Digital Business and Management Report: UltraSportex Business Plan

This report presents a business plan for UltraSportex Limited, a startup aiming to sell sports and fitness equipment online in the United Kingdom. The plan outlines the business model, target customers (youth), and competition. The report details the investment requirements (£475,000), including costs for rent, store setup, online infrastructure, and inventory, with a 3:1 equity-to-debt funding ratio. It conducts a feasibility analysis, calculating the net present value (NPV) of the business over five years to make a compelling pitch to potential investors. The analysis shows a positive NPV, suggesting profitability. The report also addresses statutory requirements and references relevant literature.

Running Head: DIGITAL BUSINESS AND MANAGEMENT
Digital Business and management
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Introduction:....................................................................................................................................2
Impact:.............................................................................................................................................2
Outline of the business:...................................................................................................................3
Target customers:.............................................................................................................................4
Competitors:....................................................................................................................................4
The business model:........................................................................................................................5
Feasibility analysis and making a pitch:..........................................................................................6
Conclusion:......................................................................................................................................8
References:......................................................................................................................................9

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Introduction:
The entrepreneur is looking to attract investors to invest in the start-up business of online
sports and fitness equipment sales in United Kingdom. In order to materialize the business plan
the entrepreneur needs investments worth of £475000. Considering that the business is a start-up
business it would be a challenge for the entrepreneur to arrange the required amount of funds.
The business will try to maintain a suitable balance between equity and debt fund. The proposed
ratio between equity and debt funds is 3:1 in favor of equity fund.Arranging the required
amount of equity to start the business is the main issue which the promoter of the business is
trying to solve by making a pitch to the investors.
Impact:
Out of the required amount of investment of £475000 the promoter needs to arrange £356250
from equity. Crowd funding using digital medium is one of the most popular sources to arrange

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capital for a business. However, the pitch for such investment should be strong enough to gather
support from investors present online.
Outline of the business:
The detailed road mapis madeto pitch for online investors to be part of the start-up
business. The form of organization will be a company and shall be registered accordingly with
the name of UnltraSportex Limited. The investment requirement of £475000 can be segregated
in terms of the usage in the start-up business as following:
The rent for company and office premises will be approximately £15000 and £10000
respectively for the first year. The company will build a large store to stock sports and fitness
equipment at a cost of £110000. Since the company is a start-up it will have to build an online
infrastructure within its office, store, and company premises; the total costs of building such

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online infrastructure including necessary information technology equipment will be about
£115000 (including expenditure on staff and personnel for the first year). The company is
looking to tie up with Nike to supply its sports accessories around the country at attractive prices
(Armstronget al. 2015). The franchisee costs such tie-up is $25000 a year. Apart from that the
company will require an additional £175000 to stock different sports and fitness equipment in its
store to satisfy the initial demand of the customers once the online business starts operation. The
company will keep £25000 as working capital in the business.
Target customers:
The business targets the youth of the country as its prime customers. Considering the fair
share of youth population of the country the online sport and fitness business will have its hands
full if it able to market its products aggressively. Using the online infrastructure to attract youth
to buy sports and fitness equipment and accessories will help the business to grow at a rapid
speed.

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Competitors:
Sportsafe UK, Gym & Fitness Equipment, Podium 4 Sport and Jordan Fitness are few of
the already established online sports and fitness equipment organizations in the country. The
Ultra Sportex Limited will be under stiff competition and thus, needs to spend wisely and
strategically to make a distinct and different place for it in the market. Providing quality products
will help the company in its endeavor of achieving this objective.
The business model:
The detailed research conducted on the financial and operational feasibility of the start-up
business has shown that the company will be able to achieve the following sales in next 5 years
after which the whole plant will have to be rebuilt in accordance with the requirements of the
future.
Year Sales Net cash inflow after tax
2018 £150000 £60000
2019 £280000 £112000

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2020 £420000 £168000
2021 £560000 £224000
2022 £480000 £192000
The standard rate of interest to borrow funds for business purpose in the country is
currently 10% per annum (assumed). On the basis of the above a suitable model shall be
prepared to make a pitch for investors using the internet. It has been mentioned that the company
will maintain a 3:1 ratio in favor of equity fund in the overall funds to be invested in the
business. Thus, out of the required £475000 the company will have to arrange £356250 from
investors as equity investment and the balance £118750 will be arrange from borrowing.
Feasibility analysis and making a pitch:
Investors always look to make investment in projects and businesses that have potential
of earning substantial profits in the future. Thus, whether it is about making case in-front of the
online investors using digital infrastructure or finding investors by searching physically the main

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objectives of the investors include profitability of business ideas and projects. In this case let us
conduct a feasibility test on economic and financial aspects of the start-up idea to make a strong
pitch for investmentto the investors (Cavusgilet al. 2014).
Making the Pitch to the investors:
The net present value of the start-up business after five years assuming that the company
will have to completely overhaul the business after five years to continue doing business in the
future (Macht and Weatherston 2014). Assuming zero residual value of all the assets the net
present value of the start-up business with £475000 is calculated below:
Year Net cash inflow
after tax (£)
Present value
factor @10%
Present value of
net cash inflow
after tax (£)
2018 60,000.00 0.909090909 54,545.45
2019 112,000.00 0.826446281 92,561.98

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2020 168,000.00 0.751314801 126,220.89
2021 224,000.00 0.683013455 152,995.01
2022 192,000.00 0.620921323 119,216.89
Present value of net cash inflow 545,540.23
Net present value
Particulars Amount
Present value of net cash inflow 545,540.23
Less: Investment 475,000.00
NPV 70,540.23
Despite assuming that the company will not realize anything from its infrastructure and
other assets after five years it is clear from the above that the net present value of the start-up
business is in positive with £70540.23. It is important to note here that net present value analysis
takes into consideration the effect of time value of money and thus, the opportunity cost of 10%,
the rate of borrowing in the country, has been considered to complete the analysis. Thus, from
the above the investors should be motivated to invest in the business as the business of online
sports and equipment sale seems a profitable proposition for the investors (Kirby and Worner
2014).
Conclusion:
In this regard it is important to note that only other objective apart from profitability of a
business idea that concerns the investors is the statutory requirements and considering the start-
up business will start operation in the form of a company all necessary rules and regulations have
been followed to form the company before starting operations. Thus, the investors need not be
concerned about the statutory compliances (Walkeret al. 2015).

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References:
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
Pearson Education.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L.,
2014. International business. Pearson Australia.
Kirby, E. and Worner, S., 2014. Crowd-funding: An infant industry growing fast. IOSCO,
Madrid.
Macht, S.A. and Weatherston, J., 2014. The benefits of online crowdfunding for fund‐seeking
business ventures. Strategic Change, 23(1‐2), pp.1-14.
Walker, C., Schofield, D. and Courtney, C., 2015. Attracting Investment Capital to Nutrition
Interventions: Promoting Sustainability, Managing Risk, and Leveraging Business Expertise.

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Link
https://ricky655786.wixsite.com/business