Business Plan for: Vitality Drinks Limited Please
Name: Business Plan for: Vitality Drinks Limited Li mited
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Business plan contents
Executive summary. 4 1 Executive summary. 4
2 Business details. 5 3 Key personnel 6 Vision. Vision. 8 4 !e "usiness idea. 8 5 Business #oals. $ 6 %!at t!e "usiness does. 1& ' %!at ma(es t!e "usiness di))erent 11 8 *e#al re+uirements. 12 ,ales and mar(etin#. 13 $ -ar(et researc!. 13 1& Pro)ilin# customers. 14 11 Pro)ilin# competitors. 15 12 -ana#in# mar(et ris(s. 16 13 Pricin#. 1' 14 Promotion and advertisin#. 18 unnin# t!e "usiness. 1$ 15 ,ta)) 1$ 16 Premises. 2& 1' ,uppliers. 21 18 E+uipment 22 1$ -ana#in# operational ris(s. 23 /inance. 24 2& ,tart0up costs. 24
21 Pro)it and loss )orecast 25 22 ,ourcin# )inance. 26 23 -ana#in# )inancial ris(s. 2' 24 as!)lo )orecast 28
Executive summary 1 Executive summary !is "usiness plan is )or vitality drin(s company *imited a proposed ener#y drin(s company. !e company ill venture into t!e drin(s mar(et and specialie on t!e production o) so)t drin(s ener#y drin(s and pac(a#ed ater. !e "usiness ill "e a limited lia"ility company it! perpetual succession. !is structure as c!osen "ecause t!e oner o) t!e "usiness does not ant to "ear any more lia"ility t!an t!e capital !ic! as contri"uted to t!e company as s!are capital. oever it is appreciated t!at operatin# a limited lia"ility company !as more le#al re+uirements to "e )olloed t!an operatin# ot!er )orms o) "usinesses. !is is "ecause a limited lia"ility company is re#arded as a le#al person. !e oner ill )irst employ a limited num"er o) employees so as to cut on costs. oever t!ese ill "e increased as t!e "usiness #ros. !e oner ill "e t!e mana#er o) t!e entity and ill also oversee some extra )unctions suc! as !uman resources. !e )inance to start and operate t!e company ill "e sourced )rom t!e oners personal savin#s. oever t!is is not enou#! and t!e company ill !ave to see( external )inancin# )rom "an(s and ot!er ot!er )inancial institutions. institutions. !is ill ill !oever !oever !ave !ave an interest !ic! !ic! acts as t!e cost o) t!e )inance. /rom t!e )orecasts !ic! ere underta(en t!e company is via"le. !e company ill ma(e minimal pro)its in t!e )irst year o) operations and t!is is expected to increase as t!e "rand name o) t!e "usiness continues to #ro.
2 Business details ompany name7 Vitality ,o)t rin( ompany *imited 9ddress7 :e ,out! %a %ales les elep!one num"er7 !e company is yet to "e set up. *e#al status7 !e "usiness is a limited lia"ility company it! t!e a"ility to on property sue and "e sued in its on name. ;t also !as a perpetual succession. !is "usiness structure as c!osen "ecause t!e lia"ility o) t!e oner to t!e creditors and ot!er t!ird parties !o are oed "y t!e company is limited to t!e amount o) capital !ic! !as "een in
3 Key personnel etails o) oner=s>7 :ame7 9rt!ur 9rt!ur Position?main responsi"ilities7 9s t!e oner o) t!e "usiness t!e same ill "e in c!ar#e o) #eneral operations o) t!e company. e ill also "e in c!ar#e o) !uman resources and production mana#ement. Experience and (noled#e o) our industry7 !e oner !as !ad a ide experience in t!e so)t drin( industry a)ter or(in# it! t!e coca cola company )irst as a promoter and later as a supervisor in one o) t!e "ottlin# plants. !e oner also !as interests in t!e manu)acture and "ottlin# o) so)t drin(s drin(s and !e is is optimistic t!at t!e introduction introduction o) anot!er so)t so)t drin( in in t!e mar(et ill "e met it! ent!usiasm "y t!e consumers. 9part )rom t!e a"ove (noled#e and experience on so)t drin( t!e oner is also a mana#ement student and !e is ea#er to apply !at !e !as learnt in sc!ool to !is "usiness. Previous employment7 employment7 e !as or(ed it! oca ola company on previous occasions as a supervisor and as a promoter. e also !as mana#erial experience )rom a company !e !as previously or(ed it!. it!. Key s(ills "rou#!t to t!e "usiness7 -ana#erial s(ills. Business experience and any trainin# underta(en7 underta(en7 !e oner !as a mana#erial as ell as mar(etin# experience. 9cademic?pro)essional 9cademic?pro)essional +uali)ications7 +uali)ications7 !e oner !as various mana#erial as ell as mar(etin# experiences. -ost recent salary @7 6&&& p.a
At!er (ey personnel =includin# s!are!olders>7 :ame=s>7 -ar#aretPosition?main responsi"ilities7 -ar#aret ill "e in c!ar#e o) accountin# and /inance in t!e company.
