Analysis:
Our business did turn out like we expected it to. We only managed to do five weeks in total. However, this was not possible as we ran out of time because was the holidays.
Also, money was a problem. Because there were only two of us in the business it was very hard to cope.
In our cash flow forecast, we approximated that we would get a total of £258. This total divided by four would equal £64.50. This would have meant that each member of our group would receive this amount. Our actual results show that we did not make near this amount.
You can see above both the prediction of how well our business would do and the reality of the amount we ended up with. As you can see, the figures are completely different and we, as a business, made a lot less money than we first hoped we would make. We started out with a lot less capital at the beginning than we thought we would receive. This was as some members of the group found it difficult to come up with the funds in time. However, we saved money on some of the stock purchasing as some of it we already owned. We didn’t meet our targets in terms of how much money we would make when we actually went out.
There are many factors that would be changed when running a real business, in comparison to the mini business that we ran for a six-week period.
Firstly, a real business would be run forever (or as long as it survived) rather than a few weeks, so it would be taken more seriously and would be fatal if it failed. The people who ran the business would not have to worry about other schoolwork and could focus totally on the business.
A business failing could ruin people’s lives and get them into debt if they didn’t have limited liability. Therefore, people would take more care in trying to make it work, e.g. they would make sure that all paperwork was handed in on time and all the equipment was in full working order. Also, they would meet deadlines exactly or at least try to in order to help the business run smoothly.
Because our groups were working in a team without hiring any staff, recruitment wasn’t necessary. This would mean that rather than spilt all of the profits between our group, according to how many cars that were washed, they would have to be used for other things. Therefore, paying employee’s wages wasn’t an issue and we didn’t have to give granted leave to anyone. Training our staff also wasn’t a problem, as we didn’t have any staff to train. Letting members of the team go on courses to improve their work such as going to a spa for the weekend, again wasn’t an issue, as we hadn’t employed any extra staff. Less money would be lost from sick pay and maternity leave too, and this would mean our profits would remain higher. Also, dismissing employees wouldn’t happen as we were in our set groups for our business. Time and money would be lost in a real business if this was to really happen, but we did not have to experience this.
Staff meetings would take a long time in a real, long term business as there would be a lot of individuals to talk to and a lot more issues to sort out. This would make a real business more stressful, while ours wasn’t. When our group talked we worked everything out quickly as we all knew what we were meant to do and we weren’t all from different departments. In a real business all the people in one team may not all keep in contact and inform other members of certain things.
More capital would be invested into the business and this would be used for advertising and stock buying. Better advertising strategies could be used such as television advertising and radio promotion. Therefore a wider range of customers would hear about the company. Also, more stock and better stock could be purchased. This would raise the quality of service we could offer and people would then be more inclined to pay higher prices.
If at the end of their business, after it had closed, the firm could afford to throw away any unused stock, or they could sell it on. This would mean that they wouldn’t lose the money that they put into buying the stock.
Paying tax was another thing that we didn’t have to worry about. However we did have to give 20% of our profits to charity. This was acting as tax payment. Our group didn’t really make enough of a profit and so we did not pay this 20%. As well as tax, insurance and VAT would be another payment a real business would have to make. Again, our small groups did not have to pay this.
When our business closed, we didn’t have to tell anyone, as no one was relying on us weekly to wash cars. However, a bigger business may have had deals with customers and may arrange to wash their cars on a weekly basis.
A real business would have to worry about setting up a place to work from. Our groups were fortunate that we could use our school and our houses for this purpose. Though, if we were a proper business then we would have needed much bigger premises to work from, possibly a large storage area and offices too.
Real businesses would have major decisions to make such as whether to expand their company overseas, in another country or have any franchises. Also, smaller decisions such as to increase any prices of certain services if one was doing exceptionally well or whether to decrease the prices if some where not as profitable. If a method was also not working so well and this was a cause for a loss of profits, then there would also be a chance for a real business to change a method of work, in order to make the business do better. We were not working for long enough to see any pattern in our profits in relation to how we worked. Therefore, we didn’t see any point in changing our prices or method.
Problems and solutions:
One problem that our group encountered was the fact that not everybody brought in their loan money when it was due, for a significant amount of weeks. The longer we did not have all of the money, the longer it took us to buy our stock. To solve this problem, we looked over the stock we needed to buy and changed some items so that we could buy everything we needed with £8 less, than we first thought we would have. Although this problem occurred, we solved it and it no longer caused a problem, as we bought our stock and began to wash cars.
