Chat with us, powered by LiveChat An Enterprise and lnnovation lnstitution (Ell) have up to f300,000 available to promote the growth of local businesses and employment in its local area. | Refine papers
  

You are required to identiff a new start-up business and seek funding from the Ell for one of the
following: Opening a new gym And write a report to the potential lnvestor:
(lndicative word length, 3000 words)
You are required to identify the following specifically and succinctly:
o State your business’s Unique Selling Point,
o Undertake an environmental analysis clearly stating the industry sector, any lndustry characteristics?
(Maturity, regulations), lndustry in numbers? (Growth rate, margins)
r Undertake a Competitive Analysis including a SWOT,
. Key success factors in the industry (20 marks)
B. Prepare a 3-year financial forecast
Construct a Pro-forma lncome statement, balance sheet, and cash flow statement over three years. (You
may wish to provide additional information such as a quarterly forecast, for example, if you expect
seasonal fluctuations in sales.)
Clearly state and discuss what type of performance ratios would be important to your business. Show
your business ratios versus other comparable (if any) organisations that are performing. (40Marks)
G. State the amount of finance you need to borrow for the business
Show clearly appropriate sources of funding (potentialfor multiple sources). (10 Marks)
D. Presenting the business plan- The PITGH
Prepare a poster outlining your start-up idea to a potential investor/lender and persuade them to see you again
to find out more. This will require you to know exactly what is unique about your product or service and what the
investor/lender is interested in. (20 Marks)
E. Personal Reflection
Reflecting on your overall learning experience briefly discuss what you have gained from undertaking this
module including the various tasks within this assignment. You should include a reflection of your
lectures/seminars/workshops and own time, in shaping your learning environment (max 2 A4 pages). Likewise
include what you would do differently now knowing what you do. (10 Marks)
Total (100 marks)
r You should make use of all available sources and current thinking on SMEs should be centralto your
analysis and illustrated regarding current articles from relevant journals and from broadsheet
newspapers (e.9., Financial Times). Use should be made of the library’s electronic databases such as
Science Direct, Emerald, etc.
o You should apply theoretical concepts and models relating to the entrepreneurial process and the
various stages of growth and development of the business.
r Once you have done your research you will need to write your report in which you will present a formal
business plan demonstrating the business concept, the marketing strategy, and the financials including
ratio analysis findinqs for the future qrowth and development of the business.
Course: Business & Management with Finance (4686)

Student ID: 3729847
BAF_6_EFI_1920
Entrepreneurial Finance

Table of Contents
Introduction 3
Environmental Analysis 3
Competitive Analysis 5
Financial Analysis 6
Pro Forma Income Statement 6
Pro Forma Balance Sheet 7
Pro Forma Cash Flow Statement 7
Ratio Analysis 8
Source of Funding 9
Personal Reflection 9
Reference List 11
Appendices 13
Appendix A: Pro Forma Income Statement 13
Appendix B: Pro Forma Balance Sheet 13
Appendix C: Pro Forma Cash Flow Statement 14
Appendix D: Financial Ratios 14
Appendix E: Pitch 15