Experience and (noled#e o) our industry7 -ar#aret -ar#aret does not !ave muc! experience in t!e production sector and in particular particular t!e "evera#e "evera#e industry. industry. oever oever s!e !as a ide experience experience in t!e mana#ement o) companies !ic! are startin# up. ,!e !as ta(en a num"er o) decisions on !et!er to "orro loans or raise s!are capital or employ any ot!er capital availa"le. Previous employment7 ,!e !as or(ed in t!e accountin# department o) many companies especially companies !ic! are "ein# started. ,!e !as also or(ed as a consultant as a part time activity somet!in# s!e still does to date. Key s(ills "rou#!t to t!e "usiness7 /inancial plannin# and mana#ement. 9uditin# 9uditin# ill also )all under !er doc(et. Business experience and any trainin# underta(en7 ,!e !as not done any "usiness on !er on "ut s!e !as "een t!e !ead o) various various accounts departments o) companies. ,!e !as !as done small courses on "usiness )inancin# and s!e !as also "een a"le to attend many "usiness con)erences dealin# it! "usiness )inancin# and mana#ement. ,!e is very crucial on t!e success o) t!e "usiness notin# notin# t!at many many "usinesses !ic! !ic! are started do do not )inis! )inis! t!e )irst to years o) t!eir t!eir operations. /inances also play a critical role as ell as t!e survival o) any "usiness entity and it is paramount t!at e #et a person e can "e a"le to trust. 9cademic?pro)essional 9cademic?pro)essional +uali)ications7 +uali)ications7 ,!e !as a de#ree in accountin# as ell a masters de#ree in "usiness administration. administration. ;n !er studies s!e !as !ad a "ias in accountin# and )inance. -ost recent salary?salaries @7 $&&& p.a
Vision 4 !e "usiness idea !e idea is to "rin# into t!e mar(et a drin( !ic! !as t!e com"inations o) a so)t drin( and an ener#y drin(. !e nutritional value o) t!e drin( ill also "e considered. !is is "ecause t!ere is no particular drin( in t!e mar(et !ic! serves t!e to purposes in t!e mar(et. !e !e drin(s availa"le are eit!er purely so)t drin(s or purely ener#etic.9not!er reasonin# is t!at t!ere is an increasin# num"er o) persons !o are continuously #ettin# concerned a"out t!eir ei#!ts. !ese persons pre)er lo calorie drin(s !ic! are limited in t!e mar(et. ;t is also appreciated t!at t!e drin( s!ould "e a"le to provide t!e needed ener#y despite t!e )act t!at it !as lo calorie content.
!e company ill "e started small and le)t to #ro #radually until it is a"le to compete on a level )ootin# it! t!e ma
Business !oals %!at do you ant to ac!ieve in your )irst year o) "usiness /or example C "usiness #oals could include turnover o) @1&&&&& or tradin# at "rea(even. •
o ac!ieve pro)it and increase t!e sta(e!olders ealt!
