Business Plan

Of
Creation
 East West University
Title : Business Plan of Creation.

Submitted To : Dr. Tanbir Ahmed Chowdhury

Professor,
Dept. of Business Administration,
East West University, Aftabnagar, Dhaka

Submitted By : Student Name ID Number

Nevin Rebeiro 2016-2-10-241
Mohammed Russel Fazal Chisty 2016-2-10-184
Lamisa Masud Mim 2016-2-10-095
Mahidur Rahman 2016-1-10-098
Mesbahuzzaman Rokib 2016-2-10-050
Md. Rifat Ahmmed Anik 2016-2-10-042

Course Code : FIN435

Course Title : Managerial Finance
Section : 02
Semester : Summer’19

Submission Date : 21st July 2019

 Letter of Transmittal

21stJuly 2019
Dr. Tanbir Ahmed Chowdhury
Professor,
Department of Business Administration,
East West University,
Aftabnagar, Dhaka 1212

Subject: Application for accepting the term paper.

Dear Sir,
Here is the term paper that you have assigned us to work on. The term paper has been
completed by the knowledge that we have gathered from the course “Managerial Finance”.

This report contains the business plan of “Creation” which an online bases service hub. We
would be happy if you read the report carefully and we will be trying to answer all the
questions that you have about the term paper.

We have tried our level best to complete this term paper meaningfully and correctly, as much
as possible. However, if you need any assistance in interpreting this term paper please contact
us without any kind of hesitation. Thank you for giving us the scope of developing
knowledge on this aspect. We will be highly encouraged if you are kind enough to receive
our term paper and pardon us for any errors and mistakes.

Thanking you
Yours obediently,

Nevin Rebeiro Mohammed Russel Fazal Chisty Lamisa Masud Mim

(2016-2-10-241) (2016-2-10-184) (2016-2-10-095)

