Question

Financials This section will offer a financial overview of Basket of Goodies as it relates to the marketing activities. Break-even analysis, sales forecasts, and expense forecasts will all be addressed. 4.1 Break-even Analysis The Break-even Analysis indicates that $5,600 will be needed in monthly revenue to reach the important break-even point.Sales Forecast The first month will be spent setting up the business. It is unlikely that there will be much sales activity. In addition to dealing with some legal and accounting issues, equipment will need to be purchased, an office created, and an assembly room/inventory room set up in the basement. Susan will also be developing a system for assembly (work flow processes) within the first month. Susan will also be working on having the Website designed and set up. This will require a bit of time spent with her Web designer to perfect the look and feel of the site as well as to set up BOG as an online e-commerce merchant. Susan plans to use 1st-At-The-Top.com Internet and Ecommerce Consulting, www.1st-At-The-Top.com, to design her secure Website, and assure strong search engine placement on the Internet. Month two - three will begin to see some sales activity. BOG recognizes that it will take a bit of time to really ramp up the sales. Susan will be doing a lot of networking in an attempt to spread awareness about BOG's products and services. Because Susan's husband will be helping out with picking up some of the materials, Susan will not need an employee until near the end of year one.

Question: Discuss the financial information and budgets

Answer 1

We can begin by looking at the financial information under three categories:

Revenue

Fixed / set up costs

Variable costs

and each of these over a pariod of time.

If you plot a simple table with rows for the above categories, and columns for different months this is what we expect to see. We want to be able to arrive at a reasonable forecast of when the break even sales of $5600 per month are likely to be achieved (we don't have the information to do it right now).

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Year 1

Revenue

Costs

Fixed Costs

Fixtures

Website set up

Variable Costs

Lease

Workers' salary

Material

Total Costs

Profit