|
START-UP COSTS |
Cost |
|
Registrations |
|
|
Business name |
£ 2,000.00 |
|
Licences |
£ 7,500.00 |
|
Permits |
£ 2,500.00 |
|
Domain names |
£ 3,100.00 |
|
Trade-marks/designs/patents |
£ 12,000.00 |
|
Membership fees |
£ 12,000.00 |
|
Accountant fees |
£ 15,000.00 |
|
Rental lease cost (Rent advance/deposit) |
£ 12,000.00 |
|
Utility connections & bonds (Electricity, gas, water) |
£ 9,000.00 |
|
Phone connection |
£ 3,000.00 |
|
Internet connection |
£ 7,500.00 |
|
Computer software |
£ 30,000.00 |
|
Training |
£ 5,000.00 |
|
Wages |
£ 20,000.00 |
|
Insurance |
|
|
Building & contents |
£ 40,000.00 |
|
Product liability |
£ 45,000.00 |
|
Workers compensation |
£ 35,000.00 |
|
Printing |
£ 15,000.00 |
|
Stationery & office supplies |
£ 15,400.00 |
|
Marketing & advertising |
£ 19,000.00 |
|
Total start-up costs |
£ 3,10,000.00 |
As per the above forecasting the start-up cost requirement will be £ 310,000. Out of the total requirement £ 250,000 will be raised through borrowing and £ 60,000 will be contributed by 6 partners £ 10,000 each.
For the financial aspects of the business plan following assumptions have been made –
|
Income statement forecast |
|||
|
Particulars |
2018 |
2019 |
2020 |
|
Sales |
£13,00,000.00 |
£14,30,000.00 |
£ 15,73,000.00 |
|
Cost of goods sold |
£ 7,80,000.00 |
£ 8,29,400.00 |
£ 8,65,150.00 |
|
Gross profit |
£ 5,20,000.00 |
£ 6,00,600.00 |
£ 7,07,850.00 |
|
Gross profit % |
40% |
42% |
45% |
|
Other income |
£ 2,30,000.00 |
£ 2,70,000.00 |
£ 3,10,000.00 |
|
Total income |
£ 7,50,000.00 |
£ 8,70,600.00 |
£ 10,17,850.00 |
|
Expenses |
|||
|
Accountants fees |
£ 54,000.00 |
£ 42,000.00 |
£ 48,000.00 |
|
Advertising and marketing |
£ 92,000.00 |
£ 80,000.00 |
£ 65,000.00 |
|
Bank fees and charges |
£ 56,000.00 |
£ 52,000.00 |
£ 46,000.00 |
|
Bank interest |
£ 7,000.00 |
£ 12,000.00 |
£ 16,000.00 |
|
Credit card fees |
£ 6,000.00 |
£ 7,000.00 |
£ 12,000.00 |
|
Utilities |
£ 22,000.00 |
£ 24,000.00 |
£ 29,000.00 |
|
Telephone charges |
£ 5,763.00 |
£ 2,200.00 |
£ 6,900.00 |
|
Loan payments |
£ 70,000.00 |
£ 70,000.00 |
£ 70,000.00 |
|
Rent and rates |
£ 4,200.00 |
£ 4,900.00 |
£ 5,400.00 |
|
Repairs and Maintenance |
£ 2,810.00 |
£ 3,260.00 |
£ 4,130.00 |
|
Stationary and printing |
£ 8,000.00 |
£ 14,000.00 |
£ 16,000.00 |
|
Payroll expenses |
£ 80,000.00 |
£ 90,000.00 |
£ 80,000.00 |
|
Insurance |
£ 25,000.00 |
£ 20,000.00 |
£ 25,000.00 |
|
Superannuation |
£ 65,000.00 |
£ 65,000.00 |
£ 75,000.00 |
|
Total Expenses |
£ 4,97,773.00 |
£ 4,86,360.00 |
£ 4,98,430.00 |
|
Profit before taxes |
£ 2,52,227.00 |
£ 3,84,240.00 |
£ 5,19,420.00 |
|
Taxes paid @ 30% |
£ 75,668.10 |
£1,15,272.00 |
£1,55,826.00 |
|
Net Profit after tax |
£1,76,558.90 |
£2,68,968.00 |
£3,63,594.00 |
|
Profit/loss percentage |
13.58% |
18.81% |
23.11% |
