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15 Jul 2018

By way of example, let’s assume that Financial Advisors charge on average 100 basis points (bps) or 1% for advice on fee-based assets under management and the approximate payout is 40% to you, the advisor. Using this information as a starting point, address the following question:

1. How will you hold yourself accountable to the client acquisition goals needed to reach your personal financial goals?

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Jamar Ferry
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15 Jul 2018

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By way of example, let’s assume that Financial Advisors charge on average 100 basis points (bps) or 1% for advice on fee-based assets under management and the approximate payout is 40% to you, the advisor. Using this information as a starting point, address the following question:

1. What goals will you set for client acquisition and at what duration?

HOME CARE Scenario Type of care provided Scenario Question 1 Question 2 Care in this capacity can range from a short-term to long-term based upon the changing needs of the patient. Patient age can range from pediatric to elderly. Care can be provided in the patient’s private home, group home, or assisted living setting. Medical homes fall into this category and are a new focus of Accountable Care Organizations through the Affordable Care Act of 2010. Review your current budget. Taking this information into account, what are some strategies you would use to identify resources to focus on improving efficiency and meeting customer expectations during this time? What do you see as the biggest financial issues of your organization? Hint: You are a nonprofit organization—so look at your means of funding and the relationship this has on your ability to treat patients and hire new staff. How will you address this financial issue? In home care, a patient is visited at home by a nurse or nursing assistants with activities of daily living (ADL), wound care, IV therapy, etc. These organizations can be nonprofit or for-profit. A physician supervises the care with the assistance of RNs or LPNs and certified nursing assistants (CNAs). You are a new administrator for a home health agency that is a national nonprofit organization that serves the surrounding Phoenix community. The agency has been recognized for the delivery of on-time quality services for a number of years. It is known to employ only the top staff within the community, but in recent months staffing numbers have dropped dramatically and you, as the agency’s administrator, have found yourself in a position where your facility is short staffed. You are unable to admit any additional patients unless you are able to have your staff work over time. Budget Considerations Operational Budget – This budget focuses on a broader view of the total operations of the organization in which all departments are reviewed for both their income potential and the costs associated with the work activities used to generate projected revenues. Each department will have its own budget for the managers to follow and on which to base the activities of the department in order to meet its contribution to the total revenues and the associated costs of the organization. Dietary Services – This is a departmental budget focused on the costs and potential reimbursement for the organization. The operation is overseen by a dietitian or nutritionist who is responsible for supplying the nutritional needs of the patients within their care. This department may utilize the services of several consultants or contract this service to an outside organization. Medical Supplies – This budget is focused specifically on the requirement-based services being delivered by the hospital professional, which are often referred to as nondurable disposable items. This budget includes specific items for the surgeon or professional performing the services. These may include such things as oxygen supplies, diabetic supplies, ostomy supplies, bandages, and related supportive items. These items are generally manufactured for one-time use. They are not reused due the inability to sterilize them. The items that are reusable are classified under capital assets and have a use-time identified with the specific piece of equipment. Human Resources – This budget indicates the finances needed to support the organization’s objectives, from a personnel perspective. Full-time equivalent (FTE) calculations are used to project the personnel budget. These individuals could include nonskilled labors to professional licensed physicians and various job descriptions within the categories. In addition to listing the FTEs, the associated benefits of the FTEs would be projected within this department for each FTE within the organization. This will generally include line items for consultants and temporary positions based on the needs of the organization. Departmental Costs – This budget focuses on the specific department and its overall needs, costs, and potential revenue in relation to the overall goals of the organization’s strategic plan. The manager’s primary responsibility is to monitor the operational efficiency of the department, including all areas that directly impact and support the generating of revenue for the organization. Managers may be required to present an analysis of the weekly or monthly operational analysis to the Chief Financial Officer of the organization or a lead manager. Vendor/External Suppliers – Health service organizations have special needs and may require certain external items and/or services. Most organizations have projected budgets to include the purchase of supplies and services for outside contractors (vendors) who specialize in installation, monitoring, and the repair of specialized equipment or technology being utilized by the specific health care delivery system. Maintenance/Facility Operations – This departmental budget focuses on the overall upkeep of the building and the related equipment and machines to provide a safe and comfortable environment for both the patients and workers. This budget includes all FTEs and may also include line items for consultants and outside sources based on needs of the facility.

Revenue 2011 2012 2013

Donations 50,000 55,000 75,200

Grants and Foundations 100,000 80,500 125,780

Government Grants 947,280 878,000 695,120

Interest Expense 6,050 8,000 10,000

Total 1,103,330 1,021,500 906,100

Expenses 2011 2012 2013

Health Center 2,482,845 2,558,265 2,668,951

Administrative Staff 100,000 110,000 125,000

Professional Staff 80,000 100,000 150,000

Family/Youth Services 214,888 210,987 230,985

General Management/Admin140,000 152,000 159,000

Total 3,017,733 3,131,252 3,333,936

Budget Spreadsheet

Develop a high-level funding schedule for a new venture business concept that can be used to discuss cash requirements for the first year of operations with prospective investors. The schedule should be prepared on a monthly basis and should include the following specific details:

(1.) Headcount plan - including all personnel needed to carry out the critical operations of the business for the upcoming year.

