Second Attempt Assignment 2: Business Plan Breakdown 3—The Simplified Financial Plan
SIMPLIFIED FINANCIAL PLAN 9
The Simplified Financial Plan
Name
Institution
The Simplified Financial Plan
Financial Plan
The proposed initiative focuses on innovative leadership strategies and their impact on effective change management practices. While the Master of Science in organizational leadership provides a background overview of leadership within organizations, the initiative seeks to propose a set of leadership approaches and change management models for organizations. Therefore, this initiative focuses on innovative leadership strategies and their influence on change processes which forms an integral component of the registered program. The startup of any particular venture is the primary concern of a business which has estimates of a given periodic time. The time proclaims each requirement within the business until the achievement of break-even point and the profits obtained from the investment. Therefore, it is in order the business manages all the costs especially those that involve the employees and the various training costs.
Sources of Funding
To begin and Start the operations of the business, the amount of money needed is $655,000. Therefore, the five members within the legal preferences have to contribute $50,000 each as part of their investment and sort for other finances firms such as commercial loans from banks. The amount of money needed from the local banks includes an additional $425,000.
The business ability to pay the commercial loan is if it is given at an interest of rate of 7% repayable for three years. Therefore, the start-up possibility action of the loan will allow the owners an added advantage of organizing the company. However, other business affairs such as payment of tax will be the source of limited liability whereby payment of loan will be in the financial information pages.
Cash Flow Projection
The cash flow projections are the financial projections ranging from $515,000, $536,000 and $456,000 in the respective years. Therefore, the projected income in the first year will be $664,000 lower than the second and third year because of the start-up expenses and an amortization expense of $242,000. Within the progression year, the revenue increases due to the growing popularity of the business. In addition, the balance sheets entail the growth of cash and the investments including the owners’ equity for the proceeding years to come.
Fast Food Restaurant Commencement Balance Sheet
Income Statement of the First Year Calendar
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Income Statement 1st Year |
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Revenue |
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Sales |
2,700,000 |
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Cost of Sales |
880,000 |
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Gross Profit |
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1,820,000 |
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Expenses |
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Rent |
76,200 |
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Depreciation |
69,420 |
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Supplies |
24,000 |
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Repairs & Maintenance |
20,000 |
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Property Tax |
5,000 |
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Utilities |
80,000 |
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Advertising |
6,000 |
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Salaries |
526,000 |
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Insurance |
25,000 |
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Bad Debts |
5,000 |
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Start Up Expenses |
242,000 |
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Uniforms |
2,400 |
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Employee Benefits |
26,000 |
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Employee Discounts |
5,000 |
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Payroll Taxes |
40,000 |
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Miscellaneous |
24,000 |
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Total Expenses |
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1,176,020 |
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Other Income/Expense |
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Interest Expense |
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25,000 |
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Net Income |
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$618,980 |
The Break-Even Analysis
Break-even analysis is an organizational structure that lets a company or industry to determine and know what to sell over a period to cover most of the costs while still doing business. Therefore, the process is secure since most of the calculations revolve around the productions and associated costs with a target sale. In most cases, the contribution margin assists in determining the break-even point of the company when doing a proper analysis.
Break Even Analysis Estimate of Monthly Gross Profit Schedule and Fixed Costs
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Rent |
6,375 |
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Depreciation |
5,202 |
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Supplies |
2,000 |
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Repairs & Maintenance |
2,000 |
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Property Tax |
395 |
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Utilities |
7,000 |
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Advertising |
500 |
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Salaries |
43,893 |
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Insurance |
2,150 |
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Bad Debts |
500 |
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Uniforms |
200 |
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Employee Benefits |
2,195 |
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Employee Discounts |
500 |
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Payroll Taxes - Employer's share of FICA |
3,358 |
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Miscellaneous |
2,000 |
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Principal/Interest Repayment |
13,123 |
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Total Estimated Monthly Fixed Costs |
91,390 |
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Average Monthly Projected Gross Sales |
229,280 |
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Average Monthly Variable Costs |
73,370 |
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Average Monthly Gross Profit |
155,910 |
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The organization Structure Chart
Top management plays a crucial role within an organization through value proposition and enhancing the adoption of strategies to strengthen the company’s position. Significantly, leadership plays a vital role in the implementation of innovative practices within an organization. In this regard, leaders often function as change agents by not only creating a vision but also highlighting the need for organizational change and enactment of the identified change process.
Ownership
|
Chelsea Jonas |
Selma’s Mike |
James Essen |
Daniel Scott |
Soong Costa |
Ratio Analysis
The ratio analysis involves some items that help in the analysis of the financial statement. Therefore, it is the mandate of the management to categorize their aspects considering all the factors. The category elements include debt ratio, asset ratio, profit ratio, and market ratio. The process of the analysis evaluation helps in knowing the correctness and efficiency of the financial performance.
List of Possible Risk
Within the implementation of the project, some risks involve the process when managing the operation of the business. The potential risks include:
• Product and service Risks- It is the operation of unleashing a new item without the certainty that is going to sell well to the market.
• Market risk- Within the market, the development of providing new services may take a little bit long for the customer to adapt.
• People risk- It is important to understand the people’s needs for example employees because they are the ones giving efficient service to the customers.
• Financial risk- The Company should have enough capital when starting the business to sustain the needs of the company. Thus they should be aware of mismanagement of funds.
• Competitive risk- Within the industry, it is important to take care of all competition within the where the company is located.
References
David. F. R. (2013). Strategic Management (14th Ed). Prentice Hall. Upper Saddle River, New Jersey
Gilley, A., Gilley, J. W., & McMillan, H. S. (2010). Organizational change: Motivation, communication, and leadership effectiveness. Performance improvement quarterly, 21(4), 75-94
Running head: SIMPLIFIED FINANCIAL PLAN 2