BUS599 Assignment

Pure Sate Business Financial Plan:

For every starting company to succeed there must be a good business plan in place. This plan should be strategically formulated to address the key sectors of the business indicating how the operations will be carried out. For a good business plan to be made, there must be a goal and objectives of the company to be covered (Barringer, 2012).This gives light in the view of the structure of the company targeting mainly the procedures of the business. A plan before start of a business is a good tool for acquiring funds from financial institutions. By doing so, it must state how the business will invest the funds, how much it should expect in future by giving financial projections to be attained. This response goes over the key steps of a business plan of Pure Sate company putting into consideration the sales forecast, expense budget, cash-flow statement, income projection and break-even analysis of the company.

Sales Forecast: Sales forecast is a sheet that shows the expected sales of the company by incorporating all the transactions which will be undertaken from the company up to the market ( Barringer, 2012). It indicates the total sales a company can achieve monthly, quarterly or yearly. As a result, the company starts up with a set mind of how many sales are expected to be made in order to achieve the set goals of a company through strategic marketing to yield more sales. Pure Sate being a company that offers non-alcoholic drinks, the marketing strategy will be in line to take a competitive advantage over the other businesses operating in the same line.

Cash-flow Statement: This is a statement which tabulates the movement of funds in and out of the company. It gives a clear view of the dollar movement for one to assess how the company is doing in terms of cash (Disatnik, Duchin & Schmidt, 2013). Basically, it is based on the sales forecast of the company and the balance sheet items.  An ideal cash-flow statement for a startup company consists of twelve months because of lack of previous financial statements to account for when making the formulation. Pure Sate being a new venture, it lacks these financial statements to put in consideration so as to come up with a concrete cash-flow that reflects the real operations of the company. However, before the launch of its operations, a clear picture of how the statements should look like is expected.

ENDING CASH BALANCE

    2017/18      $3,773,303

    2018/19      $4,618,165

    2019/20      $7,233,575

    2020/21      $21,038,849

Income Statement Projection: Ideally, this is referred to a statement that shows the financial income of a company. It tries to reflect whether the company is making losses or profits. For a business plan, this is formulated based on the sales forecast, cost of the sales , expenses likely to be incurred by the business, interest and any taxes paid by the company. Ideally, it reflects how well the company is operating, the net operational worth of the organization.

Balance Sheet :This is also referred to as asset and liabilities statement. As from the words, it comprises the assets of the company, all the liabilities to be paid by the company and other aspects. This helps to compute the overall net worth of the business. The balance sheet of Pure Sate basically comprises of the initial cost of investment and relatively the sales income forecast with few to no liabilities.

1st Quarter

TOTAL ASSETS/Liabilities/Net Worth                             $891,913

2nd Quarter

TOTAL ASSETS/Liabilities/Net Worth                             $1,285,327

Break-even Analysis: This gives the view of the viability of the business from its operations. It is a situation when the expenses of the company are in line with sales realized. This analysis is done on annual basis in order to establish how the business has performed. For a business to be viable, its overall income or revenue should exceed the expenses and interest (Ramini, Grani, Fankem, Ghiribaldi, Bartolini & Bertozzi, 2014).

Year 1 Monthly Average        $80,601   2017/18

Year 2 Monthly Average        $82,082   2018/19

Year 3 Quarterly Average      $250,657 2019/20

References

Barringer, B. (2012). Entrepreneurship: Successfully Launching New Ventures, (2012).

Disatnik, D., Duchin, R., & Schmidt, B. (2013). Cash flow hedging and liquidity choices. Review of Finance, 18(2), 715-748.

Ramini, L., Grani, P., Fankem, H. T., Ghiribaldi, A., Bartolini, S., & Bertozzi, D. (2014, March). Assessing the energy break-even point between an optical NoC architecture and an aggressive electronic baseline. In Design, Automation and Test in Europe Conference and Exhibition (DATE), 2014 (pp. 1-6). IEEE.