Small Business Financial Plan

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Subject: Business
Topic: Small Business Financial Plan
Follow instructions from the word document labeled “INSTRUCTIONS FINAL”
You will be adding on to the document labeled “REVISED Executive Summary”
Do not make any changes to Executive Summary paper, only add what is stated from the instructions.

FOLLOW INSTRUCTIONS BELOW

 

For the purposes of this curriculum, we will concentrate on the financial planning portion of the final project for your small business. Your financial plan shall tie well to the company that is attached in the other word document named Executive Summary.

Students will be expected to put together a financial plan based on the fictitious small business from the Executive Summary. While each plan is unique depending on the business sector, location, stage of development, etc., all banker and/or investor presentable Business Plans, as well as plans for internal use, should include the following:

1) Executive summary (2-3 pages) –(USE THE WORD DOCUMENT ATTACHED, THAT IS THE EXECUTIVE SUMMARY)

2) Plan should note whether cash or accrual basis accounting will be used. If you use cash basis, your firm will not have receivables or payables.

3) Plan should discuss all sources and amounts of funds to be raised, including a schedule of activity, achievement dates, etc.

4) Balance Sheet (historic [if the firm already exists] and/or pro forma projections – 3 years of projections)

5) Income Statement (historic and/or pro forma projections – 3 years of projections)

6) Cash flow projections (sources of cash and uses of cash) – historic and/or pro forma projections – 3 years of projections. Be sure to include any funding or loans as well as repayment of loans in this statement.

7) Ratio Analysis including detailed ratio calculation and brief commentary explanation (include at least one (1) of Profitability, Leverage, Efficiency and Liquidity for each of the 3 projected years). Optional: The DuPont ratios for a 3-year period are highly recommended–be sure to discuss briefly.

8) Provide discussion of assumptions under your projected Balance Sheet, Income Statement and Cash Flow Projection. In the Executive Summary assignment, you provided Total Sales, Total Variable Cost and Total Fixed Cost in dollar amounts for the next 3 years. Now in this assignment, you are to provide your rational/assumptions to support those amounts. If you have updated your projections, that is okay. Here your report shall support those revised projections.

Note that you will be making a LOT of assumptions in the pro forma (i.e., projected future) statements so be sure to clearly state your assumptions either as footnotes or in a separate document. The numbers can’t be made up without supporting assumptions. Examples of assumptions:

• Growth rates for future revenues,
• Expenses as a % of revenues (with some supporting documentation),
• Revenue patterns,
• Expense patterns, or
• Lines of credit/loans (borrowing and repayment) to maintain cash balances.
• Investments in the firm by you or by others

Executive Summary

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and description of the business (products or services offered), including type of business (i.e., partnership, corporation).

The name of my business will be AAA Co. AAA Co. is going to be well known for having products which are admirable, appealing, and affordable. This name was inspired by my childhood since growing up, my parents would always look for good deals as well as having a good quality product. I thought I could share this thought with the public since who wouldn’t want to have a good quality product with a fair price. This business will first start off with household goods and then as it grows, we will expand to different categories such as kitchen and dining, pet supplies, etc. I will create this as an LLC and I will add my husband to this business so he is able to help with anything that will be needed within the business.

Goals and objectives, including a brief discussion of why you believe the business will be successful.

My goal for this business is to provide products that the public can always trust and will feel comfortable in purchasing. Also, I want to build a reputation with the public to make them feel as if this business is not taking advantage of their money and overall cares more about the satisfaction of the customer rather than their money. Having trust from your customers and being a trustworthy business will lead to a higher success rate since the customers will feel comfortable when purchasing an item from your business. It is all about how you make your customers feel that can lead your business into success. Customers buy products based on their emotions, if they feel as if they need something or if a product could be beneficial towards them in some sort of way, then they will definitely purchase your products.

Market environment considerations, including current needs for the product and discussion of current or potential competition.

The market environment for AAA Co. will always ensure to be within the latest trends to stay within the generations that are present. Starting off with household products is always something people are looking for. Whether it is to change their home look or simply wanting to add stuff to their home, etc. Household goods is always in demand. What is not always in demand is actual stores. This is the reason why my business will be online. Having walk in stores have not been as popular especially with the pandemic going on. These recent years with technology being this high, making an online business can be more profitable and convenient for everyone.

