Cost benefit analysis

Initial investment
Kitchen appliances-freezer, cooking stove, knives, silverware, pot and utensils,
cutting board, water filter and kitchen equipment’s
Rs. 1,01,000
Packaging equipments-vacuum sealer, printer
Rs. 26700
Delivery vehicles-bikes
Rs.1,50,000

Running cost

Inventory-Vegetables (every three days)-Rs.2000

Spices (monthly)-Rs.1500
Packaging material (yearly)-Rs.20000
Total = (2000*10) + 1500+(20000/12) = Rs. 23,166 per Month
Employees-
accountant salary- 40,000
web developer salary-20,000
delivery person salary-15,000,
lawyer salary-20,000
Total - Rs. 95,000
Other costs- gas cylinder, rent, stationery, electricity, server
Rs. 27,000
Total cost – Rs. 1,20,866
 Fixed assets Estimated price
Company Registration 15,000
Tax registration 8,000
Website setup(purchase of 50,000
domain, website design)
Initial investment 2,77,700
Total 3,50,700

Operating expenses Estimated cost

salary 95,000
Website maintenance and development 12,000
Shipping and return (delivery service 10,000
charges)
Running cost 1,20,866
Marketing 15,000
Total (Monthly) 2,52,866

The above expenses is calculated keeping the following in mind

 There are only 10 employees as the business is going to follow work from
home module, 2 for managing, 1 for admin, 2 for marketing, 1 for website
development, 1 for overall accounting and other 3 for delivery.
 Helpline expense is included under the salary
 The seller will himself send the product via allotted delivery system

Growth rate-
We are expecting to grow at a rate of 20% per month

Benefit (Cash Inflow)

 We have assumed a ratio of 3:2:1 for our 3 category of boxes priced at RS.150,
Rs. 350, Rs. 500. Using Weighted Average, Average unit price comes out to be
Rs.275
We have target to sell 100 boxes in our first month growing at a rate of roughly 20% per
month

Month No. of Boxes Total Cost till Total Revenue Net Profit /
sold till that that month = till that month = Loss
month Fixed Cost + Total No of
Recurring Cost x Boxes Sold x
No. of Months Average price
per box
1 100 603566 27500 -576066
2 220 856432 60500 -795932
3 370 1109298 101750 -1007548
4 550 1362164 151250 -1210914
5 770 1615030 211750 -1403280
10 1350 2879360 778250 -2101110
15 2820 4143690 2219250 -1924440
19 5900 5155154 4842750 -312404
20 9600 5408020 5860250 452230
21 14040 5660886 7081250 1420364
22 19370 5913752 8546450 2632698

From the above data it can be clearly seen that we will be net positive in the 20 th month

Day No. of Boxes Total Cost till Total Revenue Net Profit /
sold till that that month = till that month = Loss
month Fixed Cost + Total No of
Recurring Cost x Boxes Sold x
No. of Months Average price
per box
Last day of 17610 5155154 4842750 -312404
previous month
1 17734 5163584 4876850 -286734
2 17858 5172014 4910950 -261064
3 17982 5180444 4945050 -235394
4 18106 5188874 4979150 -209724
5 18230 5197304 5013250 -184054
10 18850 5239454 5183750 -55704
11 18974 5247884 5217850 -30034
12 19098 5256314 5251950 -4364
13 19222 5264744 5286050 21306
14 19346 5273174 5320150 46976
15 19470 5281604 5354250 72646

From the above data we can see that we will be net positive on 13th day of 20th month of
operation.
We will start generatinga profit the day our revenue = no. of boxes in that month x unit
price is greater than the recurring cost of that month
Or
No of boxes needed to be sold to generate a profit = recurring cost / unit price =
252866/275 = 920 boxes approximately. From our forecast we will cross that mark in 13 th
month hence from 13th month onward we would be cash flow positive.