MGTC39 - New Business Planning & Creation Winter 2007
MANAGEMENT

 

MgtC39 - New Business Planning and Start-Up Winter 2007 - 3rd Assignment Assignment Instructions 1. As necessary, revise and update your 2nd Assignment. Submit a complete plan 2. Complete your business plan, including all of the remaining necessary information including all financial forecasts: Production and sales forecasts Cash flow forecasts Income statement (i.e. profit forecasts) Perform sensitivity analysis on key financial data Calculate the possible value of the firm in 3 to 5 years’ time. Calculate the return to investors from possible sale of the business Discuss the merits of this venture as an investment 3. The Assignment is Due: 3.10 p.m., Wednesday, 4 April, 2007 4. Late Assignments will have marks deducted. 5. All specifications with respect to presentation, layout and style are as per the 1st and 2nd Assignments. Suggested Content Production and Sales Forecasts: Provide monthly production and sales forecasts (number of units) for the first 24 months or until break-even, which ever is the greater. Explain and justify all assumptions related the timing, cost and volumes of production and sales. These will be evaluated on the basis of their clarity, prudence and realism. Cash Flows Prepare monthly cash flows for the first 24 months or until break-even, which ever is greater. These will be evaluated on the basis of their clarity, prudence and realism. They must be properly constructed, free from material error or omission and be clearly and informatively interpreted and discussed. Income Statements Prepare income statements for the end of years 1 and 2 or until profitability is achieved, which ever is the greater. They must be properly constructed, free from material error or omission, and be clearly and informatively interpreted and discussed. Sensitivity Analysis: Provide sensitivity analysis on key variables, to determine how these might affect the venture's cash flows and profitability. These must be informatively discussed and interpreted and will be evaluated on the basis of their usefulness in helping the reader to appraise the venture's risk. The Venture As Investment Opportunity Provide a clear discussion of the firm's financing needs, showing all sources of required financing including any that might be required from outside investors such as family, friends, venture capitalists or business angels. Where outside investment is being sought, provide a clear discussion of the number of shares offered for sale, and % of ownership being offered in return for the investment received. Provide Future Valuations of the Firm Using one or more valuation techniques (discounted cash flow, capitalized earnings, P:E multiples) provide a clear discussion of the estimated value of the business, and the VCs investment in the business after 3 and 5 years. Calculate the return to the outside investor if it was to sell its shares in the business after 3 and 5 years. Finally, offer a brief discussion as to the attractiveness of your venture as an investment, given the risks, returns and investment horizon. Notes on the Marking of the Final Business Plan As a marketing document, as a planning document, and as an exercise in business analysis, a business plan is intended to provide an intelligent - but non-specialist - reader with sufficient understanding of the business to allow him/her to judge the knowledge, expertise, and commitment of the management team toward the venture, and to provide the potential supplier of capital with adequate understanding of the fundamentals (and the risks) so as to make an intelligent investment decision. About 30% of the final mark will be awarded for the overall impression created by your plan.