Financial Plan Q 7,8,9 (Fikri)

8/3/2019 Financial Plan Q 7,8,9 (Fikri)

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Hi, fikri,

I feel respect when see all the statements of account that u have made. I think u spend quite a

lot of time on it. But I need ur help to do some correction because I m not really good in

account and difficult for me to figure out the figure in the account.

Firstly, four of us will become the management of the company; means that we need to hire

workers to work at our company. The calculation for expenditure should include the salary

for the worker. Maybe make an assumption that we got 5 workers include the delivery and

customer service.

Next is about the years in your calculation. Why is it starts from 2010? Since our business is

a new business and we are just going to submit our proposal, it shouldnt start earlier than this

year I think...Maybe make it 2012, 2013 and 2014?

And some expenses like the decoration or other things can we just make it into one category?

Means we don need to specify like carpet, lamp, cabinet and so on for their individual

price..just made a conclusion on the total price we need for the facilities and decoration for

the shop? Will it sounds better?

Lastly I think the promotion shouldnt make during convocation. We can make it at

supermarket and some places. Dont focus on students only. Still got other customer groups

such as the budget hotel, some companies who need the mini refrigerator in their pantry and

so on..and some ppl who wish to buy it to picnic or party perhaps?

Just edit some of the concept and the number on the figure. Thanx ya. =)

7. Financial Plan. High-level financial plan that defines financial model, pricingassumptions, and reviews yearly expected sales and profits for the next three years

i. 12

8. Resource Requirements. Technology requirements. Personnel requirements.Financial, distribution, promotion, etc. External. requirements

(Products/services/technology required to be purchased outside company )

i. 10

9. Risks (Summarize risks of proposed project). Addressing risk (Summarize how riskswill be addressed). Rewards (Estimate expected pay-off, particularly if seeking

funding)

i. 10


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7.0 Financial Planning

Financial plans are very important in determining the feasibility of the business. The

following sections will outline the financial plan that defines financial model, pricing

assumptions, and reviews yearly expected sales and profits for the next three years.

i. The below table shown the asset available in the company in year 2012:No. Asset Amount RM

1 Land (shophouse) 1 lot 600,000

2 Office equipments 30,000

3 Van 1 90,000

ii. Pricing List of MINI FRIDGE Business:No. Fridge Type Price (RM)

1 Mini Fridge RM 300.00 / item

2 Mini Fridge second hand RM 150.00 / item

3 USB Mini Fridge RM 80.00 / item


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iii. Estimation RevenueThe below table is the estimation revenue in a month for the first year 2012.

No. Fridge Type Price (RM) Amount

(item)

Total Sales

(RM)

1 Mini Fridge RM 280.00 / item 80 22,400

2 Mini Fridge second hand RM 150.00 / item 100 15,000

Total 180 37,400

The below table is the estimation revenue in a month for the upcoming year in selling USB

mini fridge

No. Fridge Type Price (RM) Amount

(item)

Total Sales

(RM)

1 USB Mini Fridge RM 80.00/ item 120 9,600

Total 120 9,600


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7.1 Budget Expenditure in year 2012

1. Initial mini fridge and second hand mini fridge cost. Estimated is 43% of the sale.

2. Initial USB mini frige Estimated is 40% of the sale.

3. Utilities Estimated is 10% of the sale.

4. Partners salary Four partners are involved in the business and each one salary is RM3,000.

Total partners salary is RM12, 000.

5. Transportation Estimated is 5% of the total sale.

6. Business license RM 200 every year.

7. Publicity Budget RM5, 000 every year.

8. Insurance Estimated is RM1,500 per months

9. Cost of maintenances Estimated is RM 3,000 per years to maintenance like transports, office

facilities

10.Loan interest


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10% from loan.11.Government tax

25% tax on the net profit every year.12.Loan payment

RM10, 000 per years13.Loan of RM100, 000 being done in year 2010.

7.2 Other Information

1. Sale is estimated RM448, 800 in year 2012 and increasing around 10% fornext each year.

2. Sale of USB mini fridge for future plan is estimated increase in sales 10% peryear.

3. Partners attribution is RM10, 000 for each person.

7.2 BREAK-EVEN ANALYSIS

The break-even analysis shows the number of units of sales required for the facility to make

profit over the fixed cost. The break-even point is the point at which revenue is exactly equal

to costs. That is, the break-even units indicate the level of sales that are required to cover

costs and the break-even revenue indicates the ringgit of gross sales required to break-even.

Our break-even analysis is based on the average of the first year for total sales of mini fridge,

total cost of sales and all operating expenses. These are presented as per-unit revenue, per-

unit cost, and fixed costs. We realize that this is not really the same as fixed cost, but these

conservative assumptions make for a better estimate of real risk.


