers.


STAGE 4: OPTIONAL FORMS

‘’Debtors” Form FD/4 and “Creditors” Form FD/5 Before trying to balance our books and preparing some figures for a Board Meeting there are two other forms we need to consider. These are forms FD/4 (Debtors) and FD/5 (Creditors).

Debtors are people or organisations which owe you money. Most debtors are people who have been provided with some of your product or service but have not yet paid. Obviously you need to keep a record of these so that you can show it properly in your accounts and ensure that you get paid.

Creditors are people or organisations that you owe money to. Again a proper record must be kept.

Debtors and creditors are a complication that most Junior Achievement Portugal companies manage to avoid.

Provided you ensure that you pay immediately for all goods and services that you buy and that you collect payment at the time of sale for all goods or services that you provide, then you will not need to use these forms.

FORM FD/4 (DEBTORS)

THIS FORM IS USED TO: •Record details of all Debtors (people or organisations which owe the JAP Company money).

YOU SHOULD: •Enter the name of your company. •Record the Debtor’s name. •Enter the date of the transaction. •Enter the total amount of the debt. •Enter the amount of JAP VAT. •Enter the net amount due. (The difference between the total amount of the debt and the JAP VAT) •Enter the date in the final column when the debt is paid.

TIMEWISE EXAMPLE Please have form FD/4 in front of you.

This is simply a record of goods or services provided which have not yet been paid for. The name, date and amount columns are completed at the time of the sale and the Date Cash Received column is completed when the goods are paid for. As soon as the goods have been paid for then the appropriate entry can be made on form FD/1 Receipts. Let’s complete an example for TIMEWISE.

It is the 14th October and Presents Galore, a local shop has agreed to buy two clocks but they have asked for 30 days credit. This has been agreed by your Sales Team. Record this on form FD/4.

Once this has been completed you should have: Name:Presents Galore Date:14th October Total DR.:€12,00 JAP VAT CR.: €1,79 Net CR.:€10,21


61

Two things to remember. 1. You do NOT enter this onto your Receipts form FD/1 until you have actually been paid. 2. The invoice which you issue to Presents Galore must NOT show the JAP VAT as a separate item. They should simply be billed for the total amount. This is not real VAT. Presents Galore will not be able to claim this on their return to H.M. Customs and Excise, the body responsible for the collection of real VAT. FORM FD/5 (CREDITORS)

THIS FORM IS USED TO: •Record details of all Creditors (people or organisations owed money by the JAP Company).

YOU SHOULD: •Enter the name of your company. •Record the Creditor’s name. •Enter the date of the transaction. •Enter the total amount due to be paid out. •Enter the amount of JAP VAT due. •Enter the net amount due. (The difference between the total amount due and the JAP VAT) •Enter the date in the final column when payment is made.

TIMEWISE EXAMPLE Please have form FD/5 in front of you.

This form is used to record detaiIs of people that we owe money to. Again let’s complete an example. On 1st October the Company Secretary took delivery of some printed notepaper which cost €10 but which has not yet been paid for. The owner of Alpha Print has said that you can pay in one month’s time. Record this on form FD/5.

Once this has been completed you should have: Name:Alpha Print Date:1st October Total CR.:€10,00 JAP VAT DR.: €1,49 Net DR.:€8,51

Make sure that you fully understand this before moving on

Ask your colleague What is a Debtor?

What is a Creditor? Check the answers above.

Do you both understand?


STAGE 5: MONTHLY TASK

Form FD/3 - Monthly summary (Extended Trial Balance)

THIS FORM IS USED TO: •Help you ensure that all your book-keeping entries are correct and to produce Profit and Loss figures and a Balance Sheet.

YOU SHOULD: •Enter the name of your company. •Enter the date and relevant month.

BALANCING THE BOOKS Once a month you should “balance the books”. That is to say you should ensure that your book-keeping entries have been correctly made. This will also enable you to tell how much profit or loss you have made (Profit and Loss Account) and prepare a statement called a “Balance Sheet” which shows what the company owns (Assets) and what it owes (Liabilities). Armed with this information you will be able to give a meaningful report at Board Meeting and answer any questions which are raised. To complete this exercise you will need the Monthly Summary (Extended Trial Balance) form FD/3.

TIMEWISE EXAMPLE: Your first task is to add up all the columns on forms FD/1 and FD/2. Do this now on our example for TIMEWISE. Complete the Totals boxes at the bottom of each page. The totals on each page must agree. If they do not you have made a mistake and you will need to check each entry carefully to see where you have gone wrong. Each of the Totals on Form FD/1 should be €374,00 and on form FD/2 they should be €254,23.

Before we can continue there is one vital piece of information you will need from the Operations Director, and that is the value of the stock that you hold.

Stock is usually valued as three separate elements.

Raw Materials.

Work in progress.

Finished goods.

(In the case of TIMEWISE this would be the separate CDs, clock movements and hands and numbers)

(Partly completed clocks. eg CDs with movements attached but no hands or numbers)

(Completed clocks ready for sale)

For Junior Achievement Portugal purposes we recommend that you value Raw Materials and Work in Progress together and at cost; i.e. try to estimate the proportion that you paid for these items when you bought them.

Finished Stock should be valued at the Total Variable Cost. This may be a new term to you but the calculation is readily available from the Single Product Break Even Forecast Sheet MD/3 held by your Managing Director. Form MD/3 (available throught JAP website) is used in the very early days of the company and helps with the preparation of a Business Plan. You should make sure that you are involved in this exercise.


63

For TIMEWISE an example would be: Finished Stock, 6 clocks,€15 Raw materials/work in progress€10 Therefore, Total Stock€25

Now this is done we are ready to complete our Monthly Summary.

Make sure you have Form FD/3 (Monthly Summary) in front of you and fill in the company name at the top.

You will see that the form is in three sections. We will consider one at a time. All the shading does make the form look rather daunting but don’t be put off. The shaded boxes are filled in to help you because they are NEVER used and therefore, in most instances, you do not have to decide which box should be completed. Although there are three separate sections they are in fact all linked together and all the headings down the left hand column relate to those specific lines right across the form. (Laying a ruler across the page may help you to follow the lines across.)

The first section we need to consider is the Receipts and Payments Totals. This is used to summarise the total Debits and the total Credits from forms FD/1 and FD/2. It checks that all the debits equal all the credits and starts to order them in a logical sequence.

You will notice that all the headings in the Description column are the same as the headings on the columns on forms FD/1 and FD/2. The column numbers are also given in brackets to help you find them more easily. There are two columns missing. These are numbers 8 and 20. These columns are used solely for transfers between Cash and Bank and they are not required here.

RECEIPTS AND PAYMENTS TOTAL Now let’s start to fill in the Debits and Credits. You should work your way down through the headings checking each time to see if you have an entry for that column.

The first item is Sales (column 4). On form FD/1 the total in column 4, Sales is €71,49. This is a credit item and therefore is entered in the credit column. Sales are ALWAYS a credit and therefore the debit side has been shaded.

The next item is Purchases. Purchases is in column 12 on form FD/2. The total is €35,09, it is a debit and therefore it is entered on the debit side of FD/3. Purchases are ALWAYS a debit and therefore the credit side has been shaded.

The next column is Production Wages (column 13). You will see that we have no entries in this column on form FD/2 and therefore the box stays empty. Carry on in this way until you have worked your way to the bottom of the form. You will see that when you come to Cash and Bank you need to fill in both credit and debit columns. The debit totals from FD/1 columns 1 and 2 go in on the debit side and the credit totals from FD/2 columns 9 and 10 go in on the credit side. Similarly you must enter both debit and credit totals from FD/2 columns 11 and 3 against JAP VAT.

Now add up the debit and credit columns. The totals must agree.

If they do not you have copied something in wrongly and you should go back and check. The total of each column should be €488,23


TRANSFERS

Let’s now move on to the Transfers section.

This is where we are able to incorporate the other very important financial information that we have but which is not included in our Receipts and Payments forms. For most Junior Achievement Portugal Companies this will simply be the value of stock held but, whatever entries are made in this section the rules for double entry book-keeping still apply. That is to say, every time an entry is made in a Debit column a balancing entry must be made in a Credit column and every credit item must have a balancing entry on the debit side.

For TIMEWISE let us take our stock valuation; remember this was €25. Look down the headings on the left hand side of the form FD/3 and you will find a credit entry for Closing Stock. You will see that both columns of the first section have been blanked off because this item did not appear in our Receipts or Payments forms. We do, however, have a column in the Transfers section marked Debit to Stock. Fill the amount in the box (€25). You will see that this is in the credit column.

Remember, following the rules, we now have to make a corresponding entry in a debit column. Go on down the headings on the left hand side and you will find an entry “Stock”. You will see that this is against a corresponding debit column in the Transfers section. Enter €25.

For most Junior Achievement Portugal Companies the “stock” entries would be the only ones you would need to make in the Transfers section. However TIMEWISE has both Debtors and Creditors and we need to deal with these. Find your forms FD/4 and FD/5.

Let’s take form FD/4 Debtors first. Following the rule above go down the headings on the left hand side of the form until, near the bottom, find a heading for Debtors.

Fill in the total amount due to ine company (€12,00) in the debit column (DR.) in the Transfers section. Now we have to find appropriate places for the credit entries. The Credit is in fact split into two separate items. One element represents the sales value of the clocks to the company (€10,21) and the other is the JAP VAT element (€1,79). Therefore you should record in the credit column in the Transfers section against Sales at the very top of the form €10,21 and against JAP VAT at the very bottom of the form €1,79. Your debit entry of €12.00 equals the total of your two credit entries of €10,21 and €1,79.