•
o ac!ieve ac!ieve competitive ed#e over its competitors
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o ac!ieve ac!ieve a very ver y lo sta)) turnover
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o open open an additional "ottlin# plant it!in to years o) operations.
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o increase increase employees "y " y 5&D it!in t!e )irst year o) operations
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o repay any additional )inancin# t!e company may see(
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o ac!ieve ac!ieve considera"le #oodill and "rand ima#e
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o ac!ieve ac!ieve "rea(0even point and a nd at least @2&&&& pro)it
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o !ave no accruements in terms o) salaries and a#es
"#ere do you see your $usiness in 3% years& time' (n 3% years t#e o)ner of t#e company #opes t#at
t#e $usiness )ill #ave sta$ilised* (t is #oped t#at all t#e finances )#ic# )ill #ave taken from $anks and financial institutions )ill #ave $een paid in completion+ and t#e company )ill not o)e any money* ,not#er issue )#ic#
s#ould #ave occurred in t#e next five years is t#at t#e company s#ould #ave !one outside its -urisdiction to #ave $ranc#es $ra nc#es and distri$utors in ot#er districts outside .e) /out# "ales* (n fact in five years& time t#e company s#ould
#ave $ranc#es all over Europe+ and t#ere s#ould $e strate!ic plans to !lo$alise t#e operations of t#e comp co mpan any y* 0#e company s#ould $e considerin! offers from overseas $ottlers on t#e $ottlin! and
packa!in! of t#e soft drink* "#at t#e $usiness does Product#ser$ice •
,o)t drin(s
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Ener#y drin(s
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om"ined "ene)its
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%ater
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-ineral ater
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i#!ly puri)ied and pac(a#ed.
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,o)t drin(s
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iet drin(s
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:o calorie drin(s )or t!ose atc!in# t!eir calorie inta(e
%eatures
Benefits
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•
•
•
•
•
•
•
•
"#at makes t#e $usiness different our product?service is uni+ue or di))erent compared it! t!e competition "ecause7 =Fse as many )ields as is applica"le and add more i) you need to.> •
•
•
•
;t com"ines t!e properties o) so)t drin(s it! ener#y drin(s ;t is suita"le )or consumption )or all cate#ories o) persons and it is clinically tested. !is is "ecause some cate#ories o) persons suc! as dia"etics !ave very restricted diets and no company !as loo(ed into t!eir interests. !e drin( ill also "e cost e))ective. !e company ill underta(e a cost leaders!ip strate#y in t!e )irst years o) operations "e)ore it develops a stron# #oodill. ;t ill "e pac(a#ed in environmentally )riendly pac(a#es
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;t ill ta(e into consideration corporate social responsi"ility
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orporate #overnance "est practices ill "e o"served dili#ently "y t!e mana#ement )or t!e company
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!e company ill also maintain an open door policy to its employees )or #reater e))iciency
Le!al re4uirements 5includin! re!ulations and licences particular to your $usiness6 !e le#al and insurance re+uirements t!at apply in your "usiness are7 =Fse as many )ields as is applica"le and add more i) you need to.> 1.
:ame searc!
2.
Busin siness re# re#iistra strattion? ;nc ;ncorporati ations o) o) t! t!e co company
3.
Employee insurance
4.
,a)ety and +u +uality certi)ication
5.
ax re#istration
ou ill meet your le#al and insurance re+uirements "y7 =Fse as many )ields as is applica"le and add more i) you need to.> 1. 2.
9ppl 9pply yin# in# )or )or a name name sear searc! c! and and prep prepar arat atio ion n o) o) arti articl cles es nec neces essa sary ry )or )or t!e t!e re# re#is istr trat atio ion n o) o) t!e t!e company a(in (in# out out insu insura ranc ncee poli polici cies es )or )or t!e t!e "en "ene) e)it it o) t!e t!e or(e or(ers rs
/ales and marketin! $ -ar(et researc! rends in your c!osen mar(et are7 1.
-ost so)t drin(s companies are #oin# #lo"al
2.
