When starting your own business, you need every advantage you can leverage. One powerful set of tools to use when you are creating (or growing) your business is business calculators.
With the right business calculators, you can make sense of the many numbers that hit your ledgers and bank statements. These calculators can be a major advantage in setting strategy, determining key performance indicators and measures that help entrepreneurs adjust the current or future direction of the business.
In Business Calculators: The Quick Guide, we define the various types of calculators available to small businesses and provide links to examples of each as well. Whether you want to get a clearer understanding of your business finances, improve your digital marketing efforts, or make business investments, these calculators are an effective way to make smarter decisions.
FINANCIAL MANAGEMENT CALCULATORS
Business Planning Calculator
This calculator can help you tally the business startup costs you need to launch your new venture. It usually tabulates the costs in two categories – one-time costs that will not be repeated after your business starts and ongoing monthly costs that will be a regular financial obligation. Here are some of the components of a starting cost calculator:
• One-Time Costs
o Franchise or licensing fees (if applicable)
o Computer and telephone equipment and software
o Furniture and fixtures
o Office supplies
o Office equipment
o Legal fees
o Initial marketing
o Prepaid insurance premiums
o Security deposits or payments for property
o Utility deposits
• Ongoing Monthly Costs
o Rent or mortgage payments
o Loan payments
o Owner salary
o Utilities (including phone, water, internet access, heat, air conditioning, cable television, electricity)
o Ongoing marketing
o Administrative costs
o Insurance premiums
o Office supplies
o Franchise fees and commissions
Benetrends offers a free business planning calculator that helps you know how much money you will need to launch, maintain, and grow your company.
Cash Flow Calculator
This tool gives you a clear understanding of how your money is being used by the business. It illustrates how B2B sales, inventory carrying, and fast growth can drive your cash spend rate. It is a helpful tool for projecting future cash flow.
It usually includes the following measures:
- Cost of goods sold (as a percentage of sales)
- Rate of monthly sales growth
- Percentage of sales on credit
- Days in collection
- Profitability (as a percentage of sales)
- Inventory balance value
- Months of industry kept on hand
- Starting receivables and payables
- Payment days
An example of a cash flow calculator is here.
A break-even analysis is a standard financial element, showing how much money needs to be brought in to meet your monthly expenses (the break-even point). The break-even calculator looks at three factors:
- Average revenue per unit
- Average cost per unit
- Estimated monthly fixed costs (though some calculators encourage business owners to instead use average running costs, such as payroll and utilities)
Once the calculator runs, it will tell you how many units and total sales you will need in a month to break even or to make a profit.
See an example of a break-even calculator here.
Business Loan Payment Calculator
Are you seeking a business loan to start or expand your business? Understanding the total costs of your loan is an important step. A business loan payment calculator helps you understand the full costs of a business loan. It asks for the following inputs:
- Desired loan amount
- Loan Repay Terms (in Months)
- Interest Rate
The calculator from Benetrends will generate the monthly loan payment amount, total loan interest costs, in addition to an amortization schedule and can be found here.
Business Valuation Calculator
While a new entrepreneur may not be thinking much about selling the business, there are helpful online tools to help you value your business. Most require multiple years of financial data.
A business valuation calculator starts with basic financial information over several years, including:
- Cost of goods sold
- Operating expenses
- Officer salaries
- Interest paid
- Other expenses
Because each business valuation is affected by different factors, different online calculators consider other risk factors and industry nuances. These calculations are usually proprietary and the formulas used are generally not available. They include:
- Earnings trends (declining, increasing, or steady revenue growth)
- Risk factors such as years in business, viability of industry, and recordkeeping quality
- Upside factors such as SBA loan eligibility, industry growth rates, and franchise recognition
There are many business valuation calculators available online. Click here to see some of the top calculators.
ONLINE BUSINESS AND MARKETING CALCULATORS
Conversion Rate Calculator
Nearly every business today needs a website presence, often to generate online sales. The quality of your website plays an important role in how many visitors you convert into paying customers. The conversion rate calculator shows how website improvements that affect your conversion rate (the percentage of visitors who make a purchase) impact total online sales.
You’ll need to determine the timeframe you seek to analyze and insert the following figures:
- Website visitors
- Average order amount
- Total orders
The calculator gives you important figures for the time period, including:
- Total website sales in dollars
- Visitor conversion rate
- Sales per visitor
The calculator also shows what impact improvements to your website and content marketing can have on all three figures. Look for a calculator that can adjust the conversion rate and see the impact. Use those calculators to determine investments and changes that boost the conversion rate to meet your targets.
See a conversion rate calculator example here.
Email Return on Investment (ROI) Calculator
Email marketing has been a go-to strategy for businesses of all sizes. Use the email ROI calculator for a clearer understanding of what your business is spending on email marketing and what the return on that financial commitment is.
The calculator asks for the following data:
- Campaign audience size (how many people or email addresses are contacted)
- Campaign costs (e.g. list purchases, content creation, and marketing platform expenses)
- Response rate (expected or actual)
- Conversion rate (how many responders buy something)
- Average purchase amount for buyers
The ROI percentage is calculated by taking the difference between the total revenue generated compared to the campaign costs. This calculator also generates the following:
- Cost per contact
- Cost per responder
- Cost per buyer
- Number of responders
- Number of buyers
- Profit (dollars)
Click here for an example of the email ROI calculator.
Pay-Per-Click (PPC) Advertising ROI Calculator
PPC is a very commonly used measure for digital marketers. If, for example, you purchase ads on Google or Facebook, you have the option to pay for a certain number of clicks from the ad to your website. Similar to the email ROI calculator, the PPC advertising ROI calculator helps you understand the return on that commitment. It asks for the following inputs:
- Clicks purchased
- Cost per click
- Conversion rate (percentage of responders who make a purchase)
- Average buyer purchase amount
The calculator computes the total campaign cost and revenue generated. The difference is the ROI rate. The calculator also generates the following data:
- Number of responders
- Number of buyers
- Cost per responder
- Cost per buyer
For a good example of a PPC advertising ROI calculator, click here.
Investment Offerings Calculator
This ROI calculator helps you see the potential gains of investment considerations. If you are offering shares in your business, this calculator can be helpful in determining the impact of those investments on your investors’ bottom line.
How much money investors contribute and how much equity they obtain in return are highly negotiable factors. Investors will look at two considerations before making a decision:
- Net Present Value (see below)
- Internal Rate of Return
Enter the investment amount, equity percentage, and discount rate, and you’ll generate both of those values in addition to the final payout amount.
These figures are based on several other important considerations – assumptions for the sales and earnings in the final year of the agreement and the valuation multipliers used for each of those numbers.
For a detailed investment offerings calculator, click here.
Discounted Cash Flow Calculator
This calculator helps determine a well-established economics term: the time value of money. This calculator helps to show that the value of money is higher in the present than in the future. It’s used to determine investment strategies and when to commit your money to an investment opportunity. It establishes the net present value of money and the internal rate of return. Enter the amount of your potential investment, the expected eventual return, timeframe for the return and the discount rate.
For an example of the discounted cash flow calculator, click here.
Supporting Small Businesses
Benetrends understands that financing your small business is a complex undertaking. Our pioneering approach uses existing 401(k) or IRA funds to provide small business owners with fast access to needed resources without incurring early withdrawal penalties. We also offer support services for your business, including credit card processing, retirement fund management, and insurance solutions.
If you are contemplating a business opportunity right now, calculate how much you need to start your business with this Benetrends calculator.