As of now, a couple of competitions that are out there to name a few is Target, Wayfair, Wal- Mart, Living Spaces, Bed, Bath and Beyond. These stores mentioned are all very well known but some might not have as many consumers as they should due to their background. Allegedly, there are bad rumors about Wayfair and Wal-Mart doing not so ethical things to get to where they are now.

 

Brief description of owners and principal managers, including what they offer to help the business succeed.

For the first year or two, I do not plan to have any employees or managers. The only one who will be running this business will be myself and my husband since it will be more online. Depending on how soon the business grows or the path it takes we will make decisions and adjust as we go. What I do see myself doing is hiring a mentor or a financial advisor to help us with strategic ways on where to place our profits such as investing, stocks, etc.

My husband is more of a hands on so he will definitely ensure and manage our inventory or anything that requires to be hands on. I will do more of the finances, marketing, ordering inventory, etc. Once my husband and I have a good grip on what we are focused on, we will teach each other what the other one does not know so we can both be experts in the entire business, not just in one part. I understand this will take time and practice that is why in the beginning we will each focus on a specific task and master it so neither him or I have to worry about that section.

Your brief marketing plan and strategy.

One of my marketing plans is to hire someone who is an expert within that field. I want to start off hiring someone so I can see how well they operate and if I could possibly create the same content they are creating. Hiring someone will help to see different ideas there may be and to successfully start off right. Since I will have so much on my plate, hiring someone will alleviate that section. I will eventually do the marketing myself as I go and learn more.

One strategy I plan to use is sponsoring well know influencers that will influence consumers into purchasing my products. The influencers would just present the product, and once consumers buy them, they will like the product since it will be of great quality. The goal is just to get my products to be seen, and once the customers begin purchasing the products, the products will sell for themselves.

Also, I would like to donate a certain percentage to animal shelters; those who support animals will be encouraged to buy from this business since it will be going towards a good cause.

Describe keys to success specifically relevant to your business in brief details. (2-4 items)

One major key to succeed with a business is managing your business efficiently and giving your business the time it deserves to grow. If you do not dedicate a certain amount of your time to your business, it will struggle to succeed.

A second key to success is to listen to what the customers want rather than what you want. A majority of the time, we tend to choose things in our interests instead of choosing what the majority of the customers want and what is in demand.

Lastly, having a great marketing program will help your business receive more attention and more customers.

Discussion of initial estimates of TOTAL Sales and TOTAL Costs (Variable Cost and Fixed Cost) for the upcoming 3-year in dollar amounts. Your Total Cost must be broken down into Variable Cost and Fixed Cost, the two major types of costs to meet the intended practice goal. NOTE: you will be asked to provide your reasoning to support the projections of sales and two types of costs in the final project (due in Week 8).

• Total Sales (Focusing on one product)

 

Black Rug (Rabbit Fur) 33in x 25in: $28.99

Sales per month (starting off): 100 rugs= $2,899

Sales for 1^st year: 1,200 rugs= $34,788

Sales per month for 2^nd and 3^rd year: 200 rugs per month= $139,152

Sales in 3 years: $173,940

 

 

• Total Costs (Variable Cost and Fixed Cost)

 

Variable Costs:

 

– Shipping from manufacturer to my business (1lb = $1.00)

1lbs = 1 Rug; 1000lbs = 1000 Rugs;

$1,000 to ship 1000 units from supplier to my business

– Supplies I will need for my business (office supplies, tape, boxes, etc) approx. $2,000

– Marketing $3,000 monthly; $108,000 (if I pay for every month in 3 years which I won’t

 

 

Fixed Costs:

 

– Manufacturer pricing per unit $4.00 (1000 Rugs = $4000)

– Software programs for my business

– Rent of location if I decide to store my inventory in a warehouse (in the beginning, I will be starting from home)

 

 

Financing Request and Funding Plan – including a) your total request of financing amount, b) source of financing and 3) itemized funding plan with item/amount broken down to show how your loan will be used. When applicable, discuss also if you have collateral available, owner’s initial capital invested and how loan will be repaid.

• If I do receive a fund, I will request the amount of what buying a warehouse is worth. Since it will be a small business, the warehouse I will need will cost no more than $100,000.
• My source of financing will be the SBA 7(a) loan veterans advantage if I am able to receive a loan for this money amount. If for some reason I cannot receive a loan from them due to the dollar amount not meeting their minimum requirement, I will look into a credit union and see what my options are.
• My loan will only be used to pay for the purchase of a warehouse in the case where I can no longer keep my inventory home. It will not be used for anything else since I have a good amount of money saved up for everything else my business will need.

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