My businesses aims are:
- Survival
- To make a profit
- To have a good reputation
- To provide good services/goods
Below I have written how I will be achieving these aims:
I will achieve this aim by making just enough profit to . To do this I will have to supply customer’s products they want at a reasonable price in order to get enough income to break-even and pay the monthly costs like electricity, lease, etc.
I will achieve this by providing good products and services at a reasonable prices and doing affective advertising to attract more customers.
This aim can be met by making sure the service being provided is good and the customers are kept happy. So this way the reputation is good and kept clean.
- To provide quality services/goods
This is done by making sure the attitude is good and making sure the products and services are fitted and done on time and making sure the quality is above standard so customers return and recommend the business.
All of these aims and methods of how I am going to achieve them are all connected with making profit in some way or another.
I have decided to produce and open a customize car garage because there is a lack of professional fitting shops around and this would bring more a lot of profit as customers would come to me due to the number of shops around. Also it is a well profited industry as one project could bring you a lot of money and depending on quality of service and end product I may get a few projects from celebrities as there are contacts within the area. The main risk I have with this is it may not be a success, but in order to succeed I need to take risks. Although if this business is a success it would benefit hugely on customers as well as myself because customers would be satisfied of the job that has been done and I would make a reasonable profit meaning both customer and workers are happy. I will also have an opportunity to build up by expanding into a bigger area if the business goes successfully as there is an open area and buildings that could be bought or extended.
This enterprise is a sole trading business because looking at the advantages and disadvantages below I have more of a chance being successful and I make all the decisions. However if the business is successful I could expand into another type of business structure.
The advantages are:
- You are your own boss and self employed meaning you make all the decisions
- I do not need a lot of capital because it’s a small business
- It is easy to set up
- Expenses are low because it is a small business
- All the profit comes to one person the owner
Although there are just as many risks as well as advantages
The disadvantages of being a sole trader are:
- Lots of admin work
- Wide range of ideas aren’t available as it’s a one man business. So business may not be as affective.
- May not make enough money in order to make a reasonable profit
- Would be hard to take days off or holidays as the business would loose money.
- Risk of unlimited liability, where sole trader maybe forced to sell personal assets to clear of any debts.
Above I have summed up all the advantages and disadvantages, there are many more advantages then disadvantages however these are the main ones and in taking them into account I think it is a suitable type of business to become.
After deciding what type of legal structure of my business would be I have to consider what finances I am available to and wisely choose the most efficient sources of finance.
The sources of finance available to me due to my chosen legal structure are:-
- Personal savings of Sole Trader
- Retained profits
- Depreciation
- Overdraft
- Credit
- Loans
- Leasing
- Government Grant
- Buying on credit
- Selling assets
- Hire purchase
- Owners capital
- Borrowing from family, friends
From the above my potential sources of finance are:
- Personal savings
- Family
- Bank
The best out of the three financial resources are personal savings. This is because that amount of money does not have to be paid back. Where as if I take money off family I will have to return it and if I take money off the bank as a loan I will have to return that amount money as well as the interest. For my business I will try to get as much personal savings as possible then the next resource will be borrowing from family and the last resource would be getting a loan from the bank. This is effective because the smaller the loan the less interest I have to pay back and the quicker I can pay it back. In order to make more profit the best thing is to borrow money cheaply.
TASK 6
To begin this business I will need to produce certain realistic financial documents.
These documents are:
- Cash flow analysis
- Break-even analysis
- Critical path analysis
- Profit and loss analysis
CASH FLOW ANALYSIS
This legal document needs to be produced because it predicts and forecasts the sales for a certain period of time. This helps me see whether I should take the risk or not of opening this corner shop and whether it is worth it and if I am going to make a good amount of profit.
An example of a cash flow analysis is shown below:
BREAK-EVEN ANALYSIS
This legal document needs to be produced because I will need to see and understand where the business breaks-even, during a certain period of time and whether I will be making a profit or a loss whilst I am running this business.
An example of a break even analysis is shown below:
CRITICAL PATH ANALYSIS
This legal document needs to be produced in order to see the least time it takes to do a certain amount of tasks in managing the project.
An example of this is shown below:
PROFIT AND LOSS ANALYSIS
This legal document needs to be produced in order to see whether the business is making a profit or a loss.
All these documents will be checked regularly during a certain period in order to see whether I am succeeding and achieving what I had first planned before I started my own business. As in whether I have made the sales I planned to sell and whether I made more or less profit then I had predicted.