Mahidur Rahman Mesbahuzzaman Rokib Md. Rifat Ahmmed Anik

(2016-1-10-098) (2016-2-10-050) (2016-2-10-042)
 Acknowledgement

First and above all we express our gratitude to the almighty, who aided us with his
strength, gave us wisdom and patience to complete this term paper. Additionally, we thank
our course instructor “Dr. Tanbir Ahmed Chowdhury”, who believed that we could terminate
this term paper on time. His moral guideline, endless effort, and joyful encouragement made
us successful in this paper. Moreover, we are also thankful to our classmates, group members,
and friends for their help and supports. At last, we thank our parents and other family
members for their helps, supports and sacrifices during the study period.
Table of Contents
Executive Summary: .................................................................................................................. v
1.0 Introduction: ......................................................................................................................... 1
2.0 About the Business: ............................................................................................................. 2
2.1 Vision: .............................................................................................................................. 2
2.2 Mission: ............................................................................................................................ 2
2.3 Objective: ......................................................................................................................... 2
3.0 Opportunity Analysis: .......................................................................................................... 3
3.1 SWOT Analysis: .............................................................................................................. 3
3.1.1 Strengths: ................................................................................................................... 3
3.1.2 Weaknesses:............................................................................................................... 3
3.1.3 Opportunities: ............................................................................................................ 3
3.1.4 Threat: ........................................................................................................................ 3
3.2 PEST Analysis: ................................................................................................................ 3
3.2.1 Political: ..................................................................................................................... 3
3.2.2 Economic: .................................................................................................................. 4
3.2.3 Sociological: .............................................................................................................. 4
3.2.4 Technological: ........................................................................................................... 4
3.3Customer Need Analysis: .................................................................................................. 4
3.4 Competitor Analysis:........................................................................................................ 5
4.0 Market Analysis: .................................................................................................................. 5
4.1 Market Size: ..................................................................................................................... 5
4.2Target Group Analysis: ..................................................................................................... 5
4.2.1 Demographic: ............................................................................................................ 5
4.2.2 Psychographic:........................................................................................................... 6
5.0 Value Proposition: ............................................................................................................... 6
6.0 Marketing Policy:................................................................................................................. 6
6.1 Marketing Mix: ................................................................................................................ 6
6.1.1 Price: .......................................................................................................................... 6
6.1.2 Place: ......................................................................................................................... 6
6.1.3 Product: ...................................................................................................................... 7
6.1.4 Promotion: ................................................................................................................. 7
6.2 Marketing Channel: .......................................................................................................... 7
6.3 Marketing Strategy: .......................................................................................................... 8
6.3.1 Awareness:................................................................................................................. 8
 6.3.2 Engagement: .............................................................................................................. 8
6.3.3 Retention:................................................................................................................... 9
7.0 Organization Structure: ...................................................................................................... 10
8.0 Key Resources: .................................................................................................................. 10
9.0 Key Activities: ................................................................................................................... 11
10.0 Key Partners: .................................................................................................................... 11
11.0 Cost structure: .................................................................................................................. 12
12.0 Revenue model: ............................................................................................................... 14
13.0 Financials: ........................................................................................................................ 14
13.1 Financing: ..................................................................................................................... 15
13.2 Utilization of fund ........................................................................................................ 16
13.3 Capital Structure:.......................................................................................................... 16
13.4 Net Present Value: ........................................................................................................ 16
Executive Summary: This report contains the business plan of ‘Creation”. It is an online
event service hub which will facilitate customers who seek event services to choose a service
provider from a pool of event service providers without much effort. The online based service
not only will reduce effort of the customers but will also save them money and give them
more options to choose from than they have at present. Event service providers remain
limited to a very narrow market but our business will help them to reach to a wider market
and earn more revenue. It will also create opportunity for individuals who are willing to
establish businesses in the event service market which will result in reducing unemployment.
In order to establish the business our main focus in research and development. Following the
market research, we will develop a mobile software application and website through which
customers can avail the services. A single order will take around four clicks to complete the
process. The huge demand for event services is the reason we choose to establish this
business. Customers now use many online service applications and rely on them as well. This
trend shows a positive signal of our potential success.
The initial target market for our business is people who live in Dhaka and have a very busy
lifestyle. We have developed our marketing strategy which is divided in three phases. The
first phases will focus on creating awareness regarding our business and service, the second
phase will focus on customer engagement, and the last phase will focus on customer retention
by providing additional customer valued services.
There are several costs associating the business. The major cost will be incurred for
developing mobile software application and website. A fixed amount of cost will be needed
for the maintenance of the system. Other costs such salaries, rent and utilities, promotion,
research and development are also significant. Our revenue will generate from commission
charged on transactions of the service providers. To finance our business we will be using
around 72% equity and 28% debt. The forecasting and capital budgeting shows positive
results as well.

v
1.0 Introduction: Bangladesh has come a long way in respect of businesses and services. In
line with the growing economic condition many new businesses and services are emerging.
Simultaneously, the customer needs and wants are changing dramatically as their income
level changes and so as their spending pattern. Since the last decade it is seen that customer
demand for services has increased tremendously. To meet these new customer demand, many
service-based organizations has emerged. Internet accessibility enabled individuals and
businesses to provide different services through internet-based platforms switching from
traditional way of operation. Food Panda, Shohoz.com, Uber, and Pathao are some the new
and prospering ventures that provide online based service. The internet has opened the gate of
immense opportunities for new businesses and services.

Bangladesh has a culture of celebrating variety of events. Throughout the year numerous
events take place in very level of life. From birthdays, weddings, anniversaries to corporate
events and many of their kind are regular part of the society. Events are always
overwhelming but organizing them is a more difficult task than ever thought. Organizing an
event is very time consuming and puts a lot of mental and physical stress. Price is also a
major concern in taking decisions as most of the events remain budget constrained. An event
takes effort of several services provided by different service providers such as, decoration,
catering, logistics and so on. These service providers are segregated by location limiting
accessibility and availability to customers. Some event management firm take care of
organizing the entire event but charge a very high price making unaffordable for most of the
customers. On the other side, the customers vary in terms of their need. Some customers
might need a particular service from a wide variety of services, but still they are limited to
few numbers of service providers and might have to pay a higher price than needed. We see
this as an opportunity that we can capitalize, and simultaneously help both parties as well. To
make it clear, we are going create a bridge which will eliminate the gap between customers
and numerous service providers. Customer is benefited by getting huge availability of service
providers, and can choose service providers according to their choice. On the other side,
service providers will be able to tap new markets and increase their sales. By benefiting both
parties we will be benefited by charging a minimal commission from service providers. Our
business is an online service hub where service providers and customers can interact with
each other. As there are no other businesses that provide similar service, we will be able to
achieve first mover advantage in this aspect.

