Question: Purpose of Assignment
The purpose of this assignment is to allow the student an opportunity to apply their understanding of cash flow management, break-even analysis, and short-term and long-term financing in starting and growing a business.
Requesting initial funding of $500,000 to start and run a start-up company. The proposed start-up company could be an existing business model of a coffee shop.
Review the following scenarios and assumption, and explain how it impacts your decision to expand:
- After Year 3, the investors are interested in your company expanding internationally to possibly outsource labor or to reduce manufacturing costs. What countries would you expand to first, and why? What factors would you need to consider in making this decision?
- What is the corporate tax rate in the countries you are considering expanding your business to, and how will that affect your decision to expand globally? (Use OECD Database or another resource to determine the corporate tax rate).
- The investors want to see a decision tree detailing the decisions you would make if you received $300K now and $200K at the end of three years instead of $500K up front.
- The investors would like your team to provide advantages and disadvantages of using debt financing versus selling company stock to raise capital for growth.
- Briefly explain the venture capital process. Does it make sense for your company to raise funds through venture capital?
1) Create 3 Year Proposed Funding Schedule (Sources and uses of the funds received.)
2) Create Break-Even Analysis