Risk and Commercial Viability Analysis
1. Executive summary
You should provide a brief description of the business, the reason the funding is required, background of promoter, and an overview of the socio-economic benefits and an overview of the future financial performance/forecast.
2. Purpose of the Required Funding
Motivate why capital is required and provide details of how these funds will b applied.
3. Valuation of business
If funds are to be used for the purchase of an on-going concern or an already existing business, you should provide details of how the business valuation was deduced, for example was it using the discounted Cashflows (DCF), or Net Asset Value (NAV), and/or using the Price Earnings, or any other method of valuation.
4. Products and Services
Describe the product(s) and or service(s) offering by including the following:
• Benefits to the user
• Specifications of the products and services
• Unique selling proposition
• Product Mix
• Source of revenue/contractual revenue
• Product life cycle
• Potential and proposed new product development
• Export potential
Funded-black Restaurant Business_products-and-services
5. Industry analysis
Provide information on the industry by including the following:
• Summary of the industry
• Value drivers and industry
• Value Drivers and industry price structures
• Historical growth rates
• Trends and problems the industry is facing
• Recent developments
• How is the market segmented and why?
• Applicable industry ratios
• Legal and regulatory environment
• Economic outlook
• Growth opportunities and constrains
• Cyclicality and seasonality
• Industry specific risks
6. Target Market Analysis
Provide adequate information on customers those entails:
• Market analysis (size and growth in terms of number of products, money value, and number of customers)
• Target market and geographic coverage
• List of existing potential customers
• Letters of intent, contracts and orders on hand
• Bargaining power of customers
• Growth opportunities i.e. new products/new customers
• Distribution channels
Target-Market_Pitch-Gambit_Target-Marketing
7. Competitor analysis
Analyse and demonstrate that you are well versed with the competitive environment. Include:
• Market Share
• Barriers to entry and new entrants
• Substitute products
• Details of marketing budget
• Marketing strategy to realise objectives
8. Supplier Analysis
Provide information on suppliers by including the following:
Number of suppliers
Bargaining power of suppliers
Availability of raw materials
Cost of imported vs local material
Rand/Dollar exchange rate (where applicable)
9. Operational analysis
Provide information on operations by detailing the following:
Production and processes
Equipment required
Plant capacity and utilisation
Production costs
Replacement requirements
New technology requirements
Quality control and reject rate
Raw material requirement
10. Management and Human Resources
Provide information on management and HR by including the following:
Management experience and qualifications
Number of employees
% BEE Skills required
Training programmes
Staff turnover
11. Summary of all internal and external risks
Provide a summary of information on the principal risks that the entity is subject to and how these risks will be addressed. Internal risks include personnel management, such as labor skills shortages or poor morale and technology redundancy, such as outdated software, Capacity Constraints, Bridging Roles, Post Acquisition Implementation etc. External risks often include economic events that arise from outside the corporate structure. External events that lead to external risk cannot be controlled by a company or cannot be forecasted with a high level of reliability. These Include Economic, Natural, Political, Social risks outside the corporate structure.
12. Social-economics benefits
Provide information on social-economic benefits by including the following:
Job creation
Poverty alleviation
Women participation
Skills transfer/training
Industrial growth and development
Number of households to benefit
13. Financials and Cash Flow Analysis
Request templated for layout of financial statements:
Please provide income statement, balance sheet and cashflow statements and state assumptions used in the projections.
Financials should reflect: 3 years historic information for existing entities plus 5-year forecasts.
Provide the most recent management accounts if the business is already in existence
The first year of financial forecasts must be broken down month by month
Include commentary on the financials to date and forecasts, as well as:
• Brea-even analysis
• Specify value drivers for base, best vs worst case scenario
• Cashflow cycle, seasonal, monthly, credit days, debtors days, stock days
• Profit margins
• Profitability
• Key assumptions used in compiling cashflow forecasts
• Cost drivers (what proportion is fixed)
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