(2.) Forecast general & administrative expenses, including office rent and related costs, utilities, communication expenses, insurance, filing fees, etc.

(3.) Estimate the cost of how you plan to market the company/product.

(4.) Develop your revenue model, including key assumptions and variables such as unit sales, sales growth, number of customers by the end of the year, product pricing, etc., Make the model flexible enough to enable you to change key variables and run “what if” analyses.

(5.) If the cost of delivering your product of service is significant, forecast the cost of goods sold based upon estimate costs and the product assumptions used in item 4 above.

(6.) After preparing the initial financial plan, critically review the plan and assumptions (including having advisors and other management team members review the plan for reasonableness). Adjust the month-to-month results to “normalize” the cash balance (and ensure it never runs below $0), adjusting discretionary expenses if necessary.

(It can be any business venture as in a resturant or a store)

Upon completion of the financial model, answer the following questions:

Question 1

How much cash do you need to raise to operate during the first 12 months of operations? Please include your numeric answer and an explanation of several sentences. (about 150 words)

Question 2

Does the amount of cash needed in item 1 above fall within the “reasonableness range” for an early stage company (i.e., up to $5 million)? Please include your numeric answer and an explanation of several sentences. (about 150 words)

Question 3

What is your monthly cash burn rate - both gross and net burn (gross burn is the average of total expenses each month; net burn is gross burn offset by the average monthly cash generated from revenues). Please include your numeric answer and an explanation of several sentences. (about 150 words)

Question 4

How long will you be able to operate at the end of the 12 months forecast before you need to raise additional funding? Please include your numeric answer and an explanation of several sentences. (about 150 words)

Question 5

Please attach a copy of the Financial Model that you created for this assignment.

EXAMPLE

How much cash do you need to raise to operate during the first 12 months of operations? Please include your numeric answer and an explanation of several sentences.

As I plan to operate a restaurant with a nice ambiance I would require premises, renovation and internal decor, furniture, electric setup, a couple of computers, staff, their uniforms, chefs, food supply, tables, chairs and couches, brochures and menu cards, marketing and advertising. Premises and land= $196.3K Renovation and internal decor= $49K Furniture, tables and chair= $20K Staff(2 waiters 1 on the counter 2 cooks)= $16K Uniforms, brochures, menu cards= $500 Food supply= Everyday return, so not included. Marketing and advertising= $20K


Does the amount of cash needed in item 1 above fall within the “reasonableness range” for an early stage company (i.e., up to $5 million)? Please include your numeric answer and an explanation of several sentences.

Total required amount is $301.8K which falls under the reasonable range.

What is your monthly cash burn rate - both gross and net burn (gross burn is the average of total expenses each month; net burn is gross burn offset by the average monthly cash generated from revenues). Please include your numeric answer and an explanation of several sentences.

Three workers at $200 per month and two workers of $300 per month (That's what the salaries are where I live). $1,200 salary, $300 for the electric, maintenance, gas and marketing etc every month. If in the starting months 20 people visits the restaurant and spends at least 7$ per person on food on average, they would bring $140 revenue everyday and in 30 days, $4,200, which is the revenue generated including 60% profit that the food items would generate. $2625 on the food that is being sold. A total of $4,125 is expected to be spent in the first few months, which is the gross burn. The $2,625 food that is sold will at least give 60% profit, that's calculated to be $1575. So the revenue earned each month for a first few months would be $4,200. This estimates that the net burn would be something around (4,125-4200) viz "-$75" every month for a first few months. The negative sign shows it's a profit, and that even at the estimated value their would be some room (of $75) for the accounts to balance and the venture to not fall off into loss. This is the minimum sale calculation which shows no loss. 20 people to visit in one day is a very small figure. Such a business offers an everyday recovery.

How long will you be able to operate at the end of the 12 months forecast before you need to raise additional funding? Please include your numeric answer and an explanation of several sentences.


As we will start gaining more costumers due to marketing and best quality provided, we will start making wholesome profits. At the rate of 50 costumers per day shopping at the average of $8 per costumer, we would make a revenue of $400 per day and $12,000 per month, which after deduction of food cost and other bills would give a profit of $3,000 every month, and hopefully at the end of the 12th month we will be making $6000 per month. Such a profit will help recovering the amount invested and in a few more months the business will be able to recover all the investment except the cost of the land and premises, which will of course be there as an asset.

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