Think Big: Overview, Assessment, Problems, Scope, Investors, Cash Flow

This document provides an overview of a proposed business idea to develop a program software for calculating heat loads and designing heating and cooling systems for buildings in Iran. It assesses the underlying business model, discusses the problems and solutions, scope and management, investors and financial feasibility, operational feasibility, and cash flow projection.

Running head: THINK BIG
Think Big
Name of the Student:
Name of the University:
Authors Note:

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Contents
1. Overview of the proposed idea:................................................................................................2
2. Assessment of underlying business model:..............................................................................2
3. The problems and solutions:.....................................................................................................3
4. Scope and management:...........................................................................................................4
4.1. Monetization of the idea:..................................................................................................4
4.2. Financial feasibility:..........................................................................................................5
4.3. Operational feasibility:......................................................................................................7
4.4. Scope of commercialization:.............................................................................................8
5. Investors and the requirements of business:.............................................................................8
6. Cash flow projection:...............................................................................................................9
Conclusion and recommendation:.................................................................................................11
References:....................................................................................................................................12
Appendix: Student charter:............................................................................................................14

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1. Overview of the proposed idea:
As discussed in the previous assessment that in Iran the construction business is completely
different from other countries as designing and construction of building in four different zones,
i.e. Mountain, forest, plan and coastal requires significant skills and competencies. Maintaining
heat loads is one of the biggest challenges for the engineers working in the construction industry
in the country. Considering the complexities involved in calculation of head loads and designing
an efficient heating and cooling system the idea of developing a program software is
promulgated. The program and software shall be able to calculate heat loads and design effective
heating and cooling system for buildings and houses in the country. The proposed business idea
has many takers provided the program software is developed properly and marketed
aggressively.
2. Assessment of underlying business model:
Considering the ever growing construction business in the Islamic Republic of Iran the
importance of having an effective program and software to calculate heat loads and accordingly
design effective heating and cooling systems for buildings has bright business prospect.
However, it is important to materialize the idea and make it a proper business model. Only with
proper business model one can convert an idea into a successful venture. In this case the idea is
very creative and has a ready market in the country however, a proper business model shall be in
place to ensure that the idea is materialized properly to achieve desired business objectives in the
future. A brief discussion on the business model is explained here (Indelicato, 2014).
Stream of revenue:

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The revenue shall come from selling of the software and program to the engineers, companies in
construction business, Government, universities and other parties. The software and program will
be updated at regular intervals to continue generating revenue from sale of different versions of
the software.
Partnering government:
The business idea shall be made into a big venture by partnering the local governments,
engineers, construction companies and other institutes in the country. This will help the idea to
grow to generate significant revenue in the future.
Business activities:
Developing the software and selling it in the market is the main business activities of the
imaginary company. In addition the company shall periodically update the software and
introduce new versions in the market to keep the flow of revenue coming.
3. The problems and solutions:
Identifying the problems to the business idea is essential to devise appropriate solutions to these
problems to implement the business idea successfully. The expected problems and relevant
solutions to the idea are mentioned below.
To prepare a market for the product:
Though there is an active market for the proposed software and program however, it is not easy
for a new business to penetrate the market and start selling its products. Thus, the company must
use aggressive marketing to familiarize its product in the market to prepare the market for its
product (de Nooij, Baarsma, Bloemhof, Slootweg & Dijk, 2016).

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Competition in the market:
The competition in the construction industry in the country is very intense. Though there is no
existing competitors developing such software in the country however the company will still face
significant challenges from the existing companies in the industry. Use of penetration pricing
will help the company to deal with intense competition in the market (Krylov, 2018).
4. Scope and management:
4.1. Monetization of the idea:
In order to materialize the business idea it is important to have necessary funds. Resources are
extremely important to implement a business idea. The company needs financial and non-
financial resources to start developing the software and selling it in the market. The following
resources are expected to be needed to implement the business idea.
Particulars Amount (IR)
Initial cost to set up a plant 4,000,000.00
Equipment and computers 1,000,000.00
Working capital 800,000.00
Others 200,000.00
Total initial funds required 6,000,000.00
The company has decided to take long term loan of IR 3,000,000 and finance the other half of
the required funds from the savings of the promoters of the company. Thus, half of the total