Another problem was the weather. The weather was bad and therefore we could not go out to wash cars. This set us back a lot as we lost business and it meant that we would have to do our business for longer. We couldn’t really solve this problem; we just had to wait for the weather to get better before we could go out. Also, during nicer weather, members of the public had already washed their cars and taken advantage of the sunnier weather. This meant that we, as a business, lost money.
It took our business a long time to start up, this was because not everyone could get in touch with each other and so arrangements could not be made about when we would be going out to wash the cars.
Before we started our business, we looked at all the car washing stock that we had already, so that the amount we spent on stock could be reduced. Some people didn’t have the things that they thought they had and so we had to buy these things in addition. The vacuum, for instance, that we thought Kelly had, wasn’t portable, we found this out a bit too late, as we had started our first day of business when we checked it was in working order.
We also encountered another problem. This was that when we were cleaning the cars, people wanted to do certain things. Disagreements occurred when people ended up not doing what they wanted. Also, people had different ideas about how clean the cars were when we finished and this caused some tension in our group.
Our group had to restock. However, as we had saved money by bringing in stock that we already owned, we spent the rest of our loan money on the re-stock. We didn’t have to take out a bigger loan with our parents.
Conclusion:
Our business made money. However, most of this money covered the costs that we had to pay, such as loans to pay back. This meant that we individually get any profit back for ourselves to keep. Still, some profit was made, so in this case our business was successful.
However, we did not work on as many days as we hoped we would be able to. Therefore, we failed. If we had have organised ourselves and kept in touch with each other, then we would have fully completed 6 days worth of work and probably more. In this instance, it may have been possible to make an even bigger profit, meaning we would have been more successful.
I am quite disappointed that our group did not do better but now I have realised that a business isn’t as easy to run as you think it will be. I cannot imagine how hard it would be to run a real business as I found our mini enterprise hard work. But, if you are prepared to do as much as you can to make it work then I am sure that it would.
Recommendations:
I recommend not doing car washing as a business. It causes too much hassle unless it is organised very well and planned to the very last detail. However, this option or choice of business brings in the money quickly and will get more on one day, compared to selling sweets, depending on what prices you charge.
Also, you should talk to your group a lot. If you don’t then this can cause problems and set you back. Keep in touch with each other, therefore you can organise what you will do and keep on top of things.
Make sure everybody brings in their money at the same time, as then you can all start the business straight away and buy more stock so then you can provide a better service to you customers.
Don’t price things too high. This will put customers off and they will go elsewhere, to a competitor, and won’t recommend you to others.
All make sure your business plans are finished. Corrections and additional information can be made later on but make sure it is all put together, and ready for starting.
Organise properly. This is crucial otherwise your group will get behind and stay behind. The less organised you are, the worse you will do, and the less money you will make. Also, if you aren’t well prepared then your customers will pick up on this and not let you wash their cars.
Don’t let conflict get in the way of your business. If it does, then it will be hard for your group to make crucial arrangements about when to work, where and what time etc.
Make sure, that when you are working, you set aside some money in case people need change. If you don’t then, either you or your customer will lose money.
If you are doing a business that will have to be done in your own time and not in school, you have to be prepared to give up your own time. Maybe a business that can be run in school time with a captive market could possibly be better.
Evaluation:
As I have said before, our business would have done so much better if we had kept everybody up to the same point, such as making sure everybody brought in the money at the same time and had finished our business plans. Also, the fact that not everybody handed in her funds at the beginning set us back too.
If we happened to do our business again we would make sure we arranged dates prior to when our business started. Therefore, we would have all been free at the same time and prepared. Also, we could have fitted in more car washing sessions and could have possibly made more money and gained a larger profit.
We could have made sure we went out earlier and made sure we washed people’s cars before they did it themselves. (When we went car washing, people had already taken advantage of the hot, sunny weather and washed their own cars.)
Next time we could spend less money on stock as there was excess and bought more to begin with, then we wouldn’t have wasted time re-stocking.
We would charge higher prices as we found that our customers thought we had charged very reasonable prices, and were very happy with the service they received for the price they paid.
I have learnt that washing cars takes much more time than I expected it to. Also, it is hard work, especially if you are working in very hot weather. I have found out that you need to organise what you are going to do every day, to the very finest detail. Therefore you will be prepared for the days ahead and be ready. If you don’t you will waste time.
