Velosa Milkshake Business Plan: Financial Projections & Risk Analysis

This report outlines a comprehensive business plan for Velosa Milkshake, a new milkshake venture. It includes a business idea summary, risk analysis, and sources of funding. The report details fixed and variable costs, presents a budgeted profit forecast and cash flow statement for the first year, calculates the break-even point and margin of safety, and identifies key performance indicators (KPIs) for monitoring business progress. Finally, it provides recommendations based on the financial analysis, offering insights into the venture's potential profitability and sustainability, available for students on Desklib along with other solved assignments and past papers.

Business Finance

Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
1. Give a brief summary about the business idea and do an analysis on the risk which the
business might face......................................................................................................................4
2. Give a brief outline about the fixed and variable costs...........................................................6
3. Prepare the profit forecast statement for the business year of the operations.........................6
4. Make a budgeted cash flow statement for the operational year of the firm............................7
5. Calculation of the break – even point and margin of safety....................................................8
6. Describe the KPIs which will be applicable in the business of milkshake..............................8
7. Provide recommendations based on the analysis.....................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
The business finance refers to managing the funds and the resources with the proper
allocation and maintenance of the funds. A business plan means the planning of the vision,
mission, aim and objective of the venture that the entrepreneur is going to start (Gassner and
Lawrence, 2019). In this report, a business is started of the milkshakes named Velosa Milkshake.
In this, the products in the milkshake which is going to be offered by the venture is analysed and
the risk which will be borne sat the commence of the enterprise. Also the investment sources and
from where the funding will be receiving is also to be determined. In addition, the fixed costs
and the variable costs are briefly discussed. Then the budget for profit and cash flow is created
taking into account all the expenses associated with opening the new business. In addition, the
KPIs and the recommendations were discussed further and briefly analysed based on the budget
drawn up.
MAIN BODY
1. Give a brief summary about the business idea and do an analysis on the risk which the
business might face.
A plan which is a composed for the stating up of the business record that clarifies
exhaustively how an organization normally a commences up its firm. It additionally
characterizes its goals and plans to accomplish them. From a showcasing, monetary, and
functional perspective, a strategy lays forward a recorded way for the organization. These are
essential papers that are utilized by both the organization's outer and inside crowds (Heil, 2018).
It is utilized to draw in venture or obtain financing before an organization has set up a history.
They are likewise a surprising way for corporation’s senior groups to remain in total settlement
with regards to vital things to do and keep focused to meet their targets.
Business Idea: The business is of the milkshake which is named as “Velosa Milkshake”. It
is a sole proprietorship business have a sole owner. The idea is to start a new business is to
provide two type of milkshake with 3 different toppings accordingly meeting to the demand of
the consumer. The product is Vanilla and Chocolate milkshake with the topping of KitKat,
Strawberry and Ferrero Rocher.

Market Research: Every day the competition of the business grows by the entrance of the new
firm. It also elevates when the already existing firm modifies it products and come up with the
new items which can be trendy in the existing environment and the taste of the customers. So,
the market research is essential for determining the taste and preference of the consumers
(Hilden, 2021).
Location: It is based in the Central London for the purpose of getting more customers and
selling more goods. As this will lead to earn more revenue. It is a famous place for the shopping
and wandering the city.
Consumers: The customers will be mainly the youth and the children, although it is a product
which is consumed by all the generations.
Competitors: It is not a business which has a monopoly, so it will have a number of competitors
such as Milkshake Mania, Subway, McDonalds and many more. The risk which the business can
be face could be the investment and the capital which has been invested into the business. The
working and reaching out to the customers will determine the efficiency of the firm.
Why the customer prefers the products: The USP of the goods is that the business is using
vegan milk which is in higher demand these days keeping in mind the health benefits of the
users. The users will prefer these innovative products as it is new in the market and better than
the traditional milkshakes which does not provide any health benefits to the consumers.
Risks: Controlling the monetary risk which is related with opening and working a style clothing
store will be one of the main obligations they will have as an entrepreneur. Indeed, even
subsequent to directing the entirety of the essential examination and methodology to guarantee
that adequate assets have been saved, it is basically impossible to plan for the unforeseen;
business is tormented by it. Monitor their costs and pay. Be prudent with their assets and forever
know about their monetary circumstance (Mohanty, 2019).
Management of the resources: This subject was an extraordinary change from the one
preceding it. During this cycle, organizations have the chance to fail to meet expectations your
assets, yet in addition all the other things they have available to them. Those things will be
classed as either physical or elusive resources. To put it another way, unmistakable resources are
for the most part resources. It covered their office, any hardware they have, business-related
vehicles, computers, machinery, licence and many more.

