INITIAL BUSINESS MODEL CANVAS
James05
formationplan.xlsxInitial Financial plan
| January | February | March | April | May | June | July | August | Sept | Oct | November | December | ||||
| Description | |||||||||||||||
| Raising of funds | |||||||||||||||
| Investment divided into50000 Ordinary shares of $150 each. | 50000 shares of $ 150 each | $ 7,500,000.00 | |||||||||||||
| 11% p.a bank loan ,repayment period of 6 years | $ 1,000,000.00 | ||||||||||||||
| Total Amount of capital raised | $ 8,500,000.00 | ||||||||||||||
| Revenues Versus Expenses | |||||||||||||||
| Personnel needs | |||||||||||||||
| managers | |||||||||||||||
| Rate | $400.00 | No. of managers | $ 4.00 | 4 | 4 | 4 | 4 | 4 | 4 | 5 | 6 | 6 | 6 | 6 | |
| total | Total Salaries | $ 1,600.00 | $1,600.00 | $1,600.00 | $1,600.00 | $1,600.00 | $1,600.00 | $1,600.00 | $2,000.00 | $2,400.00 | $2,400.00 | $2,400.00 | $2,400.00 | ||
| Product engineers | |||||||||||||||
| Rate | $300.00 | No. of Product Engineers | $ 12.00 | 12 | 12 | 12 | 12 | 12 | 12 | 18 | 18 | 18 | 18 | 18 | |
| Total Salaries | $ 3,600.00 | $3,600.00 | $3,600.00 | $3,600.00 | $3,600.00 | $3,600.00 | $3,600.00 | $5,400.00 | $5,400.00 | $5,400.00 | $5,400.00 | $5,400.00 | |||
| Accountants | |||||||||||||||
| Rate | $200.00 | No.of Accountants | $ 2.00 | 2 | 2 | 2 | 2 | 2 | 2 | 3 | 3 | 3 | 3 | 3 | |
| Total Salaries | $ 400.00 | $400.00 | $400.00 | $400.00 | $400.00 | $400.00 | $400.00 | $600.00 | $600.00 | $600.00 | $600.00 | $600.00 | |||
| Marketers | |||||||||||||||
| Rate | $200.00 | No. of marketers | $ 5.00 | 5 | 5 | 5 | 5 | 5 | 5 | 8 | 8 | 8 | 8 | 8 | |
| Total Salaries | $ 1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,600.00 | $1,600.00 | $1,600.00 | $1,600.00 | $1,600.00 | |||
| Total Remuneration | $ 6,600.00 | $6,600.00 | $6,600.00 | $6,600.00 | $6,600.00 | $6,600.00 | $6,600.00 | $9,600.00 | $10,000.00 | $10,000.00 | $10,000.00 | $10,000.00 | |||
| General and administrative axpenses | |||||||||||||||
| Office rent and related costs | $ 2,000.00 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 4000 | 4000 | 4000 | 4000 | 4000 | |||
| Utilities | $ 1,000.00 | 1000 | 1000 | 1000 | 1000 | 1000 | 1000 | 1500 | 1500 | 1500 | 1500 | 1500 | |||
| Communication expenses | $ 500.00 | 500 | 500 | 500 | 500 | 500 | 500 | 500 | 500 | 500 | 500 | 500 | |||
| Insurance expenses | $ 200.00 | 200 | 200 | 200 | 200 | 200 | 200 | 250 | 250 | 250 | 250 | 250 | |||
| Delivery costs | $ 100.00 | 100 | 100 | 100 | 100 | 100 | 100 | 200 | 200 | 200 | 200 | 200 | |||
| Filling fees | $ 7,000.00 | 50 | 50 | 700 | 60 | 79 | 0 | 790 | 900 | 900 | 900 | 900 | |||
| Total administrative expenses | $ 10,800.00 | 3850 | 3850 | 4500 | 3860 | 3879 | 3800 | 7240 | 7350 | 7350 | 7350 | 7350 | |||
| Marketing costs | Increase rate | 1.05 | |||||||||||||
| $ 1,500.00 | $1,575.0 | $1,653.8 | $1,736.4 | $1,823.3 | $1,914.4 | $2,010.1 | $2,110.7 | $2,216.2 | $2,327.0 | $2,443.3 | $2,565.5 | ||||
| Revenues | $ 1.50 | 1.5 | 1.5 | $ 1.50 | 1.5 | 1.5 | $ 1.50 | 1.5 | 1.5 | $ 1.50 | 1.5 | 1.5 | |||