-ost ost o) o) t!e t!em m are are als also o ado adoptin ptin# # di# di#ital ital tec! tec!no nolo lo#y #y and and e0 sell sellin in# #
3.
!ere is is ri risin sin# co competi etitio tion in t! t!e so so)t dru drun n(s mar mar( (et.
o you (no t!is7 =Fse as many )ields as is applica"le and add more i) you need to.> 1.
-ar(et researc!
2.
/rom "usiness nes
3.
;n)ormation )rom t!e competitors rs e"sites
4.
oriontal analysis o) competitors
5.
,toc( exc!an#e nes
17 Profilin! customers !e customer #roups you ill "e sellin# to are7 1.
,tudents
2.
People involved in manual or(
3.
ravellers an and t! t!ose ! !o ar are in in ou outin#s an and !i !i(es
our customer researc! !as s!on !at your customers ant is7 =Fse as many )ields as is applica"le and add more i) you need to.> 1.
ost ost e))e e))ect ctiv ivee dri drin( n(00 !e !ey y an antt dri drin( n(ss !i !ic! c! ill ill #ive #ive t!em t!em valu valuee )or )or t!ei t!eirr mon money ey..
2.
Guali uality ty assu assura ran nce C! C!e dri drin n( s!o s!ould uld also also "e o) !i#! i#! +ual +ualit ity y.
3.
ealt!y drin(s
o you (no t!is7 =Fse as many )ields as is applica"le and add more i) you need to.> 1.
!ro !rou# u#! ! cust custom omer er sur surve vey y0 9 surv survey ey as as cond conduc ucte ted d on t!e t!e pros prospe pect ctiv ivee cust custom omer erss o) t!e t!e company.
2.
!rou#! ex experience )r )rom ex existin# en ener#y dr drin(s
3.
!rou#! a pilot study
:um"er o) customers customers you expect expect to in in in eac! #roup and !at t!ey mi#!t pay7 =Fse as many )ields as is applica"le and add more ros i) you need to.> Hroup
:um"er o) customers
Price t!ey mi#!t pay per unit
,tudents
1&&&&
@1.5
,ic( and t!ose !o are 8'&& recoverin#
@ 2.&
*on# distance drivers 2&&&
@1.5
At!er consumers
@1.5
8&&&
11 Profilin! competitors Fse as many )ields as is applica"le in t!e ta"le "elo and add more ros i) you need to. "ompetitor name •
oca0cola
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Esta"lis!ed "rand name
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:o relia"le "ottlers around t!e orld
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Pepsi0o
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ost leaders!ip strate#ies
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i#! employee turnover
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Bert,!ell Pty o.
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*ocal acceptance
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:o pu"licity in ot!er places ot!er t!an ,ydney
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uvenay Pty o.
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!e company is #ainin# considera"le #oodill
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*imited num"er o) employees
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ed"ull 9ustralia
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!is company !as international acceptance
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Products sold at !i#! prices
&trengths
'eaknesses
o you can improve on t!eir o))er and?or price=s>7 =Fse as many )ields as is applica"le and add more i) you need to.> 1.
-anu)acture o) !i#! +uality drin(s
2.
-aintain !i#! customer sati atis)act )actiion and )ollo up
12 8ana!in! market risks %rite don t!e ris(s you !ave identi)ied7 =Fse as many )ields as is applica"le and add more i) you need to.> 1.
-ar(et ris(s
2.
/inancial ris(s
3.
-ana#ement ris(s
4.
Aperations ris(s
5.
ompetition ris(s
o ill you mana#e t!ese ris(s so t!at t!ey "ecome less o) a t!reat7 =Fse as many )ields as is applica"le and add more i) you need to.> 1.
oin oin# # a pro prope perr mar mar(e (ett sur surve vey y "e) "e)or oree t!e t!e laun launc! c! o) t!e t!e so)t so)t dri drin( n(.. !e !e mar(e ar(ett sur surve vey y il illl ena"le t!e company to come up it! strate#ies !ic! ill aid it in cost reduction.
2.