|
Cash flow forecast |
||||||||||||
|
Particulars |
Jan |
Feb |
Mar |
Apr |
May |
June |
July |
August |
Sept |
Oct |
Nov |
Dec |
|
OPENING BALANCE |
£ 60,000.00 |
£ 83,744.83 |
£ 1,20,313.50 |
£ 1,20,627.00 |
£ 1,91,722.33 |
£ 2,45,375.67 |
£ 2,94,559.00 |
£ 3,52,737.67 |
£ 4,32,250.43 |
£ 5,16,766.30 |
£ 5,93,556.97 |
£ 6,75,983.73 |
|
Cash incoming |
||||||||||||
|
Sales |
£ 72,000.00 |
£ 84,000.00 |
£ 95,000.00 |
£ 1,20,000.00 |
£ 1,05,000.00 |
£ 98,000.00 |
£ 1,10,000.00 |
£ 1,20,000.00 |
£ 1,27,000.00 |
£ 1,15,000.00 |
£ 1,22,000.00 |
£ 1,32,000.00 |
|
Other income |
£ – |
£ 2,000.00 |
£ 3,000.00 |
£ – |
£ – |
£ 1,000.00 |
£ – |
£ – |
£ 2,000.00 |
£ – |
£ – |
£ – |
|
Total incoming |
£ 72,000.00 |
£ 86,000.00 |
£ 98,000.00 |
£ 1,20,000.00 |
£ 1,05,000.00 |
£ 99,000.00 |
£ 1,10,000.00 |
£ 1,20,000.00 |
£ 1,29,000.00 |
£ 1,15,000.00 |
£ 1,22,000.00 |
£ 1,32,000.00 |
|
Cash outgoing |
||||||||||||
|
Accountants fees |
£ 4,000.00 |
£ 4,000.00 |
£ 4,000.00 |
£ 4,000.00 |
£ 4,000.00 |
£ 4,000.00 |
£ 5,000.00 |
£ 5,000.00 |
£ 5,000.00 |
£ 5,000.00 |
£ 5,000.00 |
£ 5,000.00 |
|
Advertising and marketing |
£ 10,000.00 |
£ 10,000.00 |
£ 9,000.00 |
£ 9,000.00 |
£ 9,000.00 |
£ 7,500.00 |
£ 7,500.00 |
£ 7,500.00 |
£ 7,500.00 |
£ 5,000.00 |
£ 5,000.00 |
£ 5,000.00 |
|
Bank fees and charges |
£ 4,666.67 |
£ 4,666.67 |
£ 4,666.67 |
£ 4,666.67 |
£ 4,666.67 |
£ 4,666.67 |
£ 4,666.67 |
£ 4,666.67 |
£ 4,666.67 |
£ 4,666.67 |
£ 4,666.67 |
£ 4,666.67 |
|
Bank interest |
£ 583.33 |
£ 583.33 |
£ 583.33 |
£ 583.33 |
£ 583.33 |
£ 583.33 |
£ 583.33 |
£ 583.33 |
£ 583.33 |
£ 583.33 |
£ 583.33 |
£ 583.33 |
|
Credit card fees |
£ 584.00 |
£ 433.00 |
£ 512.00 |
£ 433.00 |
£ 390.00 |
£ 510.00 |
£ 560.00 |
£ 413.00 |
£ 417.00 |
£ 583.00 |
£ 570.00 |
£ 595.00 |
|
Utilities |
£ 1,600.00 |
£ 1,800.00 |
£ 2,100.00 |
£ 1,700.00 |
£ 1,800.00 |
£ 1,900.00 |
£ 1,700.00 |
£ 1,400.00 |
£ 2,200.00 |
£ 1,900.00 |
£ 1,700.00 |
£ 2,200.00 |
|
Telephone charges |
£ 563.00 |
£ 590.00 |
£ 520.00 |
£ 490.00 |
£ 440.00 |
£ 420.00 |
£ 470.00 |
£ 430.00 |
£ 420.00 |
£ 480.00 |
£ 430.00 |
£ 510.00 |
|
Loan payments |
£ 5,833.33 |
£ 5,833.33 |
£ 5,833.33 |
£ 5,833.33 |
£ 5,833.33 |
£ 5,833.33 |
£ 5,833.33 |
£ 5,833.33 |
£ 5,833.33 |
£ 5,833.33 |
£ 5,833.33 |
£ 5,833.33 |
|
Rent and rates |
£ – |
£ – |
£ 1,050.00 |
£ – |
£ – |
£ 1,050.00 |
£ – |
£ – |
£ 1,050.00 |
£ – |
£ – |
£ 1,050.00 |
|
Repairs and Maintenance |
£ – |
£ 350.00 |
£ – |
£ – |
£ 750.00 |
£ – |
£ 600.00 |
£ – |
£ – |
£ 510.00 |
£ – |
£ 600.00 |
|
Stationary and printing |
£ 883.00 |
£ 791.67 |
£ 583.33 |
£ 615.00 |
£ 460.00 |
£ 970.00 |
£ 345.00 |
£ 677.00 |
£ 600.00 |
£ 750.00 |
£ 600.00 |
£ 725.00 |
|
Payroll expenses |
£ 6,666.67 |
£ 6,666.67 |
£ 6,666.67 |
£ 6,666.67 |
£ 6,666.67 |
£ 6,666.67 |
£ 6,666.67 |
£ 6,666.67 |
