Chat with us, powered by LiveChat The purpose of this assignment is to build and defend financial projections for your business idea. This includes estimating units sold, revenue, and costs for the first 3 years (12 Quarters) | EssayAbode

The purpose of this assignment is to build and defend financial projections for your business idea. This includes estimating units sold, revenue, and costs for the first 3 years (12 Quarters)

The purpose of this assignment is to build and defend financial projections for your business idea. This includes estimating units sold, revenue, and costs for the first 3 years (12 Quarters) of the business.

Part 1 

Build a pro forma Excel sheet estimating revenue and all operating cost items of the business for each of the first 3 years (12 quarters) of operation. Review the pro forma examples provided in the attachments. Pro forma estimates should be based on researched information and rational assumptions.

APA style is required, and solid academic writing is expected. 

Part 2

Write a 750-1,000-word summary of your pro forma spreadsheet. Include the following items:

  1. Describe how you developed the pro forma projected expenses and operating costs.
  2. Explain your revenue estimates, variable costs, fixed costs, margin, and how your arrived at your figures.

While APA style is required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines.

General Requirements

Together, the Excel spreadsheet and summary should define and defend financial projections for your business idea as if you were presenting to key stakeholders. Submit both the pro forma Excel spreadsheet and the Word document.

Sheet1

PRO FORMA EXAMPLE
GENERIC – Numbers mean nothing – project specific
Group Entered Variables
Calculated data is unshaded
Revenue Basis
Cost Basis
Calculated Gross Profit Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12
VARIABLES (GREEN)
Number of Product Units: 1 3 5 20 100 140 180 240 300 350 400 500
Material Cost/Unit: $50 $50 $50 $50 $40 $40 $40 $40 $40 $40 $40 $40
Manufacturing Cost/Unit: $25 $25 $25 $25 $20 $20 $20 $20 $20 $20 $20 $20
Operating Cost/Unit: $10 $10 $10 $10 $8 $8 $8 $8 $8 $8 $8 $8
Maintenance Cost/Unit: $10 $10 $10 $10 $8 $8 $8 $8 $8 $8 $8 $8
Org/OH (Founders) Staffing (full time equivalents – FTE) 2 3 3 3 4 4 4 4 4 4 4 4
Consultants (App Dev, SW – FTE) 0.5 0.5 0.5 0.5 0 0 0 0 0 0 0 0
Selling Price/Unit: $200 $200 $200 $200 $220 $220 $220 $220 $240 $240 $240 $240
Org/OH (Founders) Staffing Cost ($/day) $100 $100 $100 $100 $110 $110 $110 $110 $110 $110 $110 $110
Consultants Cost ($/day) $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Product Revenue: $200 $600 $1,000 $4,000 $22,000 $30,800 $39,600 $52,800 $72,000 $84,000 $96,000 $120,000
Website Revenue: $0 $500 $500 $500 $500 $500 $500 $750 $750 $750 $1,000 $1,000
Licensing Revenue: $0 $0 $0 $0 $0 $0 $0 $0 $1,000 $2,000 $5,000 $10,000
Advertising/Other Revenue: $0 $0 $0 $0 $0 $0 $0 $0 $500 $750 $1,000 $2,000
Year 1 Year 2 Year 3
Item Basis Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12
TOTAL REVENUE: $200 $1,100 $1,500 $4,500 $22,500 $31,300 $40,100 $53,550 $74,250 $87,500 $103,000 $133,000
VARIABLE COSTS
Materials $50 $150 $250 $1,000 $4,000 $5,600 $7,200 $9,600 $12,000 $14,000 $16,000 $20,000
Manufacturing $25 $75 $125 $500 $2,000 $2,800 $3,600 $4,800 $6,000 $7,000 $8,000 $10,000
Operating Labor $10 $30 $50 $200 $800 $1,120 $1,440 $1,920 $2,400 $2,800 $3,200 $4,000
Maintenance $10 $30 $50 $200 $800 $1,120 $1,440 $1,920 $2,400 $2,800 $3,200 $4,000
Legal/Acctg – $/quarter $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
IT, Website, Application and other Outreach-Sales-Advertising recurring costs $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Organizational/Overhead (Founders) See above $12,990 $19,485 $19,485 $19,485 $28,578 $28,578 $28,578 $28,578 $28,578 $28,578 $28,578 $28,578
Expenses (% of Operating Labor and Org/OH) 10% $1,300 $1,952 $1,954 $1,969 $2,938 $2,970 $3,002 $3,050 $3,098 $3,138 $3,178 $3,258
Financing Costs Typical 2% one time points/fees for equity and debt needs, plus 6-8% interest on debt – DEVELOP WITH FUNDING STRATEGY
TOTAL VARIABLE COSTS $14,385 $23,722 $23,914 $25,354 $41,116 $44,188 $47,260 $51,868 $56,476 $60,316 $64,156 $71,836
FIXED COSTS
Intellectual Property (Q2 one time cost) $15,000 $15,000
Permits/Regulatory (Q2 one time) $500 $500
Company Formation/Financial Structure $2,000 $2,000
IT, Website, Advertising and Application Platform Costs $20,000 $20,000
Consultants See above $4,871 $4,871 $4,871 $4,871 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL FIXED COSTS $6,871 $40,371 $4,871 $4,871 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL COSTS $21,256 $64,093 $28,785 $30,225 $41,116 $44,188 $47,260 $51,868 $56,476 $60,316 $64,156 $71,836
GROSS PROFIT (EBITDA) ($21,056) ($62,993) ($27,285) ($25,725) ($18,616) ($12,888) ($7,160) $1,682 $17,774 $27,184 $38,844 $61,164
Cash Needs: ($21,056) ($62,993) ($27,285) ($25,725) ($18,616) ($12,888) ($7,160) $0 $0 $0 $0 $0
Cumulative Cash Needs (for Funding Strategy): ($21,056) ($84,049) ($111,334) ($137,059) ($155,674) ($168,562) ($175,722) ($175,722) ($175,722) ($175,722) ($175,722) ($175,722)
LOW TECH/MKT VALUATION – Multiple of Annual EBITDA Year 3 6 $869,801 Note: Simple approach – more sophisticated techniques for valuation are available
HIGH TECH/MKT VALUATION – High Multiple of Annual EBITDA Year 3 10 $1,449,668

Revenue Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 200 1100 1500 4500 22500 31300 40100 53550 74250 87500 103000 133000 Cost of Sales Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 21256.25 64092.75 28784.75 30224.75 41115.800000000003 44187.8 47259.8 51867.8 56475.8 60315.8 64155.8 71835.8 Gross Profit Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 -21056.25 -62992.75 -27284.75 -25724.75 -18615.800000000003 -12887.800000000003 -7159.8000000000029 1682.1999999999971 17774.199999999997 27184.199999999997 38844.199999999997 61164.2 Cumulative Cash Needs Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 -21056.25 -84049 -111333.75 -137058.5 -155674.29999999999 -168562.09999999998 -175721.89999999997 -175721.89999999997 -175721.89999999997 -175721.89999999997 -175721.89999999997 -175721.89999999997

Breakeven

Investment Needed

Sheet2

Sheet3

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