BUSINESS PLAN FINAL DIAGRAM (ANOUSHKA)

final business plan

Final business plan strategy:

Introduction:

 

-        Company summary: - Building in flood risk zones.

                                              - Sustainable amphibious homes.

                                              - Virtual reality as representation of   work.

 

Business model:

-        Product: Creating drawings for amphibious home construction.

-        Operation process: Consultation > meetings > drawings > virtual reality.

-        Revenue model: Local grant, private investor & bank loan for start-up revenue.

 

Market analysis:

-        Market:  Developers, contractors, government agencies, home owners.

 

-        Competitors: This is a niche market which we will create as there is a gap in the market.

 

 

Business projections:

-        Sales forecast:

2021, we predict to take on 2 projects.

2022, we predict to take on 2 projects.

2023, we predict to take on 3 projects.

2024, we predict to take on 3 projects.

2025, we predict to take on 4 projects.

2026, we predict to take on 4 projects.

 

-        Pricing models: 5% profit fee on £1.5 million project = £75,000

 

Management structuring:

-        Management team: We are a limited liability partnership and therefore we are all partners.

 

-        Staff personnel:

  2021: Architect assistant (x1), Architects (x3), Technologist (x1).

  2022: Architect assistant (x1), Architects (x3), Technologist (x1).

      2023: Architect assistant (x1), Architects (x3), Technologist (x2).

      2024: Architect assistant (x1), Architects (x3), Technologist (x2).

      2025: Architect assistant (x1), Architects (x3), Technologist (x2).

      2026: Architect assistant (x1), Architects (x3), Technologist (x2).

 

Program management:

- Project plan:

Cubes studios plans to thrive as a business by creating a niche market for specialising in amphibious homes, from year’s 1- 5 we believe as a company we can change the way flood risk zones are built and thought upon.

 

- Milestone:

2021, Loss due to start- up cost.

2022, Still in a loss due to expenditure higher than revenue.

2023, Break – even point, Increase staff, Profit.

2024, Profit.

2025, Profit.

2026, Profit, begin to invest into I.T, Marketing and expanding the firm.

 

Financial consideration:

- Capital requirement: Local government grant, private investor & bank loan for start-up revenue.

- Break-even: In year 2023.

- Operating expenses & revenue:

- 2021, expenses > £185,245 Profit -£3,220

- 2022, - expenses > £179,245 Profit -£1,720

- 2023, - expenses > £211,245 Profit £1,085

- 2024, - expenses > £211,245 Profit £4,989

- 2025, - expenses > £211,245 Profit £16,335

- 2026, - expenses > £211,245 Profit £26,400

 

 

marketing break up (anoushka)

7 p's marketing (anoushka)

finance graphs - djaouida Oukil

Revenue help sheet - djaouida Oukil

What it is:

Revenue, also called sales (or turnover, in the UK), refers to the value of the products and services a company sells.
Net revenue usually refers to a company's sales net of discounts and returns.

How it works/Example:

Let's assume grocery store XYZ sold $100,000 worth of food for the year. It would record these sales as revenue on the very top of its income statement (as shown below).

Why it Matters:

Revenue is a measure of how much raw income a company is bringing in from sales of its products and services. A company that sees its revenue rise every year signals that a company is selling more of its products and services which can help it grow. Falling revenues each year signal that a company is faltering or shrinking.
Generally, the more revenue a company brings in the more money a company has to work with to pay expenses and make a profit.
Generally accepted accounting principles (GAAP) and industry standards often determine when a company can record revenue. For example, if a wholesaler sells a product for $10,000, does it record the sale when it receives the order, when it ships the product a week later, or when it receives payment from the buyer a month after that? Revenue recognition standards answer these questions, which vary by industry and type of sale. You can usually learn what a company’s revenue recognition policies are in the notes to its financial statements.
http://www.investinganswers.com/financial-dictionary/businesses-corporations/revenue-5108
 

Gross profit help sheet - Djaouida Oukil

What it is:

Gross profit is a required income statement entry that reflects total revenue minus cost of goods sold (COGS).  Gross profit is a company's profit before operating expenses, interest payments and taxes. Gross profit is also known as gross margin.

