Profit/Loss

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(4.3) Business Plan – Financial Projections – Part 4 Profit/Loss Analysis – due Sunday
During this course you will continue with the company you have chosen for the Business Plan in order to create the Financial Projections portion of the plan.  For this week, estimate profit and/or loss for the first year based on revenue, costs, and other expenses.  If you have chosen a new start up business, estimate the profit and/or loss for the first year of business.  If you are addressing a workplace situation or problem, estimate the profit and/or loss of implementing the proposal.
For this week, open the Excel spreadsheet that you have been working with for the Business Plan – Financial Projections assignments and complete the fourth tab (tabs are located at the bottom left of the spreadsheet window) related to Profit – Loss Analysis.  Estimate the revenue, cost of production, other income, wages, and operating and finance expenses.  Do not delete or add rows as that may cause the spreadsheet to calculate incorrectly.  The key to financial planning is attention to detail.  Consider the information contained on the first three sheets in order to estimate the profit/loss for the first year.  The dollar amounts can be estimated, but should be reasonable in nature.  Utilize the yellow text box on the spreadsheet to provide information regarding how you obtained the cash flow figures and the rationale for the amounts.
Once you complete the Profit-Loss tab (fourth sheet in the workbook), save the file and upload below for grading.
 
 
 
 
 
 
 
 
Starbucks
 
 
 
 
The expenses are high in the advertising section because this is a start-up and as it is the norm in the industry, startup expenses which include those costs experienced prior to the inception of the business plan are usually high. For instance, the firm will have to incur costs in developing its logo, legal work, and creation of brochures amongst other expenses
 
Start-up assets are normally high for new ventures because they have to acquire furniture, equipment and machinery. Therefore, the long-term assets have a high value in the plan. It is also noted that the company has minimized the unnecessary expenses exponentially.
 
 

Beginning Expenses Enter information only in the yellow highlighted cells.          
Starbucks     Bitmap

 
   
 
     
Buildings/Real Estate    
Purchase  $           2,500  
Construction               8,555  
Remodeling               1,528  
Other                  320  
Total Buildings/Real Estate  $         12,903  
     
Capital Equipment List    
Furniture  $         15,200  
Equipment               3,000  
Fixtures               1,630  
Machinery               2,839  
Other                  850  
Total Capital Equipment  $         23,519  
     
Location and Admin Expenses    
Rent & Related Costs  $           5,800  
Utility deposits               1,500  
Legal and accounting fees               1,980              
Prepaid insurance                  725              
Pre-opening or pre-implementing salaries               1,456              
Other                      –              
Total Location and Admin Expenses  $         11,461              
                 
Opening Inventory / Supplies Needed                
Category 1  $           6,526              
Category 2                  256              
Category 3                  450              
Category 4                      –              
Category 5                      –              
Total Inventory  $           7,232              
                 
Advertising and Promotional Expenses                
Advertising  $           3,250              
Signage                  620              
Printing                  584              
Travel/entertainment               2,852              
Other/additional categories                      –              
Total Advertising/Promotional Expenses  $           7,306              
                 
Other Expenses                
Gifts  $           3,600              
Other expense 2                  402              
Other expense 3                      –              
Other expense 4                      –              
Other expense 5                      –              
Total Other Expenses  $           4,002              
                 
Reserve for Contingencies  $           5,800              
                 
                 
Summary Statement of Beginning Expenses                
                 
Beginning Expenses                
Buildings/real estate  $         12,903              
Capital equipment             23,519              
Location/administration expenses             11,461              
Opening inventory               7,232              
Advertising/promotional expenses               7,306              
Other expenses               4,002              
Contingency fund               5,800              
Total Startup Expenses  $         72,223              
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 

 
 
 
 
 
 
 
 
 
 
Financial Projections: Sources of Capital
 
 
 
 
 
 
 
 
 
 
Financial Projections: Sources of Capital
In a business plan, it is important to indicate the sources of capital for the start-up for a strong financial strategy. Every business should have a capital structure, debt, or equity, that helps meet the costs of starting and operating the business. In this start-up, Starbucks, the capital structure is only equity from two investors.
Starbucks: Sources of Capital
We wish to have a simple and profitable investment in the company. A 50-50 share is easy to manage and share in profits and losses. The $100,000 will meet the start-up expenses of $72,223 and the surplus will be retained as earnings.

Sources of Capital  
Owners’ Investment (name and percent ownership) Amount
Shemika 50%  $       50,000
Venture capitalist 50%  $       50,000
Other investor                    –
Other investor                    –
Total Investment  $      100,000
Bank Loans Needed
Bank 1  $                –
Bank 2                    –
Bank 3                    –
Bank 4                    –
Total Bank Loans  $                –
Other Loans Available
Source 1  $                –
Source 2                    –
Total Other Loans  $                –
Sources of Capital
Owners’ and other investments  $      100,000
Bank loans                    –
Other loans                    –
Total Source of Funds  $      100,000

 

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