Bamboo Company: Business Plan
Introduction
Bamboo Company is a startup online cannabis sativa and bamboo fashion online retail store primarily targeting the growing number of environmentally conscious individuals across the globe. It will have a strong commitment to providing unique bamboo and weed garments from Europe to virtually every part of the world. It is also the goal of Bamboo Company to become a leading cultural retailer. In addition, we hope to generate high profits and build a strong reputation for customer satisfaction through providing unique and rare garments to customers.
Unique Selling Preposition: First-ever online dealer with bamboo and cannabis sativa fashion
Environmental Analysis
Several external factors could affect implementation of the proposed business plan. The PESTEL model creates a realistic pathway for understanding Bamboo Company?s external environment. It highlights the political, economic, social, technological, legal, and environmental factors that can influence financial performance going forward.
A wide range of political factors is likely to have a significant influence on Bamboo Company?s overall performance. Firstly, regulatory changes could have a direct adverse impact on the entity?s financial results (Maletic et al. 2016). Cannabis sativa and bamboo have long been considered largely unregulated, which implies that many counties are gradually moving towards regulations. A further suggestion is that a possible ban on the use of bamboo and cannabis sativa could lead to business shutdown. In addition, new tax laws could affect profitability and sustainability of Bamboo Company.
Economic factors also play a critical role as far as environmental analysis is concerned. For instance, the UK?s exit from the European Union (EU) is likely to have far-reaching impact on Bamboo Company?s financial results. Brexit uncertainties imply that the company will have to incur additional charges to do business in the lucrative UK market. This is unsurprising in the sense that the EU will introduce exportation tariffs, increase operating costs, and reduce the firm?s profitability.
Equally important, social factors could go a long way in determining financial performance and sustainability of the online fashion retail store. Consumer behavior literature indicates that some products and services tend to have relatively high switching costs (Rezaee 2019; Habisch & Schmidpeter 2016). The implication is that consumers may not buy the idea of new furniture materials, as many people are loyal to the traditional raw materials. In addition, older people may fail to believe in the power of cannabis sativa in developing sustainable fashion.
What is more, a whole range of technological factors has a significant impact on the industry performance. For instance, the advent of new technology innovations provides a realistic opportunity for Bamboo Company to cut operating costs and reach a large market share. Social media sites, such as Instagram and Twitter, are relatively cheap, easy to use, and reach a large audience. Equally important, technology will facilitate internal communication (Dinc?er & Yuksel 2020). Several state-of-the-art web conferencing tools, including Google Meet and Zoom, are increasingly becoming popular because of their ability to reduce geographical barriers and minimize costs. Therefore, technological factors will have a direct impact on financial performance and sustainability of Bamboo Company.
In addition, environmental factors can affect financial performance and sustainability of the startup company. In particular, the brand will respond to an urgent environmental need affecting the world today. In other words, the bamboo and cannabis sativa garments will go a long way in addressing the global warming issue that is already causing harm to the environment. Equally important, the management will ensure that the supply chain is sustainable. This implies that the business will also continue to operate sustainably in the near future.
Legal factors can also affect the startup company?s financial performance and sustainability. As aforementioned, cannabis sativa regulations could have a significant impact on the firm?s profitability. An increasingly growing number of countries are formulating legislations to regulate the use of cannabis sativa. Many developed nations allow weed to be used for restricted purposes, which mean that the legal factor could affect availability of raw materials. A further suggestion is that the company will maintain strong financial performance due to the fact many countries that permit production, possession, and cultivation of cannabis sativa.
Competitive Analysis
Competitive analysis is also important to ongoing business success. Literature indicates that SWOT analysis creates a rational opportunity for understanding the internal and external factors that affect financial performance and sustainability. It primarily focuses on a firm?s strengths, weaknesses, opportunities, and threats.
It is important to note that Bamboo Company has several strengths. Firstly, lean organizational structure provides a realistic opportunity for improving financial performance and sustainability. In other words, it paves way for eliminating unnecessary business processes and practices and accordingly boosting the bottom-line. Innovation capability is another conspicuous strength of the online fashion retail store. Diversity and inclusion is also a key driver of innovation and creativity at Bamboo Company. The beauty of it is that the personnel are drawn from different backgrounds, meaning that innovation and creativity are deeply entrenched in the organizational culture. Blue ocean strategy and social perspective understanding are also major strengths of Bamboo Company.
The firm also has a number of weaknesses that have a significant impact on its competitiveness. For example, Bamboo Company is relatively small compared to the close business rivals with huge financial muscles. This means that it may lack the resources needed to maintain competitiveness. Relatively limited management skills, experience, and expertise can also adversely affect the startup company?s financial position. The fact the Bamboo Company has a unique business model implies that there are no comparable businesses. In other words, it cannot benchmark with competitors to know the strategies they are using to boost and sustain strong financial performance.
Furthermore, it is worth noting that Bamboo Company has myriad opportunities. Firstly, focus on sustainability creates a rational opportunity for the online garment retailer to increase financial performance. According to Zahid and Ghazali (2017), sustainability-related activities have a significant link on corporate financial results. Both bamboo and cannabis sativa materials are sustainable in the sense that they require relatively small volumes of water during growth process. Diversification is another unique opportunity for Bamboo Company. The online retail store will deal with a wide range of sustainable fashion thus creating new revenue streams. The suggestion is that the organization will continue operating sustainably in the foreseeable future.
External threats are also likely to have a negative impact on Bamboo Company?s financial performance and sustainability. For instance, the highly segmented market implies that it will not be easy to gain a large market share in the short-run. In addition, small supply chain can play to the disadvantage of Bamboo Company in the long run. The other conspicuous strengths are fast changing market, loss of external workforce, and intense competition in the industry.
Financial Analysis
Financial analysis can also play a critical role as far as assessing feasibility of the proposed investment is concerned. Pro forma income statement, balance sheet, and cash flow all help businesses determine the current financial position and ability to continue operating sustainably. Equally important, ratio analysis creates a pathway for assessing the three financial statements. The following subsections contain an overview of the Bamboo Company?s projected financial performance during the next three years.
Pro Forma Income Statement
This is one of the major financial statements. It provides a summary of a company?s main sources of income and uses of funds. In other words, it shows what remains from the revenue after accounting for production and overhead costs. Bamboo Company?s main source of revenue is product sales. This means that it is possible to grow cash flows in the future by diversifying operations to other regions. In contrast, production costs form a significant portion of the revenue in Year 1 to 3. Other direct expenditures include advertising, packaging, and storage.
