Question
4. Lastly, answer or reflect on the financing options and answer the question end of these instructions ( Financing Options Available and Final Question ).
4. Lastly, answer or reflect on the financing options and answer the question end of these instructions (Financing Options Available and Final Question). Then save your work in an Excel file, ensure your name is visible, and submit your file including your recommendations on assignment page by the due date above. Be sure to justify your recommendations!
Your tourism business offer will operate in the Wine Industry. Some info on the industry:
- Total size of the industry is about $9 billion in Canada.
- Average winery generates about $600,000-$700,000 in revenue annually.
Ownership structure of the new business: Canadian Controlled Private Corporation (CCPC). Your team members are the owner/operators of this business.
The charts on the next page list the start-up costs for a typical winery that produces 5,000 to 15,000 cases annually:
Capital assets
Description | Low range | High range |
Land, Plant, & Office | $400,000 | $1,200,000 |
Other Equipment (receiving equipment, cellar equipment, material handling, refrigeration system, fermentation & storage, cooperage [first 3 years], tasting room) | $400,000 | $800,000 |
Pre-opening soft costs (costs incurred prior to any revenue earned)
Description | Low range | High range |
Full Time Salaries | $100,000 | $300,000 |
Part Time Salaries | $5,000 | $20,000 |
Pre-opening marketing, website, public relations | $15,000 | $25,000 |
Professional fees (lawyer, accountant, etc.) | $5,000 | $10,000 |
Utilities | $10,000 | $15,000 |
Insurance | $5,000 | $15,000 |
Other (Point of sale technology, other software, etc.) | $5,000 | $10,000 |
Working capital
Description | Low range | High range |
Cash reserve | $0 | $50,000 |
Grapes (Inventory) | $85,000 | $250,000 |
Packaging (Inventory) | $125,000 | $370,000 |
Other current assets (supplies, prepaid expenses, tech purchased, etc.) | $5,000 | $10,000 |
Financing Options Available
- Equity Investment (a potential partner wants 49% of business with max investment of $1,500,000, but will take lower % for less investment)
- Short-term loan (up to $250,000 @ 8.25% interest)
- Long-term loan (up to $1,500,000 @ 5.5% interest)
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