Amex is an online education technology company based in Lagos, Nigeria that offers online educational short courses through its online educational platform AmexEdu. The business began operations in October 2021 and has been working very hard to make ready its online educational platform that will offer Cinematography and Animation courses. Growth and good customer service make the business grow faster and will be the focus of Amex (Barrow, Barrow and Brown, 2018). It will guide students to become a highly-skilled Animators or cinematographers in any particular industry.
As animators, the students can acquire excellent graphic design skills knowledge of the 12 techniques, including staging, timing, ease in, ease out and anticipation, use and application of various animation and design software (Bertoni, Colombo, and Quas, 2015). They also include deeper comprehension of various mathematical and geographical concepts applicable to animation and soft skills like proper interpersonal and communication skills (Beckman, 2014). The college trains both 2D and 3D animators to be experts in their fields and as Cinematographers (Cholodenko, 2014). The students can work in the entertainment, media, and marketing firms to carry out activities such as filming, camera and lighting, cartoon filming, special effects, and art creation (Hu, 2015). These programs will ensure that the students become the best in the industry.
Crowdfunding
Crowdfunding has become one of the popular ways through which businesses can raise capital easily. The low cost and quick timing of this method and the availability of many crowdfunding platforms have made it possible for people to use it (Klein, 2020). The method operates by bringing together many business-minded people to invest (Lahr and Mina, 2014). The pros of this method include that it is much easier and more convenient to use online crowdfunding methods than the complicated legal and engagement process associated with the other methods (Makris, 2015). The funds raised through crowdfunding are either in the form of donation or interest-free loans and do not require any equity or collateral from the business associated with banks (Mateer, 2014). The private equity firms and the entrepreneur do not lose control of stake in the business since no equity is given out. Cons of the method include, sometimes the funding raised could below and not meet the intended capital requirements of the business. Lastly, the investors placing their capital into the business face a high risk of losing their money because of the lack of thorough due diligence before they invest.
Angel Investing
Angel investing entails having a high net worth individuals invest capital into a business in exchange for equity. These individuals are often not linked to any private equity or LLP firm. Pros of the method include that the funding is long term and patient and does not need interest payments compared to bank loans. The angel investor could bring more experience into the company and mentor the founders to navigate challenges associated with entrepreneurship (Rhodes, 2020). Pros include the entrepreneur loss of control of the business, capital offered by Angel investors is often less than what banks and private equity firms offer.
Viability of the Business Idea
Evaluating business viability is very crucial when investing in a new business. The online education industry is a sector that is anticipated to grow at a compounded annual growth of 21% between 2021 and 2027 globally (Puche and Lotz, 2015). By 2020, the industry was estimated to be valued at $250 Billion and is projected to be worth $1 Trillion by 2027 (Puche and Lotz, 2015). Low internet costs are key drives of the sector that will make the AmexEdu Platform gain traction and credibility faster. The cost of electronic devices in Nigeria and a growing middle class with disposable income want high-quality education for their children (Spadoni, 2014). Key restraints in the market are the political and economic instability associated with blocking the internet in recent years (Tripathi, 2016). Despite this constraint, our program’s low cost and flexibility will lead to faster adoption. Key players in the global market that have made online education succeed include Khan Academy and Udemy, which already offers countless courses on their online platforms.
Plan of Action
Operating Package model and Estimations
Number of students’ enrolment estimates, assuming 10% growth in enrolment in years 2 to 3 and 20% growth in years 4 to 5.
The amount chargeable per course per student
The cost chargeable per student is $250 for the entire 6-month online course
The amount payable per required number of teachers in cinematography, television, and sound engineering
The amount payable per required training materials and lesson plans with specific inputs
Assuming increases 5% year over year due to inflation
The amount required for the basic hardware required in video equipment, lights, cameras, and associated green screen studio – Assuming rental of this equipment.
Direct costs, including marketing campaigns, social media, streets, cinemas, and streaming services. Assuming increases of 10% year over year
Other overheads and assume a 10% Year-on-Year Growth.
Revenue estimates assuming $200,000 revenue (Yr. 1). Assume a 10% revenue growth (Yr. 2 – 3) and 20% revenue growth (Yr. 4 – 5)
Cash Budget
Income Statement
Interpretation of the Income Statement
The income statement indicates that the company will lose its first two years of operations and will become profitable from 2024. Profitability will increase by 2,111.3% from the year 2024 to the year 2025. This sharp increase in profits will be attributed to solid revenues and student enrolment growth. Between the years 2025 to the year 2026, profitability will increase by 113.6%, while for 2026 to 2027 will increase by 81.9%
Cash Flow Statement
Interpretation of the Cash Flow Statement
The company will become cash flow positive from 2022 to the preceding years due to financing from an angel investor and growth in sales and revenues and cutting expenditures.
Ratio Analysis 2022
Break Even Analysis
=(Fixed Costs *Sales)/(Sales -Variable Costs)
(1,500,000*12,000,000)/(12,000,000-8,605,000)
=$5,301,914.60
The company breaks even at $5,301,914.60 in 2022 and is anticipated to be profitable.
Payback Period Analysis
Payback period = amount to be invested / estimated annual net cash flow from operational activities
= 500,000/ (476,500+464,075+484,525+574,000+660,095+838,495)*100
=14.3
Reference List
Barrow, C., Barrow, P. & Brown, and R. (2018) The Business Plan Workshop: A Step-By-Step Guide to Creating and Developing a successful Business, 10th edition, Kogan Page, London. Web.
Beckman, K., 2014. Animating film theory: An introduction. In Animating film theory (pp. 1-22). Duke University Press. Web.
Bertoni, F., Colombo, M.G. and Quas, A., (2015) ‘The patterns of venture capital investment in Europe.’ Small Business Economics, 45(3), pp.543-560. Web.
Cholodenko, A. (2014) “‘First Principles’ of Animation.” In Animating Film Theory, edited by Karen Beckman, 98–110. Duke University Press. Web.
Hu, Y. (2015) “Regulation of equity crowdfunding in singapore.” Singapore Journal of Legal Studies, 46–76. Web.
Klein, C. (2020) “Film culture, sound culture: Setting, cinematography, and sound.” In Cold War Cosmopolitanism: Period Style in 1950s Korean Cinema, 1st ed., 108–43. University of California Press. Web.
Lahr, H. and Mina, A., (2014) “Liquidity, technological opportunities, and the stage distribution of venture capital investments” Financial Management, 43(2), pp.291-325. Web.
Makris, G.C., 2015. Crowdfunding: from startup businesses to startup science. Bmj, 350. Web.
Mateer, J., 2014. Digital cinematography: Evolution of craft or revolution in production?. Journal of Film and Video, 66(2), pp.3-14. Web.
Puche, B. and Lotz, C., 2015. Private Equity Minority Investments. The Journal of Private Equity, 18(4), pp.46-55. Web.
Spadoni, R., 2014. A pocket guide to analyzing films. Univ of California Press. Web.
Rhodes, G.D., (2020) Consuming images: Film art and the American television commercial. Edinburgh University Press. Web.