My trading budget includes the products I will use when making my products including the raw materials. They include products such as burger buns, chips and packaging. I have decided to buy all my products at the beginning of the month for the reason that I have a limited space inside my shop that can hold the supplies for example my fridge can only hold so much therefore by ordering on the first of the month, my fridge will be able to hold all the ingredients such as the cheese and milk. Another reason why I have chosen to do this is so the ingredients do not get ruined or expire after have kept it for a significant period of time. By ordering at the beginning of the month, the ingredients will be fresh as it will be bought recently from the suppliers. However, this could cause problems because if I get more sales than anticipated, than I would be required to order more stock which could cause problems for example if there is a delay in delivery then I won’t be able to offer the products to customers which will ultimately result to dissatisfied customers. A situation I could carry out to overcome this situation is to order stock whenever needed. By doing this, I will always have the sufficient amount of stock needed as well as having enough storage space to store them. Apart of the raw materials, I have decided to buy the non edible products such as tissues, packaging and serviettes on a 3-4 month basis. I have chosen to do this because one, they don’t take up much storage space and two, because they don’t get ruined over time. By doing this, it saves me time having to order it every month and it also saves me money having to pay for shipping if I were to order them every month.
My trading budget shows that I will spend roughly £12,849 a year on my day-to-day running costs. It also shows that I will spend on average, £800 - £1,200 a month On my trading budgets, I have increased the budget on certain months for example July and December because they’re are the holiday seasons and I feel the I will get more customers during this period. I predict that my budget will increase over the years for two reasons: The first reason is that my business will get more well known due to an increase in sales promotion and therefore the will be an increase in sales therefore I have to buy more stock and advertising and two because my primary research shows the price for the raw materials are steadily increasing little by little for example 1 month ago, the price for the cheese was £1.22 for 500g, now it is £1.34 for the same amount.
The advantages of me using a budget are that it allows me to control my costs for the reason that if I see I am spending too much on certain areas for example cheese or chips, then I can order less of it thus by doing this, it will allow me to meet my profit aim because my one of my objectives for this aim is to cut do on costs. Another advantage of setting out a budget is that it will motivate my staff as they have something to work against for example they have a set of amount of money to work against and it will encourage them to stick to this budget.
On the other hand, the disadvantages of a budget is that it could put pressure on me and my employees for example it will it will mean that it will put pressure to stick to the budget at not go over. Another disadvantage is that it doesn’t take into consideration any external factors for example, there could be a change in price for example my suppliers may increase the price of the pizza packaging and as a result of this, it will lead to me creating another budget which will ultimately waste time.
By creating the budget, it has helped me to meet my aims and objectives for the reason that it will control my spending and by controlling spending, therefore it will help me to meet my objectives of cutting down costs and will therefore, lead my business to a greater profit. As well as this, it will help me to stay within my budget and as a result, will lead to greater profit as well. Apart from my profit aim, my budget will help me to increase sales because it will motivate my staff to work harder as they are given a task to do with a set amount of budget. Lastly, if I notice I am overspending, I will look for cheaper suppliers for example if I can’t find cheaper equipments from a different website/store then I will purchase it from there and therefore will allow me to fulfil my objectives of finding suppliers and as a result will increase me profit.