Now take Form FD/5 Creditors and using the above rules make the appropriate entries in the Transfers section on FD/3. Remember that this is a creditor for Stationery.

When you have done it you should have: Against “Creditors” Against “Stationery” Against JAP VAT

€10,00 in the credit column €8,51 in the debit column €1,49 in the debit column.

Study the Transfers section carefully and you will see why there are so many lines marked “Credit to Creditors”. Although in our example our creditor was for Stationery it could just as well have been for raw materials, wages or salaries not yet paid, rent or hire charges owing or any other miscellaneous purchases. It’s just a question of selecting the appropriate line on the form. Add up the columns in the Transfer section and if you have followed the debit and credit rule the totals will agree. In our example the totals are €47,00. Do not move on until you fully understand the above.


65

PROFIT & LOSS ACCOUNT SECTION AND BALANCE SHEET SECTION We now move on to the third and final section of form FD/3 where we calculate just how much profit (or loss) we have made and produce a Balance Sheet.

PROFIT & LOSS ACCOUNT We will consider the Profit & Loss section first.

To complete this it is simply a question of transferring figures across from the first two sections of the form into the appropriate Debit or Credit column in the Profit & Loss Account.

Where you have two separate entries on one line in the first two sections of the form then these will need to be added together. For example on the Sales line we have a credit entry for €71,49 in the Receipts and Payments section and a credit entry of €10,21 in the Transfers section. Add these two together and put the total, €81,70 in the credit column in the Profit & Loss Account.

In the Purchases line we have €35.09 in the first section, but nothing in transfers, so €35,09 goes in the debit column in the Profit & Loss Account. Carry on down until you have filled in the figures for Stationery, Closing Stock and the Registration Fee (that you didn’t have pay) tand you will see that there are no more figures that can be placed in the Profit & Loss account. If you have a look at the figures you have filled in so far you will see that in fact they represent all your items of income and expenditure.

Remember that the full value of purchases and production wages has been shown as items of expenditure in the Profit & Loss Account. However, all these items have not been used as yet and that value needs to be shown as closing stock in order to arrive at the correct profit or loss for the period.

Add up each side of the Profit & Loss Account. Make sure that you put the totals in the boxes at the very bottom of the form.

On this occasion THE TOTALS SHOULD NOT AGREE. Do not despair. It is only by finding the difference between your income and your expenditure that you can calculate your profit or loss.

In our example our total expenditure (debit) is €116,60 and our total income (credit) is €106,70. As our expenditure is higher than our income what does this tell you? Yes. At the moment TIMEWISE IS SHOWING A LOSS! How can this be, you may ask, when our cash box is full, we have plenty of money in the bank and we have stock in hand? There is a very important lesson here and we will discuss it further when we have produced our Balance Sheet.

Back to the Profit & Loss Account. We have already decided that TIMEWISE has made a loss and the amount is calculated by subtracting the total credits from the total debits thus:

€116,60 - €106,70 = €9,90

In accordance with good accounting practice we need to make our Profit & Loss Account balance and we do this by inserting the amount of the loss in the credit column on the Profit/ Loss line. Rub out the total (€106,70) of the credit column and add the column again. You should of course come to €116,60 and both sides will now agree (i.e. it balances).


BALANCE SHEET

Let us turn now to the Balance Sheet.

The Balance Sheet is prepared in exactly the same way as the Profit & Loss Account, that is the figures are transferred over from the first two sections of the form but with some minor complications as follows:

For “Cash”, “Bank” and “JAP VAT” only the net figure, that is the difference between the total debit and total credit figures, is shown on the Balance Sheet.

The profit or loss figure in the Profit & Loss Account is transferred into the OPPOSITE column on the Balance Sheet. That is to say, if the company has made a loss, as TIMEWISE has, this figure is recorded in the credit column in the Profit & Loss Account. However, it must be carried over to the debit column in the Balance Sheet.

If the company had made a profit this would appear in the credit column in the Balance Sheet even though it will show as a debit in the Profit & Loss Account.

First then record the Loss in the Balance Sheet by carrying over €9,90 into the debit column.

For cash remember that we show only the net figure. Calculate the difference between €228,00 and €181,23 = €46,77. You must record the net figure (€46,77) in the debit column in the Balance Sheet.

Calculate the Bank figure for the Balance Sheet in exactly the same way. If you have done it correctly you should have €73,00 in the debit column. Had the credit figure been the larger of the two Bank figures this would mean that the company is overdrawn at the bank!

Carry on transferring the figures across the page until you get to JAP VAT. Here again you must show just one net figure in the Balance Sheet. You have debits and credits in both the Receipts and Payments Totals section and Transfers section of the form. What you must do is add together the debits from each to get one total, then add together the credits to get another total. Then subtract one from the other to find the net debit or credit thus:

Debits €6,14 €1,49 Totals €7,63

Credits €12,51 €1,79 €14,30

€14,30 - €7,63 = €6,67 net credit

Insert this figure in the credit column in the Balance Sheet

Now add up the columns of the Balance Sheet. Both totals should be €166,67. If not go back and check your calculations again.


67

WHY HAVE WE MADE A LOSS? Let’s consider again the loss made by TIMEWISE. Look at the Balance Sheet. With the exception of the recorded loss every item on the left hand, debit side, of the form represents the assets of the company, the things that the company owns. The right hand credit side on the form represents the company’s liabilities, that is the amounts owed by the company. Remember that your shareholders expect all their money back, hopefully with a dividend, at the end of the year. Suppose you had to “liquidate”, that is close the company down, right now. The first thing you would need to do is to sell off your existing stock. As this is represented by clocks in various stages of production and raw materials we decided earlier on that this would raise €25. We have a debt to collect in of €12 and a total of €119,77 in cash and in the bank. In other words all our assets are:

Cash and Bank Stock Debtors Total

€119,77 €25,00 €12,00 €156,77

From the Balance Sheet you can see that our liabilities, the money that we owe can be summarised as:

Due to Shareholders Creditor JAP VAT Total

€150,00 €10,00 €6,67 €166,67

You can see now that our total assets do not cover our total liabilities and the difference is represented by the loss of €9,90 shown in the books at the present time.

STAGE 6: FINAL ACCOUNTS

Form FD/6 - The Profit & Loss Account

THIS FORM IS USED TO: •Show the total income and expenditure over a certain period and show the profit or loss made during that period.

YOU SHOULD: •Enter the company name. •Enter the final date of the period covered. •Transfer the figures from form FD/3 into the appropriate boxes on form FD/6.

Only complete the bottom section of the form for the final accounts when your company is liquidated (closes down).

It may well be that you would wish to circulate copies of your Profit & Loss Account and Balance Sheet at your Board Meeting and the best way to do this is to transfer the appropriate figures from the appropriate sections on your FD/3 on to the Profit & Loss Account FD/6 and Balance Sheet FD/7.

Let us consider form FD/6.


You will see that there is a section for the date which indicates the final day of the period being reported. This Profit & Loss Account will cover all transactions during that period. You should find it relatively simple to transfer the totals from the Profit & Loss section on form FD/3 on to this form. Rather than putting debits and credits side by side, form FD/6 uses one column. Figures enclosed in brackets (debits) must be subtracted from the other figures in the section. For example in the box enclosing Purchases, Production Wages and Closing Stock you would add together Purchases and Production Wages, then subtract Closing Stock to get the Cost of Sales figure which is entered in the far right hand column. The Cost of Sales figure is in turn subtracted from the Sales figure to arrive at Gross Profit. All the expenses are then added together and the total subtracted from Gross Profit to give our Net Loss.

TIMEWISE EXAMPLE

Have a go using the figures from TIMEWISE.

You should have: Sales: Purchases: Cost of Sales: Gross Profit: Stationery: Total expenses: Net loss

€81,70 €35,09 less Closing Stock €25,00 equals €10,09 €71,61 €8,51 plus Registration Fee €73,00 equals €81,51 €9,90

STAGE 7: FINAL ACCOUNTS

Form FD/7 - The Balance Sheet

THIS FORM IS USED •Show the total ASSETS (what the company owns) and the total LIABILITIES (what the company owes) as at a certain date.

YOU SHOULD: •Enter the name of the company. •Enter the date to which the figures have been prepared. (This is not necessarily today’s date) •Transfer the figures from form FD/3 into the appropriate boxes on form FD/7.

Now let’s have a look at the Balance Sheet form FD/7.

Because the Balance Sheet is like a snapshot of the company’s affairs at one particular moment in time, the date is ‘’As At” the date that the books are balanced. Again the figures can easily be transferred from the Balance Sheet section on form FD/3.

TIMEWISE EXAMPLE

Once completed the totals on the Balance Sheet should read: Total A€156,77 Total B€16,67 Total C€140,10


69

Because at the moment TIMEWISE is showing a loss, the loss should be deducted from the share capital giving: Total D€140,10

At this point you have completed the exercise of producing a set of sample accounts. Hopefully this has given you a basic understanding of the forms and how they are to be completed. Keep them so that you can refer to them as necessary. The remainder of this information should be read only when you have a specific task to undertake.

PREPARING YOUR FINAL ACCOUNTS

Eventually the time will come when the rules of Junior Achievement Portugal dictate that you will have to close your company down (this process is known as liquidation), and prepare the final accounts.

You may need to prepare a set of Interim Accounts to include in your Company Report for the Competition if the Competition date is prior to your liquidation.

One of the first things you will need to do is to sell off any remaining stock you may have whether finished goods or raw materials. Eventually you may have to accept that some items just cannot be sold and therefore their value must be regarded as nil.

Once this has been done you should complete an Extended Trial Balance form FD/3. This wilI provide essential information which will be needed for your final Board meeting.

