Business Finance for Managers Assignment Sample

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Business Finance for Managers Assignment

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1 Profile 

  1. Vision of Business:

Start-up is initiated with the vision of delivering high quality products in range of hot caffeine products and also provide place for enjoy coffee with good company. Business start with a slogan which is “ Here we serve you actual socialization with a cup of coffee so please drop mobile outside for excluded disturbance and enjoy company of real life”

  1. Financial and Monetary Objectives:
  2. To Achieved sales and revenue growth near to 3 million on a serve of 10,000 customer for the café.
  3. For Setting financial goal of earning margin of 40% on overall cost which included fixed and running cost for café.
  4. Here are the forecasted sales for financial year 2020 which represent in numbers of customer served for the year. Growth is assumed to be constant with 5% on every month for the year.

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total

200

210

221

232

243

255

268

281

295

310

326

342

3183

1.1 Products and services of Café Coffee Hub

As the business is initial start up Café Coffee Hub provide middle and lower range of refreshment courses for caffeine and tea along with snack which can provide better customer experience in lower cost. Café Coffee Hub provide N numbers of services in which they provides Cold coffee with cookies, Cappuccino, Ristretto , Double Espresso or Doppio Cappuccino Long Black or Americano. & Flat White (Deng et. Al., 2019). In Snacks café offers sandwiches Burgers and cookies for satisfaction of time and hunger on café. Café also listed the required of socialized environment in old fashioned café style where stand ups and other cultural event also conducted on the participation of customers. Although business owner also settled a feedback and suggestion centre for any additional customized and personalized coffee flavour requirements for their customers.

1.2 Market Segment for Café

Café is dealing in lower market segment where they have small and localized competitor which can directly influenced on performance of Cafe in the street. Although café is intiallly focused on coverage of 40% of market size of the town or city where they can provide better range of customized quality products and along with time value to their Penny spend on café. Café expecting a growth rate of 10% as if they successfully achieved targeted market audience otherwise they assumed growth of 6% in the market as they come with unique approach which can mostly attracts customer for spend time in café.

1.3 Range of Products for Café coffee Hub

Café Coffee Hub can be a café which established with unique client approaches in which they assist there customer to rethink on old way of communication without using mobile phones in the café premises.

As Café provide unique taste of coffee along with combination of customized snacks and caffeine flavours makes café more attractive to the customers in the streets (Palczewski and Stettner 2017). This strategies indirectly influenced on flow of customers in the café as they can hit the mind-set and perception of socialized with personalized food and drinks for each person in the café.

 As the setup required initial fund which café management is targeted to earn through estimated sales around August so that business can start making some revenue or margin generation from August to December for the year. A well define financial strategy helps business in operates their working capital and also provides option of better investment in improvement of business process on large scale to capture high market size.

1.4 Local market and competitors for Café

As the café is located in Aston so café required to be cope up with local café on initial face in which Coffee hub has majorly Horgan’s café, Black Country Kitchens Limited and Coxsone lounge, Erina Café, Costa Coffee (Ding et. Al., 2018). As the café operates their business in local market so they needs to cope up with above mentioned cafes. As Coffee and socialized behaviour is highly adopted in western culture so café are mostly used in the weekends for local customers. Further, market is very much small so taste and other attractive factors are key factors which can influenced operational performance of café.

1.5 Financial Arrangements for Café

As the business or café is small in initial so owner required low value of the funds so they required to search for the local financial bodies in the market. As of now business required initial fund for their business setup as café required various machinery, furniture and other accessories for café. 