How it works/Example:

Here's a modified income statement of a large technology company.  As you can see, gross profit is the preliminary measure of profitability before operating income and net income.

Why it Matters:

Gross profit is important because it reflects the core profitability of a company before overhead costs, and it illustrates the financial success of a product or service. 
Gross profit is used to calculate gross profit margin which is calculated by simply dividing gross profit by total revenue (gross profit / total revenue). Calculating gross profit margin allows you to compare similar companies to each other and to the industry as a whole to determine relative profitability.
Companies with higher gross profit margins have a competitive edge over rivals, whether because they can charge a higher price for good/services (as reflected in higher revenues) or because they pay less for direct costs (as reflected in lower costs of goods sold).
Analysts are constantly asking themselves, "Why can some industries maintain profit margins that are so much higher than others?"  The answer lies with Porter's Five Forces, a classic business framework for discovering which firms will outperform the competition. To learn more, click here to learn about Using Porter's Five Forces to Lock In Long-Term Profits.


http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/gross-profit-2077

Cost of goods/sales help sheet - djaouida Oukil

What it is:

Cost of goods sold (COGS) is an accounting term to describe the direct expenses related to producing a good or service. COGS is listed on the income statement.

How it works/Example:

For goods, COGS is primarily composed of the cost of the raw materials that physically constitute the item. But cost of goods sold does not include indirect expenses, such as utilities, office supplies, or items not associated with the production of a specific good or service.
Let's assume Company XYZ incurs the following costs to produce one pair of eyeglasses:
Item                 Cost
Plastic frame     $10
Lenses              $5
Glue                  $1
Screws              $1
By adding these direct expenses, we can calculate that it costs Company XYZ $17 to make one pair of eyeglasses. If Company XYZ's raw materials prices never changed, it might be practical for Company XYZ to calculate total cost of goods sold by multiplying $17 by the number of eyeglasses sold in a period. However, raw materials prices frequently do change, and when Company XYZ sells a pair of eyeglasses, it must determine exactly which materials it was selling.
For example, let's assume Company XYZ purchased 100 plastic frames in January for $10 each, 50 frames in February for $9 each, and 200 frames in March for $11 each. When Company XYZ sells a pair of eyeglasses in April, which cost does Company XYZ use: $10, $9, or $11? Company XYZ's choice of inventory valuation methods (which generally include the last in, first out (LIFO), first in, first out (FIFO), and weighted-average methods) dramatically affects COGS (and by extension, profit) it lists on the income statement.
Company XYZ's choice of which inventory units to sell first affects the value of its remaining inventory and its total cost of goods sold for the period. If Company XYZ began the month with $100 of inventory, purchased $500 of inventory during the month, and ended the month with $200 of inventory, we can calculate that Company XYZ's total cost of goods sold equaled:
$100 + $500 - $200 = $400

Why it Matters:

Cost of goods sold is the primary component in calculating gross profit, and it affects nearly every other profit measure. Calculating COGS is the primary reason most companies take inventory every month.
It is important to understand that different inventory methods typically generate different costs of goods sold for identical companies, and it is therefore necessary to study a company's inventory valuation disclosure when evaluating cost of goods sold. When comparing companies, it is also important to note that some industries tend to have higher COGS than others. This is why comparisons are generally most meaningful among companies using the same inventory method within the same industry, and the definition of "high" or "low" cost should be made within this context.

http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/cost-goods-sold-cogs-2478

operating margin help sheet - djaouida

http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/operating-margin-370

What it is:

Operating margin is a measure of profitability. It indicates how much of each dollar of revenues is left over after both costs of goods sold and operating expenses are considered.
The formula is for calculating operating margin is:
Operating Margin = Operating Earnings / Revenue

How it works/Example:

It is important to understand what expenses are included and excluded when calculating operating margin. The calculation starts with operating earnings, which is equal to revenue minus cost of goods sold, labor and other day-to-day expenses incurred in the normal course of business. It typically excludes interest expense, nonrecurring items (such as accounting adjustments, legal judgments or one-time transactions) and other income statement items not directly related to a company's core business operations.
To see how operating margin works, consider Company XYZ's income statement:

Using this information and the formula above, we can calculate that Company XYZ's operating margin is:
Operating Margin = $150,000 / $1,000,000 = 0.15 or 15%
This means that for every $1 in sales, Company XYZ makes $0.15 in operating earnings.