JAP CORPORATION TAX At this stage we must assume that you have made a profit and before going any further you must calculate your JAP Corporation Tax liability. This tax is to be calculated at the current rate (assumed to be 10%) of your net profit. This is absolutely essential and MUST be paid by ALL Junior Achievement Portugal Companies. It is only by collecting taxes such as this that Junior Achievement Portugal can continue to operate and offer the experience to future generations. In the real economy taxes are vital to the Nation’s wealth and success and it is dishonest to try to evade paying them. Once you have obtained a profit figure after tax the Board will be in a position to make decisions on how the final profit is to be divided up.

SHAREHOLDERS’ DIVIDEND Firstly you must consider a dividend for your Shareholders. Remember they are the people who had faith in you in the first place and invested in your company. They certainly deserve to be rewarded. A maximum dividend of 20% is quite acceptable and you should not feel pressured to go any higher. Once the Board has decided the level of dividend to be paid then they will have to decide what to do with the balance. Most Junior Achievement Portugal Companies pay this money to a Charity Organisation.

COMPLETING THE FINAL FORMS

Profit & Loss Account FD/6 Fill in form FD/6 but this time you will need to complete the section at the bottom marked “For Final Period Only”. However, this part of the form is very straightforward and by the time you need to complete it you will be very familiar with all aspects of the accounts. It is simply a record of how the final profit of the company is to be allocated.


Balance Sheet FD/7 Your final Balance Sheet will also be very simple. Your only assets should consist of the money you have in your bank account and held in cash. Your only liabilities will be for JAP Corporation Tax and JAP VAT.

STAGE 8: LIQUIDATION (WINDING UP YOUR COMPANY)

Form FD/8 - Statement of Taxation Liabilities Form FD/8 is the Statement of Taxation Liabilities and you will need to complete this and send it with a cheque to cover the total to Junior Achievement Portugal National Office.

THIS FORM IS USED TO: •Calculate the amount of JAP VAT and JAP Corporation Tax to be paid.

YOU SHOULD: •Enter the company name and address. •Enter the company registration number. You can obtain this from the Company Secretary. It is shown on your Certificate of Incorporation. •Enter the date of your accounts as shown on your Balance Sheet. •Enter the total JAP VAT collected from column 3 on form FD/1. •Enter the total JAP VAT paid from column 11 on form FD/2. •Enter the total JAP VAT liability being the difference between the JAP VAT. Collected and JAP VAT paid. Please note, no refunds of JAP VAT are paid. •Enter the amount of JAP Corporation Tax due from the bottom section of form FD/6. •Add together the JAP VAT and JAP Corporation Tax and enter this in the final box. •Make out a cheque for the amount due and send the form and the cheque to Junior Achievement Portugal National Office.

STAGE 9

Form FD/9 - Liquidation Report

THIS FORM IS USED TO: •Report to Junior Achievement Portugal how your final assets have been distributed.

YOU SHOULD: •Complete the company name and address. •Enter the date from your final Balance Sheet. •Show how you arrived at the final amount held in cash or in your Bank Account. •Show how this money was distributed. •Ensure that the form is signed by yourself and the Managing Director. •Have the form checked and signed by an Adviser. •Enter the total JAP VAT liability being the difference between the JAP VAT collected and JAP VAT paid. Please note, no refunds of JAP VAT are paid. •Have all your accounts checked (audited) and ensure that the auditor signs form FD/9.

This form shows how you have converted all your assets to cash and the first Total figure must be the same as the figure reported at Total A on your final Balance Sheet. The Final Expenses section shows how your final assets have been distributed and the two totals must agree.

Once completed form FD/9 must be signed and sent to Junior Achievement Portugal National Office with form FD/8.


71

The Personnel Director

WHAT IS PERSONNEL?

Personnel work is about providing expertise and support for line managers in developing and managing their own staff and in handling organisational change.

Providing expertise and support in: •training and development; •motivation; •delegation; •disciplinary procedures; •managing teams; •health and safety issues; •pay and rewards.

Handling organisational change by: •ensuring directors understand their roles; •dealing with conflict; •communicating changes in strategy; •managing re-elections.

THE IMPORTANCE OF YOUR ROLE IN THE COMPANY

As Personnel Director you will play a central role in looking after the Company members.

People are the most important resource in ensuring the successful running of a company. It’s your task to help the business gain the maximum benefit from its people. Therefore your role should not be underestimated!

You will create stability within the structure by resolving conflict, and maintaining motivation in order to ensure the smooth running of the Company. Without you, chaos!

ORGANISATION CHART: Managing Director

Company Secretary

Finance Director

Personnel Director

Operations Director

Marketing Director

Sales Director ICT Director

Deputy Operations Director

Deputy Marketing Director

Deputy Sales Director

Operations Team

Marketing Team Sales Team


For words or ideas you don’t understand, the “Glossary” in Appendix l of the Student file will probably have the answer.

WHAT THE PERSONNEL DIRECTOR DOES

At the Beginning...

SELECTION AND RECRUITMENT Before selection for specific tasks starts, it will be necessary to draw up a list of job requirements. You may wish to produce job descriptions and advertise vacancies. As Personnel Director you will be expected to advise on the most suitable person for each job created, bearing in mind, of course, the skills and preferences of the Achievers involved.

PERSONNEL RECORDS Every organisation is required by law to keep details of their employees. You will need to record details of your members: •Name •Address •Telephone number •Date of birth •Ethnic monitoring •Specific skills •Training, work experience •Hobbies/interests •Role in Company

PAY POLICY People are the most important resource of an organisation. Without people, an organisation would not be successful.

One way an organisation recognises people’s contribution is through the payment of salary. It is important to have a clear payment policy. You will need to liaise with the Finance and Marketing Directors to work out a suitable payment structure.

Following this you will need to make a presentation to the Board, outlining your projected pay structure.

See form HR3, available through the JAP website.

PRESENTATION TO BOARD After your appointment, you will need to communicate some important issues to the rest of the Company. This should include: •Outlining the aims, objectives and process for completing the Record of Achievement. (Consult your Link Teacher/Lecturer about this and your Advisers) •Identifying disciplinary/grievance procedures •Outlining your role in organising training events •Discussing health and safety


73

Ongoing...

DUTIES Weekly meetings: •update on any personnel and training issues and developments; •complete attendance form. Monthly meetings: •inform Company employees of salary payments, bonuses and incentives; •report on any personnel changes; •remind employees of personal reviews for Record of Achievement.

ATTENDANCE AND PAYROLL •By recording hours worked by all employees (See form HR2) you will be able to: • calculate salary payments; • evaluate the contribution of each individual. •Forms HR1 and HR2 should be filled in weekly to record attendance at sessions. It is important to be accurate. You will be record ing your Advisers attendance as well! Your JAP Board will need this record in order to issue Certificates at the year end. •From the attendance record that you have kept, you will need to complete the payroll record HR3 each month. This identifies wages, bonuses and commissions to be paid. Forms HR1, HR2 and HR3 are available JAP website.

HEALTH AND SAFETY •All employers are required by law to meet Health and Safety standards as set out by the Government. •Depending upon your type of business, you will need to make sure that all employees understand the health and safety issues and comply with policy. (Discuss with Advisers) •You should ensure that accurate accident report forms (OPS5) are sent promptly to Junior Achievement Portugal National Office. Keep a copy. Form OPS5 is available through JAP website.

TRAINING •It is your responsibility to ensure that all employees are adequately trained for the job they are expected to do, and that training is updated whenever necessary. Training can be “On the Job” or through specially designed sessions. •Create and keep a record of all training. •Many JAP Boards organise training seminars. Be sure that representatives from your Company take advantage of these.

MOTIVATION •Involvement and communication are key. Encourage members to: (a) make suggestions, (b) take decisions, and (c) make things happen. •It is vitally important to keep the team motivated and loyal. Staff development and promotion can be a very positive incentive - as well as any financial incentives. •Lack of motivation can be quite an issue, particularly after Christmas. The whole team must think carefully how to overcome this problem.

GENERAL COMMUNICATIONS •As Personnel Director, you should be aware of any changes in strategy and the implications of these on personnel. It is your role to communicate these changes to the rest of the Company. •You should encourage open discussions about any issues or problems.


ADDITIONAL EMPLOYEES Should you need to recruit any casual employees, you will need to carry out the following: • discuss requirement with the relevant Director; • draw up a job description; • place an appropriate advertisement (perhaps on the school notice board); • interview candidates in conjunction with the relevant Director; • determine pay (with Finance Director); • make an offer of employment.

DISCIPLINE / GRIEVANCE All employees are expected to meet a required standard of conduct, attendance, timekeeping and job performance. If your Company standards are not being met by employees then you may need to take some disciplinary action. You will therefore need to have a disciplinary procedure. This should include: • verbal warnings; • written warnings; • dismissal if the other procedures prove inadequate. Any disciplinary hearing should be carried out by yourself and the relevant Director. Likewise, should an employee have a grievance you will need to ensure that you have a suitable procedure for dealing with this.

MANAGING RE-ELECTIONS You will need to organise a skills audit for all employees before the re-elections. This will enable the Company to select the most suitable people for the right roles. You will also need to manage the reelection process. This will involve: • asking for nominations at the meetings prior to the election; • encouraging nominees to press their case; • agreeing with your Advisers how to run the re-election. Remember you will also need to present your nomination for which role you wish to take up. Following the re-elections you will need to update the personnel record and ensure that relevant files have been passed across to each new Function Director.

At the end...

FINAL REPORT •When it is time to wind up the company, you will need to check through all the information on the attendance records to determine final pay or rewards. You will need to present the final attendance figure for all employees. •You should encourage individuals to complete their Record of Achievement. Make sure that an Adviser is available to sign them. •Ensure you play your full part to the very end.

