We are requesting a loan of $300,000. The funds will be used to purchase video equipment and to cover initial operating expenses.
Our repayment for this loan will come from cash in excess of profits, paid monthly. The increase in profits generated by business from television stations will provide funds to repay the loan in 10 years.
6.1 Important Assumptions
The table below highlights some assumptions that are key to the success of the company.
6.2 Break-even Analysis
For our Break-even Analysis, we assume running costs of approximately $9,000 per month, which includes gas, phone, and an estimation of other running costs. Variable costs mostly include video tapes. The chart and table below show our break-even point.
6.3 Projected Profit and Loss
The table below provides the projected income statements for Michael's Video Service. The company is basing its revenue projections on anticipated sales of services, initially to the television networks and video companies, then to other markets such as high school events and weddings.
6.4 Financial Risks and Contingencies
The company recognizes that it is subject to both market and industry risks. We believe our risks are as follows, and we are addressing each as indicated. We face all the risks associated with being a start-up company. We feel that we can overcome these with our experience in the industry and by quickly establishing desired relationships. The economy in south Ohio is based on the oil and gas industry, which is very unstable. Having seen the oil bust in the 1980's and its effects on the economy, we have diversified our efforts and will be going after markets that will not be affected by fluctuations in the oil and gas industry.
6.5 Projected Cash Flow
The following chart and table present the cash flow assumptions for the company.
6.6 Projected Balance Sheet
Projected balance sheets are provided below.
6.7 Business Ratios
The following table presents important business ratios from the motion picture production industry, as determined by the Standard Industry Classification (SIC) Index code 7812, Motion Picture and Video Production.