Why it Matters:

Operating margins are important because they measure efficiency. The higher the operating margin, the more profitable a company's core business is.
Several things can affect operating margin (such as pricing strategy, prices for raw materials or labor costs), but because these items directly relate to the day-to-day decisions managers make, operating margin is also a measure of managerial flexibility and competency, particularly during rough economic times.
It is also important to note that some industries have higher labor or materials costs than others. This is why comparing operating margins is generally most meaningful among companies within the same industry, and the definition of a "high" or "low" ratio should be made within this context.

Financial business plan - Djaouida Oukil

 

The financial manager (Djaouida Oukil) organises and collates financial information which is then assessed. Financial strategies and decisions are then made for the future years to increase customer satisfaction and in business terms the profitability of the company.

 

Financial forecast of 2021 – 2026:

 

2021:

-        Total revenue of £184500 coming from a local government grant, bank loan and private investor as well as two projects, this is essentially our start-up revenue.

-        Large operating expense figure of £185,245 in this year due to one of purchases of furniture and I.T equipment.

-        Inevitably this totals to a negative net profit/loss due to the expenditure being higher than the income of the business.

 

2022:

-        Private investors will provide the company with an additional revenue of £30,000 on top of the existing income from the two projects of this year.

-        In this year our expenditure will be just under the total revenue, however due to taxes applied this will set us back into a loss.

 

2023:

-        This year we will financially depend on our projects income for revenue. Due to a better reputation. From this year we go from a previous project unit of 2 per year to 3 per year.

-        Due to this increase in revenue we will also employ a technologist to the firm which will increase the expenditure of the firm.

-        Despite this, we will break-even in this year as our revenue in higher than our operating expenses and therefore we will make a net/retained profit of £1,085.

 

2024:

-        Revenue mirrors the previous year as we have a consist reputation due to marketing strategies (same number of projects as previous year).

-         Staff numbers are also constant.

-        What varies from the previous year is that we pay less dividends and set aside less contingencies in this year and therefore we have a higher retained/net profit.

-        This way the net profit left at the end of the year can be invested into other areas such as marketing or I.T upgrades and maintenance which is vital for our field of work.

 

2025:

-        In this year another project will be taken which means we will be doing 4 projects in the year. This will be due to the money that has been previously invested in marketing in building our reputation and image.

-        Therefore the revenue for this year will be greater than the previous and the operating expenses are constant which will lead to an increase in retained/net profit.

-        In this year we will begin to repay the bank as well as setting aside a larger amount of contingencies and paying dividends to our private investor.

 

2026:

-        As the previous year we will have 4 projects in this year due to our client referrals and positive feedback and reviews.

-        Therefore our income and expenditure is constant, what varies is the change in repayment amounts.

-        By the end of this year we will have repaid back the bank and private investor. Which will set us into a positive position for the next coming year.

 

 

Summary of the financial decisions & strategies based on financial and future forecast:

 

-        Investing more into marketing to boost the firm’s reputation and image which will in turn increase clientele and increase in clientele over time increases income.

 

-        Investing more into I.T by keeping up to date with software and new technology as a method of reaching to our clients and presenting our work through digital virtual reality.

 

-        Steady increase and expansion of staff in order to gain new expertise and generally increase in size as a firm so we can be more time efficient with work load, this way we can carry out sale generating activities in the spare time.

 

-        Over time due to size of the firm and reputation we will be taking on more projects and therefore there will be an increase if retained/net profit.