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Break-even Analysis

Monthly Units Break-even 260

Monthly Revenue Break-even RM 20,210.00

Assumptions:

Estimated Monthly Fixed Cost RM 11,666.00

7.3 Details for Estimation Sales

1. According to marketing analyze, mini fridge sale for each month isRM37,400 but total mini fridge sales will be influent for a certain period.

This is due to the demand for mini fridge increase during special period like

early opening of university, where a lot of new students register at university

around area of Lembah Klang. Usually this certain period are happening

around August or September for each year. It is estimated the increasing

around 40% of total normal sales.

-12000

-10000

-8000

-6000

-4000

-2000

0

2000

4000

6000

8000

10000

0 2 4 6 8 10 12 14 16 18 20 22 24

Units

Break Even Analysis


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2. However, our production will decrease during the end of semester for everyyear which happens around February until May. There is estimated

decreasing of around 30% of total normal production.

3. While for other period consider as normal selling.4. For the USB mini fridge sale also strongly influence during entrance of

university freshie. It is estimated around 10% of total sales during this certain

period while USB mini fridge usually constant in its sale for other period

since this product are portable and can be attached to the computer or any

devices with USB port.

*this is statement only and all I said here doesnt influence the financial

calculation whether increased or decreased percent of total priceso if u want

to add other reason just state herefor campaign our product to budget hotel

etcthe sale not influence for a certaintimeso I didnt wrote herefor the

workers informationI just see 4 others group bp and they not stated workers

or personal requirement in the question 8


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7.4 Pro-Forma Income Statement

2012 (RM) 2013 (RM) 2014 (RM)

Mini Fridge sales 448,800 493,680 543,048

USB Mini Fridge sales

Total 448,800

115,200

608,880

126,720

669,768

(-) Expenses

Initial mini fridge cost(Estimated

is 43% of the sale)

Initial USB mini frige(Estimated

is 40% of the sale)

192,984

-

212,283

46,080

233,510

50,688

Utilities (10%* Total sales) 44,880 60,888 66,977

Partner salary(4 persons*72,000 72,000 72,000


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RM1,500*12 months)

Transportation(5% Total sales) 22,440 30,444 33,488

Business license 200 200 200

Marketing strategic 5,000 5,000 5,000

Maintenance fee 3,000 3,000 3,000

Loan interest (RM100000*10%) 10,000 10,000 10,000

Insurance (RM1500*12 months) 18,000 368,504 18,000 457,895 18,000 492,863

Taxable profit 80,296 150,985 176,905

(-) Tax (25%) 20,074 37,746 44,226

Net profit

Net Profit/Sales(%)

60,222

16.34

113,238

24.73

132,679

26.92

7.5 Pro-Forma Cash Flow

2012 (RM) 2013 (RM) 2014 (RM)

Cash received from:

Operation cash Sales 448,800 608,880 669,768


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Loan

Partner attribution

Total

100,000

40,000

588,800 608,880 669,768

Payment

Initial mini fridge cost(43% of

the sale)

Initial USB mini fridge(40% of

the sale)

192,984

-

212,283

46,080

233,510

50,688

Utilities (10%* Total sales) 44,880 60,888 66,977

Partner salary(4 persons*

RM1500*12 months) 72,000 72,000 72,000

Transportation(5% Total sales) 22,440 30,444 33,488

Business license 200 200 200

Marketing strategic 5,000 5,000 5,000

Maintenance fee 3,000 3,000 3,000

Loan interest (10%) 10,000 10,000 10,000

Insurance (RM1500*12 months) 18,000 18,000 18,000


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Office equipments 30,000

Van (asset) 90,000

Land(RM 50000 / year) 50,000 50,000 50,000

Repayment loan - 10000 10000

Total payment 538,504 517,895 552,863

Cash balance 50,296 90,985 116,905

Initial balance 0 50,296 141,281

Final balance (Net Income) 50,296 141,281 258,186

8.0 Resource necessity8.1 Resource Requirements.

a) Mini FridgeFor starting the business, our company need to get for the mini fridge from the

supplier. The supplier is Styles Creative Ltd.which is the biggest producer in


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UK and the second hand item can be acquired from Singapore. This company

is a main producer for mini fridge product and a lot of information of their

product can be obtains from web www.minifridge.co.uk. The price for the

mini fridge is RM 200 for the new one and RM 100 for second hand item.

USB mini fridge can be acquired from Ningbo Bosheng Electric Co., Ltd.

which is a company from China and the price that we can obtained for one

mini fridge is about RM 50 per item.