The projected income statement indicates that Bamboo Company?s revenue will increase from around ?95,976 in Year 1 to ?138,205.44 in Year 3. This relatively high revenue growth is good for a startup in that it signal the company will continue to generate positive cash flows in the foreseeable future. Equally important, gross profit is positive during the 3-year period. The income statement also shows Bamboo Company?s tax liability in the next three years. The calculations are based on the assumption that the firm is subject to corporate rate of 21%. Net income is also an important part of the pro forma income statement. For Year 1, 2, and 3, the net profit will be about ?1,728.9, ?9,226.99, and ?16,942.56 respectively (see Appendix A). The suggestion is that the online retail store will continue operating under the going concern basis.
Pro Forma Balance Sheet
This is another crucial financial statement as far as determining the financial position and strength of Bamboo Company is concerned. A large body of literature indicates that a general balance sheet incorporates three main items, that is, assets, liabilities, and owners? equity. This means that it allows financial statement users know whether a company has adequate assets to meet its short- and long-term financial obligations (Barringer 2016; French & Gordon 2015). Equally important, liabilities show the external claims held by other independent parties. The equity section summarizes the main sources of capital during the next three years.
The projected balance sheet indicates that Bamboo Company has relatively many noncurrent assets than the current ones. This implies that it is holding excessive liquid assets and incurring high opportunity costs. In other words, the management needs to ensure that part of the liquid assets is invested in the available growth opportunities (Deresky & Christopher 2011). This will also play a critical role in boosting and sustaining strong financial performance in the foreseeable future.
In addition, liabilities consist of Bamboo Company?s account payable and long-term borrowings. For fiscal year 1, 2, and 3, the accounts payable will be ?1,195.2, ?23034.24, and ?27,641.09 respectively (see Appendix B). The calculations are based on the assumption that 20% of the total sales are in credit. In addition, long-term borrowing will remain fixed at ?25,000 throughout the three-year period. On the contrary, total capital will also grow gradually during the first three years based on the assumption that the net income is reinvested in the business.
Pro Forma Cash Flow Statement
Cash flow statements are also important in making investment decision. They primarily highlight a company?s major cash inflows and outflows in a specific period. It contains three main subsections, that is, the operating, investing, and financing activities. The current financial analysis indicates that the company?s cash flow from operating activities will increase from ?77,240.38 in Year 1 to approximately ?115,068.07 in year 3. This implies that the company will remain financially stable in future.
Investing activities represent the major source of cash outflows for Bamboo Company. This is unsurprising because the startup company will require substantial investment in noncurrent assets. For fiscal Year 1, 2, and 3, the online retail store will spend approximately ?50,000, ?52,500, and ?55,125 respectively on capital projects (see Appendix C). While the investment may cause financial strains during the first years, the assets have the potential to produce positive benefits in future. As a result, Bamboo Company is a viable investment project capable of maximize value of the owners? wealth.
Financing activities are also part of the projected cash flow statement. They primarily show the movement of the main sources of equity (Lessambo 2018; Moyer, McGuigan, & Rao, 2017). Only retained earnings appear to have increased during the analysis period. In addition, the company?s net cash balances will positive during the first three years. This implies that the entity will have adequate assets to cater for short-term liabilities.
Ratio Analysis
As mentioned earlier, ratio analysis is also at the core of making informed investment decision. Literature indicates that profitability, liquidity, and efficiency ratios provide a realistic opportunity for attaining the all-important objective. For fiscal Year 1, 2, and 3, Bamboo Company?s current ratio will be around 12.8, 11.1, and 9.96 respectively. The relatively high current ratio implies that the online fashion store is missing many investment opportunities. The beauty of it is that the ratio is reducing gradually. As Madura (2017) observes, this trend means that the management will start investing the available assets with time. Many high performing firms ensure that their current ratio is one (1), that is, they hold almost the same level of current assets and liabilities.
What is more, profitability ratios show that Bamboo Company is well equipped to maintain strong financial performance in the foreseeable future. For instance, it has high and growing net margin, indicating that the investment will become viable within a relatively short duration. In addition, return on asset ratio shows that the startup firm?s management will have the ability to generate profits with the available assets. It will improve constantly during the first three years, reflecting the learning curve of the management team.
Efficiency ratios are also used to gauge the extent to which top executives are generating value using the available resources. The asset turnover ratio falls under this category. For Year 1, 2 and 3, Bamboo Company?s asset turnover will be approximately 32.4%, 37.3%, and 41.8% respectively. The suggestion is that the management will gradually improve its efficiency in producing income with the available assets. This also implies that the company will be financially sustainable and stable in future.
Source of Funding
Financing decision is also an integral part of a comprehensive business plan. It refers to choosing an optimal capital mix to help minimize borrowing costs. Long-term bank loans will create a realistic pathway for obtaining the finances needed to implement the project. The good thing is that the UK startup loans offer relatively low interest rates to allow entrepreneurs pursue their dreams. Literature indicates that this source of capital has several tangible benefits that explain why it is relatively common across many parts of the world (Birgham & Houston 2015). For instance, tax-shield benefits will allow Bamboo Company to minimize its liabilities. Because interest expenses are allowable for tax purposes, the source of capital will create a realistic opportunity for improving and sustaining financial performance.
As aforementioned, retained earnings will also be ploughed back to the business to facilitate growth. This implies that they will serve as an internal source of capital. According to the pecking order theory, many high performing firms prefer this source of capital in the sense that it is relatively inexpensive compared to others. Of course, this can be explained by the fact that the form of capital does not require organizations to repay interest and principal after a specified period (Fijnaut & Ruyver 2015). Opportunity costs of reinvesting the capital are perhaps the only major shortcoming of this source of capital.
In future, I intend to use equity financing. This implies that I will have to sell part of the company?s stake to the public. The beauty of it is several primary markets that enable startups to sell shares to the public. It is also important to note that loss of control is one of the major limitations associated with equity financing. I will have to cede the business control to new shareholders.
Personal Reflection
There is little doubt that undertaking this module has been a life changing learning experience. For instance, it highlights the need for entrepreneurs to master the art of planning. The current business plan assignment attests to this claim in the sense that it involves formulating a roadmap for Bamboo Company during the first three years. This suggests that the module allows learners to understand the uncertainties that can have an adverse impact of financial performance of a business.
Forecasting is also an integral part of the module and the business plan assignment. It involves the use of statistical methods and professional judgment to predict future outcomes. The pro forma income statement, balance sheet, and cash flow statement all require forecasting knowledge. The suggestion is that the module provides a realistic opportunity for learners to acquire important life skills.
The model has also allowed me to improve my analytical skills. For instance, I can use ratio analysis to determine the viability of a specific investment vehicle. As mentioned earlier, analysts use a wide range of ratio categories, including the profitability, efficiency, and liquidity ones, to measure the intrinsic value of a company. I also learned that financial ratios can be used to compare performance of firms in the same industry. This implies that I will benchmark the startup firm?s financial results with those of close business rivals. This will also go a long way in improving customer service and the overall bottom-line. In other words, the course has enabled me to gain the confidence to start and operate a business.