SOME SKILLS AND QUALITIES YOU WILL DEVELOP In addition to academic qualifications, many employers want individuals who can demonstrate their ability in a range of core skills. Taking part in the StartUp Programme is an excellent way to develop these skills. As Personnel Director within the StartUp Programme, you will be able to develop skills in: • influencing others; • teamwork; • planning and organising; • drive and motivation;


75

• understanding the behaviour of others; • interview techniques; • presentation styles; • report writing skills.

WHAT KIND OF COMPANY DO YOU WANT TO BE? It is important for you and your colleagues to share a vision for your Company. You will develop a Mission Statement, which summarises this shared vision You will also develop clear objectives against at least five key criteria: • Customer satisfaction. • Use of resources. • The Environment. • Profitability. • Quality. Your aim will be to run your Company innovatively, coming up with new ways in which to overcome problems and continuously improve your Company.


The Operations Director

If you decide to provide a service, the majority of the production tasks described in this document will still apply.

WHAT IS PRODUCTION? Production is the conversion of raw materials into goods which meet a customer’s needs. For example, this could be a block of wood made into a pencil holder.

The Operations Department has considerable influence on the profitability and success of the company. The more efficient and effective the production process, the more competitive and profitable the company will be. Production is efficient and effective when it is providing goods of the right quality, at the right price, at the right time.

THE IMPORTANCE OF YOUR ROLE IN THE COMPANY In a Junior Achievement Portugal Company research and development is carried out by the Marketing and Operations departments.

You will advise on product design and development, make a prototype, cost the product, and plan a safe method of production which can reproduce that prototype effectively and efficiently.

You will purchase materials of an appropriate quality and at the best price.

You will ensure that any training requirements are met.

The Marketing Director will find out who the potential customers are, and will watch the production process very closely, to ensure that the product is exactly what the customer wants.

You will also need to liaise with the Sales Director to ensure that adequate, but not excessive, stock is available when needed.

You must keep the Financial Director informed of production costs.

Your responsabilities include doing everything you can to ensure the Company retains delighted customers.

Pay special attention to how well your Company is achieving customer satisfaction when you review your progress.

WHAT THE OPERATIONS DIRECTOR DOES

At the Beginning...

PRODUCT DESIGN AND PROTOTYPE •Once a product has been selected, liaise with the Marketing and Finance Directors on product feasibility and design. •Pay particular attention to ease of manufacture, and adherence to quality and safety standards. You will then be involved in the production of a prototype, paying particular attention to the raw materials needed and the processes which will turn these into the finished product.


77

• •

Check that your product or service does not contravene JAP regulations. Consider carefully the environmental impact of your product.

PRODUCTION METHODS AND PLANNING •Once you have produced a successful prototype, you will need to fill in the Equipment and Tools List (Form OPS1). This form must be counter-signed by an Adviser. •You will need to work out your production processes in detail, step by step. •You should fill out form OPS2, the Operation Sheet, listing all the equipment and materials needed for each step in the process including appropriate quality controls. •Plan the order and timing of your production processes so that the right amounts of the appropriate quality of raw materials and facilities are available at the right time, and machines and people are available as required. •Carry out the 5-step risk assessment. Forms OPS1 and OPS2 are available through JAP website

TRAINING AND HEALTH AND SAFETY •If training in the production processes including the use of tools is needed, work out exactly how, when and where such training will take place (Form OPS1). •Liaise with Personnel and your Advisers to ensure that you comply with Health and Safety legislation, and complete OPS7, the Health and Safety Rules form. •Be aware of the comfort and safety of your Operations Team at all times. •Check with Trading Standards. Forms OPS1 and OPS7 are available through JAP website

PURCHASING STOCK AND PRICING •You should now be able to give a fairly accurate estimate of production costs, and should liaise with the Marketing, Sales and Finance Directors to determine a selling price for your product. •Now you must purchase the raw materials needed for production. Select carefully in terms of quality, cost and reliability of supply. Use a copy of the Purchase Order form to record each purchase made. (OPS6) •Gain authority for purchases over €200 and complete the Purchase Authority section of OPS6. •Once you are sure that you can reproduce the prototype in bulk to conform to the requirements of quality, price and delivery times, agree it with the Marketing Director. Form OPS6 is available through JAP website

Ongoing...

OPERATIONS RECORD AND STOCK SHEET (Weekly: separate form for each product) • This is for details of finished products that have passed final quality inspection. • Enter number of items produced (a) today and (b) to date. • Enter number of items passed on to Sales (c) today and (d) to date. • Obtain the Sales Director’s signature. • Enter items returned from Sales in (e). Then calculate stock (b - d + e = stock). Form OPS3 is available through JAP website

STOCK SHEET (Monthly - Hand in to Finance Director in time to incorporate figures in monthly board meetings.) •Supply information relating to all stocks of raw materials, partly finished items and finished items.


For partly finished items and finished items the cost per unit will include the cost of materials and labour. •Weekly completion will make for more accurate records. See form OPS4 available through JAP website

ACCIDENT REPORT FORM •Use this form to report any accidents immediately. •It must be sent to Junior Achievement Portugal National Office through the Personnel Director. •Keep a copy for the Company Records. •Ensure that the Managing Director, Advisers and teachers/lecturers are informed. See form OPS5 available through JAP website

REVIEW (Weekly/Monthly) •You will be required to present a progress report at the weekly meetings. •For the monthly Board Meetings you must prepare a more detailed, including an inventory of stock.

OTHER DUTIES (Continuous) •Targets: Liaise with Marketing and Sales to produce target figures for your team. It is essential and motivating to know what production rate you are achieving against targets. •Quality Management: All items must pass through a quality management system before being handed over to Sales. At each stage of production check against the prototype that quality levels are being maintained and ensure that there is a final inspection point. Remember, “Quality Sells”, and a dissatisfied customer is a bad advertisement for your product. •Training: Regularly check that your team is adequately trained, especially if new production processes are introduced. •Health and Safety: Check that your team is complying with all applicable regulations. If protective clothing is necessary it must be worn and ensure the availability of any necessary supervision. Your team must be aware of any hazards that the raw materials you are working with present. They must know where the following are situated: • First aid kit • The telephone • Fire extinguishers • The emergency exits •You must also be aware of evacuation procedures •Purchasing: You will need to buy in raw materials to meet agreed production estimates. •Maintenance: Check that all equipment and tools are well looked after and stored away safely. •Production area: Must be left clean and tidy. •Review: Regularly review all operations to ensure that production is efficient and conforming to quality requirements.

•


79

At the end...

STOCK AND EQUIPMENT •Stock Clearance - Plan in agreement with Sales Director. Run down production as your Company approaches liquidation. Attempt to clear stock. •Equipment - Return all borrowed tools and equipment.

FINAL REPORT AND LIQUIDATION You will need to draw up a report of your time in office to present at the Annual General Meeting and for inclusion in the Company’s Annual Report.

SOME SKILLS AND QUALITIES YOU WILL NEED TO DEVELOP •Logical thinking: the ability to think through processes and translate these into practice. •Organisational skills: the ability to organise your team, materials and tools in order to make the best use of resources. •Understanding of technological processes: the processes will not necessarily be very sophisticated. However, you will need sufficient understanding to be able to train and advise the Operations team.

WHAT KIND OF COMPANY DO YOU WANT TO BE? It is important for you and your colleagues to share a vision for your Company. You will develop a Mission Statement, which summarises this shared vision. You will also develop clear objectives against at least five key criteria: • Customer satisfaction. • Use of resources. • The Environment. • Profitability. • Quality. Your aim will be to run your Company innovatively, coming up with new ways in which to overcome problems and continuously improve your Company.


The Marketing Director

WHAT IS MARKETING?

Good marketing is the key to the success of your Company!

Marketing is responsible for making sure that customers buy products or services from your Company. Customers will only buy your product if it will help them: • do something that they can’t do now; • do something better than they can do it now; • do something more quickly than they can do it now; • do something more easily than they can do it now; • do something more cost effectively than they can do it now; • get a better return on investment than they do now; • help them feel or look different or better than they do now.

These are “customer needs”.

Marketing is also responsible for making sure that your Company will make a profit from selling products and services to your customers. You will only make a profit if your customers buy your product at a price that will give you a profit after all your costs have been taken into consideration.

HOW DOES MARKETING DO THIS?

Research: You will need to know about your potential customers! Who are they? Where are they? Why do they need to buy? What are their “customer needs”? You will also need to know the size and value of your potential market.

Strategy: There are four key elements to any Marketing Strategy known as the “marketing mix” or the “4P’s of marketing”. •Product (or service): Your product must meet the needs of your customers identified in your market research i.e. function, style, image, colour, packaging. •Price: Your price must be one that customers see as good value and that gives you the best profit. It should also reflect the image of your product or service. (Quality image = High price) (Bargain basement image = Low price). •Place: How and where you make your product or service available to your customers. You should make it easy to buy from you. •Promotion: Only when you have got the Product, Price and Place right should you then promote your product or service and how customers can buy it.

THE IMPORTANCE OF YOUR ROLE IN THE COMPANY You will be responsible for formulating, recommending and implementing the Company’s Marketing strategy and plan. You will set your Marketing Objectives, carry out Research, formulate the Product, Price, Place and Promotion Strategy, manage and constantly monitor its implementation.

Your responsibilities also include doing everything you can to ensure that the Company retains “delighted customers”. Pay special attention to how well your Company is achieving “customer delight” when you review your progress.


81

Work with the ICT Director to exploit the new techology available to you when marketing your Company and your products. You should think about using ICT to generate promotional materials such as posters. You should also ensure that you have an input into your Company’s listing on the JAP Virtual Trade Fair (accessible through the Junior Achievement Portugal web site). You should also think about working with the ICT Director to create your Company’s own promotional web site.

