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Business Finance for Managers Assignment
Introduction Of Business Finance for Managers
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The business plan is being used to create and develop something new as in order to fulfil the market requirement and to attain profitable outcome in timely frame. It is a written document that is used to describe the core activities and objectives of business and it collectively resulted into accomplishment of respective goals with prominence(Dal Mas, and et. al., 2021, p2(1)). The businessplan for a launch of new business basically comprised of executive summary, goods and services, marketing strategy, financial planning and analysis along with a preparation of budget. It usually advance the probability of neglecting the loop hole from the launch as with this strength and marketing opportunity get advance perpetually.
A summary of the business idea
The business idea is related to opening of new business i.e. restaurant and it is due to the fact that restaurant service have been liked by people and a larger audience is attracted towards the better food services. The restaurant is named as “FOR FODDIE” and it is based on London along with this the services of restaurant is based on Italian food and continental. The company maintain target for the same as because people are likely attracted towards the same. But along with this the restaurant is based on certain theme and it is Heritage so that a warm surround is provided to the customers so that they could also related themselves and have peace while working. The customers of “FOR FODDIE”are the youngsters as they are easily grab the culture of other countries and want to taste many foods. In this management of “FOR FODDIE” assure to provide quality and timely based services so that they are able to achieve and maintain long term sustainability with suitability.
Yes, the “FOR FODDIE” has many competitors such as local business or restaurant and other small hotels as they also offered the similar services along with this have provide respective benefits and offer in order to grab attraction of many audiences(Jukova, and et. al., 2019, p4(2)). In this it is required that management assure to maintain focus target and provide the respective services as per according to the customers so that they are able to attain maximised profit with regularity. There are other risk that is faced by businesses is as:
Financial risk: It is a risk of the business that is related to adequate funds and budget as it is required to establish the company. The opening of new business is related to the provision of better services and for this it is required to have adequate budget and if there is no such budget or if budget get exceed that it is risk for business as they aren’t able to achieve the similar task in respective manner.
Competition risk: The market risk is high and in this “FOR FODDIE” has to work more through which they are able to achieve profitable standards in timely frame. There are various restaurant in marketplace and with this it is required that “FOR FODDIE” assure that there services are completely different from the others so that able to attain attraction of others.
Operational risk: It is a risk with this “FOR FODDIE” worked on their staff and resource management under which they are able to achieve profitable ending and completion of certain task. The new business launch assists the business to operate and manage their function and operation in timely frame(Souto and et. al., 2021, p5(1)). In this it is required that “FOR FODDIE” have skilled and talented employee so that working consequences and its consideration get advance with prominence.
An outline and discussion of the key fixed and variable costs
In order to achieve the initial investment it is required that “FOR FODDIE” has certain basis and it is as cleared below as:
Premises: It is an investment that is required to capital or land purchase so thatadequate premise has been developed by an organisation.
Equipment: In this “FOR FODDIE” required an investment to invest in purchasing of respective machinery and equipment that is used to perform various functions in restaurant such as knife, table, furniture, oven and many others as well.
Staffing levels: In this management invest the investment for human resource and to fulfil hire the skilled candidates for organisation.
Initial bank balance: It is an investment in which “FOR FODDIE” makes an investment to maintain balance and with this business is able to have some secured funds that has been used in future period.
Stock: “FOR FODDIE” invest in stock so that they are able to manage the inflow and outflow in business along with making strong presence in competitive marketplace(Lin, 2019, p4(2)).
The “FOR FODDIE” get generate its income with respect of various aspects and that is as summarised below as:
Pricing: In this “FOR FODDIE” provides respective services to the customers with accurate price and it is a form through which they are able to generate income.
Quantities:It is a basis for “FOR FODDIE” in which they are generates income as by selling higher quantities and through this they are able to process flow of funds with adequateness.
Cash or credit terms: It is related to the flow of cash in which “FOR FODDIE” generate this as in terms of exchange of services so that sustainable ending is resulted in systematic manner.
