Pizzamor pizza shop

You are required to produce a costed business plan for a new business launch.  The plan can, within reason, be based upon any area of business activity.  The business plan must contain the following key elements:

 

  1. A summary of the business idea, an analysis of the risks that the business will face and the source(s) of initial funding for the business.
  2. An outline and discussion of the key fixed and variable costs.
  3. A budgeted profit forecast for the first year of operation.
  4. A budgeted cash flow for the first year of operation.
  5. Calculation of the breakeven point and margin of safety.
  6. Key performance indicators (KPIs) to monitor progress towards business goals.
  7. Recommendations based on the results of your analysis above.

 

It is important that you do some research before identifying and quantifying sales and cost volumes; this could be based upon internet based research or your own knowledge of a particular business sector.  It is likely that you might have to make some assumptions with regard to some of the revenue and cost items and these should be clearly explained in your plan.

 

 

Assessment criteria

Refer to the marking criteria table for detail.

 

  1. Clear and succinct summary of the business idea.

 

  1. Outline and discussion of the main fixed and variable costs.

 

  1. A clearly presented and reasoned profit forecast and cash flow.

 

  1. A clearly presented breakeven point and margin of safety calculation.

 

  1. Clearly presented Key performance measures.
  2. Clearly presented recommendations.
  3. Presentation including spelling and grammar; clarity and layout of the report.

 

Summary of the business idea (1):

Your objective here is to ensure that the reader is clear as to: what industry the business plan sits in and the nature of the business idea/start up.  You can also identify the nature of the competition and the key success factors needed in the industry. The style should be succinct and crisp.

 

Outline and discussion of fixed and variable costs (2):

You should firstly identify and then quantify the main costs that your business idea will incur. You should try to ensure these are as accurate and realistic as possible, e.g., by referring to cost sources etc.  If you are making assumptions regarding the costs, these will need to be clearly stated.  You should divide this section into fixed and variable costs.  The section should conclude with a discussion on the costs identified: which ones are the highest? How volatile are they, etc.

 

Profit and cash forecast (3 and 4):

These should be clearly outlined in tabular format.  You might find it easier to construct both tables in excel and then cut and paste them into your report. You must annotate the forecast to indicate any assumptions made including the source(s) of finance for your business.

 

Breakeven Point and Margin of Safety (5):

Both calculations should be clearly set out with annotations to show the origin of the component items.  This section should conclude with some considered comments on each calculation. Is the breakeven point high or low? What risks are faced by the business as a result of the calculations? Is the margin of safety high or low etc.?

 

Key Performance Indicators (6):

Performance indicators should be specific to the business.  You should explain why you have chosen each KPI and how it could be measured.

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