The students are required to write a business finance plan for their business idea as guided below. The plan should cover the following:

MY business is an Auto Repair shop with Spares Outlet

1. EXECUTIVE SUMMARY (10)

2. MISSION AND CULTURE: YOUR DREAMS FOR THE ORGANIZATION (10)

· Vision, Mission, Values, Goals, and Culture

3. COMPANY DESCRIPTION/BACKGROUND AND TRACK RECORD (20)

· Company description/history

· Products and services

· Current status

· Legal status and ownership

· Key partnerships (if any)

· A prototype of your firm’s website address, customer profile (who are your customers)

4. THE ECONOMICS OF THE BUSINESS (weighted = 60)

a) Perform a Mini Financial Feasibility For Your Business (20)

- Initial Capitalisation – breakdown total start up cash needed/ initial financial requirements (e.g. working capital (5) and capital expenditure (5),

- Amount of capital invested/to be invested –provide a breakdown (5)

- Existing alternatives for money being invested - provide a breakdown (5)

- Existing alternative for entrepreneurs’ time and efforts – three to four line paragraph (5)

b) Develop Financial Assumptions (10)

o Estimate New Product/Service Demand

o Estimate Revenues, Expenses and Other Start-up Costs

c) Prepare Financing Plan (indicate clearly which Financial Instruments your business will use or is already using, the amounts and the assets financed by each)- debt, equity, grants, bootstrapping, own savings, friends, family, commercial banks, Youth Development Fund (YDF), Departments of Women Affairs, CEDA, NDB, etc.). (10)

d) Develop Detailed Financial Forecasts/ Pro-Forma Financial Statements (for years 1 up to 5). Statements should form part of the report and not be included in the Appendices. (30)

- Income Statement Projections

- Cash Flow Projections

- Balance Sheet Projections

e) Ratio Analysis

Using your Pro Forma Financial Statements, calculate the at least TWO (2) of the following Ratios and discuss their effects on the business financial affairs. For example, “the solvency ratios (debt to equity and times interest) shows high financial risk - most of the business assets are financed by debt”, meaning it will be difficult to convince the investors, especially the commercial banks to provide more debt money to the business. (30)

- Profitability ratios

- Activity ratios

- Liquidity ratios

- Financing/Solvency ratios

- Growth ratios

f) Cash Budget/Cash Flow Projections (20)

- Using the Accrual Accounting Method, develop Cash Budget/Cash Flow Projections for your business. Link the cash flow to income statement.

g) Use DCF Model (basing on your cash flow projections in Item F above) to calculate the following: (10)

- Future Value

- Net Present Value (NPV)

- Internal Rate of Return (IRR)

h) Identify Strategies For Your Business Cash Flow Management (10)

i) Using the Break Even and Ratios and DCF Model results, analyse your business overall financial attractiveness - amount of capital invested, opportunity cost for the capital invested/the existing alternatives for money being invested, the expected financial returns, Internal Rate of Return (IRR) Net Present Value (NPV), Enterprise Intrinsic Value, Enterprise Market Value, etc.). (15)

j) Identify And Discuss The Financial Risks Assumed In Launching The Business And Discuss How The Risks Will Be Mitigated (15)

k) Exit Strategy (10)

Discuss your exit strategies and milestones (at least half a page). State why you chose these strategies.

- Exit Plan – ESOP, IPO, etc.

- Milestones

l) Appendices (20)

· Resumes

· Sample Promotional Materials

· Product Illustrations/Diagrams

· Organogram

· Pro Forma Financial Statements