Cost is related to the payment that is processed with respect of certain object or in action of something. The Fixed and variable costs of business process the respective flow of income and it maintain lead to attain sustainable ending(Götz, 2020, p4(1)). The Fixed cost of business is related to amount that remain same such as rental payment, interest payment and insurance along with this variable cost is the one that get varied such as raw material, labour etc.
The business will operate in London and in this they have provide the respective services to the customers that is basically Italian food and continental food. The initial equipment and stock that is required by business writing tool such as pen, paper, computer, printers, Wi-Fi, credit card processing, online data storage, time tracking, POS system, anti-virus system and web hosting.
“FOR FODDIE” employing the staff such as manager, server, cashier, runner, kitchen manager, line cook and food and beverage manager. The running cost of the “FOR FODDIE” is $425,000 and it is related to the all investment such as human resource, machinery, equipment, capital generation, infrastructure and additional cost as well.
A budgeted profit forecast
January February March April May June July August September October November December Totals Check
Sales 151,590 151,590 151,590 151,590 151,590 151,590 151,590 151,590 151,590 151,590 151,590 124,321 1,791,812 1,791,812
Less
Cost of sales/ Variable (73,760.00) (73,760.00) (73,760.00) (73,760.00) (73,760.00) (73,760.00) (73,760.00) (73,760.00) (73,760.00) (73,760.00) (73,760.00) (60,340.00) (871,700.00) (871,700.00)
Wages (Variable)
Gross Profit/Contribution 77,830.10 77,830.10 77,830.10 77,830.10 77,830.10 77,830.10 77,830.10 77,830.10 77,830.10 77,830.10 77,830.10 63,980.79 920,111.83 920,111.83
Less
Fixed Costs
Salaries (3,000.00) (3,000.00) (3,000.00) (3,000.00) (3,000.00) (3,000.00) (3,000.00) (3,000.00) (3,000.00) (3,000.00) (3,000.00) (3,000.00) (36,000.00)
Rent (440.00) (440.00) (440.00) (440.00) (440.00) (440.00) (440.00) (440.00) (440.00) (440.00) (440.00) (440.00) (5,280.00)
Marketing etc (1,000.00) (1,000.00) (1,000.00) (1,000.00) (1,000.00) (1,000.00) (1,000.00) (1,000.00) (1,000.00) (1,000.00) (1,000.00) (1,000.00) (12,000.00)
Electricity (120.00) (120.00) (120.00) (120.00) (120.00) (120.00) (120.00) (120.00) (120.00) (120.00) (120.00) (120.00) (1,440.00)
Insurance/6 months (500.00) (500.00) (500.00) (500.00) (500.00) (500.00) (500.00) (500.00) (500.00) (500.00) (500.00) (500.00) (6,000.00) (60,720.00)
Net Profit 72,770.10 72,770.10 72,770.10 72,770.10 72,770.10 72,770.10 72,770.10 72,770.10 72,770.10 72,770.10 72,770.10 58,920.79 859,391.83
GPM % 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51%
NPM% 48% 48% 48% 48% 48% 48% 48% 48% 48% 48% 48% 47% 48%
A budgeted cash flow
Receipts
Sales Product 1-Units 300 300 300 300 300 300 300 300 300 300 300 300 3,600 3,600 units
Cash Sales Product 1- £Price/Unit 50.81 50.81 50.81 50.81 50.81 50.81 50.81 50.81 50.81 50.81 50.81 50.81
Sub Total Cash Sales Product 1 15,244 15,244 15,244 15,244 15,244 15,244 15,244 15,244 15,244 15,244 15,244 15,244 £182,923
Sales Product 2-Units 700 700 700 700 700 700 700 700 700 700 700 560 8,260 8,260
Cash Sales Product 2- Price/Unit 79.57 79.57 79.57 79.57 79.57 79.57 79.57 79.57 79.57 79.57 79.57 79.57
Sub Total Product 2 55,699 55,699 55,699 55,699 55,699 55,699 55,699 55,699 55,699 55,699 55,699 44,560 £657,254
Sales Product 3-Units 600 600 600 600 600 600 600 600 600 600 600 480 7,080 7,080
