Essay - Business Plan Financials 8a) There are Several Critical Risks that...

Business Plan Financials

8a) There are several critical risks that could compromise our ability to achieve our projected financial results. The first is customer reception to our product/service offering. The Custom Snowboards value proposition is unique. *****re ***** few if any direct competitors. Therefore the exact size of the potential market is unknown. We believe we have a strategy that will deliver on our objectives, but there ***** no way to know for certain until ***** launch the business. Customer reception will impact both ***** amount of boards we expect to sell, and the price point at which we ***** be able to sell *****m.

Another ***** risk is with respect to cost control. With our own personal experience we believe ***** feel comfort***** about our cost projections. However, as a startup firm we will have little buying power relative ***** the industry's key suppliers. Increases in factor goods, including those related to the highly volatile price of fuel, can have a signifi*****t imp*****ct on ***** margins.

***** third critical ***** is ***** respect to our ability to get the retail side ***** our business online quickly. Although we intend to start Custom ***** with ample capital to survive ***** ***** couple of seasons, we are counting on the retail outlet ***** support the company while profits from ***** board business ***** plowed back into the business so ***** we may achieve ***** growth required to secure the long term future of ***** company. The retail market is saturated in many re*****rts, ***** makes location selection ***** critical importance. Additionally, the ***** bus*****ess ***** seasonal, which means that ***** have a shorter time frame in which to build ***** market. Inability to generate profits almost immediately ***** the retail side will impact our ability ***** grow on the ***** *****, as we will ********** be supporting the store with the board sales. Our plan *****s the opposite.

*****) Assumptions to Income Statement.

***** assumed seasonality of retail/servicing revenues and calculated them on a per day basis around off/*****/front shoulder/***** shoulder *****. We ***** cus*****m board revenue will average over the year. Cost of goods sold was assumed to be 50% of revenue. We feel this is conservative, since ***** servicing side of the o*****ation is typically greater than that. Rent will increase in the second and third years as ***** take on industrial space ***** expand our manufacturing cap*****. Salaries are based on ***** salaries that vary by season and manufacturing salaries. They were calculated on the ***** of man-hours. The manufacturing salaries scale up with our producti*****.

General administration was assumed to be 5% of revenue. We ***** ***** $200,000 worth ***** equipment would ***** required for *****. This amount of ***** will be able to meet our needs ***** the first three ***** of operations. It was paid for ***** a loan, assumed to be 8% per year. Depreciation expense was ***** on 7-year MACRS. The tax rate was assumed ***** be 25% in the years ***** *****