BUSINESS PLAN 1 Essay Example

  • Category:
    Business
  • Document type:
    Case Study
  • Level:
    Undergraduate
  • Page:
    2
  • Words:
    931

Business Plan for Electric Bicycle Manufactures Limited

Students Name:

Business Plan for Electric Bicycle Manufactures Limited

Before commencing on any business, entrepreneurs prepare a business plan that guides them in accomplishing the main objective of making profits. A business plan helps in giving direction on what the entrepreneur is expected to implement (Mutel, 2010). In this case, we are going to prepare a business plan for a new product in the market. The electric bicycle business will aim at manufacturing and sell electric bicycles to people in the region. The business was developed as an idea that there is a gap in the market whereby the demand for bicycles in increasing and hence the new product will attract more customers. In the business plan below, we shall look at the market analysis and the strategies to venture into the new market. The profit and loss account, the balance sheet, SWOT analysis, Gantt chart and cash flow statement reflect the financial aspect in the business plan.

Market Analysis

A research was conducted and a gap was identified, this compelled the initiative to manufacture and supply electric bicycles. Our target market is students who enjoy going to school while riding, also the fact that it is summer season, there is high demand for bicycles. Therefore, the business is expected to thrive with the existing gap and market demand. The strategies to ensure that the business thrives involve;

  • Segmentation of the product to fit customer preference

  • Manufacturing bicycles that are fit for physically challenged people

  • Ensuring that the supply of bicycles is constant

  • The prices will be favorable especially for the summer season where the demand is high.

The current size of the business has its current turnover of $250,000 since the business is at its starting point; the number of employees is three. The business is expected to grow and hence there is a need to estimate the amount of money allocated to every activity for the purpose of predicting the financial situation of the business in the next two years.

Annual Profit and Loss Account

profit and loss

Year 1 ($)

Year 2($)

Projected sales

Direct sales

Other costs of sales

0

0

Totals sales

Gross margin

Gross margin

Expenses

Marketing/promotion

Depreciation

Vehicle expenses

Credit card

Office supplies

security

Telephone

Accounting costs

Utilities

Insurance

Payroll taxes

0

0

0

0

Total operating expenses

Balance sheet

Year 1($)

Year 2($)

Current assets; cash

Other current asset

Total current assets

Long term assets

Accumulated depreciation

Total long term assets

(-44,000)

Total assets

Liabilities

Current liabilities; accounts payable

Current borrowing

0

0

Other current liabilities

0

0

Total current liabilities

Long term liabilities

Total liabilities

Paid in capital

Retained earnings

(60,000)

(54,550)

earnings

Total capital

Total liabilities and capital

Net worth

Break Even Analysis

Break-even analysis for the business is the point at which revenue exceeds the cost of production. In this case, the business should have been able to make its first profit. For the case of Electric bicycle business, the breakeven point should be realized by the sixth month from the inception of the business. The cost analysis below shows the breakeven point of the business in the projected six months. The figures are presented in monthly revenue break even, average percentage variable cost and estimated monthly fixed cost.

Break-even analysis

Monthly revenue Break-even

Average percent variable cost

Estimated monthly fixed cost

SWOT Analysis

SWOT analysis is important for any business as it highlights on areas that the business needs to focus on in terms of strengths and weaknesses. The SWOT analysis of electric bicycle business is stated for the purpose of making appropriate strategies in making more profits and attaining a competitive advantage. It is important to consider the internal and external factors that could impact on the business.

Strengths

Weakness

Existing market gap on electric bicycles

Competition from renown bicycle manufacturers

Favorable environment for business

High cost of raw materials

Unique design of the product

High demand for bicycles

Skilled employees in manufacturing

Effective marketing strategy

Opportunities

Demand for physically challenged designed bicycles

Strong relationship between competitors and targeted retailers

The season is summer favorable for business

Use of internet in marketing

Gantt Chart

A Gantt chart is a table that indicates the sequence of activities that should be accomplished within a specific time. It is a guide to everyday activity in any business. It is developed by using the strategies and the implementation program.

activity

Preparing budget

Assembling all the manufacturing materials

Reporting of employees and orientation

Manufacturing of the bicycles

Producing the first batch of bicycles

Marketing

Supply of bicycles to retail shops

Cash Flow Forecast

Cash flow forecast determines the amount of money that flows in and out of the business. It is important to prepare a cash flow projection for the bicycle business for the purpose of making an appropriate decision on resource and finance allocation.

Cash received

Cash from operations

Cash sales

Total cash from operations

Additional cash received

Sales tax, VAT, received

0

0

Current borrowing

0

0

New liabilities

0

0

New long-term liabilities

0

0

Sales of current assets

0

0

Sales from new long-term assets

0

0

New investment received

0

0

Total cash received

expenditures

Operations expenditure

Cash spent

Payment of bills

Total spending on operations

Additional spending on cash

Sales, tax, vat paid out

0

0

Repaying current borrowing

0

0

Repayment of liabilities

0

0

Repayment of long-term liabilities

0

Current assets purchase

0

0

Long term assets purchase

0

dividends

0

0

Total cash spent

Net cash flow

Reference

Mutel, D. 2010. Business plan. Orchamps: Atelier Didier Mutel.