WHAT THE MARKETING DIRECTOR DOES

At the Beginning...

STEP 1 - SKILLS, EXPERIENCE AND PRODUCT •Liaise with the Personnel Director to identify the skills and experience of Company members. •Brainstorm what product/service you would like your Company to sell. •Remember that some products/services are prohibited by Junior Achievement Portugal. (Don’t go into detail about your product/service or think about how you are going to sell it until you have carried out your research. The details come later).

STEP 2 - MARKET RESEARCH Research customer needs: •Target: Decide who are the most likely people to buy your proposed product or service. •Desk research (Secondary research): Find out if there is any published information about your target group that will help you develop your marketing strategy. •Field research (Primary research): Design a questionnaire and use it to find out the things you need to know about your customer needs. What do customers want under the 4Ps (Product, Price, Place, Promotion)? • Product: Design, Function, Image, Packaging, requirements? • Price: What do they expect to pay and how do they want to pay? • Place: Where and how do they expect to buy your product or service? • Promotion: What type of promotion would be most effective in reaching your target group?

STEP 3 - SWOT ANALY From the research that you have carried out identify your Company’s Strengths and Weaknesses in producing and marketing your proposed product/service. Identify what Opportunities are open to you and what Threats you see. •Strengths: What are you good at and what will you be able to do well? •Weaknesses: What are you not so good at and where might problems occur? •Opportunities: What opportunities are open to your business? •Threats: What might go wrong if you are not careful?

STEP 4 - MARKETING STRATEGY As a result of your research and your SWOT analysis you should now write your strategy and present it to the Board for agreement. •Product: A detailed description of your product showing how it meets customer needs. Include Design, Function, Image, Packaging requirements, Quality and Environmental impact. •Price: Your prices and how you arrived at that figure. Terms of business (how and when you expect them to pay). •Place: How and where you are going to make your product available. •Promotion: Where and how you are going to promote your product or service. Wherever you can, use free or cost effective publicity. ie: Free Publicity such as local press and radio, school events and notice boards as well as Cost Effective such as posters and leaflets or a web site.


STEP 5 - SALES FORECAST •In order to plan, or budget, the Company will rely heavily on the sales forecasts produced by the Marketing Director, in liaison with the Sales Director. •You must use all your available data to produce the most accurate forecast possible of how many sales you expect, and the associated costs.

Ongoing...

REPORTS •You will be required to present a verbal report of sales performance and targets at the weekly meetings. •For the monthly Board Meeting you must prepare a more detailed written report.

QUALITY MANAGEMENT •Liaise with the Operations Director to manage quality at the design and development stage and regularly throughout production. •The quality of the product must conform to, or exceed, customer’s requirements.

REVIEW OF THE STRATEGY You must regularly review your marketing strategy. •Is the product right? •Is the price right? •Are your products reaching your customens effectively? •Are your promotional strategies working? Could any of the above be improved? Use market research methods and liaise with the Sales Department to gather customer reaction.

SUPPORT SALES •Work closely with the Sales Director. •Support the Sales Team and encourage their sales efforts.

At the end...

SALES DRfVE Help Sales to clear stock with imaginative marketing strategies make the most of any opportunities. For example “closing down sale” or “last chance to buy!”

FINAL REPORT AND LIQUIDATION •You will need to draw up a report of your experience as Marketing Director to present at the Annual General Meeting and for inclusion in the Company’s Annual Report. •Refer the student File for details of the Liquidation procedures. Ensure you play your full part to the very end.

SOME SKILLS AND QUALITIES YOU WILL NEED TO DEVELOP •Drawing up questionnaires: you need to design questionnaires which will provide the most useful information in the shortest time. Most people do not like long questionnaires. •Analytical ability: to use information to develop a marketing plan, forecast sales and pass on relevant information to other departments. •Creative flair: to spot opportunities, develop ideas and strategies and, use materials creatively. •You must also be enthusiastic, have a positive approach, be a good communicator and have the will to win!


83

WHAT KIND OF COMPANY DO YOU WANT TO BE? It is important for you and your colleagues to share a vision for your Company. You will develop a Mission Statement, which summarises this shared vision.

You will also develop clear objectives against at least five key criteria: •Customer satisfaction. •Use of resources. •The Environment. •Profitability. •Quality.

Your aim will be to run your Company innovatively, coming up with new ways in which to overcome problems and continuously improve your Company.


Your Guide to Gaining Publicity

INTRODUCTION An important aspect of running a company is making potential customers aware that you exist and what products or services you provide. There are two basic ways of doing this - advertising and public relations. The purpose of this document is to introduce these methods with practical advice.

Public relations can be defined as “the promotion of a favourable opinion towards an organisation among the public”. Where as advertising can be described as “presenting the most persuasive selling message to the public to encourage sales”.

The key difference is that advertising seeks to sell a product or service while PR seeks to inform people about that product or service. Or, “advertising is selling but PR is telling”.

ADVERTISING Advertising can vary from using hard hitting to subtle “selling” messages to raise awareness and build confidence in a product or brand.

With advertising, the company buys space in a newspaper or magazine, on radio or TV etc. in which to put across its message. The company has complete control over the wording and the timing of the advertisement. Provided the advertisement is legal, decent, honest and truthful, a company can say whatever it likes.

One of the most traditional methods is to use posters to promote awareness of an event, product or brand. Advertising in this manner need not necessarily be expensive, hand- made posters and flyers can be a simple and often effective means of communicating a message.

While advertising in most cases has to be paid for and will appear when you want, promoting your company through PR and media relations can be more cost effective when put to good use if budgets are limited.

THE INTERNET A good web site can be a very effective, inexpensive way of advertising your company and your products to a wider audience.

You should work with the ICT Director to decide whether a web site would be a good means of publicity for your company. First you must decide what you want the Web site to achieve.

What do you want to tell potential customers about your company and your products? Are you using your web site for advertising only or will it include an order form for products?

NB: If you include an order form you must remember you must not handle credit card transactions and so will have to think about how the customer will pay. Think carefully about the risk before giving credit.


85

MEDIA RELATIONS Public relations includes a variety of activities, from taking a stand at an exhibition, or giving talks on your particular product or service. PR also includes media relations.

Media relations is one of the core activities within public relations and can be defined as “the promotion of a favourable opinion towards an organisation, through newspapers, magazines, radio and television, among the public”.

There are three main ways you can do this: 1 By meeting journalists to tell them about yourself and your company and to offer them information and interviews. The journalist may decide to write an article about your company at that time, or will know how to get hold of you if they ever need information or comments from a Junior Achievement Portugal company. 2 Writing articles on your product or service and offering the articles to the media for exposure. For example, HSBC offers newspaper articles on subjects ranging from new bank accounts and services available to the public, to the effects of a single currency on the European Monetary Union. A Junior Achievement Portugal company might write an article about how or why you set up a small company, what you hope to achieve, or about how a company rur by teenagers can compete with the corporate giants. 3 Issuing press releases to the media with a newsworthy story or angle. The key word is “news”. The release should tell the journalist something he or she does not already know.

PRESS RELEASES The press release is an essential part of gaining extra publicity. Even when members of the media are approached directly over the telephone or in person, they will inevitably ask for something in writing.

To gain extra publicity through the media you will have to compete for valuable space in a newspaper, or limited air-time on radio or television. The press release must therefore have a newsworthy story or angle.

A press release should be a short piece of narrative, which encapsulates the central elements of a story so that they can be grasped quickly. It also has to be persuasive and therefore well written. Here are some basic rules to keep in mind:

8 Golden rules for an effective press release 1 A press release should be clearly typed, preferably on one or two sides of an A4 page with 1.5 line spacing. 2 Try to think of a heading for your press release - one that is active and catches the attention. What you are trying to do is make your press release stand out from all the others. 3 The contents of the press release are traditionally reduced to answering the six W’s. WHO are you writing about, WHAT are you writing about, WHY is it happening, WHERE is it taking place, WHEN is it happening, and HOW (although it doesn’t begin with a W, it does end in one!) These may not all apply to every story, but it is amazing how many press releases leave out essential information. 4 The story should be briefly introduced in the first two or three sentences, within the first paragraph. 5 A press release is a mainly factual piece of narrative and personal opinion, or advertising style hype, should be limited to quotes. Introduce a quote from a representative of the company or one of your Advisers. Do not forget to mention the name and title of the person who is quoted who should also approve it before it is sent to the media.


6 A standard paragraph relating to Junior Achievement Portugal in general should be included at the end of each press release to give background information. 7 Conclude with the precise address, any timings, dates, cost of admission etc. or further relevant details. 8 Finally and most importantly, the name or names, addresses and telephone numbers for further information. If you are issuing a press release to radio or television, you should be prepared for someone to be interviewed.

TARGETING PRESS RELEASES Targeting means compiling a list of media to whom you should issue your press release in order to reach your target audience. Your product or service may be of general interest to the public, but perhaps more specifically to one in particular e.g. the youth or business markets. The targeted media list should include those publications and programmes that reach the largest proportion of the audience. For example your targeted list may include your regional and local newspapers, radio and TV stations. Their names and addresses and telephone numbers can be found in telephone directories or by visiting your local library.

You can issue your press release by fax or post. There are arguments and against each method. Faxing is quick, but not always accurate. Post gets to the right person, but is sometimes slow. If you have the choice it’s best to ask the journalist which they prefer. Just remember - if you are issuing the release by post, write and date it for the day that it will land on the journalist’s desk, otherwise it’s old news. You might also want to consider e-mail as many journalists and news desks now have e-mail addresses. This is a good way of ensuring that your release is sent quickly, and goes to the person it is intended for. However don’t assume that because the e-mail has been sent, it has also been received!

