your company name, your tag line, your name, and “Business Plan” “Finance” on it. Do not use terminology like “we have incurred expenses”. Don’t talk in the past
tense. YOU ARE SUBMITTING TWO FILES !!! A document file and an Excel file.
• THE WHOLE FINANCE SECTION USES FINANCIAL SPREADSHEETS SUPPLIED BY THE INSTRUCTOR !!! DO THE WORKSHEETS IN THE FOLLOWING ORDER BY FILLING IN THE GREEN SHADED
CELLS !
1. DATA
2. ASSETS WORKSHEET
3. MARKETING ACTIVITY
4. INITIAL CASH
5. SALES PROJECTIONS
6. CASH BUDGETS
7. THE REST OF THE SHEETS SHOULD FILL IN AUTOMATICALLY !!!
THE FINANCIAL SECTION REQUIRES DISCUSSION. IT IS NOT JUST A SET OF SPREADSHEETS. NO DISCUSSION, NO MARKS.
Just in case you were not in class on Tuesday, there are 2 assumptions for BP Part 4, as follows:
1. Personal investment of $10K
2. Love money (family) of $15K
This info is entered into the first spreadsheet – Data.
FINANCES
OWNER(S)’S INVESTMENT
• Briefly explain how much you, your partner(s), and any other investors (angels, venture capitalists) will be contributing in order to start the business. (Do
not include any borrowed money.) Be sure to include the value of those things you already own (cash, equipment, or materials) that will be used exclusively for the
business. Also include any expenses you have already paid.
• Put these numbers into the appropriate area of the financial spreadsheets.
BORROWED MONEY
• Discuss any money your business will have to borrow. Identify the lender(s), the interest rate, and the repayment terms.
• Also include “love money” loans.
• Put these numbers into the appropriate area of the financial spreadsheet.
ASSETS & INITIAL CASH WORKSHEET
• All of these numbers should be collected from the other sections of the project that you have done so far. Enter these numbers into the spreadsheets.
GROSS MARGIN OR MARKUP
• Does your business have a revenue stream that includes goods or services that are purchased from someone else then re-sold ? What percentage of the business
does this revenue stream account for ? Explain this.
• The goods or service that you re-sell – what is the mark-up on this ? How do you know ? Put these numbers into the financial spreadsheets. Discuss this in the
report.
• The goods that you sell – how much inventory are you going to have ? If you said you are going to compete by having more/better inventory/selection than your
competition, your inventory will be higher than your competitor’s inventory. Explain this.
COSTS AND EXPENSES
• Complete the ongoing costs and expenses by carefully reviewing all of the earlier parts of the business plan and entering how much you will need to pay
annually or monthly, for expenses to operate the business. For costs or expenses that are paid on an irregular basis over periods longer than monthly, provide notes
and numbers in the written section, then put them in the appropriate cells of the spreadsheets. Examples might include semi-annual licence fees or large inventory
purchases (initially the spreadsheets calculate that your inventory on hand should equal 3 months sales).
• Cost of Goods Sold and operating supplies are two different things, but both are usually variable expenses. Cleaning supplies for a cleaning service would be
operating supplies. Cleaning supplies that are re-sold in a retail store are cost of goods sold. Cleaning supplies used in a business office are office supplies. Make
sure you allocate this correctly.
• Is there any other variable expense such as labour that you need to discuss?
• Have you paid yourself under “owner’s wages”? (The answer does not go in this section, it goes in “organization” in operations.) Have you discussed any numbers
that magically appear on your spreadsheet, but no-where else in your report ? Make sure you have not missed any expenses by running down the rows in the cash budgets.
Make sure your expenses carry through to each year. Explain any expenses not discussed previously.
• Put all numbers in the spreadsheets.
SALES & INCOME BY MONTH
• Take the sales forecast from Section 2 (Feasibility) of your business plan and break it down into monthly predictions.
• Give logical reasons for this monthly breakdown, considering items like seasonality, special holidays like Christmas and growth of the business within the
first 12 months. In the first year you might want to think about allowing the first few months for business to “ramp up”
• Describe any credit or payment terms you will expect from your suppliers or subcontractors and note how this will affect your cash disbursements (startups
usually do not get credit).
CASH BUDGETS
• Fill in your cash budgets with any special payments that are not already filled in.
• Are there any months with negative balances ? Explain what are you going to do about that.
INCOME STATEMENT & BALANCE SHEET
• Does your company show a profit in the first year ? The second year ? The third year ? Is it increasing ? Any surprises? If your income statement has blank
lines in accounts such as Marketing Activity, Telephone, etc., ask yourself whether that makes sense. If you have expenses in the first year but not the rest of the
years – does that make sense? You may have to go back and fill in the Marketing sheets or the cash budgets – do not enter numbers into the income statement. Discuss
your income statement.
• Are there any surprises on your balance sheet ? Are the Retained Earnings (a measure of the company’s wealth) appropriate ? Why?
RATIO/TREND ANALYSIS
• Have a look at the ratios spreadsheet. Based on your knowledge gained from the FINA 1031 course, what comments can you make about Debt:equity, Gross Margin,
Net Margin, Return on Equity, Interest Coverage and the company’s performance over three years. Explain: Is the situation getting better or worse ?
BREAKEVEN
• What is your breakeven date ? What are your annual and monthly breakeven amounts ? Discuss ways to improve this. What happens if sales are 20% lower than what
you projected?
CONCLUSION
• Is this a good business for you to be in?
When you hand it in put two files (one excel and one MSWord) into the FOL dropbox. Extra files will not be looked at.