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2.0 About the Business: We are intending to create an online event service hub by which we
will create a bridge between customers and event service providers. In simple words, an
online marketplace of service providers from which customers can choose according to their
choice. The name of our business is “Creation “following with a tagline which is “we create,
you celebrate’. Customer willing to avail the service will have to sign up with the required
information. For the service providers, they will have to sign up as well and have to submit
proper documents in order to verify their business. Service providers will offer their services
on the platform and will set prices for them as well. They will also have the option to upload
sample portfolio of their work. There will be a rating system by which customers can rate the
service provider from whom they avail the service. Customers can access the platform
through dedicated website and mobile software application. There will be several service
categories which will increase customer experience. Customers can avail bundled and
unbundled packages. Wedding, corporate, general, are some the categories from which
customers can choose their desired service provider. As a customer gives an order for a
particular service, a contract is automatically generated on our system. The customer will
have the option to track their orders by calling a toll-free number. Using our platform will
give customer assurance about the service they want to avail. The basic costs for our business
include research and development, mobile software application and website development,
marketing and promotion expenses. Our revenue model is based on commission. A certain
percentage of commission will be charged on the monetary amount of the service provided by
the service provider. In summary, we are creating a platform to bring customers and
dispersed service providers together. Through our online platform customers can get a wider
range of service options to organize an event saving money and time. Our business will also
create opportunity for individuals and businesses to expose their services to wider market and
make more money.

2.1 Vision: To be established as the largest online event support service hub.

2.2 Mission: Create a bridge between service providers and customers ensuring
convenience, trust, and security.

2.3 Objective: Be recognized as trustworthy online service platform in the market.

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3.0 Opportunity Analysis:

3.1 SWOT Analysis:

3.1.1 Strengths: We have a first mover advantage in this business arena. Our offering
is completely different from existing businesses in event service industry. Most of the
directors have sound business knowledge and prior experience in this field which will
help the business to grow and expand. We have a rent-free office space will reduce
cost in the initial stage. We also have a unique selling proposition.

3.1.2 Weaknesses: The major weakness of our business is financial limitation. We do

not have any skilled software engineer in our team who can take care of the issues
related to application development and maintenance. We do not have the market
reputation needed to borrow big amount of fund from external sources.

3.1.3 Opportunities: New generation customers prefer online based services.

Numerous online service-based organizations are doing very well and growing
rapidly. Government is encouraging entrepreneurship and providing seed funding to
potential startup businesses. Rapidly growing internet accessibility across the county
will give us the opportunity to serve the whole country.

3.1.4 Threat: This sector has a huge potential and thus has a high threat from new
market entrants. Existing offline event service businesses may expand their business
by entering this market and increasing the competition. New government rules and
regulations on online businesses may poses threat as well.

3.2 PEST Analysis:

3.2.1 Political: The political situation of the country is quite stable in the recent years.
There is less chances that rules and legislations will be changed as the government has
taken long-term plans to support continuously growing economic prosperity of the
country.

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 3.2.2 Economic: The economic condition of the country is doing quite good at the
moment. The country is experiencing a continuously growing GDP (Gross Domestic
Product) over the past few years. Many foreign multinational companies are investing
in Bangladesh. Bangladesh is creating a new image in the international arena with its
economic growth.

3.2.3 Sociological: The lifestyle of people in Bangladesh has dramatically changed

over the years. Income level of people also increased as the economy is growing.
People in the metropolitan cities are adopting international standards of living. People
are more adaptive to technological changes than ever before. They are active in social
media and other online platforms. Convenience is prioritized in most of the aspects.

3.2.4 Technological: In the recent years many technological advances were

introduced in the market and they got tremendously positive results. An online mobile
payment system Bkash has gained huge popularity throughout the country. People
now easily adapt to technologies easily. Around 80 million people of country use
smart phone which signifies how adaptive they are now. Around sixty million people
use internet and increasing every day.