| Unit cost | $ 0.55 | $ 0.55 | $ 0.56 | $ 0.55 | $ 0.55 | $ 0.55 | $ 0.55 | $ 0.65 | $ 0.65 | $ 0.65 | $ 0.65 | $ 0.65 | |||
| units saleable | (Units must be increasing | $ 16,000.00 | $ 17,600.0 | $ 19,360.0 | $ 21,296.0 | $ 23,425.6 | $ 25,768.2 | $ 28,345.0 | $ 34,014.0 | $ 40,816.8 | $ 48,980.1 | $ 58,776.1 | $ 70,531.4 | ||
| Total revenue received | $ 15,200.00 | $ 16,720.00 | $ 18,295.20 | $ 20,231.20 | $ 22,254.32 | $ 24,479.75 | $ 26,927.73 | $ 28,911.88 | $ 34,694.25 | $ 41,633.10 | $ 49,959.72 | $ 59,951.67 | |||
| Net revenue before payment of interest | $ (3,700.00) | $ 4,695.00 | $ 6,191.45 | $ 7,394.76 | $ 9,971.06 | $ 12,086.33 | $ 14,517.58 | $ 9,961.22 | $ 15,128.07 | $ 21,956.11 | $ 30,166.38 | $ 40,036.16 | |||
| No of customers | $ 2,000.00 | 2120 | 2247 | 2382 | 2525 | 2676 | 2837 | 3007 | 3188 | 3379 | 3582 | 3797 | |||
| Cash Requirements | |||||||||||||||
| January | February | March | April | May | June | July | August | September | October | November | December | ||||
| Opening Balance | $ - 0 | $ 577,265.92 | $ 562,926.84 | $ 550,084.21 | $ 538,444.89 | $ 529,381.87 | $ 522,434.12 | $ 517,917.63 | $ 208,844.77 | $ 204,938.76 | $ 207,860.79 | $ 218,993.09 | |||
| Collection of Start up funds(Shares and Loan) | $ 8,500,000.00 | ||||||||||||||
| Net Inflows of cash from operations | $ (3,700.00) | $ 4,695.00 | $ 6,191.45 | $ 7,394.76 | $ 9,971.06 | $ 12,086.33 | $ 14,517.58 | $ 9,961.22 | $ 15,128.07 | $ 21,956.11 | $ 30,166.38 | $ 40,036.16 | |||
| Cash outflows | |||||||||||||||
| Loan repayment(interest +Principle) | $ 19,034.08 | $ 19,034.08 | $ 19,034.08 | $ 19,034.08 | $ 19,034.08 | $ 19,034.08 | $ 19,034.08 | $ 19,034.08 | $ 19,034.08 | $ 19,034.08 | $ 19,034.08 | $ 19,034.08 | |||
| Investment in Complete worspace (Asset) | $ 7,900,000.00 | ||||||||||||||
| Refurbishment of Expansion floor area | 300000 | ||||||||||||||
| Closing Balance | $ 577,265.92 | $ 562,926.84 | $ 550,084.21 | $ 538,444.89 | $ 529,381.87 | $ 522,434.12 | $ 517,917.63 | $ 208,844.77 | $ 204,938.76 | $ 207,860.79 | $ 218,993.09 | $ 239,995.16 |
The above model was developed on the following assumptions. 1.from January to July TBSB will have 4 managers earning at a rate of $2.00 per hour,12 product engineers earning at the rate of $1.5 per hour,two accountants,earning at the rate of $1 an hour ,5 market experts ,earning at the rate of $1.00 per hour.Each working day has eight working hours.Thereafter,the market experts will be increased by 3 and the product engineers will be increased by 50% ,an additional manager and an additional accountant will be employed .There are 25 working days in a month. 2.Area used ,utilities,insurance expense,will have to be increasedin the month of August to accommodate increased no. of staff 3.Delivery costs include Subscriotion to softare and application distribution sites. 4.Filling fee is for registration of patent and/or copyright in each and every new product put on sale as game or news 5.Marketing costs includes the cost of erecting bill boards and posters,placing of adverts in social interative sites and use of telecommunication channel subsriptions.They are bound to increase by 5% in each month. 