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This Sales forecast and Valuation after 5 years section is apart of a Business Plan.  

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excel document contains the sheets with the (SalesProJ) It must be completed in its entirety.  The Valuation after 5 years must include charts/graph with a detailed write up, which includes 1 of the 5 approaches in a word document. There must also be a write up for the SalesProJ in a word document.

The attached files contains all the information need to complete this work. **Excel Document please make sure and read the Welcome Tab**

Running head: CHOW CHOPPER INDUSTRY ANALYSIS 1
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P a g e | 1 CHOW CHOPPER INDUSTRY ANALYSIS TABLE OF CONTENTS Introduction. ........................................................................................................................ Page 2 Industry Review. ................................................................................................................. Page 2 Regulation Review and Legal Concerns. ............................................................................ Page 4 Competitive Analysis. ......................................................................................................... Page 6 SWOT Analysis. ................................................................................................................. Page 8 Conclusion. ......................................................................................................................... Page 12 References. ......................................................................................................................... Page 14 Introduction The Chow Chopper is a company that aims to deliver fresh food in minutes with care via state of the art drone technology to the Portland, OR community. Currently, there are very few companies offering food delivery via drones and both Amazon.com and Walmart are initializing similar services in various cities. This company is different from competitors in that it will specialize in the Portland locality and offer restaurants an option to deliver food faster than ever before right to customer’s doorstep or to a location unreachable via car delivery. People want their food fast and to get on with their day. The Chow Chopper is the solution. This on demand delivery service provides customers fresh food in less than 30 minutes. Our drone delivery service will deliver from local restaurants in an eco-friendly delivery container to your 1
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Running head: CHOW CHOPPER 1
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P a g e | 1 CHOW CHOPPER Pricing Strategy The pricing strategy is formulated to have restaurants in the Northwest Portland, Oregon area subscribe to the Chow Chopper. As the demand increases the Chow Chopper can expand to further surrounding areas. The concept of subscribing for delivery services that will boosts profitability for the restaurants makes it enticing to pay the fees associated with the delivery services rendered by the Chow Chopper. The demand for more food orders will rise with the convenience of the fast and fresh delivery options the Chow Chopper offers. This leads to the take out segment of restaurant businesses increasing rendering higher income leading to increased levels of profitability. The Chow Chopper also allows restaurants to cut cost while increasing profitability and still meeting the needs of loyal customers wherever they may be. Expenses associated with the cost of delivery staff, the vehicles for delivery, leasing expenses, gas, and time for delivery and errors of redelivery of mixed up orders will be reduced. Also for those who want to dine in and still enjoy a nice meal, or simply cannot find a baby sitter, or people who want to drink without driving home, or enjoy a nice movie and dinner in their home they can have it all as the Chow Chopper will bring their meal to their door steps (Marketing 4 Restaurants, 2015). Restaurants can still connect with a loyal customer base and expand on that level while cutting costs by hiring less staff to take care of table services or food delivery via other means such as ground transportation. 1
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Sales Forecast To begin creating your financial statements, you will make assumptions that will help explain your sales forecasts. Use your industry analysis and target market analysis to help determine a reasonable sales forecast. From your research, what are the annual sales of similar competitors in your industry? Remember that a sales forecast requires a statement of units and dollars over a period of time. You cannot just state your sales in Years 1–5 without an explanation of how you arrived at the figures! Your potential investor expects you to "build out" how you arrived at your sales projection. To do this, you will need to include a table or a formula with the expected number of units you will sell during a stated time period times the price of those units. The number of units you select should be directly related to your definition of the target audience from your Marketing Plan. In other words, if you are selling craft beer in the Chicago suburb of Naperville, your marketing plan should include an estimate of the number of qualified prospects in this trading area, and what share of those prospects you expect to sell. For your sales projection, you would state the expected number of monthly or annualized units (perhaps six- packs) that those qualified prospects would purchase, multiplied by the selling price of those units, to arrive at your sales forecast. This approach is also true if you are selling a service, or even selling consulting contracts. You still need to show your investors units and dollars and their relationship to your gross sales projection. Because the entire financial plan hinges on your sales forecast, you should include your team while creating these numbers. Create your sales forecast using 12 months for Year 1, and then build into quarterly sales forecasts over the next 4 years. Your software templates will help you do this. Carefully consider the time it takes to build up sales. Remember that it takes time for new businesses to create a customer base. Valid sales forecasts accept this fact; thus, it is completely reasonable for a new company's sales to start off slowly and build up over time. Once you have your business established, your growth factor will increase. Be sure to provide a narrative of the logic you used to build up the forecast. Your sector analysis will be a helpful piece of this logic. It is very rare for a new business to grow at a rate faster than the rest of the industry. You should know your industry-annualized growth rate from research, and it makes sense to apply the same growth rate to your sales year to year. IMPORTANT: At your option, your financial software can automatically apply a monthly grow rate to sales. If you use this feature, remember that the software uses a monthly growth rate, not an annual growth rate. If sales are growing at 4% per year in your industry that is only a 0.33% monthly growth rate. Do not overstate sales by applying an annualized growth rate every month! For businesses with seasonal changes, you will want to factor in these seasonal ups and downs to mirror reality.
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Valuation After 5 Years In this part of the business plan, you should outline what you think the value of your company will be after 5 years. Many business valuation models exist for how to determine the value of a business. This course does not intend to force you into one method. You pick the method. This tutorial will simply point out various methods you can use to show your investors (or your team) what the projected value of your business will be at the end of 5 years. You have most likely learned at least one or two of these models over the course of your career at Keller. Utilize the one you feel most appropriately fits your business and explain why you picked it. Typically, valuing businesses is in the realm of a CPA. However, MBA candidates and graduates need to know when a valuation provided by a qualified profession is reasonable. Thus, you need to know how this works, so that you can see through errors in judgment or valuation when you look at a business plan in the future. Click to visit a business valuation website where you can find some help in valuing your business. Note: This is not a site that gives you the answers. You will have to do the work, inputting the correct numbers. When you arrive at your answer, you will need to know how you got it well enough to explain that in your paper. Below are some approaches to business valuation. 1. Income approach: Using this approach, you can determine the fair market value of your business by looking at the revenue stream and multiplying this against a capitalization (or growth) rate. You will want to use the discounted cash flow method because you will be using projected cash flows and not historical ones. 2. Asset valuation approach: Here, you take the value of your assets, add them together along with the cash value, and have your value. The difficult piece here is the valuation of goodwill, which most CPAs will ensure gets placed into the fair market value of the property. Goodwill is a subjective number that you will want to avoid getting into in your project—there is no such thing as a "projected" goodwill value. 3. Hybrid valuation approach: Here, the CPA combines the asset valuation approach with the income method and comes up with a more reasonable value. This really is the most realistic method, although it will be subject to the methods used. Here is an article comparing hybrid value to income and asset-based approaches written by David Jenkins, CPA, PhD. This article has two very well-described examples of using the different methods that really help explain this process. 4. The Gordon method: For many years, this method was required for all MGMT600 students to use to value their businesses. The downside to this method is that the Gordon Method is a "stock" valuation method, and your businesses are privately owned entities. We have included this method for your edification and you are certainly allowed to use this if you want to. When using this method, most students substitute an industry or sector-specific growth rate to help determine the numbers to use in the method. Work
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Valuation after 5 years doc.docx

Valuation after 5 years
Gordon model was used in the valuation. The valuation was done as below;
Total sales for 2020 = gross profit $21,015,513 - $1,306,779
= $19,708,734
Tax at 25%
= 0.75 x...

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