Empl Employ oyme ment nt o) o) comp compet eten entt empl employ oyee eess !o !o can can ma( ma(ee rati ration onal al dec decis isio ions ns.. !i !iss is imp impor orta tant nt "ecause a limited lia"ility company is
3.
Prope roperr monit onitor orin in# # o) t!e t!e oper operat atio iona nall acti activi viti ties es o) t!e t!e )irm )irm
4.
;mpl ;mplem emen enti tin# n# prop proper er compe competit titiv ivee str strate ate#i #ies es suc! suc! as di)) di))ere erent ntiat iatio ion n strat strate#y e#y.. oev oever er a ,%A analysis ill !ave to "e conducted "e)ore t!e correct strate#y can "e arrived at.
5.
rain rainin in# # t!e t!e mana mana#e #eme ment nt on corp corpor orat atee #ov #over erna nanc ncee and and on cont contem empo pora rary ry issu issues es in mana#ement so as to "e a"le to )ace contemporary c!allen#es.
13 Pricin#
o you can calculate your prices7 =Fse as many )ields as is applica"le and add more i) you need to.> 9ddin# a small mar( up on t!e overall cost o) manu)acturin# t!e drin( includin# t!e over!eads
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onsiderin# compara"le products in t!e mar(et
•
o
eterminin# t!e overall pro)it anticipated dividin# t!is amon# all t!e products !ic! ill "e produced "y t!e company. !is is very complicated and a nd may not "e practica"le practic a"le in t!is case.
o your prices compare it! t!e competition7 =Fse as many )ields as is applica"le in t!e ta"le "elo and add add more ros i) i) you need to.> to.> Product#ser$ice
our price(s!
)ange of co competitor prices (per unit!
,o)t rin(
@1.5
@1.50 2.&
Ener#y rin(s
@ 2.&
@2.50 3.&
%ater
@1.&
@1.201.5
@
@
@
@
@
@
@
@
easons )or t!e di))erence "eteen your price=s> and your competitors price=s>7 Aur company is startin# up !ile t!e competin# companies !ave "een in t!e mar(et )or a considera"le period o) time and !ave #oodill to sell. -y company is still "uildin# up a #oodill
•
-y company is also see(in# lo contri"ution mar#ins in a "id to attract more customers
•
o
!e competitors use di))erent production tec!ni+ues !ic! may lead to di))erent cost o) production in t!e end.
19 Promotion and advertisin! o and !ere ill you promote your product?service =Fse as many )ields as is applica"le and add more i) you need to.> •
%it! t!e advent o) tec!nolo#ical advancement internet tools suc! as t!e social media are #radually "ecomin# a very important advertisin# tool especially )or upcomin# companies due to t!e cost savin# involved. !e company ill t!ere)ore use t!e social media "y openin# up )ace"oo( pa#es and titter trends )or t!e purpose o) t!e company.
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!e company ill also !ave a ell structured e"site !ere consumers and suppliers can #et in touc! it! it to ne#otiate on "usiness tools. !is ill also save t!e company o) employee costs "ecause a person ill also only come to t!e company premises !en t!ey !ave su))icient (noled#e o) t!e products and t!e visit ill "e to conclude "usinesses.
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Print and media "roadcasts ill also "e underta(en. !e "roadcast !ic! ill "e employed ill "e on t!e local media "ecause t!at ill "e t!e )ocus o) t!e company upon t!e inception o) operations. !is ill !oever "e evaluated it! time to ensure t!at t!e company is "ene)itin# )rom it "ecause it is (non to "e very expensive compared to ot!er advertisin# met!ods.
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!e employees o) t!e company co mpany ill also act as #oodill am"assadors o) t!e company. %!at t!is means is t!at t!ey ill ear t!e company t0s!irts and !ave t!eir cars "randed at t!eir re+uests. !is ill ena"le a ider (noled#e o) t!e company to t!ird parties.