Credit Sales Product 3- Price/Unit 134.41 134.41 134.41 134.41 134.41 134.41 134.41 134.41 134.41 134.41 134.41 134.41
Sub Total Credit Sales Product 3 80,647 80,647 80,647 80,647 80,647 80,647 80,647 80,647 80,647 80,647 80647.10 64517.68 £951,635.73
TOTAL Receipts from Sales 151,590 151,590 151,590 151,590 151,590 151,590 151,590 151,590 151,590 151,590 151,590 124,321 1,791,812
CUMULATIVE Receipts from Sales 151,590 303,180 454,770 606,360 757,950 909,541 1,061,131 1,212,721 1,364,311 1,515,901 1,667,491 1,791,812 18,940
Payments
Cost Of Sales/Variable Costs
Cost of Sales Product 1-Units 300 300 300 300 300 300 300 300 300 300 300 300 3,600
Cost of Sales Product 1- Price/Unit 22 22 22 22 22 22 22 22 22 22 22 22
Sub Total Direct Costs 1 6,660 6,660 6,660 6,660 6,660 6,660 6,660 6,660 6,660 6,660 6,660 6,660 79,920
Cash Sales Product 2-Units 700 700 700 700 700 700 700 700 700 700 700 560 8,260
Cash Sales Product 2- Price/Unit 41.00 41.00 41.00 41.00 41.00 41.00 41.00 41.00 41.00 41.00 41.00 41.00
Sub Total Product 2 28,700 28,700 28,700 28,700 28,700 28,700 28,700 28,700 28,700 28,700 28,700 22,960 338,660
Credit Sales Product 3-Units 600 600 600 600 600 600 600 600 600 600 600 480 7,080
Credit Sales Product 3- Price/Unit 64.00 64.00 64.00 64.00 64.00 64.00 64.00 64.00 64.00 64.00 64.00 64.00
Sub Total Credit Sales Product 3 38,400 38,400 38,400 38,400 38,400 38,400 38,400 38,400 38,400 38,400 38,400 30,720 453,120
Total Cost of Sales/Variable/Direct Costs 73,760 73,760 73,760 73,760 73,760 73,760 73,760 73,760 73,760 73,760 73,760 60,340 871,700
CUMULATIVE Cost of Sales 73,760 147,520 221,280 295,040 368,800 442,560 516,320 590,080 663,840 737,600 811,360 871,700 871,700 871,700
Fixed Costs and Equipment etc
New Car 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 130,000
Equipment 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 65,000
xxxxx - -
xxxxx -
Total Start Up Costs 15,000 15,000 15,000
Fixed Costs
Salaries(Fixed) 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000
Rent 440 440 440 440 440 440 440 440 440 440 440 440 5,280
Marketing/Adv/Legal/Accountancy 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Electricity 120 120 120 120 120 120 120 120 120 120 120 120 1,440
Public Indemnity Insurance 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Total Fixed Costs 5,060 5,060 5,060 5,060 5,060 5,060 5,060 5,060 5,060 5,060 5,060 5,060 60,720 60,720
Total Payments (V.C + Fixed+ Equipment/Start Up Costs) 93,820 78,820 78,820 78,820 78,820 78,820 78,820 78,820 78,820 78,820 78,820 65,400 947,420 947,420
CUMULATIVE PAYMENTS 93,820 172,640 251,460 330,280 409,100 487,920 566,740 645,560 724,380 803,200 882,020 947,420 947,420
Net Cash Flow 57,770 72,770 72,770 72,770 72,770 72,770 72,770 72,770 72,770 72,770 72,770 58,921
Opening Bank Balance 10,000 67,770 140,540 213,310 286,080 358,850 431,621 504,391 577,161 649,931 722,701 795,471
Closing Balance 67,770 140,540 213,310 286,080 358,850 431,621 504,391 577,161 649,931 722,701 795,471 854,392
Calculate CONTRIBUTION by subtracting SALES RECEIPTS-COST OF SALES
CONTRIBUTION 77,830 77,830 77,830 77,830 77,830 77,830 77,830 77,830 77,830 77,830 77,830 63,981
CUMULATIVE CONTRIBUTION 77,830 155,660 233,490 311,320 389,150 466,981 544,811 622,641 700,471 778,301 856,131 920,112
COMPARE CONTRIBUTION to TOTAL FIXED COSTS in YELLOW (R65)
Calculation of the breakeven point and margin of safety
Breakeven Point For Company
Step 1 Calculate Total Contribution
SALES Cont/Unit Total Contribution Average Cont..
