- Develop a budget that captures all the non-recurring (one-time / capital) expenses to get your venture up and running.
Many of these costs will be recurring, but are also necessary when initially starting out the business. The major non-recurring expense is a food processor.
2. Develop pessimistic, optimistic, and realistic sales projections for your venture over three years (at six month intervals).
The values represent how many 1 kg bags of bio pellets will be sold.
3. Develop a detailed income statement for your venture for three years (at six month intervals). Explicitly state the assumptions that underlie your financial model.
This model assumes that we will not have our business up and running until the middle or end of 2025. We are also assuming that we will be able to sell the bio pellets in batches of 1 kg. We do not yet know what quantity of bio pellets our customers will want to purchase. It may be difficult to make more income if we have to sell them in batches of less than 1 kg because we will need to make more sales just to meet the same revenue. The main factor that adds variability here is that we do not have an exact formula for our bio pellet yet. We had to just estimate how much of each ingredient is added. Our final income statement will end up being a lot different based on what our bio pellet consists of.
4. If you are a B2B venture, develop realistic sales projections and an income statement for your customers. Determine the ROI period and the net profit.
This is the sales projection of a restaurant that sells about 5 dollar dishes using our biodegradable packaging.
The net profit of a restaurant using our biodegradable packaging after 3 years is $8,800. This means that there is an 8.54% return on investment.