The launch of a new UK nationally distributed magazine is proposed to fill a gap in the market catering for young adults and families with interest in biking and travelling. No other biking and travelling magazine currently published is dedicated to the editorial content now proposed as its prime attraction. It will be called “Superb Magazine Limited” and issued monthly, with a cover price of £2.50, available through the major chains and other national outlets.
An experienced management team has been put together by Bull Wheeler, an entrepreneur with a flair for business development and offering the long-standing experience of the biking world. He will be ably assisted by recognised media advertising and distribution companies to ensure that the launch will be professionally managed from the outset.
Equity finance of £25,000 has already been raised, and negotiations are in progress to obtain a bank loan of £60,000 for two years to help finance production and trading. As with all new publications, the level of investment in start-up promotion costs will be crucial to the degree of success of the launch.
• It is estimated that a further £100,000 equity (risk) capital will be needed for this aspect of the operations, perhaps being contributed by up to four investors.
• For this cash investment, a 31.25% share of the business is offered, with projected repayment of the whole investment at the end of the third trading year.
• After that time profits are forecast to expand further and at least a dividend of similar amount should be possible to be declared annually to shareholders.
The investment can be structured for approval under the Enterprise Investment Scheme if investors prefer. Otherwise, shares may be realized through an earlier trade sale or possible market flotation if the business expands sufficiently in the UK and overseas. Turnover is forecast to exceed £1 million by year four and publication in Asia is being researched.
This proposal should be read in conjunction with the business plan that has been formulated and the caveats stated therein that any money invested will be fully at the risk of loss if assumptions about the market and the trading projections underlying the business plan do not materialise for whatever reason. Potential investors should be aware that all forecasts given in the business plan and the investment proposal have been put forward on the basis that any person relying on their accuracy and authenticity do so wholly at their own risk. The forecasts, comments and assumptions provided are the personal views of Bull Wheeler who has given and not withdrawn his consent for their publication.
This assignment will be graded to reflect your understanding and ability to evaluate business creditworthiness from a commercial banker’s perspective. This should be carried out by appraising a wide range of financial and non-financial information presented in the coursework.