 

-        Due to the period 2021-2026 predicted as a time when we will be out of recession, there will be a larger amount of people wanting to invest in the company. To make the most of this period we could increase the profit fee from 5% to 5.5%

 

-        Over time through having punctual and regular purchases of our consumables we may be able to get a deducted prices on these products or a larger amount for the same price from our provider which will in turn reduce operating expenses.

 

-        Another way of reducing operating expenses will be through reduction of utility bills. To achieve this we will need to switch off lights when we leave a room as well as some spaces having motion sensor lighting. Use windows for cooling rather than mechanical cooling to reduce electricity use. Make sure taps are turned off properly and not dropping. To radiate heat in winter months, put a reflective board between the wall and heater.

 

-        Due to lack of land we can build on in the UK, building in flood risk zones will be a niche market we will fit into. Niche markets are created by identifying needs, wants and requirements that are not being addressed by others and developing a service to meet them.  

 

Project/service fee:

 

-        As shown in the cash flow sheets, each project income is estimated to be £75, 000 which is a 5% profit fee of the £1.5 million project which is the cost of the amphibious house.

 

-        Under this £75,000 bracket is the cost of the service for producing the amphibious home drawings, client consultation meetings, and planning permission and building regulation fees. In the final stage the digital virtual reality representation of the final product will be included in this service fee.

 

-        VAT is also included in the service charge so it’s not an extra charge needed to be paid out by the firm.

 

Contingencies:

 

-        Money will be set aside every year in case problems arise. This amount will vary based on how much as a firm we can afford to set aside.

 

Validation and verification:

 

-        On a regular basis the financial manager will carry out verification and validation methods on the financial data stored to ensure there are no inconsistencies or errors.

 

-        These checks will be carried out after new data has been inputted.  

 

-        They will also be carried out on a weekly basis (every Friday).

 

-        Through accuracy of data, correct decisions and strategies can be taken in order to make the business more profitable.

 

 

 

 

Definitions

 

Assets = Things a business owns, e.g. buildings, vehicles, stock and money in the bank.

 

Brand = Refers to the words and symbols such as a name, logo and slogan that represent a business’s identity.

 

Breakeven = The amount of sales a business needs to make to cover all its costs.

 

Business plan = A document that describes a business’s aims and objectives and a plan for how they can be achieved.

 

Capital expenditure = Money spent on buying or improving items that will be owned by a business for a long time, e.g. Buildings or equipment.

 

Carbon footprint = A measure of the impact that human activities have on the climate in terms of the total amount of greenhouse gases produced.

 

Cash flow forecast = An estimate of the amount of money a business will spend and receive within a certain time period (usually a year).

 

Private investor/ Creditor = Somebody to whom a business or individual owes money.

 

Expenditure = Money paid; cost.

 

Fixed assets = Things a business owns or controls for a long time, such as premises or equipment.

 

Fixed costs = Costs that stay the same, regardless of how many sales a business makes, e.g. Rent.

 

Gross profit = Total income from a business’s sales minus the direct costs of making the sales (this does not include a business’s overhead or running costs).

 

Margin = The difference between the selling price of a product/service and its costs. The higher the margin, the more profit that is made.

 

Marketing = Any activity a business does to try and contact potential customers.

 

Market positioning = How a business presents its products/services in relation to its competitors; higher quality, cheaper, etc.

 

Net profit = A business’s total income minus its total costs.

 

Profit and loss account = Shows a business’s total income and expenditure for a given period of time.

 

Target market = The group of customers a business chooses to focusits marketing efforts on.

 

Turnover = A business’s total sales income for a year.

 

Usp (unique selling point) = A benefit that a business offers to its customers that its competitors do not.

 

Values = The principles and beliefs that guide what a business does and how it does it.

 

Variable costs = Costs that vary in line with a business’s level of sales.

 

Viable = If a business idea is viable, it means that it should work and the business should be success.

 

Vision = A business’s long-term goal.