2. Give a brief outline about the fixed and variable costs.
For the setting up of the venture, certain costs are forced that is borne by the businesses
which are fixed and variable costs.
 Fixed Costs: It alludes to a cost that doesn't change with an extension or decreasing in
the amount of work and items made or sold. These are the costs that should be paid by an
association engaged with any business action. This infers fixed costs are generally
circuitous, in that they don't have any critical bearing to an association's advancement of
any work and items (Mourtzis, and et., al., 2018). A portion of the costs which are lease,
salary, maintenance, compensation, insurance, interest borrowed, loan reimbursement
and many more.
 Variable Costs: It is a corporate expense that adjustments of extent to how much an
association makes or sells. Its addition or reduction depends upon an association's
creation or arrangements volume they climb as creation augmentations and fall as
creation decreases. A portion of the variable costs incorporate utilities, telephones, fixed,
advancement and notice, transport and so on.
Total Costs Selling Price
Description
No of
hours
Material
kgs/g/ltrs/
m
£ Rate per
Hour/kg/Itr
Total
Variable
Cost/unit
Fixed
Cost /
Unit
Total
Cost /
Unit
Marku
p +50%
or
100%
Selling
price
metres £ £ 200%
Labour 2 5 10
flour Material 1 0.35 2 0.7
sugar Material 2 0.5 3 1.5
butter Material 3 2 5 10
fruits xxxx 0
flavour
s xxxx 0
Eggs xxxx 0.58 1.85 1.08
Total 23.28 3.21 26.49 26.49 52.97
3. Prepare the profit forecast statement for the business year of the operations.
Budgeted Profit and Loss Statement ( for the first year of operation)
Particulars £ £
Income from sales 1799582

Less: variable costs:
Materials -675000
Staff costs -200585
-875585
Contribution 923997
Less fixed costs:
Salaries -36000
Electricity -1440
Rent -5280
Business Insurance -6000
Marketing -12000
-60720
Profit 863277
On sales of £1,799,582, the company is predicted to make a profit of £863,277, resulting
in a net profit margin of 48 percent. The ratio of contribution to sales is 51%.
Paticulars January February March April May June July August September October November December Totals
Sales 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,24,968 17,99,582
Less:
Cost of sale
Variable -74,083.75 -74,083.75 -74,083.75 -74,083.75 -74,083.75 -74,083.75 -74,083.75 -74,083.75 -74,083.75 -74,083.75 -74,083.75 -60,663.75 -8,75,585.00
Wages (Variable)
Gross
Profit/Contribution 78,153.85 78,153.85 78,153.85 78,153.85 78,153.85 78,153.85 78,153.85 78,153.85 78,153.85 78,153.85 78,153.85 64,304.54 9,23,996.83
Less:
Fixed Costs
Salaries -3,000.00 -3,000.00 -3,000.00 -3,000.00 -3,000.00 -3,000.00 -3,000.00 -3,000.00 -3,000.00 -3,000.00 -3,000.00 -3,000.00 -36,000.00
Rent -440 -440 -440 -440 -440 -440 -440 -440 -440 -440 -440 -440 -5,280.00
Marketing etc -1,000.00 -1,000.00 -1,000.00 -1,000.00 -1,000.00 -1,000.00 -1,000.00 -1,000.00 -1,000.00 -1,000.00 -1,000.00 -1,000.00 -12,000.00
Electricity -120 -120 -120 -120 -120 -120 -120 -120 -120 -120 -120 -120 -1,440.00
Insurance/6 months -500 -500 -500 -500 -500 -500 -500 -500 -500 -500 -500 -500 -6,000.00
Net Profit 73,093.85 73,093.85 73,093.85 73,093.85 73,093.85 73,093.85 73,093.85 73,093.85 73,093.85 73,093.85 73,093.85 59,244.54 8,63,276.83
GPM% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51%
NPM% 48% 48% 48% 48% 48% 48% 48% 48% 48% 48% 48% 47% 48%

