Business Plan Financial Projections Annex

Project instructions:
Your group is the management team of a venture in its DEVELOPMENT/START-UP stage which is looking for at least $ 1,000,000 in external funding. You must prepare and present a FINANCIAL MODEL which validates the commercial viability of the business; and supports the proposed investment.. The model should be sufficiently detailed to become the FINANCIAL ANNEX of a business plan. There is no prescribed format of the written plan, except that it must begin with a 1 page executive summary. The project should:

1.Briefly describe the product or service. Identify the product and the industry in which the company will operate, the approximate size of the market, and the company?s market/niche goals Classify the product or service as a NICE to HAVE, WANT to HAVE, NEED to HAVE, or MUST HAVE; and discuss how the classification impacts on access to funding. THIS IS A FINANCE PAPER SO DO NOT EXPEND A LOT OF EFFORT ON MARKET RESEARCH OR PRODCUT DESCRIPTION.

2.Remember that THE STARTING POINT FOR MOST FINANCIAL PROJECTIONS IS the SALES FORECAST. Make sure you can explain and justify the assumptions on which your forecast it is based.

3.Present a comprehensive REVENUE and PRICING model. IDENTIFY and VALIDATE the MARGINS, and COST STRUCTURE.
a.Calculate EBITDA and SURVIVAL (if applicable) BE revenues
b.Calculate and discuss the risk implications of the operating and financial leverage the model assumes for the first period the company will BREAKEVEN. Explain how and when the company will make enough return (revenue, profits, FCFs) to justify additional investment? Explain the RISK associated with the cost structure, why you chose it, and the revenue projections used in the firm?s model. ALSO?YOU MUST HAVE A CONTINGENCY PLAN

4.Present the AMOUNT and TIMING of TOTAL asset and capital (FUNDING) requirements to bring the product/service to market (FINANCIAL FORECASTING); and how much ADDITIONAL CAPITAL will be required to get the company to self-sufficiency or harvest, whichever is the venture?s goal. (You should use some adaptation of the AFN formula model). Clearly identify the projected USES for the capital you are seeking.

4.The business model must be robust enough to support $ 1,000,000 in EXTERNAL financing. Make sure you PRESENT AND JUSTIFY the IMPUTED VALUE of the company at the time you are seeking external financing (AGAIN?think of the factors which drive interest of the Sharks) Your Plan may anticipate sequenced capital infusions, but THE TEAM MAY NOT PRESENT A PLAN THAT IS SELF FUNDED.

5.THE WRITTEN REPORT:

a.Present SWOT and VOS analyses which support the viability of the venture
b.Prepare Statements of Cash Flows and Income Statements for the first THREE years of operations.
c.identify ALL ASSUMPTIONS on which the statements are based.
d.Calculate Net Cash Build/Burn for at least Years 1 & 2. Most of the assumptions for this requirement will come from the Revenue and Pricing Model developed for #2 above
e.JUSTIFY all imputed values included in your pitch
f.Identify the ?EXIT STRATEGY? for the company. Will it be sold or otherwise liquidated OR operated on a ?permanent? basis. Explain why your choice is most probable/desirable? When will liquidation or the sustainment period occur? (Generally that is when VCs/ANGELS will get RETURN on their investments)
g.Present a reasonable CONTINGENCY PLAN. Remember the Gompers Questions: what can go wrong, what can go right, and what outcomes can you influence. (Decide how much of the ?what can go wrong? stuff you should include in both presentations).
h.Include a COVERSHEET with the TEAM NUMBER and the NAMES of members in alphabetical order.
i.Grammar, spelling precision and clarity of thought are critical aspects of quality commercial presentations, and along with professionalism of the in-class presentation, they will SIGNIFICANTLY INFLUENCE the project grade. The written report is ? of the group project grade.
j.Put your best (but honest) foot forward. Be passionate?make sense!!!!