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Running head: BES TUTOR BUSINESS PLAN
Business Plan for Bes Tutor
Student Name
Institutional Affiliation
1
BES TUTOR BUSINESS PLAN
2
Introduction
Bes Tutor is a software development firm focused on making educational process more efficient
and effective for High school students. Bes Tutor’s software serves as a virtual teaching assistant
for the educational process.
Financial Considerations
Bes Tutor expects to raise a substantial amount of owner capital, and borrow a comparable
amount in a guaranteed SBA 10-year loan. This provides the bulk of the current financing
required. Bes Tutor intends to deliver generous sales in the first year, with steady growth in the
second and subsequent 2 years of the plan.
Start-up Summary
Of the total start-up expenses, the lion’s share will be spent on software licenses. Estimated startup cash requirements should be sufficient to cover ongoing expenses in the first months of
operation. The company will seek to secure a 10-year SBA loan and a one-year loan from its
bank. Following is a chart and table summarizing projected initial start-up costs.
Table 1: Start-up cost
Legal Fees
Software Licenses
$3,000
BES TUTOR BUSINESS PLAN
3
$10,000
Research and Development
Others
$10,000
$1,000
Total
$24,000
Table 2: Start-Up Assets
Cash Required
Other Current Assets
$180,000
$75,000
Long-term Assets
$100,000
Total Assets
$355,000
Total Requirements
$379,000
BES TUTOR BUSINESS PLAN
4
The venture’s most significant cost is the amount incurred in software licenses and research and
development. The projected software production cost per unit is as follows:
Dire cost –
$1,248
Operating expenses – $ 1,552
Total cost
$2,800
Service Description
Bes Tutors offers a suite of educational software targeting high school students. These suites are
developed in collaboration with major curriculum publishers with whom Bes Tutor has
established strategic partnerships. Bes Tutor provides full installation, and ongoing consulting
support. These services are provided as part of each software package purchase.
Market Analysis Summary
Bes Tutor has a focus on High school students within the U.S. market. It competes with other
companies offering educational software products to schools, such as Blackboard, Apple
Computer, and Glimbse K12 Incorporation.
Financial Projections
BES TUTOR BUSINESS PLAN
5
The table and chart show the level of sales Bes Tutor intends to deliver in the first year through
the 3rd year of the plan.
Table 3: Proforma Profit and Loss
Year 1
Year 2
Year 3
Sales Revenue ($)
10,200,000
11,730,000
13,489,000
Direct Cost of Sales($)
3,120,000
3,588,000
4,126,200
Gross Margin ($)
7,080,000
8,142,000
9,362,800
Operating Expenses ($)
3,881,700
4,127,625
4,444,391
3,198,300
4,014,375
4,918,409
Profit Before Interest and
Taxes ($)
BES TUTOR BUSINESS PLAN
6
Gross Margin
$10,000,000.00
$9,000,000.00
$8,000,000.00
$7,000,000.00
$6,000,000.00
$5,000,000.00
$4,000,000.00
$3,000,000.00
$2,000,000.00
$1,000,000.00
$0.00
Bes Tutor
Year 1
Year 2
Year 3
Table 4: 5 Years’ Unit Sales Projection
Year 1
Year 2
Year 3
Year 4
Year 5
Growth
Units Sold
5%
2,500
2,625
2,756
2,894
3,039
5%
We have projected to grow our unit sales at a minimum of 5% per annum based on the industry
average of 8%. Gross profit margin is about 70%.
Best and Worst Case Scenarios
The best case scenario will be to sell 2,500 units of the software in Year 1 which will see us
generate a gross margin of $7,080,000. This will allow Bes Tutor to cater for operating expenses,
expand to more schools and hire additional software developers. The worst case scenario will be
to sell a minimum of 2,000 units generating a gross margin of $5,040,000. This will cause Bes
BES TUTOR BUSINESS PLAN
7
Tutor to run in a deficit which could force the management to file for dissolution if no other
funding will be available. To prevent the worst case scenario, Bes Tutor will develop both
marketing and fundraising plans to ensure that there is a good response to our product and cash
flow coming into the organization to pay all operational costs.
Table 5: Competitor Analysis: Operating Profit
Year 1
Year 2
Year 3
Bes Tutor
7,080,000
8,142,000
9,362,800
Blackboard
19,700,000
32,700,000
39,800,000
Glimbse K12 Incorporation
12,800,000
15,800,000
19,700,000
Competitor Analysis: Operating Profit
50,000,000
Bes Tutor
40,000,000
30,000,000
Blackboard
20,000,000
10,000,000
Glimbse K12
Incorporation
0
Year 1
Year 2
Year 3
Source: https://www.businesswire.com/news/home/
Bes Tutor and its competitors have had a consistent increase in operating profit during the three
years under consideration. Tutor’s sales revenue is slightly lower than the competition since it is
a new player in the industry.
BES TUTOR BUSINESS PLAN
8
Cost Control and Cash flow Projections
Our cost control is meant to identify and reduce our business expenses and increase profits. We
manage our costs through budgeting and monitoring all expenses. We also compare actual
expenses and budgeted expectations so that if actual costs are higher than planned, we take
action. As for Cash flows, we perform a cash flow analysis on a regular basis and utilize cash
flow forecasting to take steps necessary to head off cash flow problems.
Table 6: Proforma Cash flow Statement
Year 1
Year 2
Year 3
9,096,700
11,564,505
13,299,181
Cash Spending
3,270,000
3,433,500
3,605,175
Bill Payments
4,171,394
5,201,383
6,118,402
Subtotal Spent on Operations
7,441,394
8,634,883
9,723,577
Repayment
12,000
12,000
12,000
Purchase Long-term Assets
135,000
225,000
295,000
Subtotal Cash Spent
147,000
237,000
307,000
Net Cash flow
7,588,394
8,871,883
10,030,577
Cash balance
1,508,306
2,692,622
3,268,604
Cash from Operations
Expenditures from Operations
Long-term Liabilities Principal
BES TUTOR BUSINESS PLAN
9
The cash flow projection shows that provisions for ongoing expenses are adequate to meet Bes
Tutor’s needs as the business generates cash flow sufficient to support operations. Our cash flow
expenses include: Bill payments, loan repayments and purchase of long term assets.
Much our costs are in‐house except for sub-contracting fees that will be paid to external experts
who will assist us in preparation of a business proposal to help us seek funding and the cost of
hiring part-time software developers. This cost is consolidated under Bill payment in the cash
flow statement in Table 6.
Financials:    illustrates  the  financial  needs  and  projections.    It  will  describe  the  type  of  financing  
desired  as  we  as  the  amount,  payback  terms,  and  potential  return  on  investments.  
 
