Originally you thought that $5,000 would be enough to start-up your business. You have now realised after completing the worksheets that this is not enough - you will need to raise some more cash.

You contacted a private lender, Malcolm Mills, who advertised on the internet. He offers business finance. His terms are:

• Up to $100,000 over 3 years
• Interest rate 8.0%
• Set up fees $2,000 (included in the loan total)
• Must be secured with a mortgage (which can be a second mortgage if there is already a first mortgage in place).

You have a home that is worth about $800,000 and a home loan owing of about $100,000. QUESTION: 1) Calculate how much you would like to borrow from the lender to cover: start-up costs, working capital (for cash flow shortfalls) and unexpected 'contingency'. Please refer to the figures I have provided, and allow at least $2,000 to $$5,000 to cover the unexpected. Deduct the cash you have available.

Calculate how much capital needed:	$
Start up costs	+
Working capital (for cashflow shortfalls)	+
Unexpected 'contingency' (suggest $2000 to $5000)	-
Available cash	$5,000
Capital Required	=

2) Please refer to the figures provided, and record the month that starts to show consistent positive net cashflows each month.

Jx Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total yr Cash inflows Coffee regular $ 16,528 $ 15,968 $ 15,393 $ 17,024 $ 15,695 $ 16,600 $ Start up costs 17,520 $ 15,378 $ 16,298 $ 15,927 $ 16,205 $ 16,751 $ 195,287 Coffee Large $ 12,158 $ 11,746 $ 11,323 $ 12,523 $ 11,544 $ 12,211 $ 12,888 $ 11,312 $ 11,989 $ 12,676 $ 12,792 $ 12,322 $145,484 Description Cost Bottled water $ 961 $ 928 $ 895 $ 990 $ 914 $ 966 $ 1,019 | $ 895 $ 947 $ 1,003 $ 1,349 $ Banana cake $ 2,521 $ 2,433 $ 2,346 $ 2,594 $ 2,397 $ 2,536 $ 2,675 $ 2,346 $ 2,485 $ 2,631 $ 3,537 $ Carrot cake $ 2,369 $ 2,287 $ 2,205 $ 2,438 $ 2,253 $ 2,383 $ 2,514 $ 2,205 $ 2,335 $ 2,472 $ Choc chip cookie $ 2,369 $ 2,287 $ 2,205 $ 2,438 $ 2,253 $ 2,383 $ 2,514 $ 2,205 $ 2,335 $ 2,472 $ 3,324 $ 3,324 $ 975 $ 11,842 2,558 $ 31,058 2,404 $ 29,188 2,404 $ 29,188 Professional advisors Legal and accounting Training course $750 $600 Website development $1,000 Total cash inflows 36,908 $ 35,649 $ 34,365 $ 38,008 $ 35,054 $ 37,079 $ 39,128 $ 34,340 $ 36,389 $ 37,182 $ 40,531 $ 37,413 $442,047 Licences and Registrations Licences and permits Cash outflows Business name registration Start up costs (less $5,000 in savings) $ 29,544 $ $ $ $ $ $ $ $ $ $ $ $ 29,544 Company registration Other $200 $150 $600 Coffee (variable costs) -Raw materials and labour $ 16,925 $ 16,351 $ 15,762 $ 17,433 $ 16,071 $ 16,999 $ 17,941 $ 15,748 $ 16,690 $ 16,891 $ 17,122 $ 17,153 $201,086 Purchase price of retail pre pkgd products Non-current Assets Coffee machine $8,500 - Bottled water $ 273 $ 263 $ 254 $ 281 $ 259 $ 274 $ 289 $ 254 $ 269 $ - Banana cake $ 1,691 $ 1,632 $ 1,573 $ 1,740 $ 1,607 $ 1,700 $ 1,793 $ 1,573 $ 1,666 $ 284 $ 1,764 $ 382 $ 2,372 $ 277 $ 3,357 1,715 $20,825 Coffee cart or cabinet or bench $2,520 Refrigerator $999 - Carrot cake $ 1,553 $ 1,499 $ 1,445 $ 1,598 $ 1,476 $ 1,562 $ 1,647 $ 1,445 $ 1,530 $ 1,620 $ 2,178 $ 1,575 $ 19,125 Glass food display $5,600 - Choc chip cookie $ 1,553 $ 1,499 $ 1,445 $ 1,598 $ 1,476 $ 1,562 $ 1,647 $ 1,445 $ 1,530 $ 1,620 $ 2,178 $ 1,575 $ 19,125 Point of sale machine with card reader and cash drawer $1,865 Fixed costs - Rent $ 3,100 $ 3,100 $ 3,100 $ 3,100 $ 3,100 $ 3,100 $ 3,100 $ 3,100 $ 3,100 $ 3,100 $ 3,100 $ 3,100 $ 37,200 Business premises -Electricity $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 2,400 One month rent - Coffee machine servicing $ 21 $ 21 $ 21 $ 21 $ 21 $ 200 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ Internet and WiFi setup 250 - Internet service $ 80 $ 80 $ 80 $ 80 $ 80 $ 80 $ 80 $ 80 $ 80 $ 80 $ Blectricity, gas and water connections. 80 $ 80 $ 960 Insurances - Bank fees $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 10 $ 120 Signage $3,100 $180 $250 $1,500 $350 - Marketing $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 600 - Barista (full time) $ 6,360 $ 6,360 $ 6,360 $ 6,360 $ 6,360 $ 6,360 $ 6,360 $ 6,360 $ 6,360 $ 6,360 $ 6,360 $ 6,360 $ 76,322 Operations Stationery-business cards, brochures $280 Total cash outflows $ 61,358 $ 31,064 $ 30,299 $ 32,469 $ 30,710 $ 32,096 $ 33,138 $ 30,284 $ 31,505 $ 32,001 $ 34,053 $ 32,116 $ 410,915 Stock purchase (initial) $400 Net cash flows Advertising -$24,451 $4,585 $4,066 $5,538 $4,344 $4,983 $5,990 $4,056 $4,884 $5,181 $6,478 $5,298 $30,953 Advertising initial campaign $700 Beginning cash balance $5,000 Ending cash balance -$19,451 -$19,451 -$14,866 -$14,866 -$10,799 -$10,799 -$5,261 -$5,261 -$917 $4,066 $10,057 $14,112 $18,997 $24,178 $30,656 -$917 $4,066 $10,057 $14,112 $18,997 $24,178 $30,656 $35,953 Total start up costs $29,544