Compilation of Financial Plan for Micro and Small Business Enterprises

SWEET SPOT MINI DONUT Financial Plan

& Investment Plan Proposal for year 2023 & 2024

A proposed Financial Plan presented to

College of Business and Accountancy
City of Malabon University

In Partial Fulfillment of the Requirements for the Degree of

Bachelor of Science in Business Administration
Major in Financial Management

Members:
De Guzman Catherine
Falceso Mayzel
Lada, Marian
Mararac, Lawrence
Peteza, Ricky Mae S.
Pena, Aljay Mark
Royeras, Christian

BSBA FM 4A
2023

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 Table of Contents

Start-up date.....................................................................…………...................................3

Projected Annual Sales....................................................................…………...................3

Total Project Cost..............................................................................................……...…..4

Financial Plan & Loan requirements……………………………………...….…………. 5

Loan Repayment Schedule...............................................................................…………..6

Security For Loan............................................................................................…………...9

Profit & Loss Statement................................................................................…………… 10

Cash Flow Statement........................................................................................…………. 11

Executive Summary …….................................................................................…………. 12

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1. START-UP DATE

● This financial plan provides future financial estimates from January 2024 onward,

outlining expected revenues, expenses, and cash flow for the business. These

projections, based on historical data and market analysis, guide decision-making and

resource allocation to achieve financial goals over the specified period.

2. PROJECT ANNUAL SALES

● This table shows the sales forecast per piece, per box, and assorted flavor of Sweet

Spot Mini Donut F.Y 2024-2026.

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4.1 TOTAL PROJECT COST

● This table shows the following information about the total project cost

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4.2 FINANCIAL PLAN AND LOAN REQUIREMENTS

The projected financial breakdown for Sweet Spot Mini Donut outlines the expected

expenses across different categories.

● Working Capital: This includes the monthly and annual estimates required for day-to-

day operations, covering raw materials, rent, utilities, labor, and other ongoing

expenses, totaling around PHP 146,264 monthly and PHP 1,755,168 annually.

● Property & Equipment: Anticipated costs for setting up and maintaining the business

infrastructure, encompassing production and office equipment, maintenance, and

depreciation, amount to approximately PHP 165,230 monthly and PHP 1,986,954.6

annually.

● Pre - Operating Expenses: These initial costs for permits, clearances, and promotional

activities come to about PHP 12,500 monthly and PHP 150,000 annually.

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 ● Total Project Cost: The overall cost projection sums up to PHP 323,994 monthly and

PHP 3,892,122 annually. This breakdown offers a clear view of the financial

necessities essential for launching and running Sweet Spot Mini Donut effectively.

4.3 LOAN REPAYMENT SCHEDULE

● In support of their business operations, they've secured a principal loan amounting to

PHP 300,000. This infusion of financial support is critical for sustaining their growth

trajectory, covering essential operational expenses, and fostering enhanced efficiency

within their business ecosystem.

● The net proceeds from this loan stand at PHP 295,000, after deducting associated fees.

This transparent breakdown ensures clarity regarding the available capital earmarked

for immediate utilization within their business processes. This precise delineation aids

in informed decision-making and strategic financial planning. With a duration of 12

months, the loan term provides a structured timeline for repayment. This aligns with

their financial strategies, allowing ample time for capital utilization while adhering to

a well-defined repayment schedule.

● Repayment of the loan will follow a systematic and manageable monthly installment

plan. This approach facilitates structured repayments, enabling them to honor their

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 financial commitments without straining operational cash flow. Consistency in

monthly payments ensures a disciplined approach to meeting financial obligations.

● The interest rate, set at 9% per annum in accordance with Security Bank's lending

policy, offers a competitive rate beneficial to their financial stability. This rate ensures

a reasonable cost of borrowing, allowing access to necessary funds for growth

initiatives while effectively managing the cost of capital.

