Question

Prepare a financial plan for the company you select for your business plan, this should be a company that you start versus an existing publicly traded company. This financial plan will be included in your final business plan in your capstone course. Be creative and think about a franchise or business that you have always wanted to create.

Describe the business that you would like to start, including the type of business (what industry, product offering, etc).

Create the business case, which is your justification of why the business is needed in the market.

• Determine why funding is needed for the company.
• Determine the sources of funding. Considerself-funding, borrowing, equity, venture capital, etc.
• Evaluate the requirements of each funding source you determined appropriate.
• Analyze the associated risks of each funding source.
• Decide which sources are the best fit for your company based on the requirements of each. Justify your decision.
• Estimate the cost of capital for both short-term and long-term funding sources. Research current estimated APRs for your selected sources of funding. Consider creating a table or chart to display this information.

Create a profit-and-loss statement for a 3-year period. Project revenue, stating realistic assumptions, such as growth per year, in your projections. You will have to develop these numbers and provide details.

Estimate direct costs, including capital, marketing, labor, and supply costs, which should be included in your P&L statements for all 3 years.

Answer 1

Financial paln

Description of business plan:The business that i Would like to start is manufacturing of cement.

Product-Cement

Industry- Cement industry

Type of business-Manufacturing.

I want to satart own business not going for franchising.

Reason for Selecting this business:

The countries especially developing countries spending more amounts on infrastructural development.It creates demand for cement in the country.The competition is also heavy in this industry.Every individual has a dream of own house it is also creating demand for the industry.to sustain inthis industry i focused on new technology to produce the qualitative cement and offer the cement at less cost compare to manufacturer.

Reasons for funding:

To start the cement plat i need to install big machinaries and need to purchase land and building-this is longterm capital requirements.For salaries to workers and employees i need short term finance.--This is short term finance requirements.

Sources of funding

S.no	Sources of finance	Cost of capital	Risk associated with source of finance
1	Self finance	10%(Lending )	More risk because of Unlimited liability
2	Equity	2% of profit	Less risk (after getting the profits only paying dividend to share holders
3	Borrowing	6% of interest on principle amount	Moderate risk(even the company is not earning profits ,the interest needed be paid to lenders
4	Venture capital	10% of agreed share in profits	Moderate risk( the projet accepatance and getting funds from venture capitalist takes more time.

Short ter sources of finance

To meet the working capital needs I need short term finance.The sources of short term finance are bank overdraft and commercial papers and short ter ban loans.

Current estimated APR  for selected sources of funding:

s.no	Selected source	APR
1.	Equity capital	2%+Brokerage cost+Underwriting cost=4%
2	Borrowed Funds	6%+Processing fee=6.75%

Profit and loss account for 3 years