Customer:
Right choice is target two mains customer: house owner and local business. The surrounding area is quite wealthy; nearly 30% of the residents earn more than £65,000 a year. Consequently, they want their window to clean every 2-3 days time and want them to look nice. There are six different window cleaning within this town and surrounding areas.
Legal implication:
The legal implication for sole trader is that because the owner has sole control of a business, therefore the owner has a responsibility for the business. The owner is personally legally responsible for any business debts so, the owner have to report any business profits or loss on the individual tax. If the business is in debts or seriously loss this could lead to a high risk in business of bankrupt.
As, a sole trader, I must register to the Inland Revenue (IR) which include, income tax, national insurance, VAT, etc. So, I will have to pay the income tax on my business profits. Then I have to pay for the VAT when my turnover reached a limit in any 12 mouths.
Description of services:
For our business, the customers have to book the appointments over the phone when they want their window clean. The customers will have to wait the next door in order to clean their window. The customer will not need to pay for the services is done, we’ll come back to collect the money later.
The customers don’t need to wait for us to clean their window; we can clean their window while there are out. I will group customer that situated in the same areas together.
Advice taken- background research:
For my business I had been research and ask for the advice in other business. I had collected some data in other business and found that most of the business are sold trader and located around Newark. Many professional cleaning is able to clean more than 40 houses per day. As, for my business, I would not be able to clean more than 40 houses a day, as my business are new to local peoples.
From my research so far, I found that in or around Newark has a lots of window cleaning services. Therefore, I will have a lot of competition.
Business around Newark:
- Walters cleaning Service – a family run business, commercial window cleaning and carpet & upholstery cleaning.
- Wright Cleaning Service – a sole trader business.
- Clear Cleaning Window Service
Business Aims:
Our main aim is to provide a good quality cleaning for local house owners, at a reasonable price.
Objectives:
To meet our mains aim, we have to:
- Gain a good reputation for the business
- Give the customer confidence with our services, so the customer will come back to use our services again.
- Make sure our business will survival in the first year.
Key planning elements:
Location: Right Choice will be located around Newark all along Bowbridge Road. Our customer will find our office easy as it’s not far away from town centre and easy to access.
Price: Right Choice will be cost at a competitive price for our customer. We’ll be cost the service around £6 - £10, the service for window cleaning will be charge at £6 and the conservatory will be charge at £10.
Promotion: Right Choice will promote our self through leaflet; I will hand out our leaflet for a local area that I will be working on, in the first 6 months. Then, we’ll promote our self again by advertising our business in a local newspaper.
Production: Right Choice is considered in a window cleaning as well as conservatory cleaning services.
Customer: Right Choice determinate to start with a low number of customers, since our business is new to local people. In the first two months or so, I possibly comprise 4-5 customers each day. But after a few months later, a number of customers will increase recently throughout a year.
Market research conducted:
Primary research: I will collect some data from my customer and surrounding peoples by doing a survey of questionnaire. I also, ask some professional cleaner about their business and how they run their own business. This will help me to develop my plan further.
Secondary research: I have collected some data and find out what the customer needs and wants. The graphs below will help me to analysis the customer needs and wants.
This graph below showed how often the customers get their window clean. Many customers often clean their window 2-3 days. Therefore, I will have a lot of customer, but there is still a lot of competition. More than a quarter of the customers want their window to clean every week rather than every 2-3 days, because it much cheaper and they don’t want to pay much to get their window clean. However, as a new business, I will not get those customers who regular clean their window every 2-3days, because many customers find it difficult for use or try out a new business.
This pie chart show how much the customer expected to pay went they get their window clean. Nearly half of the customers expected to pay £6 for the service. But more than a quarter of the customer expected to £5 -£5.50. From this I would say £6 would be an affordable price for the customer to pay.
Many customers choose to pay by cash other than credit or debit card or cheque because it’s the easiest way to pay and quick. I would expect most of my customer to pay card. Paying by cash is easy for both customer and cleaner.