Whatever method you choose for issuing your release, it is always advisable to contact the media you have targeted prior to issuing the press release, to ensure you are sending the press release to the correct journalist. Within the editorial staff, there are journalists who specialise in particular areas e.g. business, politics, youth, sport etc. This is also a good means of introducing your story to the relevant journalist.

PHOTOGRAPHY Newspapers always need good pictures to liven-up the printed pages of text, and one picture is worth a thousand words

When a good photographic opportunity arises, always invite the picture desk to send a photographer. Or alternatively, accompany your press release with your own photography.

A picture should be lively and represent the story. Always caption the picture with a note of who is in the photograph and contact details for further information. Always attach the picture to your press release to prevent them from becoming separated.

A standard sized, good quality colour picture is sufficient for most newspapers. But a hired photographer will add a professional touch and advice at a cost.

If you have access to a digital camera, it’s a good idea to take electronic photographs as these can be quickly and inexpensively e-mailed to a journalist or picture desk - no cost of developing. Do, however, bear in mind that the newspaper will probably need a high quality image and the file size may be too big to send on a normal e-mail.


NEEDS OF DIFFERENT MEDIA A press release will be well received by the press, but regional or local radio and television are both valuable allies in trying to reach a wider audience - particularly if you are arranging an event that could be of interest to people further afield.

Both radio and TV may require an articulate spokesperson to go on air, either in front of a camera, in the studio, on tape or over the phone. Remember that radio will need to paint pictures with sound, while television news will require relevant footage.

EXAMPLE PRESS RELEASES Attached are three outline ideas for press releases to suit different stages in the development of your company. They have been designed so that you can simply add your own information to achieve a good basic press release. You may wish to rewrite the release to suit your own local story.

1 2 3

The launch of your company. Sales Success (Christmas). Company reaches Regional Final.

Remember there are no limitations on the number of press releases you may issue to help market your company.


PRESS RELEASE

<NAME OF SCHOOL> LAUNCHES JUNIOR ACHIEVEMENT PORTUGAL COMPANY

Date/Month/Year - Local students from <NAME OF SCHOOL>, have recently launched their own company under the Junior Achievement Portugal StartUp Programme. The company, which the students have named <NAME OF JAP COMPANY>, will now manufacture and market <DETAILS OF PRODUCT> from now until the end of the academic year, when the programme ends.

<NAME OF JAP COMPANY> Junior Achievement Portugal Company involves <NUMBER> students, aged between <YOUNGEST AGE> and <OLDEST AGE>. In the Company Programme, students known as ‘’Achievers” set up and run their own company over the course of one academic year. They elect a board of directors from amongst their peers, raise share capital, and market and finance a product or service of their own choice. At the end of the year they liquidate the company and present a report and accounts.

<NAME OF JAP COMPANY> is supported by <NAME OF ADVISERS & THEIR COMPANIES> who act(s) as adviser(s) to the company. <NAME OF ADVISER> commented, “This is an excellent opportunity for the students to learn about business and broaden their skills within a real working environment. The challenges ahead are both exciting and, above all, fun.”

Junior Achievement Portugal is a non-profit association, founded in Portugal in September 2005, which promotes enterpreneurship, criativity, innovation in next generations. It mission is to inspire and equip young people to learn and succeed through enterprise. JAP operates a number of programmes for young people on a learning by doing principle. These include running a real company in Company Programme and StartUp Programme.

- ENDS -

Press Contact: <NAME OF MARKETING DIRECTOR>, Marketing Director for <NAME OF COMPANY> on <TEL. NUMBER>


89

PRESS RELEASE

CHRISTMAS CHEERS FOR JUNIOR ACHIEVEMENT PORTUGAL COMPANY SALES

Date/Month/Year - Local students from <NAME OF SCHOOL>, who are running their own business under Junior Achievement Portugal’s StartUp Programme, are celebrating today after exceeding all expectations over the Christmas season.

Junior Achievement Portugal Company, <NAME OF COMPANY>, saw sales of their product, <NAME OF PRODUCT> soar over the Christmas period. The product a <DESCRIPTION OF PRODUCT> proved very popular among festive shoppers <WHERE - E.G. AT THE CHRISTMAS TRADE FAIR/ LOCAL SHOP ETC.>

In the StartUp Programme, students learn about business through setting up and running their own company over the course of one academic year. <NAME OF JAP COMPANY> Junior Achievement Portugal Company is run by <NUMBER OF ACHIEVERS> students aged <AGES>.

< NAME OF AE COMPANY> is also supported by <NUMBER> of Advisers. <NAME OF BUSINESS ADVISER> , <TITLE> from <COMPANY> said, “The Christmas period has been an excellent opportunity for the students to market their <NAME OF PRODUCT>. Their initiative and enthusiasm has driven sales beyond all expectations.”


- ENDS -



PRESS RELEASE

LOCAL TEENAGE ENTREPRENEURS TO COMPETE IN JUNIOR ACHIEVEMENT PORTUGAL <REGION NAME> REGIONAL FINAL

Date/Month/Year - Local students from <NAME OF SCHOOL>, who are running their own business under Junior Achievement Portugal’s StartUp Programme, have won a place in the <NAME OF COMPETITION> Nacional Finals of the programme’s annual competition.

In the StartUp Programme, students learn about business through setting up and running their own company over the course of one academic year. <NAME OF JAP COMPANY> Junior Achievement Portugal Company has spent the past year <INSERT DETAILS OF PRODUCTS OR SERVICE e.g. manufacturing and marketing CD clocks to sell at local Trade Fairs over the course of the Year>.

The young directors represent their company on the National Final Competion. They are judged on a written 10 page Company Report; answer questions at a company display stand; and finally a ten minute verbal presentation. If <NAME OF JAP COMPANY> they win the National Final they will go on to compete in the European Final Competition.


- ENDS -



91

WHAT IS SALES? It’s the responsibility of the Sales department to identify prospective customers and to encourage them to buy. Sales interacts directly with customers and provides a great deal of customer support. Success in Sales wiII only come if you and your sales people are: •friendly and enthusiastic; •good at Iisten ing to customers; •knowledgeable about your product or service; •willing to understand how your product or service will help customers; •able to show customers how your product or service will help them; •able to gain a commitment from potential customers. A pleasing personality and a positive attitude are good attributes to have.

THE IMPORTANCE OF YOUR ROLE WITHIN THE COMPANY You will be responsible for preparing the Company’s sales plans and forecasts, and for achieving sales targets. You will train and direct the sales team, and you will work closely with the Marketing Director and other company directors in formulating Company policy and strategies.

How does sales do this? Research: You will need to know who your potential customers are where they are, the reasons why they would want to buy your product or service, and what would influence them to buy.

Product knowledge: To be effective you must know all about your product or service. You will have to understand the features and benefits that your product or service can offer to customers and how customers will use your product or service.

Features: Are the attributes that your product or service has. (A cup has many features one of which is the handle.)

Benefits: Customers only buy features when they give benefits. It’s important to know what benefits you have to offer. (The benefits of the handle of a cup are: makes the cup easy to hold; stops you burning your fingers on the side of a hot cup.)

Product or Service uses: Understanding how customers will use your product or service will help you to know the reasons they have for buying from you. This also makes sure that you are able to give good advice and after-sales service.

Planning: Preparing a sales campaign showing which type of customers you are going to see, when and how you intend to see them, what you expect to sell to them and the value of those sales. You will also need to estimate how many sales you will make and how much those sales are worth. The forecast that you have made can only be achieved by seeing as many potential customers as you can and using selling skills to help them buy from you.

WHAT THE SALES DIRECTOR DOES


At the Beginning...

STEP 1

Skills, Experience and Product •Liaise with the Personnel Director to identify the skills and experience of Company members. •Brainstorm what product/service you would like your Company to sell. •Remember that some products/services are prohibited by Junior Achievement Portugal. •(Don’t go into detail about your product/service or think about how you are going to sell it until you have carried out your research. The detaiIs come later.)

STEP 2

Assist the Marketing Director in preparing the Marketing Strategy. Product:Give a detailed description of your product showing how it meets customer needs. Include: Design, Function, Image and Packaging requirements. Price:Your price and terms of business. (How and when you expect them to pay.) Place:How and where you are going to make your product available. Promotion:Where and how you are going to promote your product and service. Wherever you can, use: (a) Free publicity such as local press and radio, school events and notice boards. (b) Cost effective publicity such as posters and leaflets.

STEP 3

Prepare your sales plan and forecast showing the following: •The types of customers to be seen. (i.e. Students, Engineers, Teachers, Housewives, etc.) •Where those customers will be seen. (i.e. School, Workshop, Supermarkets.) •How many customers will be seen in your JAP year. •How many of those customers do you expect to buy from you. •The number of sales. •The value of those sales. •The resources that you will need in order to implement the plan. (i.e. Premises, Sales-people, Literature, Samples, etc.)

STEP 4

Decide how to pay the sales force. Method and amount of remuneration for the sales force. (i.e. Commission and/or salary structure.)

STEP 5

Get Board agreement. Present steps 3 and 4 to the Board for their agreement.

STEP 6


93

Appoint and train the sales force. Make sure that they understand their potential customers, give them product knowledge and train them in selling skills. Now you can implement the sales plan. Liaise with ICT Director for help in the production of any support materials that may be required.

STEP 7

Devise and implement an after sales customer support policy and programme. You want to retain “delighted customers”!

STEP 8

Record all sales so that you can monitor the achievements of the sales force and report progress to the Finance Director and the Marketing Director.

