Investor Proposal Report

Investor Proposal Report

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Introduction and Outline

  1. Introduction

I am planning to start gaming lounge in Sunderland UK named New Sunderland gaming Lounge. The study of the arte indicates that there are less than 50 gaming lounges in the entire area, which creates an ample opportunity for establishment of one.  The business will be offering computer games, mainly targeting the population aged below 30 years. To start a business £167020 will be needed. This will cater for purchasing the gaming systems, renting the house paying licenses, and meeting all the other initial costs.

  1. Source of Finance

Currently, I have insufficient amount of money to finance the business. Of the needed amount I can only get £ 97020, showing that I have a deficiency of £70000. The loan from the bank will be the most appropriate source of financing. I have chosen Barclays bank as the source of financing due to its competitive rates compared to other banks, it has a business mentorship programe from business startups and it offers adjustable loan. The average micro loan interest rate in UK is 13.5%, but Barclays offers 9.5% which is more competitive (Trading economics, 2015).  If the bank does not offer this loan, it will be impossible to start the business because I do not have enough capital. Selecting another investor with higher rate will increase the total expenses, increase the payback period and lower the NPV which will make the business less attractive.

Financial documents

  1. Statement of Income

Statement of income indicates the expected revenue from the business, the expected expenses as well as the expected net profit. The format used is in line with the IFRS income statement for the SME’s. The projected income assumes that the revenue of the company will grow by 20% over the six months period. The expenses on the other hand are expected to grow by 3%. It is projected that the business will register a profit of 60410 in the first month of business. In the sixth month the business will make a profit of £213847 represent a 57% profit growth over the months. The high growth rate will be contributed by the increase in the number of customers due to the development of the business image. This is illustrated in the table 1.0 below

Table 1.0 the projected income statement for the New Sunderland gaming Lounge.

  New Sunderland gaming lounge  
Projected Income for the next six months  
    Month 1 month 2 Month 3 Month 4 Month 5 Month 6
    (UK £) (UK £) (UK £) (UK £) (UK £) (UK £)
Revenue   108000 137160 174193.2 221225.4 280956.2 356814.4
Cost of sales   0 0 0 0 0  
Gross profit   108000 137160 174193.2 221225.4 280956.2 356814.4
  labor 18000 18360 18727.2 19101.74 19483.78 19873.45
  electricity bill 820 984 1180.8 1416.96 1700.352 2040.422
  license 10000 10000 10000 10000 10000 10000
  rent 13200 13200 13200 13200 13200 13200
  Loan interest payment 770 770 770 770 770 770
  gaming systems maintenance 1200 1248 1297.92 1349.837 1403.83 1459.983
  Miscellaneous expenses 3600 3672 3745.44 3820.349 3896.756 3974.691
  Total expenses 47590 48234 48921.36 49658.89 50454.72 51318.55
Net income before tax   60410 88926 125271.8 171566.5 230501.5 305495.8
Tax   0 0 37581.55 51469.94 69150.45 91648.75
Net income after tax   60410 88926 87690.29 120096.5 161351 213847.1
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