8.2 Sales AccommodationEfficient sales of product not only contribute because of shop and decoration but also

need suitable accomodation. That accomodation helps minifridge sales operation with

better, quick and effective. Among accomodation needed is:

a) VanThis is the most important accomodation to our company which is used to take

and send product. It needed to occupy as many as possible in order to save

cost of our business. We decided to buy Toyota Van Hiace V05 with prices

about RM 90,000

b) Tables, Banner, and equipments for outdoor promotionSales of our product mainly focuses on outdoor promotion which is we will go

and tour universities in Malaysia especially Lembah Klang area and sales our

products to students. We will promote and sales our product mostly during

convocation time. Tables, banner, and equipments here needed to be portable

and not an our office facilities. We estimated the cost for this facilities about


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RM2000.

c) Mini Fridge Equipment and AttractorMini Fridge and USB mini fridge are specific in design and their function.

Because of the small as its main attraction, our company were trying to

highlight this criterion in order to attract buyers to subscribe this products. So,

lightning, cupboard, desk, carpet, and cabinet play an important role in order

to highlight our products. We estimate the cost to buy of this item around RM

15,000.

8.3 Maintenance equipmentsIn order to sell a quality product with best condition and fulfil our customers desire

we will inspect our product annually. Yearly maintenance will be doing to our

properties like van, outdoor promotion equipments, lightning at our shops and second

hand product which is when it needed to replace its gas. We estimates the cost for

maintenance about RM 3000 per year.

8.4 Office equipments

TYPE AMOUNT

Personal Computer 4

Printer, Photostat and

scan machine

2

Facsimile Machine 1

Telephone 2


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Furniture 2 set

Stationeries -

TOTAL 11

8.5 PromotionIn order to promote our company, at early stage of promotion, we will introduce our

company and the product from this company by using a newspaper and website. At

the newspaper, we will mention the type fridge that our company is selling and our

competitive price compared to others competitors. And through website which is we

will mention the location of our shop, our mission on satisfying the customers and

also the type mini fridge we sell. Through this website, the customer also can make

and order by filling the information needed in the website. We also will advertise our

products when there are carnival whether it is in universities, non-government

carnival or fiesta which is we feel that program is suitable for our promotion.

Since activities to promote our product to students held only at a certain of time, we

also advertising our fridge to the budget hotel, some companies who need the mini

refrigerator in their pantry and people who wish to buy it to picnic or party.

Critical risk

i. Financial risk

Financial risks increase with increasing intensity. In more intensive systems, the

probabilities of loss, and cost of such losses if they do occur, are likely to be

higher. Although average returns may be higher, they are subject to larger


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fluctuations in response to factor prices, market prices, and losses from disease or

environmental factors. Although the risks can be reduced through good sitting,

design, technology, and management, serious disease outbreaks can be a problem

on all types of products. Municipalities occasionally default as well can be a

financial risk, although it is much less common.

ii. Potential of existing new competitors

There are a few competitors right now for the mini fridge selling in this country.

But in the future, new competitors will exist with the same product. Ways to

compete and maintain our business with the existing and new competitors is by

maintains our reasonable prices and to improve the quality of the product. We also

need to do effective marketing campaign and also establish our long-term

relationships with customers.

iii. Labor risk

Lack of specialized know-how on the part of promotion managers and workers is

a major risk factor. We need to make sure that the employer has solid experience

in promotion and proper management practices. The proper training of personnel

is important and may significantly reduce the risk loss of production sales during

outdoor promotion. Management procedures should include safety margins that


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are realistic given past experience and industry averages, while also taking into

account the degree of know-how on the part of employees and managers.

iv. Risk of disease

The risk of disease should be appraised thoroughly for fridge because some fridge

may use harmful gaseous for its chiller. Any leakage or damaged in fridge may

harmful users. Even today technology have developing gaseous used for chiller at

low rates of toxic gaseous, but it still a toxic gas that harmful to users. However,

today still there are no cases reported that people get sick because of fridge

gaseous because percentage of safety for usage of fridge is high.

v. Unfavorable accidentsAlthough those unfavorable hazard such as fire, flood, stock stolen there are

covered by insurance, but it will still affect the operation of company, especially

within the first or two years in the beginning of business. Once the accidents

happen, our company would have to set up everything start from beginning again,

this may cause a big financial problems to company. Thus, to minimize the

impacts from those accidents, our company has to always caution with the

electrical system in company, monthly maintenance on computers in company,

and also emergency passage to transfer the stocks once fire or flood.

Documents

Financial Plan Q 7,8,9 (Fikri)