Questions  to  Answer—  
 
1.   What  are  the  financial  projections  for  this  venture  for  the  first  3-­‐5  years?      
2.   How  do  these  projections  compare  with  industry  norms?  (Are  the  costs,  revenues,  
profits,  etc.  higher  or  lower  than  for  similar  businesses?)  
3.   What  assumptions  are  your  projections  based  on?    Give  best-­‐case  and  worst-­‐case  
scenarios.  
4.   What  are  the  venture’s  start-­‐up  and  research/development  costs?  (Provide  itemized  
list)  
5.   What  are  the  costs  to  produce  the  product  and  get  it  into  the  market?  
6.   What  are  the  venture’s  most  significant  costs?  
7.   Do  you  have  a  cost  and  cash  flow  control  system  in  place  (your  procedure  for  
monitoring  and  authorizing  expenses)?  
8.   What  are  the  margins  (difference  between  the  cost  to  produce  your  product  and  
expected  sales  projections)?  
9.   Have  you  analyzed  your  capitalization  decisions  (lease  purchase,  tax  consequences,  cash  
flow  expenses)?    What  are  they?  
10.   Have  you  analyzed  cost  alternatives  (subcontracting,  shared  services,  in-­‐house  vs.  out-­‐
of-­‐house  expenses)?  
11.   Have  you  forecasted  the  amount  of  product  you  will  have  to  inventory?  
12.   How  much  money  will  you  need?    How  will  it  be  used?    How  much  for  investment  
capital  (property,  equipment,  etc.)?    How  much  for  working  capital  (operating,  
inventory,  etc.)?  
13.   What  will  be  the  effect  on  the  business  of  an  injection  of  new  funds?  
14.   What  access  to  funding  sources  do  you  have  that  you  may  qualify  for?    State  bonds?    
Government  land  grants?    SBA  (Small  Business  Administration)  programs?    SBIR  (Small  
Business  Innovation  Research)  programs.  
15.   What  is  the  potential  return  for  investors?  
 
 
Common  Mistakes  
 
1.   Making  unrealistic  sales  and  profits  projections.  
2.   Failing  to  make  reasonable  assumptions.  
3.   Planning  to  spend  too  much  money  on  “fringes”  
4.   Failing  to  project  the  downside  if  sales  don’t  go  as  expected.  
5.   Proposing  a  return  lower  than  industry  norms  
 

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