Question

The following table contains financial information from the business plan of a new venture that makes a portable device that uses laser technology for measuring distances with great precision, LaserGolf, Inc.

The information in the table is in thousands of dollars.

Month	6	12	18	24	30	36	42	48	54	60
Sales ($000s)	$          -	$       -	$       100	$       500	$ 1,000	$ 2,500	$ 5,000	$ 10,000	$ 12,000	$ 15,000
Profit ($000s)	$     (200)	$ (300)	$     (500)	$     (200)	$     100	$     300	$     700	$    2,000	$    2,500	$    3,500
0Cash Flow ($000s)	$ (1,000)	$ (500)	$ (2,000)	$ (1,000)	$   (500)	$   (100)	$     300	$    1,000	$    2,000	$    3,000

Assume that the amounts highlighted i.e Profit in the table are cumulative.

1. Using this information how might you propose to identify the stages of new venture development?
2. How much cash is the venture expected to need in total?
3. How would you suggest staging or planning for the infusions of cash? Why?
4. What kinds of investors are best suited for investing at the various stages of development?
5. What would you suggest as useful milestones for evaluating progress?

Answer 1

a. The stages of new venture development is provided below:

b. How much cash is the venture expected to need in total? $1,200 ($ 000's)cash needed in total

c. How would you suggest staging or planning for the infusions of cash? Why?

The current stage requires a consistent cash flow of $ 3,000,and this infusion will stabilize the growth of the company. This approach allows the owners to maintain greater control and if the infusion sparks growth and profit, which literally means the stakeholders receive greater earnings.

d. What kinds of investors are best suited for investing at the various stages of development?

Active investor are best suited as the sales is increasing.  

e. What would you suggest as useful milestones for evaluating progress?

Milestones gives you the opportunity to visualize the company's future and the path for success. The useful milestones are high priority tasks, check points and deliverable. In this case the important milestones as per the above chart is the incremental sales.