Ongoing...

RESPONSIBILITIES •Work closely with the Marketing Director. •Ensure that the sales plan is implemented and monitored. •Review the sales plan, as and when needed. •Managed, motivate and monitor the sales force. •Visit potential customers in order to increase sales. •Manage the remuneration scheme (Commission if required) and ensure that sales people are paid by the Finance Director.

STOCK MOVEMENT •Receive and sign for all finished goods ready for sale from production (Form OPS3). You are now responsible for the safe keeping of the Company’s stock. •Any stock given to individual sales people to sell should be recorded on the Monthly Sales Record form (Form SAL2) and on the sales person’s individual Sales Record. Form OPS3 and Form SAL2 are available throught JAP website.

INDIVIDUAL SALES RECORD •For each selling day each sales person must record the number of items sold (or returned). •On a monthly basis total all sales forms SAL1 an SAL2. Pass this information to Finance, Marketing and Promotion. Forms SAL1 and SAL2 are available through JAP website.

INCOME AND STOCK •Sales income must be handed over intact to the Finance Director or authorised official for immediate banking. •Stock: the number of items currently held by your sales team should be recorded. See form SAL2, available through the JAP website.

COMMISSION PAYMENT RECORD (monthly) •Fill out cash sales of each sales person and commission due. •Hand over to Financial Director who will pay cash due out and obtain signatures. See form SAL3, available through the JAP website. REPORTS AND REVIEWING


(weekly/monthly) •You will be expected to present a verbal report of sales performance and targets at the weekly meetings. •For the monthly Board Meetings you should prepare a more detailed written report. •The sales plan should be regularly reviewed in the light of feedback from the sales team. •Record any customer reaction to feedback to Operations and Marketing.

At the end...

SELL THE GOODS OFF! With the Marketing Director, devise a promotional strategy to help clear any remaining stock. Remember you may need to retain some items for the Company Competition.

FINAL REPORT AND LIQUIDATION •Draw up a report of your experience as Sales Director and report to the Board of Directors. •Refer to the company manual for details of the liquidation procedure. •Play your full part right up to the end.

A GUIDE TO HELP YOU WITH SELLING SKILLS

Opening the sale: Introduce yourself to the potential customer in a way that will build trust, rapport and interest in what you have to say.

Looking for customer needs: Use questioning and listening skills to identify what is important to the customer (i.e. Doing something better, quicker less cost, looking better, feeling better).

Offering your solution: Showing them how the benefits of your product or service will help them. (i.e. To do something, better, quicker, easier, for less cost, to look better, feel better.) You don’t need to be able to help in all of these areas, however the more area you cover the more likely potential customers are to buy from you.

Handling objections: The potential customer may not like everything about your product or service and may say so. This does not mean that they will not buy from you. Deal with their objections sensitively and then show them benefits that you think they will agree with.

Closing the sale: At the end of a sales conversation it is helpful to summarise the needs and benefits that have been discussed and then to agree to the next step. (i.e. The sale, follow up, etc).

WHAT KIND OF COMPANY DO YOU WANT TO BE? It is important for you and your colleagues to share a vision for your Company. You will develop a Mission Statement, which summarises this shared vision. You will also develop clear objectives against at least five key criteria: •Customer satisfaction. •Use of resources. •The Environment. •ProfitabiIity. •Quality. Your aim will be to run your Company innovatively, coming up with new ways in which to overcome problems and continuously improve your Company.


95

The Information Communication

Technology Director

WHAT IS ICT MANAGEMENT? Information is essential to everyone in an organisation, including customers and suppliers, to enable them to do their jobs.

It is the role of the ICT Director to ensure that systems utilising the most appropriate technology are in place to satisfy all of the information needs of the company, the customers and the suppliers.

THE IMPORTANCE OF YOUR ROLE IN THE COMPANY It is your job to contribute to the planning and running of the Company with particular emphasis on information systems at the following levels:

Strategic Level - Work with and advise the management team on the most appropriate ways to exploit existing technology available to you, and to source and use new technology that you need.

Operational Level - Provide high quality, reliable ICT services to the organisation through training, development, implementation, application and by monitoring usage and effectiveness of systems. Support and deliver ICT related projects, where appropriate, within agreed costs and timescales.

The ICT Director’s role should emphasise the importance of information technology in businesses today, and more specifically the market opportunities available via the internet.

The ICT Director’s role includes responsibility for creating your Company Web Site to assist with the marketing of your products/services.

As ICT Director you should be aware of the Data Protection Act (consult with your Adviser over this matter)

WHAT THE ICT DIRECTOR DOES

At the Beginning...

BEFORE YOU START Assess existing technology available to you. Pay particular attention to: •Computer equipment available •Access to the internet •E-mail facility •Computer software avaiIable •IT training needs of the company

ASSESS THE ICT NEEDS OF YOUR COMPANY Carry out an audit of your company’s ICT needs (See form ICT1) •Talk to the other Directors about their requirements e.g. Advertising your company and its products via the internet may require a web site. •Ensure that all the Directors in your company are able to access the forms that are specific to their role. Form ICT1 is available through the JAP website.


PREPARE A PLAN FOR YOUR COMPANY’S IT NEEDS •Agree with the other Directors in your Company which areas you are going to provide systems for, and how much money you can spend (your ICT Budget). •Develop implementation plans with timescales and methods of reporting progress. •Ensure other Directors who have actions to carry out within the plan understand what is required of them.

Ongoing...

IMPLEMENT YOUR PLANS Implement your specific ICT plan including the following: •Create your web site with input from your Marketing and Sales Directors. •Train staff to ensure those who will need to use specific software packages have the knowledge to do so. •You may wish to develop computer-based systems to complement the existing ones.

MONTHLY REVIEW - OPERATION OF YOUR SYSTEMS •Is information being kept up to date? •Are the users making effective use of systems? •Are third parties meeting their service level agreement? •Are any systems not being used and should be terminated or improved? •Have any changes taken place in equipment availability which could be used to improve or further develop your systems?

PROCESS IMPROVEMENT •From your monthly review of information systems, have you identified possible improvements? •Have any of the Directors in your Company changed, and are there any new ICT training requirements? •Have any of the Directors in your Company identified additional ICT requirements? •Revise implementation plans with costs and timescales, and agree with other Directors. •Implement your revised plans.

At the end...

PREPARE TO CEASE TRADING If you have a web site, ensure that the site has a date for last orders and that the system will not accept orders after that date.

CEASE TRADING When the last order date has been processed close down the web site.

SOME SKILLS AND QUALITIES YOU WILL DEVELOP •Computer Literacy. •Web-based knowledge. •Planning and organisation. •Knowledge of business processes. •Creative flair. •Influencing others.


97

APPENDIX 3

RESPONSIBILITIES

Students, Business Consultants, Enterprise Tutors - Please read carefully. Very important information for all Junior Achievement Portugal Companies.

1 LEGAL STATUS OF JUNIOR ACHIEVEMENT PORTUGAL COMPANIES

All Junior Achievement Portugal Companies are, for the year of their operation, branches of the Junior Achievement Portugal Regional organisation in which their college or University is situated.

Written Contracts

Junior Achievement Portugal Company members signing written contracts entered into by the Junior Achievement Portugal Company, or cheques, should add the words “FOR AND ON BEHALF OF <COMPANY NAME e.g. INSPIRATIONS> A BRANCH OF JUNIOR ACHIEVEMENT PORTUGAL, <REGION> A REGISTERED CHARITY”.

Cheques

Junior Achievement Portugal Company cheques must also carry the wording ‘’A branch of Junior Achievement Portugal, <Region> a registered charity”. See below: Sample wording for company cheques:

Banl< address

Everybank

Date:

Pay

€

For and on behalf of “Inspirations”, a branch of Junior Achievement Portugal, <Region> A registered Charity.

CHEQUE NUMBER BRANCH NUMBER ACCOUNT NUMBER

Contracts and Cheques in excess of €200

These must be countersigned by a Business consultant, or if no Business Consultant is available, the Enterprise Tutor who is automatically delegated by Junior Achievement Portugal to act on behalf of the Organisation. Remember: The Bank Mandate must also be signed, therefore, by one of your Business Consultants and your Enterprise Tutor.

Electronic Banking and Credit Card payments

Please note that Junior Achievement Portugal companies are not allowed to set up or use online or telephone bank accounts. Junior Achievement Portugal companies are not allowed to engage in any credit card transactions and/or when trading on the internet accept payments for goods and services through electronic payment service providers. All sales must be cash or cheque with order, on purchase or on invoice.


99

Fees, Share and Taxes Share Price = 2 to 4 euros Maximum Share Capital = €400 JAP VAT (On all items without exception)21% JAP Corporation Tax (small business rate) 25%

2 SAFETY FIRST

Health and Safety at work is very important. More time is lost for health reasons and as a result of industrial accidents than through any other cause.

You, as a Junior Achievement Portugal Company, must also be aware of your responsibilities.

The Health and Safety at Work Act applies to all work premises and activities. Everyone at work - employee, supervisor, manager, director or self-employed, has responsibilities under the act. Some special points to bear in mind:

Machinery

• •

Never use a machine unless you are authorised and trained to do so. Never wear dangling jewellery, loose clothing, gloves, rings, or allow long hair to hang loose where it could get caught up in moving parts.

Certain activities may require you to wear protective clothing such as goggles and aprons.

Be sure that you fully understand the fire regulations and methods of evacuation.

Protective Clothing

•

Fire Precautions

•

Safety

General Duty/Product Liability You have a duty to trade safely and to make sure that no-one is harmed by the goods you supply or the services you perform.

