W7_Reginald Nwachukwu_Analysis of Business Plans Using B.E. ROI and ROS

1. Problem definition and Opportunity Statement:

" To evaluate and compare two business plans alternatives using Break-Even Analysis, ROI and ROS"

I have decided to run a new business venture and have two different business plans that I have researched on: these includes running a 3D Modelling Training Center and/or a Cybercafe Business Center. Using and a questionnaire and self-survey research methods, I have gathered the startup funds/capital for these independent business opportunities as shown in table 1-1 below:

Table 1-1 Startup capital and assets required for two independent business plans

2. Development of Feasible Alternatives:

The following are feasible alternatives I have developed for investment opportunities; 

(I) 3D Modelling Training Center
(II) Cybercafe Business Center

3. Development of Outcome for Each Alternatives:

The outcome for each alternative will be based on the results obtained from analysis using basic pricing tools which includes B.E analysis, ROI and ROS. Pricing strategy is not considered as this is more intriguing at this stage of business planning.

4. Selection of Acceptable Criteria:

The selection of acceptable criteria for each business alternative will made by comparing the values of  B.E sales revenue, higher ROI, higher ROS for each business plan considered for investment purpose.

5. Analysis and Comparison of Each Alternatives:

The various tools and techniques for pricing model were applied on the startup capital and cash flow projects to evaluate the profiatbility and business potentials inherent in each business plan. The tools and techniques used include: Break-even analysis (B.E.), Return on Investment (ROI) and Return On Sales (ROS) etc.

    Table 5-1 Analysis and comparison of the two independent business plans

6. Selection of Preferred Alternatives:

    Based on the values obtained from Table 5-1 by Comparing the values of  B.E. sale revenue, ROI and   ROS for the two independent business plans; investment in 3D Modelling Training Center would be a preferred alternative since it has a higher complex ROI and B.E. sales revenue. Both business plans has equal values for ROS.

7. Performance reporting and Evaluation of Results:

The performance of each business plan will be reported by measuring the number of 3D modelers trained or the number of time tickets sold during the earning life of the business plan.

Reference:

1. AACE International. Skills and Knowledge of Costing Engineering 2004 P 34 - 38, (5th Edition Revised)  Morgantown W.V West Virginia

2. Project Management Institute (PMI). 2000. The Project Management Body of  Knowledge (PMBOK 2000)

3. Sara Sack Return on Investment: Initial considerations for Measuring Cost Savings of AT Reuse 2007 Retrived from: 

http://www.passitoncenter.org/documents/.../Return%20on%20Investment%202.ppt