Interior Design Business Plan and Risk Management

The assignment delves into the creation of an interior design business plan. It presents a sample balance sheet showcasing the company's assets, liabilities, and equity over several years. Furthermore, it outlines a detailed risk management plan to mitigate potential challenges in this competitive industry. The plan addresses risks such as fluctuating customer expectations, material delays, procurement issues, and labor shortages, proposing strategies for effective risk containment.

Entrepreneurship

TABLE OF CONTENTS
2.1 Financial projections for the venture....................................................................................1
Cash flow statement...............................................................................................................1
Statements of comprehensive income....................................................................................3
Statements of financial position.............................................................................................1
2.2 Risk management plan.........................................................................................................1
References..................................................................................................................................3

2.1 FINANCIAL PROJECTIONS FOR THE VENTURE
Cash flow statement
Particulars
Pre-operating
year Year 1 Year 2 Year 3 Year 4 Year 5
Cash inflow
Opening $35,000 $67,000 $143,800 $288,200 $543,800
Sales $ 90,000 $135,000 $202,800 $304,200 $456,600
Initial investments
Owners savings $100,000
Bank loan $30,000
Total cash inflow (A) $ 130,000 $125,000 $202,000 $346,600 $592,400 $1,000,400
Total cash outflow
Direct expenses
Machineries $40,000

Total direct expenses $- $ - $ -
Marketing and
promotions $20,000
Furniture and Interior $25,000
Rent $4,000 $4,000 $4,000 $4,000 $4,000
Marketing expenses $500 $500 $500 $500 $500
Salaries to staff $ 42,000 $ 42,000 $ 42,000 $ 42,000 $ 42,000
Telephone charges $1,000 $1,100 $1,200 $1,300 $1,400
Electricity bill $500 $600 $700 $800 $900
Insurance $50,000
Loan repayment $ 10,000 $ 10,000 $ 10,000
Total cash outflow (B) $95,000 $ 58,000 $ 58,200 $ 58,400 $ 48,600 $ 48,800
Total cash flow(A-B) $35,000 $ 67,000 $143,800 $288,200 $543,800 $951,600

Analysis
Cash flow statement can be specified as one of the most significant part of financial statement for projecting a business. Details
regarding cash outflow and cash inflow which is provided for specified no. of years has been specified in this statement. From above
analysis it can observed that the company is expected to have an increasing trend of sales; as the expected sales are increasing every
year for consecutive five years. Further, the liquidity of the company seems to be stable and strong as sufficient cash funds are
available ant same can be applied appropriately for required purpose. No higher financial loan exist in above cash flow statement
which specifies that the company has its own sufficient funds and not dependent on outer resources for meeting its day to day
operations as well as long term obligations.
Statements of comprehensive income
Income statement Year 1 Year 2 Year 3 Year 4 Year 5
Sales $ 90,000.00 $ 135,000.00 $ 202,800.00 $ 304,200.00 $ 456,600.00
COGS $ 9,000.00 $ 13,500.00 $ 20,280.00 $ 30,420.00 $ 45,660.00
Gross profit $ 81,000.00 $ 121,500.00 $ 182,520.00 $ 273,780.00 $ 410,940.00
Expenses
Rent $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00
Marketing $ 500.00 $ 500.00 $ 500.00 $ 500.00 $ 500.00
Salaries to staff $ 42,000.00 $ 42,000.00 $ 42,000.00 $ 42,000.00 $ 42,000.00
Telephone charges $ 1,000.00 $ 1,100.00 $ 1,200.00 $ 1,300.00 $ 1,400.00

Electricity bill $ 500.00 $ 600.00 $ 700.00 $ 800.00 $ 900.00
Depreciation $ 12,000.00 $ 12,000.00 $ 12,000.00 $ 12,000.00
Interest payment $ 2,100.00 $ 1,400.00 $ 700.00
Other expenses $ 500.00 $ 500.00 $ 500.00 $ 500.00 $ 500.00
Total expenses $ 50,600.00 $ 62,100.00 $ 61,600.00 $ 61,100.00 $ 61,300.00
Profit before tax (operating profit) $ 30,400.00 $ 59,400.00 $ 120,920.00 $ 212,680.00 $ 349,640.00
Tax @10% $ 3,040.00 $ 5,940.00 $ 12,092.00 $ 21,268.00 $ 34,964.00
Net profit $ 27,360.00 $ 53,460.00 $ 108,828.00 $ 191,412.00 $ 314,676.00
Analysis
Income statement can be specified as which presents data such as revenue, operating expenses, dividend paid and retained earnings.
As the company deals with interior designing operations the major variants of income statement on which focus should be made
comprise sales, salaries and marketing. Other expenses do not play major role as the profit is dependent on sales and the salaries paid
to the employees for their operations. An increasing trend in sales can be observed and the same is present in profit. Income statement
assists investors in ascertaining whether appropriate profits will be provided by the company to them or not and whether they should
invest in the company or not. Increasing sales directly effects the profit; thus the same is best way to improve profitability of a
company.

