Week 3

Christopher Staples

Revenue Forecast

FIN/575: Project Budget and Finance

Week 2

September 7, 2020

Revenue Forecast

Our company will be called Black and White Apparel and Footwear Company. It will be formed and begin operating in 2022. The company’s vision is to provide adequate and quality products across different states with the aim of expanding globally and become one of the leading companies in the production of apparel and footwear products.

Below is a revenue forecast for the first five years of the company’s establishment:

Assumptions

It is assumed that in the first year, the market size will be relatively small due to the company still being in its initial stages of development. Most people are still unaware of the company's products leading to low sales (Hovland, 2019). Another assumption is that there will be no inflation in the economy. The value of the dollar will be of the same value throughout the first year of the business. Also, there is an assumption that the company will lack investors as they lack awareness of the existence of the company. The company will generally operate using the little funds invested by the owner (Gibbons, Hisrich, & DaSilva, 2014). It is also expected that a good and peaceful environment will be present where both the company and the consumers will be able to conduct their business with minimal interruptions both within and outside the company. Another assumption is that the cost of the goods sold will be constant throughout the first year of business. No drastic change in products' prices is expected hence a stable market. With regard to expenses, the company will invest heavily in assets and recruitment of employees to work in different sectors of the company. This is expected to be a paramount process; thus, much of the company's initial funds will be geared towards ensuring that everything is handled effectively.

Revenue Adjustment after Year 1

The revenues for the first five years of the company are projected to be on a rising trend. That is because we anticipate the business to grow significantly every year due to an increase in capital and growth of market share. The projected growth in the second year of business is expected to be the greatest because the consumers will start appreciating and realizing the strength of the founder’s idea (Palepu et al., 2020). Because of our plan, execution and timing will be superior, thus, our chances of success will be very high. The other factor that will cause the business to grow is excellent leadership. We will source for exceptional leaders to inspire workers to work hard to accomplish the goals of the company. They will also help in making effective high-level decisions and turning weak ideas into successful ones.

Hiring the right people for the job will help in maintaining the business, driving innovations, and implementing high-level goals. Working capital is also expected to increase per year. The increase in capital will increase the number of units produced and fund other projects that will help in reducing the cost of production and producing innovative products. Continuous investment into the business will help in maintaining the constant growth of the business. After the first year, the company will execute its plans perfectly, providing a solid foundation for what did not work from our initial concept. The growth is likely to be based on how well the business responds to crisis (Savall, & Hillon, 2017). Having a well thought out crisis response plan will help the business to stay strong even in times of crisis. Also, the unique marketing of our brands is likely to increase the market share and enhance brand awareness as time progresses. Our memorable branding will likely affect the buying decisions of the consumers positively. Some factors can be almost impossible, but the company will make adjustments where that can maximize its chances for success.

References

Gibbons, G., Hisrich, R. D., & DaSilva, C. M. (2014). Entrepreneurial finance: A global perspective. Sage Publications.

Hovland, T. (2019). Effective Financial Projections for a Startup: Get a Business Started with Meaningful Financial Projections. Journal of Accountancy, 227(3), 38.

Palepu, K. G., Healy, P. M., Wright, S., Bradbury, M., & Coulton, J. (2020). Business analysis and valuation: Using financial statements. Cengage AU.

Savall, A., & Hillon, Y. C. (2017). Strategic venturing for entrepreneurs: a new application of the socio-economic approach to management. American Journal of Management, 17(3).

Create a 5 year revenue forecast using the textbook for this course to assist you, pages 29 and 32 have examples and I have provided the template below to help you.

· Create the company of your dreams. Show five years of data.

· This is a simple revenue forecast , however, you must provide an explanation of what assumptions you use to come up with revenue, cost of goods sold (if used), and expenses for the first year. Then explain how they will be adjusted for the next four years. 

· Be consistent throughout the budget.

· Display and explain your calculations (This means show your numbers).  

Format assignment consistent with APA guidelines.