Assignment 2 Course Project Due Date Assigned Submit

Assignment 2 Course Projectby The Due Date Assigned Submit Your Assi

Describe your business. Explain your expenses. Specify your financial needs for the first year. How will you use the lender’s money to create profit and repay the loan? Use your budget as support for your claims. In your supporting evidence you should include a break-even calculation in dollars to strengthen your repayment plans discussion. Be sure to format your paper and cite any sources using APA style. You may use this APA Citation Helper as a guide. This APA formatting handout will help you set up your essay using APA style.

Prepare an executive summary and a three-page paper, in APA format, selling your business idea to the lending source of your choice. Remember, you need to be both factual and persuasive.

Paper For Above instruction

Starting a new business is an endeavor that requires strategic planning, financial acumen, and a persuasive presentation to secure funding. This paper aims to craft a compelling and comprehensive business proposal tailored to attract potential lenders by emphasizing the business concept, financial needs, and repayment strategy, including a break-even analysis.

Business Description

My proposed enterprise is a specialty coffee shop located in a bustling urban neighborhood. The concept centers around offering high-quality, ethically sourced coffee and related beverages to a diverse customer base. The shop will feature a warm, inviting atmosphere designed to encourage repeat patronage, along with a selection of baked goods and snacks to complement our beverages. The business aims to fill a niche for premium coffee experiences in an area with limited specialty coffee options.

Expenses and Financial Needs

The primary startup expenses include leasing and renovating the storefront, purchasing high-end espresso machines and brewing equipment, initial inventory, marketing, and licensing fees. An estimated total startup cost is $150,000. For the first year, operational expenses projected are approximately $200,000, covering rent, salaries, utilities, supplies, and marketing. To facilitate this growth, I am seeking a loan of $100,000, which will be allocated toward renovations, equipment purchase, and initial working capital to support operations during the initial months.

Use of Funds and Profit Generation

The lender’s funds will be used primarily for renovating the space ($50,000), purchasing equipment ($30,000), and covering initial operational costs ($20,000). By investing in quality equipment and a strategic marketing campaign, the goal is to attract a steady inflow of customers, ensuring consistent revenue streams. The business expects to generate approximately $250,000 in revenue in the first year, with a gross profit margin of around 70%, considering the premium pricing and cost controls.

Break-even Analysis

The break-even point is a critical metric to assess the viability of the business and to ensure the lender’s confidence in repayment. Based on the projected fixed costs of $150,000 annually and a contribution margin of 70%, the break-even sales volume is calculated as follows:

Break-even sales in dollars = Fixed costs / Contribution margin ratio = $150,000 / 0.70 ≈ $214,286.

This calculation indicates that the business must generate at least $214,286 in sales during the first year to cover all fixed and variable costs. Achieving this target is feasible through effective marketing, a strong customer base, and excellent product quality.

Master Budget

The master budget integrates projected revenues, direct costs, fixed expenses, and cash flow considerations. Anticipated monthly revenue will start at $20,000 and grow through customer loyalty programs and marketing efforts, reaching over $25,000 per month by the end of the first year. Expenses are aligned with sales volume, with variable costs around 30%, and fixed costs including rent and salaries totaling approximately $12,500 monthly.

Financial projections demonstrate that, after covering initial expenses, the business will generate sufficient cash flow to service the loan and reinvest in growth. The careful management of costs and strategic marketing will sustain profitability and support loan repayment.

Written Analysis and Conclusion

This business plan combines realistic financial projections, a compelling value proposition, and a clear strategy for growth and repayment. The coffee shop’s focus on quality and community engagement creates a competitive edge, while the detailed break-even and budget analyses reinforce the feasibility of the venture. The requested loan of $100,000 will facilitate the startup and early operational phases, with expected profitability well exceeding the break-even threshold within the first year. This demonstrates not only the potential for business success but also a solid plan to ensure timely loan repayment, making this a credible investment opportunity for the lender.

References

  • Brigham, E. F., & Houston, J. F. (2020). Fundamentals of Financial Management (15th ed.). Cengage Learning.
  • Gartner, W. B. (2017). Entrepreneurial Startups and Growth. Journal of Business Venturing, 32(4), 430–445.
  • Heising, E., & Maslach, C. (2018). Business Planning and Financial Forecasting. Prentice Hall.
  • Kim, W. C., & Mauborgne, R. (2015). Blue Ocean Strategy. Harvard Business Review Press.
  • Ross, S. A., Westerfield, R., Jaffe, J., & Jordan, B. (2019). Corporate Finance (12th ed.). McGraw-Hill Education.
  • Scarborough, N. M. (2020). Essentials of Entrepreneurship and Small Business Management (11th ed.). Pearson.
  • Schindler, R. M. (2021). Business Research Methods. McGraw-Hill Education.
  • Sullivan, D., & Mackenzie, M. (2016). Financial Analysis & Planning: A Guide for Managers. Wiley.
  • Watson, J., & Everett, G. (2018). Making Strategy Work: Effective Execution and Implementation. CRC Press.
  • Zimmerer, T. W., Scarborough, N. M., & Wilson, D. L. (2017). Entrepreneurship: Successfully Launching New Ventures (5th ed.). Pearson.

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