● The table represents a payment schedule for a PHP 300,000 loan with a 9% interest

rate, payable in 12 equal installments over 12 months. Here's how each column is

computed: Principal:

● Each month, an equal portion of the principal is repaid. Since the loan is for PHP

300,000 and payable in 12 months, the principal payment per month is PHP 300,000 /

12 = PHP 25,000.

● Interest:

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● The interest for each month is calculated based on the remaining outstanding balance

at the beginning of the month and the annual interest rate. The formula used to

compute monthly interest is:

● Monthly Interest = Remaining Loan Balance * Monthly Interest Rate

● Monthly Interest Rate = (Annual Interest Rate) / 12 months

● For example, in the first month:

● Remaining Loan Balance (at the start) = PHP 300,000

● Monthly Interest Rate = 9% per annul / 12 months = 0.75% per month

● Monthly Interest = PHP 300,000 * 0.0075 = PHP 2,250

● The interest decreases each month as the outstanding balance reduces.

● Total Amortization:

● This column shows the sum of the Principal and Interest for each month, representing

the total payment due for that specific period. It's the amount the borrower needs to

pay monthly, combining both the repayment of the principal and the interest accrued

on the outstanding balance.

● Loan Balance:

● The outstanding balance after each payment is calculated by subtracting the principal

paid that month from the previous month's remaining loan balance.

● For instance, after Month 1:

● Loan Balance = Previous Month's Loan Balance - Principal Paid (Month's Principal)

● Loan Balance = PHP 300,000 - PHP 25,000 = PHP 275,000

● This calculation continues each month, gradually reducing the outstanding loan

balance until it reaches zero by the end of the 12-month repayment term.

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 ● This repayment schedule demonstrates how the monthly payments are structured,

with a portion allocated to the repayment of the principal and the rest covering the

interest charges, ultimately reducing the loan balance over time until it's entirely paid

off.

4.4 SECURITY FOR LOAN

The SME Business Express Loans from Security Bank offer a way for borrowers to access

funding up to PHP5,000,000 without the need for collateral. Eligibility criteria typically

involve having an active account with Security Bank or holding a credit card from a

recognized bank. Despite being unsecured, these loans involve additional costs such as

processing fees, notarial charges, and possible penalties for delayed payments.

These fees are integral components of the loan terms, necessitating careful consideration by

borrowers to comprehend the overall expenses and responsibilities associated with

borrowing.

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4.5 PROFIT AND LOSS STATEMENT

Financial Assumptions All sales throughout every year are on cash basis. Inventories

are purchased on cash basis and increased by 5% annually. Supplies purchases will increase

by 10% annually and also subject to inflation rate. It is assumed that only 90% of each kind

of supplies will be used at year-end. Utilities expense will also increase 5% annually and also

subject to inflation. create profit and loss statement.

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4.6 CASH FLOW STATEMENT

The cash inflow in year 1 includes sales revenue, loans, and savings investments the total

amount of the inflow is 3,558,400, and in year 2, it focuses on sales revenue, which amounts

to 2,840. Cash outflow is money moving out of the business, like expense costs, debt

repayment, and operating expenses. The movement of all your cash in and out is recorded

in detail on the cash flow statement in financial reporting. The total cash outflow in year 1 is

4,779,122.6, and the ending cash balance is -1,220,722.6. The year-to-date total amount of

cash outflow is 5,852,601.2, and the ending cash balance is -3,012,201.2.

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1. Executive Summary:

Sweet Spot Mini Donut is seeking an investment of PHP 3,892,122 to fund its startup and

initial operating expenses. The business aims to establish a strong presence in the market by

offering high-quality mini donuts in various flavors. With a comprehensive financial plan and

a clear repayment strategy for a PHP 300,000 loan, Sweet Spot Mini Donut is poised for

sustainable growth.

2. Investment Breakdown:

● Working Capital (Annual): PHP 1,755,168

● Monthly operating expenses covering raw materials, rent, utilities, labor, and

other ongoing costs.

● Property & Equipment (Annual): PHP 1,986,954.6

● Costs associated with setting up and maintaining business infrastructure,

including production and office equipment.

