Based on the information presented on the next page, provide your recommendations for the following:

1. How much cash will be required to start the business?
   • Where will the start-up cash come from? How will the start-up cash be used? Organize the information in terms of : (1) operating, (2) investing, and (3) financing activities.

     Your tourism business offer will operate in the Wine Industry. Some info on the industry:

   • Total size of the industry is about $9 billion in Canada.
   • Average winery generates about $600,000-$700,000 in revenue annually.

   • Ownership structure of the new business: Canadian Controlled Private Corporation (CCPC). Your team members are the owner/operators of this business.

     The charts on the next page list the start-up costs for a typical winery that produces 5,000 to 15,000 cases annually:

     Capital assets

     Description	Low range	High range
     Land, Plant, & Office	$400,000	$1,200,000
     Other Equipment (receiving equipment, cellar equipment, material handling, refrigeration system, fermentation & storage, cooperage [first 3 years], tasting room)	$400,000	$800,000

     Pre-opening soft costs (costs incurred prior to any revenue earned)

     Description	Low range	High range
     Full Time Salaries	$100,000	$300,000
     Part Time Salaries	$5,000	$20,000
     Pre-opening marketing, website, public relations	$15,000	$25,000
     Professional fees (lawyer, accountant, etc.)	$5,000	$10,000
     Utilities	$10,000	$15,000
     Insurance	$5,000	$15,000
     Other (Point of sale technology, other software, etc.)	$5,000	$10,000

     Working capital

     Description	Low range	High range
     Cash reserve	$0	$50,000
     Grapes (Inventory)	$85,000	$250,000
     Packaging (Inventory)	$125,000	$370,000
     Other current assets (supplies, prepaid expenses, tech purchased, etc.)	$5,000	$10,000

     Financing Options Available

   • Equity Investment (a potential partner wants 49% of business with max investment of $1,500,000, but will take lower % for less investment)
   • Short-term loan (up to $250,000 @ 8.25% interest)
   • Long-term loan (up to $1,500,000 @ 5.5% interest)