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funds shall be financed by own capital and the rest shall be financed from bank loans. The bank
loan will attract 10% interest per annum. It has also been assumed that the after tax cost of
capital is also 10% for the ease of calculation (Pandit & Poojari, 2014).
4.2. Financial feasibility:
The company shall determine the financial feasibility of the business idea by assessing the
expected revenue from the business in the future. The company expects that the software and
different versions of the software subsequent to up-gradation shall add value to the construction
business for next five years. After which it will be necessary to develop a completely new
software and program due to the technological evolution. Thus, investment in the business idea
shall provide substantial return in next five years for the promoters to make investment in the
proposal (Pereira, 2014).
The expected revenue and profit from the business operations of the company in next five years
is as following:
Years 1 2 3 4 5
Revenue from sale of
software
3,000,00
0.00
6,000,00
0.00
7,500,00
0.00
9,000,00
0.00
9,900,00
0.00
Operating expenses 1,200,00
0.00
2,400,00
0.00
3,000,00
0.00
3,600,00
0.00
3,960,00
0.00
Profit before tax 1,800,00
0.00
3,600,00
0.00
4,500,00
0.00
5,400,00
0.00
5,940,00
0.00
Less: Tax @30% 540,00 1,080,00 1,350,00 1,620,00 1,782,00

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0.00 0.00 0.00 0.00 0.00
Profit after tax 1,260,00
0.00
2,520,00
0.00
3,150,00
0.00
3,780,00
0.00
4,158,00
0.00
Depreciation includes in
operating expenses
120,00
0.00
240,00
0.00
300,00
0.00
360,00
0.00
396,00
0.00
The financial feasibility of the business idea is determined by calculating the net present value of
the business idea from the above information.
Years 1 2 3 4 5
Profit after tax 1,260,00
0.00
2,520,000
.00
3,150,000
.00
3,780,000
.00
4,158,000
.00
Add: Depreciation 120,00
0.00
240,00
0.00
300,00
0.00
360,00
0.00
396,00
0.00
Net cash inflow 1,380,00
0.00
2,760,000
.00
3,450,000
.00
4,140,000
.00
4,554,000
.00
Present value factor
@10% pa
0.90909090
9
0.82644628
1
0.75131480
1
0.68301345
5
0.62092132
3

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Present value of cash
inflow
1,254,54
5.45
2,280,991
.74
2,592,036
.06
2,827,675
.71
2,827,675
.71
Particulars Amount (IR)
Present value of total cash
inflow
11,782,924.66
Less: Initial investment 6,000,000.00
Net present value 5,782,924.66
Since the net present value of the project is positive, i.e. IR 5,782,924.66 thus, the business idea
has huge potential to provide significant return to the promoters in the future. Thus, the business
idea is financially feasible (Taner, 2012).
4.3. Operational feasibility:
The business is meant to solve huge problem in the construction industry in Iran by providing a
software which will calculate heat and design heating and cooling system within buildings to
maintain proper temperature within the buildings. The operational feasibility of providing up-
dated software to the construction industry at regular basis is very much feasible considering that
the software has been developed keeping in mind the importance to provide up-graded version of
the same in the future. Hence, the operational feasibility of the business idea is very much bright

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provided the company continue on the path of innovation and technological growth by investing
in new and better technology in the future (Umurzakov, 2017).
4.4. Scope of commercialization:
The scope of commercialization for the software is to be evaluated by conducting thorough
investigation into the consecution industry in the country. As per the study into the construction
industry in the country it is quite clear that the industry lacks such software to calculate heat
loads and design effective heating and cooling system accordingly. Thus, there is definitely
demand for the software in the market and the company should use the perceived demand in the
market to commercialize the software. Use of marketing and promotional campaigns shall be
helpful in developing keen interest in the construction industry for the software. Once the
benefits of the software are shown to the industry it would be quite easy to commercialize the
product (Vesic-Vasovic, Radojicic, Nesic & Mihailovic, 2014).
5. Investors and the requirements of business:
Investors look to invest in proposals that are expected to provide them with significant return in
the future. They are mainly concerned with the return on their investment. The investors as
mentioned earlier will have to make a total investment of $6,000,000 as detailed below.
Particulars Amount (IR)
Initial cost to set up a plant 4,000,000.00
Equipment and computers 1,000,000.00
Working capital 800,000.00
Others 200,000.00

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Total initial funds required 6,000,000.00
The investors will make the above investment only if they are assured of receiving significant
return on their investment. The net present value calculated earlier shows that the company is
expected to earn significant return on the proposal. The following table shows the net present
value of the proposal (Young & Legister, 2018).
Particulars Amount (IR)
Present value of total cash
inflow
11,782,924.66
Less: Initial investment 6,000,000.00
Net present value 5,782,924.66
The business idea is expected to have a life time of 5 years and within five years the investors are
expected to gain a net return of IR 5,782,924.66 on their investment of IR 6,000,000. Thus, the
expected return on investment is significant from the point of view of investors (de Nooij, 2010).
6. Cash flow projection:
The free cash flow from operating activities are provided below:
Years 1 2 3 4 5