The pest (political, economic, sociological, and technological) analysis shows positive results
in all aspects and gives a strong vibe that our business has a huge potentiality to be successful
in this market.

3.3Customer Need Analysis: After conducting a few short interviews of potential customers
we have found the following needs of the customers.
 Customers prefers high availability of service providers
 Price is a major determinant in choosing a vendor from other alternatives
 Quality of the service is also an important aspect
 Humble behavior of service provider
 Smooth transaction
 Online based service
 Experienced service provider
 Bundled and unbundled offers

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  Short notice requests
 Comparison between two or more service provider
 Trustworthy service providers
 Frequent update of ordered service
 Easy Communication

More or less these are the needs of the customers in the given service category.

3.4 Competitor Analysis: We are the first business of our kind who is an expertise on so
many types of event management and with so much option to customize from. We have
competitors like Antor Showbiz, Wedding Diaries, Dream Weavers and other local event
management firms. Unlike them our offering to our customer is of wider range and we are
not specialist in one kind of event but we possess the more varieties than all of them
combined. They are more of an offline-based firm whereas we are more of an online based
thus saving time and money for our customer. Normally a customer will have to go from one
firm to another in order to compare the price and quality of services to be provided but they
can do all of these and much just by browsing through our app.

4.0 Market Analysis:

4.1 Market Size: Currently there are more than 80 million smart phone users in Bangladesh.
Among them 60 million users are available to internet and 5 million of them are using the
service based online platforms. But more or less everyone at some point are required to
organize an event such as a birthday, wedding anniversary, business meeting, surprise party
and an endless other occasion. Therefore, our market size can be considered as way more
than 5 million but to anyone who has access to internet.

4.2Target Group Analysis:

4.2.1 Demographic: our service attracts anyone from the age of 15 and above. Our
service is not limited to budgets. We provide a variety of budget options to our
customers as anyone from a student to middle income group to a higher income group
can have benefit of our service. Our service will initially begin from Dhaka and we
will expand our operation domestically as the market size increases.

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 4.2.2 Psychographic: the common traits or patterns among our customers can be their
willingness to save time, money and hosting a fabulous occasion. An example can be
beneficial to this explanation- a corporate person who has very busy schedule wants
to celebrate his wife’s birthday. But he has no available adult family member to
organize everything according to his wishes. He also doesn’t have sufficient to sit and
manage and a birthday party. He can use our app and easily arrange everything within
5 or 10 minutes without going anywhere or taking extra stress. He will also have the
option to choose from a wide variety of service providers and different budget
options.

5.0 Value Proposition: Our app will provide a wide variety of budget choice and event
options to choose from. We are very loyal and will prove to be trustworthy for our customers.
Our goal is to provide fast and quality service in a convenient way to our customers. We will
provide bundle, unbundle, and off-season offerings. We will also provide time to time
discount on particular bundle packages to motivate our customers to use our services
frequently. Normally none of the firms will provide emergency services on short notice at
regular price but us. We are prepared for any emergency and customized event.

6.0 Marketing Policy:

6.1 Marketing Mix:

6.1.1 Price: As for the price, we are charging a certain percentage of commission from
the service providers. For the services, service providers will set prices for their services.
The service provider offers different options to the customer for different prices. High
competition between service providers will encourage them to reduce their prices in order
to capture more customer orders. So, customers will be able to avail more benefit for
relatively lower price.
6.1.2 Place: Initially our business location is Dhaka city. When our business is
implementing day by day. Then we will plan to expand our business operation in others
district.

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 6.1.3 Product: Software application and Website.

6.1.4 Promotion: As our business is online based, we are mostly focusing on content
marketing. Our promotions will be promoted in social media applications such as face
book, you tube, snapchat. We will be doing some BTL (below the line).

6.2 Marketing Channel: Marketing channel is the people, organizations, and activities

necessary to transfer the ownership of goods from the point of production to the point of

consumption. It is the way services get to the end-user, the consumer; and is also known as a

distribution channel. A marketing channel is a useful tool for management and is crucial to

creating an effective and well-planned marketing strategy.