6.The unit revenue receivable from each game will be $1.5 per game played on site. The The unit cost will be $0.55 per game played on TBSB from January to July after which it will be increased to $0.65 . 7. The no of games on play will be increasing by 10% in each month between January and July and on september,it will increase by 20% . 8.Complete workspace includes High speed computers used by Delopers, Server Computers Softwares and restructuring of the whole workspace. the whole setup cost $7.9 million. and in the month of August,$300000 was used to expand the facility to occupy more staff. On review of the above terms ,the suggested changes include the following. 1.Reduce the number of managers in January till may from 4 to 2, reduce the rate of remuneration of engineers from $1.5 to 1.25 per hour, and do not increase the number of accounts during the year. 2.Filing fees to be a increased to $2000 per month. 3. The Unit cost to be constant at 0.55 throughout the year. 4.the amount to be borrowed to be reduced to cut down on costs of paying interest. 5.Adjust January sales to 11450 games played
Normalised Financial plan
| January | February | March | April | May | June | July | August | Sept | Oct | November | December | |||||
| Description | ||||||||||||||||
| Raising of funds | ||||||||||||||||
| Investment divided into50000 Ordinary shares of $150 each. | 50000 shares of $ 150 each | $ 7,500,000.0 | ||||||||||||||
| 11% p.a bank loan ,repayment period of 6 years | $ 800,000.0 | |||||||||||||||
| Total Amount of capital raised | $ 8,300,000.0 | |||||||||||||||
| loan repayments per month | $ 15,227.3 | |||||||||||||||
| Revenues Versus Expenses | ||||||||||||||||
| Personnel needs | ||||||||||||||||
| managers | ||||||||||||||||
| Rate | $400.00 | No. of managers | 2 | 2 | 2 | 2 | 2 | 4 | 4 | 5 | 6 | 6 | 6 | 6 | ||
| total | Total Salaries | $ 800.0 | $ 800.0 | $ 800.0 | $ 800.0 | $ 800.0 | $ 1,600.0 | $ 1,600.0 | $ 2,000.0 | $ 2,400.0 | $ 2,400.0 | $ 2,400.0 | $ 2,400.0 | |||
| Product engineers | ||||||||||||||||
| Rate | $250.00 | No. of Product Engineers | 12 | 12 | 12 | 12 | 12 | 12 | 12 | 18 | 18 | 18 | 18 | 18 | ||
| Total Salaries | $ 3,000.0 | $ 3,000.0 | $ 3,000.0 | $ 3,000.0 | $ 3,000.0 | $ 3,000.0 | $ 3,000.0 | $ 4,500.0 | $ 4,500.0 | $ 4,500.0 | $ 4,500.0 | $ 4,500.0 | ||||
| Accountants | ||||||||||||||||
| Rate | $200.00 | No.of Accountants | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 3 | 3 | 3 | 3 | 3 | ||
| Total Salaries | $ 400.0 | $ 400.0 | $ 400.0 | $ 400.0 | $ 400.0 | $ 400.0 | $ 400.0 | $ 600.0 | $ 600.0 | $ 600.0 | $ 600.0 | $ 600.0 | ||||
| Marketers | ||||||||||||||||
| Rate | $200.00 | No. of marketers | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 8 | 8 | 8 | 8 | 8 | ||
| Total Salaries | $ 1,000.0 | $ 1,000.0 | $ 1,000.0 | $ 1,000.0 | $ 1,000.0 | $ 1,000.0 | $ 1,000.0 | $ 1,600.0 | $ 1,600.0 | $ 1,600.0 | $ 1,600.0 | $ 1,600.0 | ||||
