Business planning
Case study - Worksheet
Before starting this worksheet, make sure you have thoroughly read the case material.
1. Which legal business structure would be most appropriate for taktical.com? Justify your answer.
N.B. You may find it helpful to look at the explanation of the different business structures.
(4 Marks)
2. Use the axes below to draw a break-even diagram for taktical.com.
(5 Marks)
3. If taktical.com do manage to meet the forecasts of sales that Frank has made, what will be their margin of safety?
_____________ units
(1 Mark)
4. Use the break-even diagrams below to show the effect on break-even of each of the following changes in taktical.com's position.
(a) Frank decides to reduce the price to boost sales.
(b) Frank finds a new supplier who can create the CDs for £1.25 instead of the original £2.50.
(c) Problems with the compatibility of the software mean that the programming costs for the software rise by £1,750.
(d) Strong initial sales are encouraging. Frank decides to replace the original version with a new premium version which he sells for £85.
(8 Marks)
5. Use the figures given in the case material to prepare a cash flow forecast for the first year of operation. Use the table below to fill in your figures.
N.B. Use the following assumptions:
- All the set-up costs (software, e-commerce and design) will need to be paid out in March when he starts up.
- His sales are all made with one month's credit offered (i.e. the cash is received one month after the sales are made)
- Expenses associated with the production of the software (CD, manual and distribution costs) have to be paid in the same month as the sales are made.
- The marketing budget of £3,600 will be spread over the year and spent monthly.
| Mar | Apr | May | June | July | Aug | Sep | Oct | Nov | Dec | Jan | Feb | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | ||||||||||||
| Sales | ||||||||||||
| Expenses | ||||||||||||
| Set-up costs (software, e-commerce and design) |
||||||||||||
| CD costs | ||||||||||||
| Manual printing | ||||||||||||
| Postage and distribution | ||||||||||||
| Net cash flow | ||||||||||||
| Opening balance | ||||||||||||
| Net cash flow | ||||||||||||
| Closing balance |
(12 Marks)
6. Frank would like some help preparing the business plan that the bank have asked for. Using the break-even forecast and the cash flow forecast that you have already produced, create a full business plan for taktical.com. Make sure you include the following:
- Details of appropriate marketing tools
- A projected profit and loss account for the first year
- Details of possible market research that Frank could carry out
- The target markets for the product
- Suitable promotional techniques for selling the software
(20 Marks)
Total Marks = 50