Here is another pie chart showing the percentages of the customer who had a conservatory at their house. More than 80% of the customers had conservatory in these areas, which mean I will be clean more conservatory as well as the window.
Another pie chart showing percentages of how much the customer expected to pay for their conservatory to clean. This pie chart is shows that 40% of the customer expect to pay £8 for their conservatory to clean, still there is about 60% who expected to pay £9 - £10 to get their conservatory to clean.
Lastly, this pie chart show the percentages of the customers who is likely to use a new window cleaning. Nearly, 80% that want to use a new window cleaning. Still, there is another 20% who would not like to use a new window cleaning.
Equipments:
I have research and collected my data from the internet in the website: www. Allcleangroup.co.uk this is a UK website which provide all cleaning equipment, all the prices are include VAT. Their delivery usually takes up to 3 working days, however I will have to pay for the packaging fee £5.
- Water fed poles
- Water fed tank
- Bucket
- Scrapers
- cloths
- Squeegees
- Soap
- bike
Resource:
The following table showed all the equipments that the business needed in order to run a business. This equipment will be last for least 1-3 years, these include; water fed pole and bike, and therefore this equipment is added to fixed cost/fixed asset in balance sheet and P&L account. But some of this equipment may be a least last for 5-6 months such as scrapers, squeegees belts, holster etc. consequently, I will be added those to my fixed cost/fixed asset, because those equipment are those which I buy to use over and over again for a long period of time.
In the other hand, soap and cloths will be added in my current asset along with my own cash (in the first year), as those only last for two or three months time Consequently, water fed pole had added to this table, but I can not afford to buy them yet, because I don’t need them straight away, I probably buy this in the next 7 or 8 months when I started my business.
- The cost in the first year
Start – up Business
The start-up expenses for Right Choice will be financed by Prapha Srida, from the profits I made in selling my window cleaning business. A minimum for rent is three year of the property on Bowbridge Road, and will be rent in January 2009, with the preference to lengthen the rent for another three years after that, if the business is maintain very well.
I working with my owner solicitor to set up business start-up and to discuss rents issues before the business is set up.
Rent on the location has been discuss as well and will be £120 per months. The rent itself is very affordable, as I chosen to use my own property as my office. The property has been share with my family; I order to pay for the rent and other electrical bills separate from a family.
In addition, life insurance for me will be approximately £30 per month and will be pay by cash on each month. Expensed equipment includes water fed poles, water tank and bike. All this equipment will be depreciated over three years.
The graph show Right Choice start – up business, from this I can see how much I spent on starting up. For example, the total start-up expense was approximately £300 and shows the total assets approximately £310. The investor is the amounts of total expenses add total assets. However, the current liabilities was £0 therefore, I haven’t had to pay for the loan.
Right Choice Cleaning
Profit and loss Account in the first year
The following table showed the profit and loss account in the first year of Right Choice. The table showed the incomes and outcomes of the business throughout the year. Profit and loss accounts helped to calculate the amount of profit made by the business.
Notes:
- No. of houses cleaned × Price = Sales
- No. of houses cleaned × Labour cost = Costs of Sales
- Sales – Costs of Sales = Gross profit
- Labour costs include; cloths, soaps.
Analysis of Profit and loss account:
The table above shows a profit and loss account for Right Choice, sole trader who set up a window cleaning service. The services are include window cleaning, conservatory cleaning and both window and conservatory cleaning. The start-up costs were about £620. A number of assets were purchased such as equipment – e.g. buckets, water fed pole/tank, bike etc. Previously the business started to operating the cost must meet a range of running cost. The most important of these was the cost of sales. This is payments on material such as liquid soaps. The cost of sales was approximately £50. Rent, wages and electrical bills must be met in other expenses. Regardless of these cost Right Choice business is made a profit in the first year of £2,126.90. Finally, I had calculated the net profit margin. It was approximately 55%, and I planned to increase this by 10% in the next year. In order to increase this, I have to employ couple more people in the next year. The more customer I made the more costs of my expense will increase.
