Please find the questions below and find the attached documents, only answer either number 1 or 2 of the provided.

MGMT 5374-

Assignment week 3-

After reviewing the sample pro-forma and reviewing the text on " How to build financials projections for a chosen project"complete one of the following:

1. For the sample excel sheet develop a month-by-month year 2 and year 3 budget with the following considerations:
   1. Consider staffing adjustments for increased customer load
   2. New functionality for business continuation (customer support, IT security, contracting, added office management, etc.)
   3. Show rationale in cell comments and show formulas.
   4. Submit as completed xcel sheet.
2. Take a new business concept, describe the business justification, and develop a year I pro-forma, with startup costs (you can leave out amortization of loan if preferred)

Articles:

How to build nancials projections for a chosen project- TAMUK- MGMT 5374 In healthcare as in all US industries organizational results are built around nancial via bilities. Being a forprofit or a nonprofit does not differ in that aspectNo money, no mission\" is often heard in philanthropic circles. In the current business climate, whether you are asked to develop a business plan, marketing plan, a disaster management plan or a strategic plan, the decision to adopt any of these will be weighed to a great extent against the yield vs. cost benefit. This does not mean that a profit needs to be attained, sometimes a breakeven or even a calculated loss is acceptable to move a project into the implementation stage. Yet, without a financial underpinning, any plan will and should be rejected by a responsible and engaged oversight entity {senior management, board, department head, @313}. Following is a stylized outline of what you need to consider in developing a financial picture. Here, we assume that you are evaluating a new business, a business enhancement, or a replacement services for the business. For convenience we will refer to the chosen option as \"NEWCO\". lnvariably there are two major considerations: 1) what is the cost to start \"NEH/CO\o Recurring costs vs. variable costs 0 Supplies 0 Marketing 8K sales 0 Monthbymonth also called a rampup projection, a critical budgeting item as you will only gradually build customers. During that rampup you need to be sufficiently capitalized so that the venture has a chance to succeed. By ramping up you will get an idea when you attain your breakeven point i.e. when your expenses match the myou bring in. Monthly net btealceven. point look at required volume to cover your expenses. Make sure that 3% account for \"bmdenLcosts. such as taxes. Aggregated breakeven point. This is the point where you generate a bottom line that has included the monthly losses you incurred during the startup. EBITDA {Earnings before Interest, Taxes, Depreciations and Amortization)_':i.is is your financial measure {profit, earnings\" before accounting for interest, taxes, depreciation and amortization expense. This is typically the terrain of your accountant, who can be creative with these line items, but will be needed when you intend to attract outside investors. Nonprof it vs Forprofit tax impactf Non-profit Buslrlen: reporting; corporate Still Ct" i'e-_BDIJJ. Ch oose a legal structure: Tiiere are various legal structures available for types Of busmesses are designed to offset non-profit organizations, including charitable trusts, corporations, and expenses with matching revenues, so non \"\"'nm'pa'm" \"550mm\" . . . . Choose a legal structure that aligns With your organization's rnissian profits are sometimes inappropriately and goais. perceived as having unlimited fl.| nding incorporate your organization: if you choose toforrn a corporation, you Will need to file articles of incorporation With your state's Secretary of 50" l'CES. some exemptions that non State. This establishes your organization as a legal entity. profits have is that they do not pay taxes Obtain tax-exempt status: To qualify as a non-profit organization, you _ _ _ Will need to apply for tax-exempt status with the internal Revenue 0" Prots, bUt COHVE rselv are llmlted to Service HRS) byfiling Form 1023 or 1023-EZ. This will require providing what they can do With any profits The-v detaiiea' information about your organization's purpose, structure, _ finances, and activities. Still pay FICA and 55 taxes. At the same Develop governing documents: Non-profit organizations typicallyr have time, n0n_prot5 come in different byiaws that establish now the organization will be run and a mission . . . statement that outlines the organization's purpose. Incorporation Struaures' 0f WhICh the 501 Obtain necessary licenses and permits: Depending on the type of [C] [3] l5 the most frequently occurring. A activities your organization pians to wyou rnay neea' to obtain . . . aaaiti'anal licenses and errnits ron'i local or state authorities. business has to qualify as a nonprofit by p I the IRS. To do so: Actual vs. budget need for