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Profit after tax 1,260,00
0.00
2,520,000
.00
3,150,000
.00
3,780,000
.00
4,158,000
.00
Add: tax 540,0
00.00
1,080,000
.00
1,350,000
.00
1,620,000
.00
1,782,000
.00
Profit before tax 1,800,00
0.00
3,600,000
.00
4,500,000
.00
5,400,000
.00
5,940,000
.00
Add: depreciation 120,0
00.00
240,00
0.00
300,00
0.00
360,00
0.00
396,00
0.00
1,920,00
0.00
3,840,000
.00
4,800,000
.00
5,760,000
.00
6,336,000
.00
Less: income tax paid 540,0
00.00
1,080,000
.00
1,350,000
.00
1,620,000
.00
1,782,000
.00
Free cash flow from
operating activities
1,380,00
0.00
2,760,000
.00
3,450,000
.00
4,140,000
.00
4,554,000
.00
Assumption:
It has been assumed that the company has not invested in any fixed assets or sold any fixed asset
during the period of above five years. Thus, the operating cash flows has only been provided as

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the company is mainly concerned with the free operating cash flows to determine the suitability
of the project.
Conclusion and recommendation:
The proposed business idea has significant scope and opportunity to be a successful business
venture. Thus, a company should be formed and the idea shall be materialized by investing
necessary funds to successfully conduct business operations in the future to earn substantial
amount of return on investment in the future.

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References:
de Nooij, M. (2010). Social Cost Benefit Analysis of Interconnector Investment: A Critical
Appraisal. SSRN Electronic Journal, 2(7), 187-324. doi: 10.2139/ssrn.2226254
de Nooij, M., Baarsma, B., Bloemhof, G., Slootweg, H., & Dijk, H. (2016). Development and
application of a cost–benefit framework for energy reliability. Energy Economics, 32(6),
1277-1282. doi: 10.1016/j.eneco.2010.06.005
Indelicato, G. (2014). A Compendium of PMO Case Studies: Reflecting Project Business
Management Concepts. Project Management Journal, 45(2), e4-e4. doi: 10.1002/pmj.21401
Krylov, S. (2018). Target financial forecasting as an instrument to improve company financial
health. Cogent Business & Management, 5(1), 18-32. doi: 10.1080/23311975.2018.1540074
Pandit, D., & Poojari, D. (2014). A Study on Amazon Prime Air for Feasibility and
Profitability-- A Graphical Data Analysis. IOSR Journal Of Business And
Management, 16(11), 06-11. doi: 10.9790/487x-161110611
Pereira, J. (2014). Survival Analysis Employed in Predicting Corporate Failure: A Forecasting
Model Proposal. International Business Research, 7(5), 18. doi: 10.5539/ibr.v7n5p9
Taner, M. (2012). A Feasibility Study for Six Sigma Implementation in Turkish Textile
SMEs. South East European Journal Of Economics And Business, 7(1), 63-71. doi:
10.2478/v10033-012-0006-6
Umurzakov, S. (2017). Business Process Management in Financial and Non-Financial
Institutions: Payment Process Modelling in Financial Flows
Management. INTERNATIONAL JOURNAL OF MANAGEMENT SCIENCE AND

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BUSINESS ADMINISTRATION, 3(5), 50-5. doi: 10.18775/ijmsba.1849-5664-
5419.2014.35.1006
Vesic-Vasovic, J., Radojicic, M., Nesic, Z., & Mihailovic, D. (2014). Possibility of choosing
development investment programs of a production company by applying discounted
investment appraisal technique. Journal Of Engineering Management And
Competitiveness, 4(1), 41-46. doi: 10.5937/jemc1401041v
Young, J., & Legister, A. (2018). Project-Based Learning in International Financial
Management. Journal Of Teaching In International Business, 29(1), 76-87. doi:
10.1080/08975930.2018.1455943

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Appendix: Student charter:
Steps Contribution
Business proposal Finding a suitable business proposal for the
idea to develop a software to effectively
calculate and manage heat loads.
Feasibility study To conduct feasibility study of the business
proposal.
Business model To come up with an effective business
model for the software development and
sale.
Marketing idea To prepare an effective marketing plan for
the software.