  • Owner’s Capital – As the initial investment for the start-up owner required their own fund for their business activities. As for the preliminary cost and legal cost are required to bear by the owner itself so they needed to arranged some of the capital from their personal savings for their business.
  • Local Lender: Owner also can arranged fund from local lenders which can be friends relatives and any known personal who can help or lend fund for coffee business. Although many of the people are provided fund on high interest rate from which owner can borrow loan for their business start-up.
  • Financial Institutions: The owner can go for the option of financial institution which can be NBFC and Banks. This financial institution can provide various kind of financial products for fund borrowing which can be used by the owner for their business start-up.
  • As of now business owner currently required fund of £60,000 in which they can arranged fund of £10,000 through their own capital, £15,000 from local lenders and remaining can be taken from financial institutions.

1.6 Fund Utilization for Café coffee Hub

  • Legal Cost – Initial Café owner required to bear the legal and registration cost which they required to be paid though owner’s personal pocket. Further many of the other legal cost also business needs to bear which required for start-up of business or Café.
  • Fixed Assets: Café owner required to purchase the relevant plant and machinery along with furniture and fixtures which required to initial start the café in Aston (Piano and Rouanet, 2020). As of now initial investment for assets is the only target for the owner so that He/she can use fund through appropriate allocations.0
  • Raw Material – Initial fund also required for purchase of various raw material which can be used for prepare Coffee for the customer of the company. This includes Milk, Sugar, Caffeine, Biscuits and other flavour which required to prepare various types of coffee for the customer.
  • Land And Building: As the Land is borrowed by the owner on the lease of 10 years for which He/She required to pay amount of £10,000 for each month?
  • Machinery and equipment:

SL No.

Description

Nos. required

Rate

Total Value(£)

1

Semi-automatic coffee machine

3

800

2400

2

Espresso grinder

3

200

600

3

Blenders.

3

100

300

4

Refrigeration system

1

1500

1500

5

Countertop display warmer

1

1000

1000

7

Food prepping table

1

200

200

8

Utensils Sets

4

500

2000

  • Other Assets:

SL No.

Particulars

Nos.Required

Rate

Total Value

1

Furniture

10

250

2500

2

Computer

1

50

50

3

Inverter

2

100

200

4

CCTV Camera

5

50

250

  • Prior Business Expenses :

SL No.

Particulars

Amount

1

Legal Cost

1000

2

Travelling Expenses

300

3

Consultancy Cost

200

  • Operational Cost

SL No.

Particulars

Amount

1

 Raw Materials stock

1000

2

Running Expenses

1500

3

Fixed Cost

500

1.7 SWOT Analysis of Coffee Café Hub

 The bakery main faces compliance issues for meeting the customer's requirements 

2. Income & Costs

Income:

Provide a little discussion on how you arrived at your selling price i.e. “here owner initial selling two different type of Coffee for £75 and £150 for each customer. Price determination is taken on cost plus 25% margin for the year.

Costs:

Cost type

£

Fixed / variable

Notes

Initial set up

 

Fixed

 

Staff costs – manufacturing

 

Variable Costs & Fixed Costs

Managers (Fixed)

Hourly Pd staff (Variable)

Raw materials

To manufacture/make your product?

Variable

Use the excel spreadsheet to help you.

Rent

 

Fixed

 

Electricity

 

Semi-variable

 

Administration

 

Fixed

 

Advertising

 

Variable

 

Business insurance

 

Fixed

 

Bank interest

 

Fixed 3%

 

Telephone / internet charges

 

Semi-variable

 

3. Calculation of Unit Costs

 

Product

Cost

             
 

Cake

               
 

Description

No. of Hours

Material kg/ltrs/m

£ Rate per hour/kg/ltr

Total Variable Cost

Fixed Cost

Total Cost per unit

Markup 94%

Selling Price

 

Labor

0.10

 

25.00

2.50

       

Milk

Material 1

 

0.40

50.00

20.00

       

Sugar

Material 2

 

0.25

8.00

2.00

       

Coffein

Material 3

 

0.60

40.00

24.00

       

Fruits

Material 4

 

0.20

25.00

5.00

       

Flavor

Material 5

 

0.50

35.00

17.50

       

Biscuits

Material 6

 