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9not!er ay in !ic! t!e company can advertise its services is t!rou#! t!e use o) "ill"oards. !ese expire a)ter a certain period o) time and t!eir cost e))ectiveness s!ould "e considered "e)ore t!e company resorts to t!e t!e same. !ese "ill"oards ill "e placed at strate#ic locations !ere t!e companys potential customers can "e )ound. !is re+uires a prior mar(et analysis.
unnin! t#e $usiness 1 /taff Fse as many )ields as is applica"le in t!e ta"le "elo and add more ros i) you need to. )ole
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*otal cost
@12&&&pa Heneral -ana#er
Necessary e+perience &pecialist skills and#or ,ualifications •
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@12&&&pa
@8&&&pa
%ide experience in mana#erial and supervisory or( e#ree in "usiness
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/inance mana#er
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Extensive )inancial or(.
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-aster o) Business administration
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Production -ana#er
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%ide experience in
1 /uppliers our (ey suppliers and t!eir credit terms7 =Fse as many )ields as is applica"le and add more ros i) you need to.>
&upplier •
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'hat you-ll buy from them Number of days- credit
!emical ,uppliers !e c!emicals needed to manu)acture t!e drin(s
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3&
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%ater suppliers
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!ey ill "e responsi"le )or t!e supply o) t!e ater to "e used in t!e manu)acturin# plant 3&
•
•
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Bottle manu)acturer ;t ill manu)acture t!e "ottles !ic! are re+uired to pac(a#e t!e drin(s.
1 E4uipment •
3&
•
esi#ners
!ese ill desi#n Fse as many )ields as is applica"le and add more ros i) you need t!e to. "ottles and t!e outard appearance on )esource 'hen .ow funded "ostt!e / psame. er unit -anu)acturin# 9t t!e inception o) e"t )inance @ 1&&&& 3& e+uipment "usiness •
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Bott Bottli lin# n# e+u e+uipme ipmen nt
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9t t!e t!e ince incep ption tion o) e"t )inance "usiness
@5&&&
9t t!e inception o) Personal savin#s "usiness
@1&&&
Pac(a#in# e+uipment? 9t t!e inception o) Personal sa savin#s mac!ine "usiness
@2&&&
Bottles and ot!er 9t t!e inception o) e"t )inance pac(a#in# e+uipment "usiness
@2&&&
omputers and ot!er o))ice accessories
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•
•
•
•
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@ •
@ @ •
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•
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1; 8ana!in! operational risks )isk
&olution
,ta)) •
•
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urnover Breac! o) con)identiality and divul#in# t!e company secrets
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e0motivation
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H!ost or(ers
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/raud
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•
•
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,uppliers •
Poor +uality supplies
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Enter into con)identiality a#reements at t!e inception o) employment contracts. !ere s!ould "e restriction o) trade clauses in t!e contacts o) employment. per)orm a constant employee appraisal ;nvesti#ate into t!e possi"le causes o) turnover and recti)y t!e same. Fnderta(e employee )idelity insurance covers Per)orm audit procedures on t!e payroll )re+uently to ensure t!at #!ost or(ers are not paid "y t!e company. company. ontracts s!ould "e en)orced strictly to protect t!e company.
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*ate supplies
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-ar(et ris(s
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!e company s!ould implement supply tec!ni+ues !ic! save t!e company )rom detrimental e))ects o) late suppliers. I; tec!ni+ues may not or( )or ne suppliers
/inance *he finance section of this template is intended for business planning purposes only0 1f financial tables are to be used for any purpose other than internal financial management we strongly recommend you consult an accountant or ta+ ad$isor0 "lick on the links below to access a range of 2icrosoft 3+cel work sheets to input your figures 2icrosoft 3+cel will automatically update the totals for you0 =;) you do
not !ave access to -icroso)t Excel you can save t!e )iles on to your P. ou can t!en use Apen ,ource ,o)tare suc! as Hoo#le ocs or ocs or ApenA))ice to ApenA))ice to access t!e in)ormation "y uploadin# t!e )iles into t!is so)tare. %e !ave provided Apen ocument /ormat versions o) t!e ta"les in t!is section as ell.> Please note t!at all ta"les can "e customised and additional ros and cate#ories can "e
added. ;) you need to print out t!is "usiness plan and t!e associated ta"les =once you !ave completed t!em> e# to s!o your accountant or your "an( place t!e ta"les "e!ind t!e next pa#es in t!is template. ou ou can )ind in)ormation a"out -icroso)t Excel and accessi"ility on t!e -icroso)t e"site.. e"site
27 /tart%up costs Calculate how much money you need before you start trading (This helps you to calculate the costs of starting your new business.)