Product 1 3,600 28.61 103,002.58
Product 2 8,260 38.57 318,593.52
Product 3 7,080 70.41 498,515.73
Total Sales 18,940 920,111.83 48.58 per Unit
Breakeven Point
Total Fixed Costs 60,720
Average Cont £ 48.58
Breakeven Point Overall 1,250 units
Margin of Safety 17,690
Key performance indicators (KPIs) to monitor progress towards business goals
The critical success factor of “FOR FODDIE” is related to better potential customer, brand recognition, higher revenue generation and strong market presence. The key performance indicator has been used in business so as to monitor and measure the success as in this business allocates the standard outcome and worked as per accordance to achieve the same. The financial and non-financialmeasure that has been used by “FOR FODDIE” is as explained below as:
Revenue: It is a measured in which “FOR FODDIE” expected to achieve 30% of sales increment within two months.
Net income: It is an income that is related to exact inflow and outflow in which such as attaining sales and provision of respective income to the staff and to imply the investment toward raw material(Grit, 2019, p6(3)).In this “FOR FODDIE” assures to take higher income and it is related to 25% as in initial 6 months.
Brand value: It is related to the higher value generation and in this “FOR FODDIE” assures to have higher market presence so that they are able to achieve profitable income in timely frame.
Brand recognition: It is dependent over attaining attraction of many potential customers so that customer base of “FOR FODDIE” gets advanced as per certain time period.
The respective measures has been taken to advance the profit credibility and by analysing the balance scorecard so that suitable profitability and productivity of business get analysed with perfection and with suitability. It has been frequently measures within a time period of 2 months and in this they are able to manage the profit standards with prominence. The balance scorecard approach that is being used by “FOR FODDIE” is internal process and growth and with this they have worked to manage and control the flow of working with effectiveness.
Recommendations based on the results
As per based on result it has been recommended that business assure to provide timely based services along with provision of effective and efficient infrastructure so that they are able to achieve profitable and systematic profit in timely frame(Masciocchi, 2020, p6(4)). In this “FOR FODDIE” is able to attain the market attraction with ease. In addition, as per timely constrained “FOR FODDIE” assure to make respective innovation in infrastructure and in working attribute so that customer receive favourable changes with suitability. Moreover, “FOR FODDIE” also worked for to satisfy the customers and for that make effective usage of social media platform and in this they are able to connect with the customers with effectiveness. In this the customers those are in reach also get attracted in beneficial manner.
References
Books and Journals
B Masciocchi, 2020. How to make a business plan. In Studies in Surface Science and Catalysis (Vol. 179, pp. 465-484). Elsevier.
E Jukova, and et. al., 2019. Planning a new business: typical mistakes of a business plan in the service sector. Journal of Environmental Management & Tourism, 10(3 (34)), pp.441-447.
E Lin, 2019. The Business of Bariatrics: Creating a Business Plan.
F Dal Mas, and et. al., 2021. Translating knowledge in new entrepreneurial ventures: the role of business plan development. VINE Journal of Information and Knowledge Management Systems.
J Götz, 2020. Business Plan. In Seasonal Affective Disorder and Light Therapy (pp. 165-203). Springer, Wiesbaden.
J Souto, and A Rodríguez-López, 2021. Entrepreneurial learning in an experiential and competences training context: A business plan in Bachelor thesis. The International Journal of Management Education, 19(3), p.100513.
R Grit, 2019. Making a business plan. Routledge.