Product Safety There are a number of detailed regulations made which deal with specific goods. The aim is to prevent or reduce the risk of death or injury from goods. This is often done by requiring goods to comply with certain standards. They can cover things like: •the way goods are made, their contents, design, finish or packaging; •warning labels or instructions for use; •quality control checks or tests by the manufacturer.

Price Marking

Virtually all goods which are offered for sale must have a price indicated (the price per kilo or per item) either on or near the display. You should not give a false or misleading indication of the price of anything you are supplying and you must not charge a customer more than the advertised price. If, at the end of your scheme, you decide to have a sale to get rid of stock, take care over how you advertise your price reductions. The price must include JAP VAT, whatever the product or service.


Any hidden extras, which must be paid for, such as delivery charges, must be included in the price.

Ensure Safety

You are responsible for safety. Help everyone develop safety skills. Watch for unsafe behavior, and correct unsafe conditions. See a good example! •Employee safety. If an accident occurs, first treat the injuries. Minor accidents may be treated on site, but ready to seek professional help, if needed. Second, investigate the cause of the accident. Finally, take the necessary steps to eliminate the chances of a similar accident occurring again. Work with your consultants or teacher to eliminate all hazards. •Stay away from power tools!. If you or your consultant or teacher has any question about tools being used, check with your local JAP office. •Comsumer safety. Is your product safe? Could it be easily misused? Special care should be given to evaluating whether or not a product could cause injury and/ or property damage. Make sure that all statements company members make during a sales presentation are correct. Do not misrepresent what the product or service will or will not do. Any necessary warnings should be revealed to a customer in writing, preferably through a label affixed to the product or in a letter about the service provided.

Use common sense in selecting a product. Avoid any product or service that is potentially hazardous to a customer. Good, safe, reliable products and services result in successful JAP companies!

Safety Rules

Wear impact-resistant goggles or glasses in there is danger from flying objects.

Wear cup-type or side-shield goggles to protect against dust or small flying particles.

Store scissors in a sheath when not in use. Pass them handle first with blades together, and carry them point down - never in a pocket.

When working with flammable materials, wear protective gloves. Work in a well - ventilated area or under an exhaust hood. Store materials in metal containers. Never store flammable rags, solvents, etc. in a locker of any kind.

Internet Trading

Creating a web site for your company can be a valuable and interesting learning experience and has the potential for stimulating sales interest in your products or services.

5 BASIC FACTS: PATENTS, COPYRIGHT, REGISTERED TRADEMARKS, DESIGNS

The Patent Office publishes the following free literature:

1 What is intellectual property?

2 Patent protection


incorporating: Basic Facts - Patents Basic Facts - Copyright Basic Facts - Registered Trade Marks Basic Facts - Designs

101

3 How to prepare a PT patent application

4 Design registration

5 Registering a trademark

6 Patent search service

7 Trademarks - search and advisory service

8 Set of six information booklets

incorporating: Keeping your patent in force Restoring your patent Registering transactions which affect the rights in your patent Registering licenses under your patent Filing translations of European patents (PT) Deciding patent disputes in the Patent Office

Your Company should ensure that Junior Achievement Portugal National Office is advised when an accident occurs using form OPS5 (available through the StartUp Programme web site at www.japortugal.org).

It should be noted that there is NO personal accident cover on individual participants in the StartUp Programme and all members should be aware that this cover is up to the individual concerned.

7 JUNIOR ACHIEVEMENT PORTUGAL COMPANY HEALTH & SAFETY

When you are planning your company it is important to think about the things that could go wrong. You want to be thinking about what might cause you or the other members of the company to injure yourselves or cause them to suffer an illness as a result of the work they are doing.

There are laws that both employers and self-employed workers have to follow. It requires them to: i Find out what might cause an accident at work, and ii Put rules in place to prevent it. Workers then have a responsibility under this law to follow the rules that have been made.

Form Ops 7, available through the StartUp Programme web site at www.japortugal.org, allows you to write down the things that could go wrong in your company and the rules that you will put in place. You should discuss this at a Company meeting and then keep the form as a record of your decisions.


APPENDIX 4

JUNIOR ACHIEVEMENT PORTUGAL

STARTUP PROGRAMME

LEARNING LOG

Making the most of the Junior Achievement Portugal StartUp Programme

RECORDING YOUR LEARNING All StartUp Programme students learn something from their experience of running a company, whichever role they play. Unfortunately, many only realise this afterwards and miss a great opportunity to really build up useful skills in a business environment.

This Learning Log will help you to reflect on your learning and the development of your abilities for CVs, so that employers can recognize your experiences and skills and the value you can potentially add to an organisation. It will also enable you to focus on your personal goals during your time on the StartUp Programme, improve areas which you feel are weak, and discover and build on areas you feel are strong.

THE REVIEW PROCESS With the help of your Business Consultants and Enterprise Tutor, you are encouraged to think about your Company objectives and personal targets. Chart your progress and learning as set out in the review sessions. It is important for you to set dates for these review sessions and stick to them!

FIRST STEPS The first step to achieving your targets is setting objectives. This is what you need to do right at the outset. As your Junior Achievement Portugal experience grows, you will find that you do change, and you do make progress towards your targets. But you need to stop and review every so often to take a look at and record your progress. You may find at these stages that you have moved on further than you had planned, or developed new ideas about other skills you need. These should form the basis of the review and recording process.


103

First Review Meeting

(1) Key activities undertaken (strengths and weaknesses)

Date:

(2) What have I learned so far?

(3) What are the Company targets?

(4) What are my personal targets? (Refer to the Junior Achievement Portugal StartUp Programme Key Skills/Experience profile)

(5) What do I need to do now ?

Action By when


Second Review Meeting

Date:

(1) Review of progress with the actions agreed in the previous meeting





Action By when


105

Third Review Meeting

Date:






Action By when


Fourth Review Meeting

Date:






Action By when


107

Junior Achievement Portugal StartUp Programme Learning Log

Name:

Company Name:

This document reviews the learning experiences of the above named student as a Director of a Junior Achievement Portugal StartUp Programme Company. In the StartUp Programme students form and run their own Company, supported by volunteer Business Consultants, for one academic year.

University:

SUMMARY OF LEARNING

My Junior Achievement Portugal StartUp Programme Company and the roles I undertook: (What the Company was about and positions held)

What I have learnt - and the skills I have developed

Student Signature:

Business Consultant Comments

Date:

Business Consultant Name:

Signed:

Enterprise Tutor Name:

Signed:

108

Company:

Date:

Date:


APPENDIX 5

KEY CALENDAR DATES

Name:

This record of Key Calendar Dayes is for your own personal use and will help you to organise your Junior Achievement Portugal StartUp Programme activities. You should insert the dates for the following:

Weekly Meetings:

Day Time Venue

Monthly Board Meetings 1. 2. 3. 4. 5. 6. 7. 8. 9.

Sales Events

1. 2. 3. 4. 5. 6.

Key Activity

AGM Liquidation

Date Learning Log

Review 1 Review 2 Review 3 Review 4

Training Sessions

1. 2. 3.

Date

Date

Date Holidays

1. 2. 3. 4. 5. 6.

Date

Date

Copyright 2004 Junior Achievement Portugal


109

APPENDIX 6

OPERATIONAL TIMETABLE

TIMING STAGE ONE

ACTIVITY

(1) Introductions (2) Adviser’s Role (3) Explain how StartUp Programme operates (4) Decide Company name (5) Register the Company (6) Future meetings

(1) Election of Directors (2) Go through Company Kit - Arrange session for Finance Step by Step (3) Discuss potential products and services (4) Complete Memorandum and Articles of Association (5) Discuss Business Plan (6) Agree to open a Bank Account (optional) (7) Any outstanding business including key dates for students’ calendars (8) Date of next Meeting

(1) Agree on product or service (2) Consider Health and Safety issues (3) Agree how capital will be raised (4) Draw up Business Plan and Mission Statement (5) Discuss operations plan (6) Date of next Meeting

(1) Weekly Meetings Opening Meeting Closing Meetings (2) Monthly Meetings Company Progress Review Personal Progress Review (3) FIRST REVIEW MEETING

(1) Weekly Meetings (2) Production and Sales continue (3) Monthly Board Meeting (4) Be aware of seasonal market opportunities (5) Plan for other opportun ities post-season (6) Continue motivation (7) Has Registration Fee been paid? (8) Discuss participation in Trade Fairs

STAGE TWO

STAGE THREE

STAGE FOUR

STAGE FIVE


TIMING STAGE SIX

ACTIVITY

(1) Weekly Meetings (2) Monthly Board Meeting (3) Agree post-season plans (4) Review and Plan for half-year elections

(1) Weekly Meetings (2) Monthly Board Meeting (3) SECOND REVIEW (4) Half Year elections

(1) Weekly Meetings (2) Monthly Board Meeting

(1) Weekly Meetings (2) Monthly Board Meeting (3) Start planning for Liquidation (4) THIRD REVIEW

(1) LIQUIDATION PROCEDURE Dispose of stock and assets Final accounts drawn up and audited Liquidation report completed (2) Board Meeting to discuss: Final account and liquidation report Shareholders dividend Return of capital Date of Annual General Meeting Completion of Annual Report (3) Circulate Annual Report (4) Return capital and pay dividend to shareholders (5) FOURTH REVIEW (6) Send Liquidation Report and Junior Achievement Portugal Corporation Tax Return and payment to Junior Achievement Portugal National Office (7) Close down Company website (8) Close Bank Account if you opened one

STAGE SEVEN

STAGE EIGHT

STAGE NINE

STAGE TEN


111

NOTES


NOTES


113

NOTES


startup programme student - jayeapps.comshare.jayeapps.com/uploads/2b5c42b673bdf8d8980a4272e...an...

Documents