Service provider Creation Customer

Software Application
and Website

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Service providers are the ones who provide various services to organize an event. They might
provide a single service or multiple services. Like photographers, decorating, catering,
logistics and so on. The mobile software application and website will create a link between
service providers and customer. All processes are given this software application and website.

6.3 Marketing Strategy: Marketing strategy is the section of your business plan that outlines

our overall game plan for finding clients and customers for our business. Marketing strategy

focuses on what we want to achieve for our business and marketing efforts. Marketing plan

details how we will achieve those goals.

The marketing strategy is divided in three phases:

6.3.1 Awareness: Awareness is positively related for the business with high customer
interaction. For this business with low customer awareness, the relation is either negative or
insignificant. In addition, we find that the effect of awareness is very important by the
business operation.

 BTL: BTL means below the line. It is actually off-line promotion, such as road show,
booth activation and newspaper also.
 Content Marketing: It is actually online marketing promotion. Now, this time most
popular online marketing strategy is Facebook and YouTube. Created the Facebook
page and the page will be sharing different Facebook group and community. YouTube
is also very important to marketing strategy for their business.

6.3.2 Engagement: Through engagement activities customers and service providers will be

encouraged to use.

 Content Marketing: Regular contents will be posted through social media intending
to simulate interest on services. Hash tag marketing is one of the most effecting forms
of engagement. For example, we will promote #Creation.

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  Discount Offers: Discount offers will encourage customers to avail the services and
boost our sales. It will vary from season to season. We can shift demand to non-peak
seasons as well.
 SEO & ASO: Search engine optimization and App store optimization will give the
visibility of our apps and service. Easy accessibility will encourage customer and
service provider to download and use the application.

6.3.3 Retention: Retention activities will help to build long term relationship with customer
and will also motivate.

 Query Management: Query management service help to provide customer solutions

in real time and ensure quality service.
 24/7 Toll-free Number: There will a dedicated hotline number which will allow
customer to get any relevant information without any cost and can get information of
their order as well.
 After Sales Service: It will ensure quality of the service and will promote reliability
of the platform.
 Collecting Feedback and Response: Collecting feedback and response will help us
to make changes and create better user experience.
 Insurance: Considering the price of the services we kept a facility of insurance which
will assure customers for any mishap and will build trust for the platform in the minds
of the customers.

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7.0 Organization Structure:

Board of Directors

Executive Members

Engineering Operation Sales & Marketing Legal Accounts & Finance

Chief User Brand Compliance Accounts Manager

Information Experience Development Manager
Officer
Service Sales Team Financial Planner
Maintenance Management & Controller

R&D

Board of directors is mainly taking all kind of decision and they oversee all the managerial
work. Executive members have the responsibility to assign the work in a particular section
and give the report to the board of directors. Engineering sector includes maintenance team
who mainly maintain all the electronic things and they all are expert in technology. Their
works also include research and development sector because they research about the product,
partner and developmental issues. In operation sector mainly refers the service management,
service type, variation, service price, service quality etc. Marketing section related with sales,
advertising and promotion. Legal sector related with general and corporate development that
all kind of rules and regulations are applied in the business properly or not. Financial sector
related with the financial planning and control which refers that the total budget and the total
scenario of financial situation.

8.0 Key Resources: For this type of online business the key resources are most important
because the resources help a business to achieve its goal. The resources are:

 Skilled employees: Skilled employee is most important for all kinds of business
because they do most of the work which are related to the business goal. If the business
is online based then the employees should be skilled in technological issues. Maximum
work is related with the technology.

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  Loyal Business Partners: In our business the loyal partner is important because as our
business is totally customer oriented so to satisfy customer, loyal business partner is
needed. Loyal business partners are those who are directly connected with our business
and who always helps us to reach our customers.
 Brand: we provide all types of branded products from different types of industries.
People can easily access our website and get the product which they need.