0.80

30.00

24.00

       
         

95.00

25.00

120.00

30.00

150.00

4 Budgeted Profit Forecast for year ended 31st December 2021

5. Cash Budget (to be submitted in spreadsheet format)

6. Cost Volume Profit Analysis

 Calculation of Break Even Point and Margin of Safety:

Income Statement

 Particular 

 Amount 

   

 Sales 

 £ 477,513.80

 Less - Variable Cost 

-£ 143,254.14

   

 Contribution 

 £ 334,259.66

 Less- Fixed Cost 

-£ 256,823.96

   

 Profit 

 £ 77,435.70

Break Even Point

=

Fixed Cost

x Sales

Contribution

Break Even Point

=

 £ 256,823.96

X £477,513.80

 £ 334,259.66

Break Even Point

=

 £ 366,891.37

Margin of Safety

=

Sales

-

Break Even Point

Margin of Safety

=

 £ 477,513.80

-

 £ 366,891.37

Margin of Safety

=

 £ 110,622.42

7. Key performance Indicators

Here some of the key performance indicators are listed which is used for evaluation of performance of the company. This factor provide broad understanding for the financial performance and future path of the company so that management of the business can take corrective or strategic decision for overall growth of business.

  • Net Profit – Net profit is the financial figure which indicates the financial performance of the business. Net profit indicates how a business operates their business or business is profitable or not from their business activities (Fonnum, E., 2018). Net Profit is the most key attractive figure for the investor in the market as the Coffee Hub is new in the market so owner required to be more careful for the profit figure of the business in starting phase because financial institution is also consider this figure as the base for the financial borrowings.
  • Cash and Cash Equivalents - Cash and Cash Equivalents is the balance of the liquid assets which can convertible in cash in very short term period (Kviat, A., 2021). This financial figure reflects liquidity status of the company and also provide capability of the company for settle off their current liabilities in short term periods.
  • Working Capital - Working capital reflects the capital requirement for the business activities to run up their operational activities for a fiscal year. This also reflects the efficacy of the business and also suggest about the fund which required to settle down current liabilities of the business.
  • Sales Revenue – Sales revenue is the key tool which is used for better analysis the financial growth of the company. Sales is directly linked with the performance of the business and also helps in capturing better market share in Aston for Café.

8. References

  • Fonnum, E., 2018. Development of Key Performance Indicators for measuring performance at Bispevika construction site(Master's thesis, Norwegian University of Life Sciences, Ås).
  • Kviat, A., 2021. Post-digital prosumption and the sharing economy of space: The pay-per-minute cafe. Journal of Consumer Culture, p.14695405211022080.
  • Deng, Q., Allard, B., Lo, P., Chiu, D.K., See-To, E.W. and Bao, A.Z., 2019. The role of the library café as a learning space: A comparative analysis of three universities. Journal of Librarianship and Information Science, 51(3), pp.823-842.
  • Palczewski, J. and Stettner, ?., 2017. Impulse control maximizing average cost per unit time: A nonuniformly ergodic case. SIAM Journal on Control and Optimization, 55(2), pp.936-960.
  • Ding, D., Pavlichin, D.S. and Wilde, M.M., 2018. Quantum channel capacities per unit cost. IEEE Transactions on Information Theory, 65(1), pp.418-435.
  • Piano, E.E. and Rouanet, L., 2020. Economic calculation and the organization of markets. The Review of Austrian Economics, 33(3), pp.331-348.
  • Chen, X. and Koebel, B.M., 2017. Fixed cost, variable cost, markups and returns to scale. Annals of Economics and Statistics/Annales d'Économie et de Statistique, (127), pp.61-94.
  • Saediman, H., Nalefo, L., Tufaila, M. and Zani, M., 2019. Cost and return analysis of rice farming and brick making in South Konawe District of Southeast Sulawesi. Int. J. Sci. Technol. Res., 8(10), pp.835-838.
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