Finance business plan

Type of company?

We are a limited liability company so that we are taxed as an entity not separately, each member of the company is a director earning a salary and is considered as self-employed.

Demonstrating commercial viability

We need to have a strong business idea and a unique selling point to ensure our company can surpass our competitors to be able to make a profit.

STRATEGY

TACTIC

To compete with other companies and create a unique selling point we want to be designing in Virtual Reality, fully immersing ourselves and our clients in the designing process.

To have a unique selling we our carrying out research with Cambridge University to push further our interaction in the virtual world. We will be testing how to bring across sensing into the designing to help, the client understand the atmosphere that we have created for them.

Financially, we have a higher charge rate, so that we have high profits at the end of the year, this will allow us to have money aside for any future Virtual Reality equipment cost that occur as our research and the products develop. This is important as we want to constantly remain up to date in the market sector.

Set up Funding

Due to the high tech that we are using, we will require a high amount of set up funding.

STRATEGY

TACTIC

This will be funded by a bank loan from Santander of £30,000 and we will undergo a research project with Cambridge university which will provide us with £20,000 in funding.

For extra money to help ease our cash flow, our tech specialist Froilan Palacio will be undertaking a module with Cambridge universities architecture department. This is to also help push virtual reality into education.

Each partner will also be contributing £2000 to the business to help cover our outgoings whilst our project incoming is still fairly low.

We require £50,000 to start up our business, this is so that we can afford the initial capital equipment outlay and software subscriptions.

Cash flow

Our cash flow is fairly irregular in the beginning of the year as our business expenses are levelling out and our project income is just starting to come in.

We break even in September as our cash in hand reaches the same amount as our overall out comings.

Due to this factor each director will be given a pay rise of 5% in October and we will be taking on an architecture part one student, accredited by the RIBA. We have set the students wage at £18,000 a year. Each of these factors will cause our national insurance costs to also be increased.

We have a high charge fee so that we receive a high income from our projects, this is to cover our high software and tech costs. This has also given us a high profit at the end of the year which is important in case we incur any new virtual reality software expenses, that we require to keep up to date in the market.

Debts paid off

Bank Loan - We have taken a loan to be paid back over 5 year so we would have given all the money we owe back by 2031.

Owner Contributions - Each owner will be contributing £2000 each to help start up the business. The owners withdrawals will be set at £25 a month up until May, where the owners withdrawals with be increased to £50 in June and then £100 for July, which will be increased by £100 each month. In December, the withdrawal is £325 to pay off the rest of the debt for the year, this is to decrease our debt ready for the next year when we have to pay a lump sum of money again for our software.

recession

Due to our current economic situation, there is a possibility that we could go into a recession.

STRATEGY

We want to start off by approaching commercial companies and then as we develop our technology and virtual reality becomes more accessible, we can focus on more domestic projects, such as new builds.

TACTIC

However, if we go into a recession, we may need to focus on commercial clients that require virtual reality and have a higher income to afford it. This is due to domestic clients being less likely to spend money on a new build project during a recession.

We want to be flexible and broaden our skills

This will be important during a recession to maintain our income when consumer spending declines. This will involve increasing our teaching at the Cambridge university and furthering our research strategy.

We would like to buy an office space within the third year of our business.

We wont be able to risk a large chunk of money going towards offices so we may have to continue renting until the economy is in a more stable position.

Spreadsheet

To see the full outline of our expenses, in comings and cash flow, take a look at our spreadsheet. The break down of each expense and what we have brought has been put into a note attached to each column.