9.0 Key Activities:

 Marketing and Promotion: Our key activity is marketing and adds which mainly
attracts the people towards our business. Marketing and ads mainly related with the
promotional process, marketing policy and marketing structure.
 Apps Development &Maintenance: one of the major activities is apps development
and maintenance because as our business is totally online based. Most of the works are
done through apps, so regular maintenance and development of those apps is essential.
 Contract with Businesses: As we are not producing any product or service but we
deliver the product or service to the people who need this. We contract with many types
of businesses which are ready to do work with us on a contractual basis. Here our main
activity is creating bridge among customers and businessmen.
 Customization: We provide customize services to our customers. It mainly refers the
customer choices, customer’s preference.

10.0 Key Partners: For every type of business, partners play an important role.

 Legislation &Regulatory Authorities: To safeguard the business it is essential to

abide by all rules and regulations enforced by the government. Keeping good
relationship ICT division and other regulatory bodies is vital for the business.
 Investors: As this is a new business so most of the investors are board of directors or
the owner of the business. Other investors are mainly bank. There are many
organizations that help the new business by investing money on them like Grameen
phone.
 Payment Processors: As our business is online based so the payment system is also
online based. To collect payment from customer Bkash work with us as a partner.

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11.0 Cost structure: Cost structure refers to the various types of expenses a business incurs,
and it is typically composed of fixed and variable costs. Fixed costs are cost that remains
unchanged regardless of the amount of output a company produces while variable costs
change with production volume. From our business’s point of view, there would incur a
number of fixed costs. Those are application development and maintenance, promotion cost,
research and development and finally the salaries and rent. These costs are briefly explained
below:

 Application Development and Maintenance Cost: It is one of the main primary costs as
our business platform is totally technology-based. In addition, several types of services
will be chosen by the potential customer through this way. Mobile application
development cost is irregular in nature while the maintenance cost is quite irregular. The
cost of application development would be significant especially for the first three years.
After that, only the cost of maintaining the application would be incurred and will have to
bear as long as we are in the market. Here, the maintenance cost will definitely vary based
on the varied services, features and so on. Apart from the cost application development or
maintenance, we have also considered the cost of developing our official website and so
the maintenance. Customers might get an overview on the business and also reach to
useful resources when needed.

 Promotion Cost: As we are going establish the largest online event support service hub,
we really do need to acknowledge our potential customer about the multiple offerings
through the advertisements. Basically, we have chosen to advertise both on social media
and print media as well. Social media includes Facebook, YouTube, official website and
LinkedIn whereas the print media involves the newspaper, magazine, poster and banner.

 Cost of Research and Development: The research and development cost can be incurred
on various aspects. Those are as follows-

 Rising the availability of quality service providers with an acceptable price

along with the potential customer those are quality service seeker

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  Increasing the number of features (GPS system, rating system, review
system, categorization of best, better and good service providers,
dissemination of updated information) on application software for the
convenience of potential customers
 Trying to increase the involvements of young generations on this type of
business as a mechanism of poverty reduction
 Finding out the possible ways to retain customer as well as mass
engagement of customers in the platform as a cost responsiveness
 Establishment of commercial relationship with IT expert of loyal and
committed to any issues related to application development and maintenance

 Salaries &Rent Expenses: We have got employees of 15 members including executives’

staffs. Furthermore, we are bound to pay a minimum salary to those employees. Besides,
we also have call center executives who are mainly responsible for informing the real-
time information of the delivered order of a particular service to the customers. In turn,
we really do need to pay the executives for the 24/7 service. On the other hand, we are
blessed that we have our own office space which can be used for a long time. We may
need to pay rent expense just after the economic lifetime of the office space.

Now, the estimation of total cost of our business is illustrated below:

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12.0 Revenue model: A revenue model refers to a framework for generating revenues. It
identifies which revenue source to pursue, what value to offer, how to price the value and
who pays for the value. Moreover, it is a key component of a company’s business model. It
primarily identifies what product or service will be created in order to generate revenues and
the ways in which the product or service will be sold.

Every business has a common characteristic which include either selling a product or
delivering services to the potential customer. However, the business what we are interested to
start is quite different from those types of business. Because, we are just going to play a role
as an agent between service provider and a customer. Thus, how much revenue we want to
generate that completely dependent on commission and the rate is 10%. In other words, if we
can manage to receive 3,000 orders annually with an average fee of Tk.1000 per transaction,
then the amount of revenue stands is 3 million BDT. The average fee per transaction is being
assumed by us. The rest of 90% of the total revenue will be received by the service provider.
That is the actual process of our revenue generation.