4. Make a budgeted cash flow statement for the operational year of the firm.
Receipts January February March April May June July August SeptemberOctober NovemberDecemberTotals
Sales Product 1-Units 300 300 300 300 300 300 300 300 300 300 300 300 3,600
Cash Sales Product 1-
EPrice/Unit 52.97 52.97 52.97 52.97 52.97 52.97 52.97 52.97 52.97 52.97 52.97 52.97
Sub Total Cash Sales
Product 1 15,891 15,891 15,891 15,891 15,891 15,891 15,891 15,891 15,891 15,891 15,891 15,891 £190,693
TOTAL Receipts from
Sales 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,52,238 1,24,968 17,99,582
Cumulative Receipts
from Sales 1,52,238 3,04,476 4,56,714 6,08,952 7,61,190 9,13,428 10,65,666 12,17,904 13,70,142 15,22,380 16,74,618 17,99,586
Payments
Cost OfSales/Variable
Costs
Cost of Sales Product 1-
Units 300 300 300 300 300 300 300 300 300 300 300 300 3,600
Cost of Sales Product 1-
Price/Unit 23 23 23 23 23 23 23 23 23 23 23 23
Sub Total Direct Costs
1 6,984 6,984 6,984 6,984 6,984 6,984 6,984 6,984 6,984 6,984 6,984 6,984 83,805
Total Cost of
Sales/Variable/Direct
Costs 74,084 74,084 74,084 74,084 74,084 74,084 74,084 74,084 74,084 74,084 74,084 60,664 8,75,585
Cumulative Cost of
Sales 74,084 1,48,168 2,22,252 2,96,336 3,70,420 4,44,504 5,18,588 5,92,672 6,66,756 7,40,840 8,14,924 8,75,588 8,75,585
Fixed Costs and
Equipment etc
New Car 10,000 10,000
Equipment 5,000 5,000
XXXXXX -
Total Start Up Costs 15,000 15,000
Fixed Costs
Salaries(Fixed) 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Rent 440 440 440 440 440 440 440 440 440 440 440 440 5,280
Marketing/Adv/Legal/Acc
ountancy 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Electricity 120 120 120 120 120 120 120 120 120 120 120 120 1,440
Public Indemnity
Insurance 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Total Fixed Costs 5,060 5,060 5,060 5,060 5,060 5,060 5,060 5,060 5,060 5,060 5,060 5,060 60,720
Total Payments (V.C+
F.C + Equipment Costs)
94,144 79,144 79,144 79,144 79,144 79,144 79,144 79,144 79,144 79,144 79,144 65,724 9,51,305
Cumulative Payments 94,144 1,73,288 2,52,432 3,31,576 4,10,720 4,89,864 5,69,008 6,48,152 7,27,296 8,06,440 8,85,584 9,51,308 9,51,305
Net Cash Flow 58094 73094 73094 73094 73094 73094 73094 73094 73094 73094 73094 59245
Opening Balance 10000 68094 141188 214282 287376 360470 433564 506658 579752 652846 725940 799034
Closing Balance 68094 141188 214282 287376 360470 433564 506658 579752 652846 725940 799034 858279
5. Calculation of the break – even point and margin of safety.
Break-even point (in units) = Fixed Cost / (Selling price per unit – Variable Cost per
Unit)
Total fixed costs = £60,720
Contribution per unit (Selling price less variable costs) = £52.97 -23.28 = 29.69
Break even units = £ 60,720 / 29.69 = 2,045

Breakeven point in
Sales value = 2,045 * £ 52.97 = £ 108,324
Margin of safety: Budgeted output – BEP
= 10,000 - 2,045 = 7,955
= (7,955 / 10,000) * 100 = 79.5%
6. Describe the KPIs which will be applicable in the business of milkshake.
Key Performance Indicators (KPIs) allude to a lot of quantifiable assessments used to
gauge an enterprise’s productivity for the long – term. It explicitly helps in deciding the
organization's monetary, non – financial and the strategic accomplishments by contrasting its
exhibition and different firms inside a similar industry (Paulet, 2018).
The KPIs of the business of milkshakes can be:
1. Customers: These will help in identifying the satisfaction of the consumer y the products
and the services which are offered by the business. It will also help in maintaining a long
term relationship with the clients to retain them for a longer period. This will enhance the
visibility of the management of enterprise in knowing better about the value of their
product in the market.
2. Goods and services: It will help in monitoring the quality and the quantity which the
customer demand is appropriate or not. Because it affects the dominance of the business
in the competitive market and will establish an image of its item and the services
(Tairova and Niyazov, 2021). It is a strategic measure of the performance of the small
business which save their time, effort and cost in capitalising the research.
3. Prime Cost: It is the absolute of work costs such as the salary, wages and the expense of
merchandise sold. It is a fundamental key exhibition marker the business because the
milk and the ice-cream cost is the main source of the expense in this venture. It usually
runs 60% to 65% of all out deals in a full-administration of the eatery shops and 55% to
60% of the revenue for the quick services offered by the firm.
Prime Cost = Labour Cost + Cost of Goods Sold.

The expenses which are related to the labour and staff, including salaries, hourly, week by
week, and others. Presently, add the amount of your work costs and your expense of merchandise
offered to show up as a huge expense of the undertaking (Wirka, and et., al., 2021).
7. Provide recommendations based on the analysis.
It tends to be suggested from the above investigation that the budget which has been
prepared by the administration is in general great. In any case, it would more be able to zero in
on giving more weight on dealing with the innovative work cost. It can demonstrate supportive
for the business for its turn of events and development. The organization can add new flavours
such as strawberry, tutti-frutti and can also have a criticism book, which each client can fill
subsequent to utilizing their labour and products. It will be valuable for dealing with the assets
and working on the management of the firm. It will help with expanding the net profit.
CONCLUSION
From the above report, it tends to be reasoned that financing a business for the beginning is
the most impost and significant piece of speculation. The investors put their cash in risk for
getting the great returns. Prior to beginning and setting up the new pursuit, it is fundamental for
the proprietor to do a full statistical surveying and examination and afterward just fill the roles of
initiating a business. Then, at that point, a business system and financial plan ought to be ready
and give an examination on the net deals, fixed expenses, variable costs, net benefit and net
increases. The planned income likewise assumes a crucial part in deciding the net money inflows
and outpourings from different exercises. The break – even point and edge of security tell about
the benefit in the wake of selling the number of units will be accomplished. Besides, the KPIs
were talked about with respect the milk and the eatery industry. Also, the proposals dependent on
the above spending plan and assessment were given considering the market tastes and
inclinations of each client.

REFERENCES
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Mohanty, D., 2019. R3 Corda for Architects and Developers: With Case Studies in Finance,
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