£ 6,666.67 |
£ 6,666.67 |
£ 6,666.67 |
£ 6,666.67 |
|
Insurance |
£ 2,000.00 |
£ 2,000.00 |
£ 2,000.00 |
£ 2,000.00 |
£ 2,000.00 |
£ 2,000.00 |
£ 2,166.67 |
£ 2,166.67 |
£ 2,166.67 |
£ 2,166.67 |
£ 2,166.67 |
£ 2,166.67 |
|
Superannuation |
£ 5,416.67 |
£ 5,416.67 |
£ 5,416.67 |
£ 5,416.67 |
£ 5,416.67 |
£ 5,416.67 |
£ 5,416.67 |
£ 5,416.67 |
£ 5,416.67 |
£ 5,416.67 |
£ 5,416.67 |
£ 5,416.67 |
|
Income tax |
£ 5,458.50 |
£ 6,300.00 |
£ 7,200.00 |
£ 7,500.00 |
£ 9,340.00 |
£ 8,300.00 |
£ 10,313.00 |
-£ 266.10 |
£ 1,963.80 |
-£ 1,347.00 |
£ 939.90 |
£ 3,165.90 |
|
Total outgoing |
£ 48,255.17 |
£ 49,431.33 |
£ 97,686.50 |
£ 48,904.67 |
£ 51,346.67 |
£ 49,816.67 |
£ 51,821.33 |
£ 40,487.23 |
£ 44,484.13 |
£ 38,209.33 |
£ 39,573.23 |
£ 44,179.23 |
|
Monthly cash balance |
£ 23,744.83 |
£ 36,568.67 |
£ 313.50 |
£ 71,095.33 |
£ 53,653.33 |
£ 49,183.33 |
£ 58,178.67 |
£ 79,512.77 |
£ 84,515.87 |
£ 76,790.67 |
£ 82,426.77 |
£ 87,820.77 |
|
CLOSING BALANCE |
£ 83,744.83 |
£ 1,20,313.50 |
£ 1,20,627.00 |
£ 1,91,722.33 |
£ 2,45,375.67 |
£ 2,94,559.00 |
£ 3,52,737.67 |
£ 4,32,250.43 |
£ 5,16,766.30 |
£ 5,93,556.97 |
£ 6,75,983.73 |
£ 7,63,804.50 |
|
Balance sheet forecast |
|||
|
Particulars |
2018 |
2019 |
2020 |
|
Current assets |
|||
|
Cash |
£ 7,63,804.50 |
£ 6,61,018.00 |
£ 6,83,644.00 |
|
Accounts receivables |
£ 25,000.00 |
£ 32,000.00 |
£ 29,000.00 |
|
Inventory |
£ 20,000.00 |
£ 1,90,000.00 |
£ 1,50,000.00 |
|
Total current assets |
£ 8,08,804.50 |
£ 8,83,018.00 |
£ 8,62,644.00 |
|
Non-current assets |
|||
|
Plant, property & equipment |
£ 50,000.00 |
£ 50,000.00 |
£ 45,000.00 |
|
Land and building |
£ 40,000.00 |
£ 40,000.00 |
£ 45,000.00 |
|
Furniture & fittings |
£ 5,000.00 |
£ 5,000.00 |
£ 15,000.00 |
|
Computer equipment |
£ 10,000.00 |
£ 10,000.00 |
£ 15,000.00 |
|
Total non-current assets |
£ 1,05,000.00 |
£ 1,05,000.00 |
£ 1,20,000.00 |
|
Total assets |
£17,22,609.00 |
£ 9,88,018.00 |
£ 9,82,644.00 |
|
Current/short-term liabilities |
|||
|
Accounts payable |
£ 7,20,000.00 |
£ 2,80,000.00 |
£ 3,10,000.00 |
|
Bank charges payable |
£ 1,20,000.00 |
£ 35,000.00 |
£ 46,000.00 |
|
Interest payable |
£ 40,000.00 |
£ 14,000.00 |
£ 16,000.00 |
|
Accrued wages |
£ 85,000.00 |
£ 52,000.00 |
£ 51,000.00 |
|
Income tax |
£ 95,000.00 |
£ 52,000.00 |
£ 35,000.00 |
|
Total current liabilities |
£ 10,60,000.00 |
£ 4,33,000.00 |
£ 4,58,000.00 |
|
Long-term liabilities |
|||
|
Borrowings |
£ 2,50,000.00 |
£ 50,000.00 |
£ 25,000.00 |
|
Total liabilities |
£13,10,000.00 |
£ 4,83,000.00 |
£ 4,83,000.00 |
|
Owner’s equity |
|||
|
Issued capital |
£ 1,76,050.00 |
£ 1,76,050.00 |
£ 76,050.00 |
|
Shareholder’s equity |
£ 60,000.00 |
£ 60,000.00 |
£ 60,000.00 |
|
Retained earnings |
£ 1,76,559.00 |
£ 2,68,968.00 |
£ 3,63,594.00 |
|
Total equity |
£ 4,12,609.00 |