13.0 Financials: Every Business needs capital. Capital is required at the time of beginning of
the business. It is also needed when the business is in operation. As an enterprise grows in
size and expands, it’s needed finance to establish. The capital requirements for our business
are divided into two classes which are discussed as under: 1. Fixed Capital; 2. Working
Capital

 Fixed Capital: Every business required a sufficient amount of fixed capital for beginning
its operational activities. As the name indicated, the amount of capital invested in various
fixed or permanent assets, which are necessary for conducting the operation of a business
is known as fixed capital. The fixed assets normally do not change their form and cannot
be withdrawn from the business at a short notice. They can, however be disposed-off.
Fixed capitals thus are the funds required for the purchase of those assets that are to be
used over and over for a long period of time in business. In our business, we will assign a
certain amount for the cost of “Application development, website development and
research & development” under fixed capital.

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 Working Capital: Working capital is called circulating capital, which is the life blood
and nerve center of a business. Working capital is mostly used for the purchased of raw
material, payment of wages, seasonal urgent demands of the Business, purchase of more
goods for sale, meeting the expenses of advertising, providing credit facilities to the
customers etc. It consists of cash in hand and bank balances, bills receivable, short term
investments, and inventories of stocks. In our business, we will assign a certain amount
for the cost of “salaries & rent and promotional cost” under working capital.

13.1 Financing: Thinking for the financing for a new business, there are some prominent
ways for financing. First of all, we can manage the financing of our business from two
sources. Equity and debt.

 Equity financing: Equity financing is a common way for businesses to raise capital by
selling shares in the business. Some common way for financing a new business by equity
can be, Bootstrapping, crowd funding, Angel investment from venture capital firms,
Funding from business incubators & accelerators, raising funds by winning contests and
govt. programs that offer startup capital.
 Debt financing: Debt financing refers getting a loan for your business from different
sources. It is other common types of financing for businesses, especially those who are
just starting out. Some common way for financing a new business by debt financing can
be Business Loans from Microfinance Providers or NBFCs, Govt. Programs That Offer
Startup loan and loan from family and friends.

In respect of the existing economic and other situations, getting funds from sources like,
crowd funding, Angel investment from venture capital firms, Funding from business
incubators & accelerators, raising funds by winning contests get business loans from
microfinance providers or NBFCs govt. programs that offer startup capital are unattainable
for a new business like ours. That’s why we are going for the simplest way of financing we
can manage. For the needed BDT 33, 00,000 we will go for bootstrapping which means
financing by own money. We each one will provide BDT 4, 00,000 which amount to BDT
24,00,000. The rest of the BDT 9,00,000 will collect from family and friends as loan. That’s
mean:

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Total fund needed Sources

Bootstrapping or own fund – BDT24,00,000

BDT 33,00,000
Loan from family and friends – BDT9,00,000

13.2 Utilization of fund: To utilize the collected fund intelligently, we must decide the
adequate and minimum amount of fund needed for the intended purposes. As we mentioned
above that, cost of Application development, website development and research &
development under fixed capital and cost of salaries & rent and promotional cost under
working capital. So that’s how we will use the available fund for our business. Which means:

Capital fund Working capital fund

Application software + Website +

Salaries &Rent Expense + Promotional cost
R&D
BDT (17,00,000 + 1,00,000) =
BDT (5,00,000 + 1,00,000) = BDT 6,00,000
BDT 18,00,000

13.3 Capital Structure:

Equity= (24,00,000/33,00,000) *100= 72.73%
Debt= (9,00,000/33,00,000) *100= 27.27%

13.4 Net Present Value:

Cash outflow = 33,00,000 + (10,00,000*0.917) + (10,00,000*0.845) = BDT 50,62,000
Cash inflow = (30,00,000*2.531) = BDT 7,593,000
NPV (9%, t=3) = (7,593,000 - 50,62,000) = BDT 2,531,000

Note: Salaries, rent, promotion, and R&D expenses together accumulates to BDT 10,00,000
for each of following two year.

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