Statements of financial position
Particulars year 1 year 2 year 3 Year 4 Year 5
Assets
Current assets
Cash $ 67,000.00 $ 143,800.00 $ 288,200.00 $ 543,800.00 $ 951,600.00
Debtors $ 30,000.00 $ 35,000.00 $ 40,000.00 $ 50,000.00 $ 40,000.00
Fixed assets
Equipment $ 40,000.00 $ 32,000.00 $ 24,000.00 $ 16,000.00 $ 8,000.00
Furniture $ 20,000.00 $ 16,000.00 $ 12,000.00 $ 8,000.00 $ 4,000.00
Total assets $ 157,000.00 $ 226,800.00 $ 364,200.00 $ 617,800.00 $ 1,003,600.00
Equity and liabilities
Current liabilities
Creditors $ 26,800.00 $ 66,200.00 $ 138,800.00 $ 210,600.00

Long-term liabilities
Bank loan $ 30,000.00 $ 20,000.00 $ 10,000.00 $ - $ -
Capital
Amount invested $ 100,000.00 $ 127,000.00 $ 180,000.00 $ 288,000.00 $ 479,000.00
Profits $ 27,000.00 $ 53,000.00 $ 108,000.00 $ 191,000.00 $ 314,000.00
Total equity $ 157,000.00 $ 226,800.00 $ 364,200.00 $ 617,800.00 $ 1,003,600.00
Analysis
Balance sheet provides details regarding assets and liabilities of a company. AN investor can ascertain the details regarding net worth,
book value and other necessary details required for ascertaining whether the company is appropriate for investing or not. Above
balance sheet specifies that the financial liabilities are paid within time. No uncertain fluctuation exists in current assets and current
liabilities. A prospective future for the same can be expected for the company has sufficient funds and profit are available in the
company.

2.2 RISK MANAGEMENT PLAN
RISK MANAGEMENT PLAN
For The
(Interior designing venture)
Scope: Cited plan describes the process to be used by Interior designing venture to ensure
success. Risk Management is significant for Interior Designing Business as management is
required to be precise with their tasks to satisfy needs and expectations of customers. In this
industry; several customers criticize that the provided services were not as per standard or the
product does not have timely delivery. Henceforth to manage all aspects there should be pre-
planning about such problems. So by considering this risk Management plan of business is as
follows:
Purpose: Objective of risk management plan is to analyse business uncertainties in order to
minimise the adverse consequences by developing viable work practices.
Summary: In the proposed venture major risk for business is increasing competitions;
changing and increasing expectations of customers and ensure final product is as per the plan.
It is general perception that in Interior Designing business management has frequently have
to deal with several problems such as procurement, labour force, user backlash and material
delay. Due to this aspect, for effective management these concerns must have a first-hand
solution as a significant part of business policy and strategy. Thus to ensure execution is as
per planning risk plan has been developed.
Risk management process

Identify Risk
Appoint Owner
Qualitative
Assessment
Agree Containment
Strategy
Assign Actions to
Action Managers
Monitor Progress
Update
Risk Control Form
Select
Program-Level
Risks
Quantitative
Analysis
Model Effects of
Risks on
Program Networks
Review by
Risk Management
Committee
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This process is supported by four primary stages i.e. risk identification; risk assessment; risk
containment and risk control (Pritchard and PMP, 2014). For identification of risk; risk
manager will make use of following techniques:
 Analysis of change requests and proposals
 Analysis of the Work Breakdown Structure and Networks
 Structured Interviews
 Use of checklists
 Workshops for Risk Identification
Further; quantitative assessment will be done by making use of percent estimate of
probability by categorise into three categories i.e. minimum, most likely and maximum. On
the basis of significance of risk steps will be taken by management to resolve this issue in
best possible manner to control it (Haimes, 2015).
General risk measures
To resolve procurement problems business will have dealers more than requirements to
ensure sufficient resources for business. Further, business team had developed a plan to deal
with users to assure specification with agreements supported by dually signed agreement.
Further; labour will be hire on work project basis not as permanent staff to manage costs and
liquidity of work staff. Sufficient inventory and benchmark for work will be managed to
prevent delays.

REFERENCES
Pritchard, C.L. and PMP, P.R., 2014. Risk management: concepts and guidance. CRC Press.
Haimes, Y.Y., 2015. Risk modeling, assessment, and management. John Wiley & Sons.