Business & Operations

UpTown Swirl

Business Operation and Strategy

· Source and Use of Funds

· Plan Assumptions

1. Monthly Volumes = 1,000 Bottles in January

2. Monthly growth = 50%

3. Price per unit = $2 per bottle

4. Sales made through commission agents = 30%

5. Commission to sales agents = 15%

6. Returns and allowances = 2.5% of gross sales

7. COGS = 28% of Gross Sales ($0.56 per bottle)

8. Monthly Inventory

9. Capex

a. 2 NAB Mixers of $28,500 each with life of 5 years and salvage value of $5,000

b. 2 Bottling Machinery of $9,600 each with life of 6 years and salvage value of $1,500

c. 4 Panel Vans of $10,000 each with life of 4 years and salvage value of $2,000

d. 3 Apple Macintosh computers of $1,200 each with life of 4 years and salvage value of $100

e. 1 Graphic Software of $750 with life of 4 years and salvage value of $100

f. 2 Mobile Phone of $250 each with life of 3 years and salvage value of zero

10. Staffing

a. Management Employees = 3 head count @ $2,000 per month

b. Salary of myself is ignored and hence not considered in management headcount

c. Administrative Staff = 2 head counts @ $1,500 per month up to June.

d. Sales Team = 2 head counts @ $1,000 per month. 5 head counts from July onwards

e. Operations = 1 head count @ $1,500 per month

f. Other Staff = 1 head count @ $500 per month

g. Retainer = 1 head count @ $10 per hour for 20 hours week or 80 hours a month

11. Marketing

12. Professional Services

a. Attorneys = $2,000

b. Accountants = $1,500

c. Management Consultants = $2,000

13. Capital Investment

a. Myself = $50,000

b. Melinda Cates = $40,000

c. Seed Funding from friends = $20,000 to be repaid in full without interest at end of December of first year

d. Bank Loan = $100,000 for 5 years @ 3% p.a.

e. Series A round of funding from private equity = $120,000 in April

14. Miscellaneous Expenses

· Break Even

Reference

Abor, J. Y. (2017). Evaluating Capital Investment Decisions: Capital Budgeting. In Entrepreneurial Finance for MSMEs (pp. 293-320). Palgrave Macmillan, Cham.

Korauš, A., Gombár, M., Kelemen, P., & Backa, S. (2019). Using quantitative methods to identify insecurity due to unusual business operations. Entrepreneurship and Sustainability Issues, 6(3), 1101-1112.

Zhang, G. (2017). Fundamental (versus Market) Risk and Capital Budgeting Decisions: Distinguishing between the Investment Hurdle Rate and the Cost of Capital. Available at SSRN 3019270.