Analysis of balance sheet;
The table above shows the balance sheet for Right Choice business in the first year. Balance sheet shows the financial situation of a business in a particular time. The figures of how much I spent at the in of the year in order to set a business. The table shows a summary of all assets, liabilities and capital. The fixed assets the amount of the business buys to use for a long period of time. The current assets show the amount of the business buys to use up in production such as stock of raw materials and cash from your own money and loan. The current liabilities are £0 as I did not borrow any money from a bank or anyone else. The business also in a good position as there is £2,500 in my own bank account. Finally, the closing balance was £2,976.73, which is slightly high for the first year, although the business had made a profit.
Analysis of Cash flow forecast:
This graph shows an estimating the cash coming in and going out each moth, as well as calculating the expected monthly cash balance. The cash flow forecast will help to control the cash flow. In the January the total sales was fairly low but the payments was twice as the total sales, and as result I had a negative balance. In Feb, the sales started to increase recently until July, the sales had drop down nearly 90% of sales, compare to the preview months. This is because the season had change, around July – September was a raining seasons so, many customers does not want their window clean. Consequently, my balance was negative again for three months.
However, the sales started increasing in October, but started to decrease again, as result the payment was incredible high nearly half of the sales have to pay for the payment and its make the balance decrease.
Analysis of Break-even:
I had decided to charge £5 for window cleaning, £10 for conservatory cleaning and £15 for both cleaning. I then divided them into fixed cost and variable cost, the variable cost for 1 house is 0.13p. The most important thing for setting a business is fixed cost, such as buying new equipment. With this information, I create the break-even chart shown below. The chart shows that the business will break-even if I get 380 customers.
The chart also helps to analyse the financial position of the business. From this I can see how much profit and loss I will be depending on how many customer I get. For example, if I get 985 customers my profit will be about £5900. However, if variable were estimate incorrectly then the break-even point would be different.
Use of computer
Spreadsheets, word processing and databases:
Right Choice is a steady business; I get the benefit from the use of computer. Personally, I had a basic knowledgeable in using computer, I had been using Microsoft word, and Microsoft excel, in order to produce cash flow forecast, sales forecast and other financial. Microsoft word helps to produce word processing and is likely to be use in all business departments. I used to help producing graph and help to improve in grammar and punctuation. Microsoft word can be use to send document by attachment using e-mail. I also, used to insert clip art and produce some table.
However, Microsoft excel can help to produce table and graph. I find Excel easier than Word to produce table and graph. Most important, for Excel is help produce spreadsheet, for example. I used Excel to produce cash flow forecast, sales forecast, and other financial sector. I found that a lot of time was saved, particularly when changing access in the forecast. For example, if the amount of sales in February was change to £290, on the spreadsheet, the total receipt, and closing balance will all be change automatically. Along with, the opening balance in March and other following months are changing.
Generally, the use of computer software help to speed up my tasks and a lot of time saved. Computers are also more accurate and the programmes are easy to use once you cope with it.
Specialist software:
Business use of software packages, provide a range of activities such as design, stock control, customer accounts, decision making of information and internet selling. Financial and account application is one of the most common area. Accountancy software, are used to record and store financial operations and create financial information such profit and loss account, balance sheet, and creditors and debtors lists.
Right choice uses an accountancy, internet and e-mail packages. An accountancy software help to generate profit and loss account and balance sheet for Right Choice. Internet helps to find accessing information and offering services. I sued internet to find information that can be accessed to help in decision making for Right Choice. For example, I visit the websites of business link and HRMC to find out information of financial investment and how to set up a business. I also used e-mail to send equivalent information such as business plan, spreadsheet and reports. Most advantages for e-mail is that information can be sent anywhere around the world.
