Budgeting and Business forecasting
N278buS Course Project OverviewThis is an individual project where you’ll be acting as a consultant to an entrepreneur who wants to start a new business. As the consultant, you’ll create a 5 year budget that supports the entrepreneur’s vision and strategy and needs for equipment labor and other startup costs. You can choose from one of three types of new business startups — a landscaping company, a restaurant, or an electronics store that sells portable computing devices. Each business has its own Business Profile detailed in the below sections. The purpose of the Business Profile is to guide you in understanding the scope of the business, the entrepreneur’s startup costs, and financial assumptions.The project requires you to create a written budget proposal, a supporting Excel Workbook showing your calculations, as well as a PowerPoint presentation summarizing the key elements of the budget proposal, which you assume will be presented to a management team.This is an individual project. Each week you will complete a section of the project in draft form. In Week 7, you will submit the Final version of the project’s Budget Proposal, Budget Workbook. In Week 8 you will present and defend your budget.Deliverables Schedule / PointsWeekDeliverablePointsDraft Sections1Section 1.0 Executive Summary 102Section 2.0: Sales forecast 103Section 3.0 : Capital Expenditure Budget 104Section 4.0 Investment Analysis 105Sections 5.1 and 5.2: Pro Forma Income Statement and Balance Sheet 106Section 5.3 Pro Forma Cash Flow statements 10Final Deliverables7Final Budget Proposal1508Final Presentation w/ PowerPoint60Total project points 270
Page 2 of 9BUSN278 Course Project Description.docxBusiness Profile: Papa Geo’s RestaurantVisionThe vision of the entrepreneur is to create a single-location, sit-down Italian restaurant called Papa Geo’s. The goal is to generate an income of $40,000 per year, starting sometime in the second year of operation, as wells as profit that is at least 2% of sales.Strategya) Market Focus/AnalysisThe restaurant targets middle to lower-middle class families with children as well as adults and seniors, located in Orlando, Florida. The area within 15 minutes of the store has 10,000 families, mostly from lower to middle class neighborhoods. Average family size is 4 people per household. There is no direct competition; however, there are fast food restaurants like McDonald’s, Taco Bell and Wendy’s in the geographical target market. The lower-to middle class population is growing at about 6% per year over the next five years in this area. b) ProductThe product is Italian food served buffet style, in an all-you-can-eat format, with a salad bar, pizza, several different types of pasta with three or four types of sauces, soup, desserts and self-serve soda bar. The restaurant is also to have a 500 square foot games area which has game machines that children would be interested in using.c) Basis of CompetitionCustomers come to come to this restaurant because of the good Italian food at a low price – where you can get a meal for $7 including drinks. Customers also eat at Papa Geo’s due to the cleanliness of the facility, the speed of getting their seat and food, as well as the vending machines which keep the children busy while adults enjoy their meal.Startup Requirements*Given CostsThe cost of registering a Limited Liability Company in Florida, filing fees listed at the bottom of the application form located at http://form.sunbiz.org/pdf/cr2e047.pdfRenovation of the facility expected to cost $15000Business Insurance, estimated at $1000 per yearHealth and other benefits are 20% of the salaries of the manager and assistant manager
.Page 3 of 9BUSN278 Course Project Description.docxCosts you should estimate through research, experience or other methodsï‚·Soda Fountain Barï‚·2 Pizza Ovensï‚·Salad and Pizza/Dessert Barï‚·Approximately 100 square foot commercial refrigeratorï‚·2 cash registersï‚·6 Video Game vending machinesï‚·Average of 6 staff members at any given timeï‚·Management Office with desk, lower-priced laptop computerï‚·Staff lunchroom equipment such as microwave, sink, cupboards and refrigeratorï‚·20 four-seater tables with chairsï‚·Busing cart for transporting dirty dishes from the dining area to the dishwashing areaï‚·140 sets of dishes, cutlery and drinking cupsï‚·Commercial Dishwasherï‚·Miscellaneous cooking and food handling equipment like trays, lifters, spoons, pots etceteraï‚·The cost of an average of 7 employees on the payroll. ï‚·All operating costs, such as advertising, rent for a 3500 square foot facility with male and female washrooms, already installed, utilities, maintenance, and annual depreciation.*if you have questions about startup requirements, or think other startup costs are necessary for the business are missing, then make an assumption and state it in the relevant section of the report.Given Financial Assumptions*ï‚·The owner will be granted a loan for the initial startup, repayable over 10 years at current interest rates for small business loansï‚·The owner will use personal funds to operate the business until it generates enough cash flow to fund itself.
Page 4 of 9BUSN278 Course Project Description.docxï‚·Essentially, all sales are made by credit card. All credit card sales are a paid to the restaurant daily by the credit card companyï‚·2.5% of sales is paid to a credit card company in feesï‚·Food suppliers give 30 days of trade creditï‚·Inventories are expected to be approximately 10% of the following month’s salesï‚·The average meal costs $4.00 in materials and labor.ï‚·The average family spends $4.00 on vending machine tokensï‚·Equipment is depreciated on a straight-line basis over 5 yearsï‚·Managers have health benefits, other workers do not.The company will operate from 10:00 am to 9 pm, 7 days a week.ï‚·The entrepreneur will manage the store and draw a salary.ï‚·Every shift has one person on the cash register, one keeping the food bars stocked with food, and one on busing and table cleaning, a manager and assistant manager. *If you believe any other assumptions are necessary, then please state them in your budget proposa