Reference List
Barringer, B. R. 2016, Preparing effective business plans: An entrepreneurial approach. Langara College, Vancouver, B.C.
Birgham, E. F. & Houston, J. F. 2015, Fundamental of financial management, Cengage Learning, Abingdon.
Deresky, H., & Christopher, E. 2011,?International management, P. Ed Australia, Melbourne.
Dinc?er, H., & Yuksel, S. 2020,?Handbook of research on decision-making techniques in financial marketing. Business Science Reference, Hershey, PA.
Fijnaut, C., & Ruyver, B. 2015,?The third way: A plea for a balanced cannabis policy.
Brill Nijhoff, Leiden.
French, J., & Gordon, R. 2015,?Strategic social marketing. SAGE, Los Angeles.
Habisch, A., & Schmidpeter, R. 2016, Cultural roots of sustainable management: Practical wisdom and corporate social responsibility, Springer International Publishing, Cham.
Hamilton, L., & Webster, P. 2018,?The international business environment. Oxford University Press, Oxford, United Kingdom.
Kingsnorth, S. 2019,?Digital marketing strategy: An integrated approach to online marketing. KoganPage, London.
Lessambo, F. I. 2018,?Financial statements: Analysis and reporting. Palgrave Macmillan, Cham, Switzerland.
Madura, J. 2017,?International financial management, Cengage Learning, Mason, OH.
Maletic, M. et al. 2016, ?Effect of sustainability-oriented innovation practices on the overall organizational performance: An empirical examination?, Total Quality Management & Business Excellence, vol. 27, no. 9, pp. 1171-1190.
Moyer, R. C., McGuigan, J. R., & Rao, R. P. 2017,?Contemporary financial management. Cengage Learning, Boston, MA.
Rezaee, Z. 2019, Business sustainability, corporate governance, and professional ethics, John Wiley, New York, NY.
Zahid, M. & Ghazali, Z. 2017, ?Corporate sustainability practices and firm?s financial performance: The driving force of integrated management system?, Global Business and Management Research, vol. 9, no. 479-491.

Appendices
Appendix A: Pro Forma Income Statement

Appendix B: Pro Forma Balance Sheet

Appendix C: Pro Forma Cash Flow Statement

Appendix D: Financial Ratios

Appendix E: Pitch

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