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e-Business Financial Plan
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Prehistoric Computers Financial Plan Introduction Prehistoric Computers has redesigned the traditional operations systems with an e-operations series of systems. The e-operations plan has implemented systems to support the revenue growth strategy. The next step is to approve and implement the financial plan, the real backbone of a business plan. To start the financial plan, Prehistoric Computer forecasts exactly how much capital will be needed to finance the e-business operations during the critical start-up phase. Financing is necessary for the new technology investment, additional management staff, marketing effort, customer relations system, and other working capital expenditures. Financial Plan Prehistoric Computers has already begun the e-commerce initiative by implementing the Web site successfully. The next rollout of the mini-ERP system involves significant financial investment. Today, Prehistoric Computers has over 11 weeks of inventory available. Primarily sales are in the form of credit card payments, cash, or COD, see financial statements in Appendix C. There is a modest balance of about 1.75 weeks’ sales outstanding as account receivable. There is no long-term debt; the building is owned free and clear, as is the equipment. The short-term debt is a revolving cash line of credit with the bank. The accounts payable is modest at just over two weeks worth of sales. The company is in a solid position to seek financial assistance. The financing plan includes seeking a 30-year mortgage on the building. It is feasible to obtain $1,280,000 to start funding the technology and the needed inventory for growth as the Web site initiative begins to take off. Partial funding will be from the increased level of sales already evident from the Web site initiative. Sales have increased 15% in the first nine months of 2003. Sales are on track to increase 25% by year-end. The next level of funding will be in the form of a SBA or Economic Development loan for low-income areas backing bank loans. The research on this type of program indicates a promising program that focuses on government-backed loans from a local lending institution. These programs support for profit companies that are adding jobs in low-income areas such as outside Little Rock, AR. The time frame is approximately one year to obtain the needed financing and the SBA or Economic Development backing for the long-term loans. Preliminary conversations with the local loan officer of Prehistoric Computer’s bank are favorable towards this program. The needed maximum of $5,000,000 can be obtained using these methods in conjunction with tight controls on inventory to sales ratios and cash ratios. A third possibility exists if Prehistoric Computers wishes to go public by selling shares to either employees or local individuals; or if the President’s family wishes to increase the investment in the firm to aid in the expansion plans.
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