outeryear budget planning. Accrued vs. direct revenues. This exercise will be critical once you are established and it will assist you in budgeting in future years. Whatif scenarios or 10% upanddown sides. When you prepare a budget you want to know the impact if your estimates do not realize; you will encounter many reasons for that. When you build your budget{excel is a perfect vehicle] you want to build in functions that allow you for such scenarios {i.e. what if your customer base grows slower, your staffing model is different from expected, you left out a major business driver, etc.) Building reserves. Once you get to your aggregated breakeven and start to generate net profits, you will look at paying incentives, bonuses to maintain team enthusiasm and retain staff who may have been under compensated to get through the start up. For forward budgeting a line expense item should be added for monthly reserve building for future expansion, R&D, etc. MGMT 5374 budgeting Page | 2 Wis uniquely sLLi.teto help you make upfront business decisions as you embark on a business venture. Even with a basic understanding ofthis tool, you can easily assess pricing considerations, staffing costs, fixed and variable cost items and other components. This platform lets you copy cells and formulas between worksheets, as well as replicate cell functions across columns. By understanding the elemental functions in the sample proforma and obtaining some experience, you will be able to use this tool for multiple functions in your career. month 1 month 2 month 3 month 4 month 5 month 6 month 8 month 9 month 10 month 11 month 12 200 225 225 250 275 300 320 330 200 347 541 756 964 1192 1433 1702 1979 2253 2543 10 16 23 29 36 43 51 59 63 $ 1,600 $ 3,152' $ 5,456' 3 3,439' $ 11,330' $ 15,067' $ 13,604' $ 22,432' $ 26,542' 3 30,345' $ 35,175' $ 39,691' $ 625 $ 625 $ 625 $ 625 $ 625 $ 625 $ 625 $ 625 $ 625 $ 625 $ 625 $ 625 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,5007 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 4,417 $ 4,417 $ 4,417 $ 4,417 $ 4,417 $ 4,417 $ 4,417 $ 4,417 $ 4,417 $ 4,417 $ 4,417 $ 4,417 $ 1,667 $ 1,667 $ 1,667 $ 1,667 $ 1,667 $ 1,667 $ 1,667 $ 1,667 $ 1,667 $ 1,667 $ 1,667 $ 1,667 $ 1,533 $ 1,533 $ 1,533 $ 1,533 $ 1,533 $ 1,533 $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 3,167 $ 91500 $915 $915 $915 $915 $915 $1,053 $1,053 I $1,053 II $1,053 $1,053 $1,053 5 1,100 $ 1,100 $ 1,100 $ 1,100 $ 1,100 $ 1,100 $ 1,100 $ 1,100 $ 1,100 $ 1,100 $ 1,100 $ 1,100 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 300 s 300 $ 300 $ 300 $ 300 $ 300 $2,133 $2,133 $2,133 $2,133 $2,133 $2,133 $2,133 $2,133 $2,133 $2,133 $2,133 $2,133 5 17,295 $ 16,495 5 17,295 5 16,495 $ 17,295 $ 16,495 5 19,020 5 18,220 5 19,020 5 18,220 $ 19,020 5 18,220 $ (15,695) 3 (13,343) S (11,339) $ (3,005) 3 (5,465) $ (1,423) $ (416) S 4,212' $ 7,522 3 12,625 $ 16,155 $ 21,471 $ (15,695) 3 (29,037) S (40,376) $ (43,331) 3 (54,346) $ (55,774) $ (56,190) $ (51,973) $ (44,457) $ (31,332) $ (15,677) $ 5,794' (64,495) $ (77,337) (39,676) $ (97,631) (103,146) $ (104,574) $ (104,990) $ (100,773) $ (93,257) $ (30,632) (64,477) sample proforma 6\" technology license purchase licenseannual 1 5 10,000 1 5 10,000 Project manager ' hours/month 20 S 25 6 5 3,000 development hours senior analyst hours/month 80 S 75 6 5 36,000 development hours analyst hours/month 80 S 50 6 5 24,000 testing hours/month 40 S 35 2 5 2,800 training development hours/month 80 S 75 2 5 12,000 marketing development & presale (100 users) hours/month 40 S 75 2 5 5,000 marketing materials design/print 1 5 5,000 1 5 5,000 Total cost 5 98,800 Note: annual technolo a license fee: Bankloan B6 X V fx A B C D E F G H 1 Loan repayment 2 Annual Interest Rate 4.75% 3 Years 4 Payments per year 12 5 Amount $ 50,000 16 8 Payment Number Payment Principal Interest Balance 19 1 ($2,187.98) ($1,990.06) ($197.92) $48,009.94 10 2 ($2,187.98) ($1,997.94) ($190.04) $45,821.97 11 3 ($2,187.98) ($2,005.84) ($182.13) $43,633.99 12 4 ($2,187.98) ($2,013.78) ($174.19) $41,446.01 13 5 ($2,187.98) ($2,021.76) ($166.22) $39,258.04 14 6 ($2,187.98) ($2,029.76) ($158.22) $37,070.06 15 7 ($2,187.98) ($2,037.79) ($150.18) $34,882.09 16 8 ($2,187.98) ($2,045.86) ($142.12) $32,694.11 17 9 ($2,187.98) ($2,053.96) ($134.02) $30,506.14 18 10 ($2,187.98) ($2,062.09) ($125.89) $28,318.16 19 11 ($2,187.98) ($2,070.25) ($117.73) $26,130.18 20 12 ($2,187.98) ($2,078.45) ($109.53) $23,942.21 21 13 ($2,187.98) ($2,086.67) ($101.30) $21,754.23 22 14 ($2,187.98) ($2,094.93) ($93.04) $19,566.26 23 15 ($2,187.98) ($2,103.22) ($84.75) $17,378.28 24 16 ($2,187.98) ($2,111.55) ($76.43) $15,190.31 25 17 ($2,187.98) ($2,119.91) ($68.07) $13,002.33 26 18 ($2,187.98) ($2,128.30) ($59.68) $10,814.35 27 19 ($2,187.98) ($2,136.72) ($51.25) $8,626.38 28 20 ($2,187.98) ($2,145.18) ($42.79) $6,438.40 29 21 ($2,187.98) ($2,153.67) ($34.30) $4,250.43 30 22 ($2,187.98) ($2,162.20) ($25.78) $2,062.45 31 23 ($2,187.98) ($2,170.76) ($17.22) ($125.53) 32 24 ($2,187.98) ($2,179.35) ($8.63) ($2,313.50) 33 34 35