| Total Remuneration | $ 5,200.0 | $ 5,200.0 | $ 5,200.0 | $ 5,200.0 | $ 5,200.0 | $ 6,000.0 | $ 6,000.0 | $ 8,700.0 | $ 9,100.0 | $ 9,100.0 | $ 9,100.0 | $ 9,100.0 | ||||
| General and administrative axpenses | ||||||||||||||||
| Office rent and related costs | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 4,000.0 | $ 4,000.0 | $ 4,000.0 | $ 4,000.0 | $ 4,000.0 | ||||
| Utilities | $ 1,000.0 | $ 1,000.0 | $ 1,000.0 | $ 1,000.0 | $ 1,000.0 | $ 1,000.0 | $ 1,000.0 | $ 1,500.0 | $ 1,500.0 | $ 1,500.0 | $ 1,500.0 | $ 1,500.0 | ||||
| Communication expenses | $ 500.0 | $ 500.0 | $ 500.0 | $ 500.0 | $ 500.0 | $ 500.0 | $ 500.0 | $ 500.0 | $ 500.0 | $ 500.0 | $ 500.0 | $ 500.0 | ||||
| Insurance expenses | $ 200.0 | $ 200.0 | $ 200.0 | $ 200.0 | $ 200.0 | $ 200.0 | $ 200.0 | $ 250.0 | $ 250.0 | $ 250.0 | $ 250.0 | $ 250.0 | ||||
| Delivery costs | $ 100.0 | $ 100.0 | $ 100.0 | $ 100.0 | $ 100.0 | $ 100.0 | $ 100.0 | $ 200.0 | $ 200.0 | $ 200.0 | $ 200.0 | $ 200.0 | ||||
| Filling fees | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | $ 2,000.0 | ||||
| Total administrative expenses | $ 5,800.0 | $ 5,800.0 | $ 5,800.0 | $ 5,800.0 | $ 5,800.0 | $ 5,800.0 | $ 5,800.0 | $ 8,450.0 | $ 8,450.0 | $ 8,450.0 | $ 8,450.0 | $ 8,450.0 | ||||
| Marketing costs | Increase rate | $ 1.1 | ||||||||||||||
| Total marketing costs | $ 1,500.0 | $ 1,575.0 | $ 1,653.8 | $ 1,736.4 | $ 1,823.3 | $ 1,914.4 | $ 2,010.1 | $ 2,110.7 | $ 2,216.2 | $ 2,327.0 | $ 2,443.3 | $ 2,565.5 | ||||
| Total operationa costs | $ 12,500.00 | $ 12,575.00 | $ 12,653.75 | $ 12,736.44 | $ 12,823.26 | $ 13,714.42 | $ 13,810.14 | $ 19,260.65 | $ 19,766.18 | $ 19,876.99 | $ 19,993.34 | $ 20,115.51 | ||||
| Revenues | $ 1.5 | $ 1.5 | $ 1.5 | $ 1.5 | $ 1.5 | $ 1.5 | $ 1.5 | $ 1.5 | $ 1.5 | $ 1.5 | $ 1.5 | $ 1.5 | ||||
| Unit cost | $ 0.6 | $ 0.6 | $ 0.6 | $ 0.6 | $ 0.6 | $ 0.6 | $ 0.6 | $ 0.6 | $ 0.6 | $ 0.6 | $ 0.6 | $ 0.6 | ||||
| units saleable | (Units must be increasing | 11450 | 12595 | 13855 | 15240 | 16764 | 18440 | 20284 | 24341 | 29209 | 35051 | 42062 | 50474 | |||
| Total revenue received | $ 10,877.5 | $ 11,965.3 | $ 13,161.8 | $ 14,478.0 | $ 15,925.7 | $ 17,518.3 | $ 19,270.2 | $ 23,124.2 | $ 27,749.0 | $ 33,298.8 | $ 39,958.6 | $ 47,950.3 | ||||
| Net revenue before payment of interest | $ (1,622.5) | $ (609.7) | $ 508.0 | $ 1,741.5 | $ 3,102.5 | $ 3,803.9 | $ 5,460.0 | $ 3,863.5 | $ 7,982.8 | $ 13,421.8 | $ 19,965.3 | $ 27,834.8 | ||||
| No of customers | $ 2,000.0 | $ 2,120.0 | $ 2,247.2 | $ 2,382.0 | $ 2,525.0 | $ 2,676.5 | $ 2,837.0 | $ 3,007.3 | $ 3,187.7 | $ 3,379.0 | $ 3,581.7 | $ 3,796.6 | ||||
| Cash Requirements | ||||||||||||||||
| January | February | March | April | May | June | July | August | September | October | November | December | |||||
| Opening Balance | $ - 0 | $ 398,377.5 | $ 382,540.5 | $ 367,821.3 | $ 354,335.5 | $ 342,210.7 | $ 330,787.4 | $ 321,020.1 | $ 9,656.4 | $ 2,412.0 | $ 606.6 | $ 5,344.6 | ||||
| Collection of Start up funds(Shares and Loan) | $ 8,300,000.0 | |||||||||||||||
| Net Inflows of cash from operations | $ (1,622.5) | $ (609.7) | $ 508.0 | $ 1,741.5 | $ 3,102.5 | $ 3,803.9 | $ 5,460.0 | $ 3,863.5 | $ 7,982.8 | $ 13,421.8 | $ 19,965.3 | $ 27,834.8 | ||||
