Business Financial Plan
Initial Start up Costs
The total startup budget will be inclusive of total overhead costs of an amount that is expected to cover all expenses including; business licenses, office supplies as well as marketing. This is to determine the total amount of start- up capital that the business will require until it is able to create a positive cash flow independently. To break it down as follows:
Business licenses: These include the necessary requirements that the owner of the business needs to provide, sign as well as attach a copy of the following;
Copy of National ID
A certified contract with Saudi Pharmacists by ministry of commerce
A filled out pledge form to ensure the pharmacy does not work in the government sector
A sharia agency in the case of a female applicant
Sketch map of a detailed location of the pharmacy
Telephone number, fax, email, mobile as well as the physical address of the applicant
Office Supplies: These are the requisite equipment needed for the operation of the street pharmacy. These will also be inclusive of any fixed costs needed for the business. They are as follows;
Storage for the drugs; metal or glass shelves
Refrigerators for storing low temperature medicines and drugs
Stands or gondolas provided by cosmetic companies for storage of cosmetic products
Counter with an exclusive cashier
Rent and insurance for the building and all its fixtures and equipment
Inventory and income for the owner: Unless there is surplus money after paying all the business bills, employees or business loans, the owner of the business cannot take any money from the business.
Marketing: This involves the costs of making the public as well as potential or target customers aware of the pharmacy and the products it intends to avail. A breakdown is as follows; Don't use plagiarised sources.Get your custom essay just from $11/page
Business cards with all details such as pharmacy logo and contact for access to the pharmacy
Advertisements
Social and Digital media for example blogs
Participation in sponsorship events such as Diabetes Global Day
Financial Projections: This is a forecast of the expenses that will be incurred in the future as well as revenues that will be generated. They are shown by income statements and balance sheets.
Income Statement
| Net sales | 3’000’000 |
| Revenue from dividends | 0 |
| Revenue from Rent | 0 |
| Total Revenues | 3’000’000 |
| Cost of Goods Sold | 2’400’000 |
| Gross Profit | 600’000 |
| Operating Expenses | |
| Less Expenses | 200’000 |
| Salaries (Salesman, administration, shipping) | 390’000 |
| Utilities | 50’000 |
| Depreciation | 20’000 |
| Total Expenses | 480’000 |
| Net Profit | 120’000 |
Balance Sheet
| Liabilities & Owner Equity (SR) | Assets (SR) | ||||
| Capital | 80’000 | Fixed Assets | 170’000 | ||
| Profit & Loss Balance | 120’000 | Less Depreciation | 120’000 | 100’000 | |
| Profit Made in the year | 20’000 | 100’000 | Accounts Receivable | 150’000 | |
| Add Interest | 7’000 | 145’000 | Less Bad Debt | 8’000 | |
| Wages due | 10’000 | Net Account Receivable | 100’000 | ||
| Less Reserve for Bad | 7’000 | 10’000 | |||
| Closing Stock | 20’000 | ||||
| Prepaid Insurance | 125’000 | ||||
| Total | 255’000 | Total | 255’000 | ||
Breakeven Analysis for Sales
| Analysis of breakeven | |
| Monthly unit breakeven | 0.4 |
| Monthly sales breakeven | 93’750 |
| Assumption | |
| Average unit per revenue | 250’000 |
| Average variable cost for each unit | 150’000 |
| Estimate of fixed costs per month | 37’500 |
Following the analysis, it is evident that a total of 0.4 units must be sold in a month in order to break even and sell at least 93’750 to be able to cover all the costs. To make a profit, more than 0.4 units have to be sold and sales must exceed 92’750.
Assessment of Risks and Rewards
This will be achieved by division of the net profit by the maximum risk. In this case, it will be 150’000/ 50’000 which equals to 3. The risk reward ratio is therefore 1:3, which is an acceptable risk ratio.
Anticipating Financial Returns
This means making measurements in order to make an evaluation on the efficiency of the investment, and is measured by percentage.
Investment Return: (Investment Gain- Investment Cost)
Gain of Investments: Proceeds obtained from the sales of the investment
ROI =(3’000’000- 240’000) /240’000
= 11.5