SKYBUS, LTD.BUSINESS FEASIBILITY PLAN.PartVI.Section 5

FINANCIAL PLANNING

1. Sources Of Finance

As it was already outlined in section III, to obtain the proposed business it is required to have an access to approximately €110,000 to run SKYBus for the first three months.

Internals recourses

The owner of the proposed business currently holds a saving account with €30,000 on it and he intends to use this money as a help of starting SKYBus, Ltd.

The parents of the owner also decided to support the potential business and hence made a contribution of €30,000.

External resources

The proprietor of SKYBus is currently unemployed and hence there is no additional income that could be used for investing the proposed business. However there are two strategic plans as a result if which SKYBus can get a second half of finances for investing the start-up of its business.

Plan A

According to Department of Social Protection the owner can have the Short-Term Enterprise Allowance (STEA). In order to be eligible for this governmental support the owner must be:

·    Be getting/have an entitlement to Jobseeker’s Benefit

·    Have 104 paid PRSI contributions.

(Note: The owner has a hold of both mentioned above)

However in order to receive a permit for this support scheme SKYBus will have to be approved in advance in writing by a Job Facilitator based in Social Welfare Local Office. SKYBus may also get extra support under this scheme (if granted), for example grants for training, market research, business plan and access plan to buy equipment (www.welfare.ie)

Plan B

If SKYBus is not granted with STEA the owner will seek a loan of €50,000 from Allied Irish Bank. The bank offers a special scheme for start-up business where an “unemployed” status of employer is not an obstacle.

Once the business plan is approved to be successful, AIB gives SME Loan, which specifically caters for the needs of the young or just starting up company. SKYBus will seek €25,000 over 3 years term (3 years – subject of normal lending criteria) at the highly competitive rate of 4.40% p.a. (Refer to Appendix V.A)

2. Financial Forecast

Set-up costs

The first month will be used to set up the business. It is unlikely any business will be officially transacted. In addition to dealing with legal and accounting issues for the business, office equipment will be purchased and set up.

Once the physical office is ready we will then develop the employee policy and procedure manual. Then we will develop our training program. This will take a bit of time therefore it is very important it is set up at the beginning, ensuring that it is completed and done properly when there are far less time constraints. ( for more detailed set up costs refer to appendix V.B)

Profit & Loss

SKYBus intends to start operating in March of 2013. It is expected to have a profitable income due to the seasonal demands as many passengers start travelling at this time of the year (presence of many spring holidays: Easter, Sport events, St. Patrick, etc). The second month will be active. We will begin to field inquiries over the phone and expect to turn some of those into contracts (Co-operation with Hotels, Dublin Airport, etc). It is expected that the number of passengers using the services of SKYBus will grow up at the end of the second month.

By the end of the forth month the company expects to reduce the loss rate and make the business profitable (for a detailed Profit & Loss statement refer to appendix V.C)

The sales forecast is based on the assumption that increased demand will occur at a steady pace. This is based on the assumption that a large part for our new passengers after month two will be from word of mouth referrals. The logic is that we will gain passengers as we continue to serve current passenger. It is expected that this will happen steadily and incrementally.

Generally, it is expected to have at least one passenger per ride (during the first month of operation). After that it is believed that as a result of “word of mouth referrals” and a help of advertising agency the number of passengers will double, reaching 2400 passengers every month (depending on the number of days in one month). Following that, the growth people using our services should increase steadily. The year 2 is expected to show an increase in sales also, as well as year 3.

Note: The forecast is approximate; it is possible SKYBus will not reach the expectations due to a further economic downtime or some unexpected factors that might have a negative impact onto SKYBus developing business.

Cash Flow

The total repeating costs as it was outlined before is approximately €25,000. During the first month our business will have no profit as it will be used to set up the business. The vehicles are expected to start operating during month two. Having at least one passenger per ride (40 passengers per day), the monthly income will constitute €9,600 (where the ticket fee is €8 for adult).

The steady growth rate is expected to be seen during the month 2 and from that on. By the end of the month 5, where the number of passengers will reach 3,600, SKYBus business is expected to be in a profit of around €3,000 (for the detailed cash flow chart, refer to Appendix V.D)

Balance Sheet & Break Even Analysis

At the point of starting up the business, SKYBus is in a possession of €60,000 where €30,000 is the personal savings of the owner of the potential business and the second half is an investment of the owner's parents. The long-term liabilities, such as the bank loan, are €50,000.

The capital required to establish the business is €55,838. In order to run the proposed business it is required to have an access to approximately €25,000 per month. And also the business should be in a possession of at least €5,000 in cash for unexpected expenses (for detailed balance sheet refer to appendix V.E)

The break even analysis is based on an average monthly fixed costs of approximately €23,500. By establishing our ticket price of €8, we need only 3,600 rides per month to break even. During the summer months as well as holidays we expect to surpass the number of rides three times as much (Appendix V.F).

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