| Cash outflows | ||||||||||||||||
| Loan repayment(interest +Principle) | $ 15,227.3 | $ 15,227.3 | $ 15,227.3 | $ 15,227.3 | $ 15,227.3 | $ 15,227.3 | $ 15,227.3 | $ 15,227.3 | $ 15,227.3 | $ 15,227.3 | $ 15,227.3 | |||||
| Investment in Complete worspace (Asset) | $ 7,900,000.0 | |||||||||||||||
| Refurbishment of Expansion floor area | $ 300,000.0 | |||||||||||||||
| Closing Balance | $ 398,377.5 | $ 382,540.5 | $ 367,821.3 | $ 354,335.5 | $ 342,210.7 | $ 330,787.4 | $ 321,020.1 | $ 9,656.4 | $ 2,412.0 | $ 606.6 | $ 5,344.6 | $ 17,952.1 | ||||
| Funds needed to operate in the first 12 months | ||||||||||||||||
| month | $ 1.00 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | Total | |||
| Total operational costs | $ 12,500.00 | $ 12,575.00 | $ 12,653.75 | $ 12,736.44 | $ 12,823.26 | $ 13,714.42 | $ 13,810.14 | $ 19,260.65 | $ 19,766.18 | $ 19,876.99 | $ 19,993.34 | $ 20,115.51 | $ 189,825.69 | |||
| Initial investment | $ 7,900,000.00 | $ 7,900,000.00 | ||||||||||||||
| Expansion of floor area | 300000 | $ 300,000.00 | ||||||||||||||
| Total operational costs | $ 7,912,500.00 | $ 12,575.00 | $ 12,653.75 | $ 12,736.44 | $ 12,823.26 | $ 13,714.42 | $ 13,810.14 | $ 19,260.65 | $ 19,766.18 | $ 19,876.99 | $ 19,993.34 | $ 20,115.51 | $ 8,389,825.69 | |||
| Gross burn | $ 15,818.81 | |||||||||||||||
| Revenues | $ 10,877.50 | $ 11,965.25 | $ 13,161.78 | $ 14,477.95 | $ 15,925.75 | $ 17,518.32 | $ 19,270.15 | $ 23,124.19 | $ 27,749.02 | $ 33,298.83 | $ 39,958.59 | $ 47,950.31 | ||||
| Average revenues | $ 22,939.80 | |||||||||||||||
| Net Burn Rate | $ 7,121.00 | |||||||||||||||
| 1.1348575639 | ||||||||||||||||
1.The firm will need $ $8389825.69 to operate in the first year of operation. Out of these funds, $7.9 million is for the initial investment required for the commencement of operations, Three hundred thousand dollars for expansion during the month of August. The rest of the amount of $189825.69 is required for the day to day running of the organization and will be used as Salaries and remuneration for the staff, as marketing fees, filling fees, communication expenses, payment of rent and delivery costs and for other related expenses. The above costs have to be incurred regardless of the no. of games played on the site. 2.NBSB on average will have a gross burn rate of $15.818.81, and on average generates $22939.80 per month. The net burn rate is $ 7,121. The rates are calculated on the assumption that the number of games played on the site on January is 11450 and this number will be increasing at the rate of 6 % p.m. due to aggressive marketing. The gross burn rate represents the rate at which the company is using up startup capital before it begins to generate profits. 3.At the end of 12 months the firm will have a bank balance of $17952.1 which can be able to run the organization for $17,952.1/15,818.81 =1.13 months. The firm is still dependent on startup capital since the 11%p. a loan of $ 800000 has not been paid for and the scheduled payment of $15227.3 is still to be paid.