£ 5,05,018.00 |
£ 4,99,644.00 |
|
Toal liabilities and equity |
£17,22,609.00 |
£ 9,88,018.00 |
£ 9,82,644.00 |
|
Break -even analysis |
|
|
Timeframe (e.g. monthly/yearly) |
|
|
Average price of each product/service sold |
£ 1,800.00 |
|
Average cost of each product/service to make/deliver |
£ 1,100.00 |
|
Fixed costs for the month/year |
£ 2,10,000.00 |
|
Profit percentage |
38.89% |
|
Total sales needed to break-even |
£ 5,40,000.00 |
|
Number of units sold needed to break-even |
300 |
The contingency planning will be prepared for helping the management to overcome or face the possible future circumstances or events (Authority 2016). The contingency plan will include the system programming, internal auditors, applications programming, legal department, safety, security and fire plan, insurance, responsibility, communications. Further, the app can be developed or modified as per requirement. The plan will include the following –
|
Problem |
Response |
|
App not responding |
The client can report the issue online and the solution will be provided in 24 hrs of time after checking all the details of the user. |
|
Non-availability of signal in client’s end |
In such circumstances the client must notify the issue through the 24 hrs customer care services and shall follow the instructions as will provided by the customer care executive |
|
Mobile Phone of the client lost or stolen |
The client can suspend the service through calling the service centre number immediately and then again start the service on new handset through login password. |
|
Ratio |
2018 |
2019 |
2020 |
Analysis |
|
Current ratio |
0.76 |
2.04 |
1.88 |
The current ratio of the company for the year 2018 will be lower than the average that is 1, however, it is expected to improve from next year |
|
Debt equity ratio |
3.17 |
0.96 |
0.97 |
The debt ratio of the company for the year 2018 is quite high that is funding through borrowing is high. However, it is expected to improve from next year (Vogel 2014) |
|
Return on equity |
0.43 |
0.53 |
0.73 |
Both ROA and ROE of the company are expected to improve from the 2nd year that is from 2018 as the net profit of the company is expected to improve |
|
Return on assets |
0.10 |
0.27 |
0.37 |
|
|
Net profit margin |
13.58% |
18.81% |
23.11% |
Net margin is expected to increase each year as the sales will increase at 10% each year (Brigham and Ehrhardt 2013) |
References and Bibliography
Authority, N.I.F.H., 2016. Business Plan 2016/17.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice. Cengage Learning.
Finch, B., 2016. How to write a business plan. Kogan Page Publishers.
Vogel, H.L., 2014. Entertainment industry economics: A guide for financial analysis. Cambridge University Press.
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