● Pre-Operating Expenses (Annual): PHP 150,000

● Initial costs for permits, clearances, and promotional activities.

3. Loan Utilization:

Sweet Spot Mini Donut has secured a principal loan of PHP 300,000 with a transparent

breakdown of net proceeds after deducting associated fees, resulting in PHP 295,000. The

loan, with a 9% annual interest rate, is repayable over 12 months. The funds will be utilized

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for working capital, property & equipment, and pre-operating expenses to ensure a smooth

and efficient business launch.

4. Repayment Schedule:

A structured repayment schedule has been devised, with monthly installments of PHP

25,000 toward the principal and interest. The 9% interest rate, aligned with Security Bank's

lending policy, provides a reasonable cost of borrowing, enabling access to necessary funds

for growth initiatives while managing the cost of capital effectively.

5. Security for Loan:

Sweet Spot Mini Donut is availing SME Business Express Loans from Security Bank, offering

funding up to PHP 5,000,000 without the need for collateral. While unsecured, borrowers

must consider additional costs such as processing fees, notarial charges, and penalties for

delayed payments.

6. Financial Assumptions:

The profit and loss statement is based on cash sales, with inventory and supplies increasing

annually. Utilities expenses are expected to rise by 5% annually and are subject to inflation.

The financial assumptions provide a realistic foundation for revenue and expense

projections.

7. Cash Flow Statement:

The total property & equipment cost represents a small percentage (4%) of the total project

cost, highlighting the business's efficiency in managing capital expenditures. The project cost

table underscores the need for working capital to initiate and sustain operations.

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8. Conclusion:

Sweet Spot Mini Donuts investment plan is built on a solid financial foundation, emphasizing

responsible loan utilization and strategic allocation of funds for sustained growth. The

business is positioned to thrive in the competitive market by delivering high-quality

products while maintaining financial discipline.

Investors are invited to participate in this exciting venture, contributing to the success of

Sweet Spot Mini Donut and sharing in the potential rewards of a thriving business in the

lucrative mini donut industry.

INVESTMENT PLAN

Given that the company's understudied business planning resulted in a 3 million negative

income, a thorough investment strategy is needed to correct the situation. The root causes

must be identified through a thorough financial analysis, allowing for strategic

reorganization to optimize processes and cut costs. Investment security becomes critical,

requiring strategies to draw in venture capitalists, angel investors, or investigating bank or

crowd-sourcing platform debt finance. This project necessitates a strategic redesign, which

includes a revised business plan, technology advancements, and increased marketing efforts

to reach a wider audience. Process optimization will be achieved by embracing eco-friendly

strategies for cost containment and concentrating on operational efficiency and

sustainability initiatives. Putting strong risk management procedures into place including

ongoing observation and flexible tactics is the basis of this strategy.

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Below are the list where can get investment even with the negative income. these

investment sources list, it's crucial to understand their specific criteria, expectations, and

requirements. A prepared and convincing approach can secure investment even in the case

of negative revenue. It includes showing a clear way to profitability, reducing risks, and

showcasing the potential of your company.

Local Banks and Financial Institutions:

Example: Banco DE Oro (BDO), Bank of the Philippine Islands (BPI), or Development Bank of

the Philippines (DBP)

Why: Despite challenges with negative income, some local banks might offer tailored loan or

credit facilities, especially for established businesses with potential.

Government Programs:

Example: Department of Trade and Industry (DTI), Small Business Corporation (SBCorp), or

Department of Science and Technology (DOST)

Why: Various government agencies offer programs, grants, or low-interest loans aimed at

supporting small and medium-sized enterprises (SMEs) and fostering economic

development.

Angel Investors and Networks:

Example: Manila Angel Investors Network (MAIN), First Asia Venture Capital, or individual

angel investors

Why: Angel investors or networks offer capital and expertise to early-stage businesses,

often with a focus on local entrepreneurship and potential for growth.

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