e,uipment re,uired
3stimated cost
-anu)acturin# e+uipment
@1&&&&
Bottlin# e+uipment
@5&&&
-otor ve!icle
@1&&&&
Bottles
@1&&&
omputers and ot!er accessories @2&&& !emicals needed
@5&&&
ent
@1&&&&
istri"ution costs
@2&&&
,alaries and a#es
@3&&&&
*otal
/45666
Personal survival budget: Estimated annual personal expenditure (This helps you wor out the minimum amount you need to earn from your business in the first year and how much money you might need to borrow to start the business.)
Personal sur$i$al items
"ost
ent
24&&
r ansport ansport
@2&&&
/ood
@3&&&
Entertainment
@15&&
lot!in#
@2&&&
-iscellaneous
@3&&&
and loss expectations*6 Please note:
!here !h ere the bus busin iness ess holds holds and sells sells sto stoc c th this is cos costt sh shoul ould d be inc includ luded ed in dir direct ect costs. costs. "t is calculated as: opening stoc # purchases $ closing stoc.
%% &ourcing finance
Total borrowing re'uirement for the business (This helps you to understand how much money you will need to find in order to close the gap between your startup costs as well as the costs of operating before your business will mae a profit and the money that you have available to put into the business yourself. yourself.)) This is in a separate excel worsheet which has been provided.
23 8ana!in! financial risks The riss that you have identified for your financial forecast are: *.
"nterest rates riss
%.
"nfl "n flat atiion wh whiich wi will ll le lea ad to chan ang ges in th the e cost of sal ale es
+.
"nability to ac achieve th the in intended sales
,.
Poor estimation of the costs of goods
-.
Poo oorr rep repay ayme ment nt by th the e cre credi dito tors rs com compr prom omis isin ing g the the li li'u 'uid idit ity y of of the the co comp mpan any y
.
/appen /app enin ing g of ev even ents ts whi which ch wil willl ma mae the the comp compan any y una unabl ble e to rep repay ay the the ban ban loan loan it it borr borrow owed ed and thereby threatening foreclosure.
/ow you will minimise their impact: *.
The ris The ris of of the the lo loan an wh whic ich h was was ta tae en n by by the the co comp mpan any y can can be re redu duce ced d thr throu ough gh th the e use use of he hedg dgin ing g financial instruments such as derivative derivatives. s.
%.
The fin The finan anc ce dep depar arttme men nt to do do an ev eval alu uat atio ion n of th the mar maret et fro from m time time to to time time so so as tto o no now whether there is any change which is expected in the maret. "t is only then that the company can tae corrective action.
+.
The comp The compan any y shou should ld res restr tric ictt the the cred credit its s it offe offers rs at leas leastt duri during ng the the fir first st yea yearr of oper operat atio ions ns or until it can determine the creditworthiness of the person who is seeing the credits.
,.
!hen est !hen estim imat atin ing g the the cos costs ts of of good goods s and and othe otherr capi capita tall e'ui e'uipm pmen ent t reg regar ard d shou should ld be be had had on th the e upper margin. "t is better to be overstated that being understated because this is a new business.
-.
/oweve /owe verr it is unf unfor ortu tuna nate te th that at mos mostt of th the e fact factor ors s whi which ch gi give ve ri rise se to to fina financ ncia iall ris riss s are are exte extern rnal al to to the firm and the firm has no control over them. 0actors such as inflation and the fluctuation of money marets cannot be controlled by the company.
29
if you are 23T registered all sales and costs records should be entered excluding 23T. "f you are not 23T registered then you will need to include 23T in your costs where it is charged. This has been done on the 4icrosoft Excel worsheet which has been uploaded differently.
