Environmental Health and Trading Standards Department (EHTS)
Trading standards officers are employees by local authorities and their remit is to investigate complaints from consumers against businesses. Having investigated the complaint they have the authority to take the business to court to prevent reoccurrence of the complaint.
The Impact this act will have on my business
If I continuously provide excellent customer service this should not affect me. But still some complaints may occur and in case this happens I need to ensure that my business is always running to the very best standards in all aspects.
Food Safety Act 1990
The Food Safety Act 1990 affects everyone who works in the production, processing, storage, distribution and sale of food. This includes self employed people and nonprofit making organizations as well as farmers, growers and caterers. The Act aims to ensure that all food produced for sale is safe to eat, reaches quality expectations and is not misleadingly presented. It also provides legal powers and penalties. The Act is enforced by Central and Local Government. Environmental Health Officers working for Local Governments have powers to enable them to enforce the Act and supplementary legislation on a day to day basis.
The Impact this act will have on my business
This act is relevant to my business as my business will be a food selling business. I will need to ensure all food is prepared correctly also that it is stored properly. If this act is not followed then food may not be fresh and/or may not be prepared properly. Resulting in the risk of my business being shut down.
Health and Safety at Work Act 1974
This piece of legislation gives rights to both employers and employees. Employers must provide a safe and healthy workplace including maintenance of reasonable working temperature of not less than 16 C after the first opening hour, suitable lighting and adequate toilets and washing facilities. Proper safety procedures (fire exits, notices, handling and recording of accidents) Safe equipment which is regularly serviced. Access to a written local health and safety policy. Employees must follow health and safety procedures, act to protect themselves and others and treat all equipment properly and report any faults.
The Impact this act will have on my business
This act is relevant to my business as it ensures my workplace is a safe place for everyone who enters the premises. It also makes it clear to everyone working in the business what necessary actions are required to ensure the business remains a safe place to work in. if this act was not enforced on my business then accidents or illnesses may occur which could result in my business being sued or closed down.
Some of the financial aspects I will need to consider while running my business will be:
Break-Even Analysis
The break-even point for a business is the point in which the total revenue and the total costs meet. Break-even points are calculated to work out how much it is necessary to make for a business to begin to make a profit.
The Impact this will have on my business
This account is important to my business as it gives me a clear indication of how much money I will need in order for my business to survive and also how much money I need to make before the business begins to make a profit, if this document was not kept then I would not have no idea of the amount of money that need for my business to survive which could result in the loss of money or the creation of debt.
Cash Flow Forecasts
The purpose of a cash flow forecast is to provide calculated figures to show the survivability of a company (this is usually done over 12 months). Cash flows in the business through sales and out through expenses.
The Impact this will have on my business
As this document records the money that may/does come in and go out of my business over a 12 month period it will give me an idea of when I will be making a profit and how much this profit will be and also if I am making a loss when I will be making a loss and how much it will be, this will give me time to try and take action to prevent this from happening.
Personal Survival Budgets
A personal budget is a financial plan that allocates future personal income towards things such as expenses, savings and debt repayment. Previous year’s spending and personal debts are taken into consideration when creating a personal survival budget.
The Impact this will have on my business
This is important to my business as it will mean that I will have money set aside encase my business goes through periods of financial difficulty. Having a personal survival budget could keep my business out of debt
Sole Trader
As I will be setting up my business as a sole trader I need to be aware of the implications that come with being a sole trader. A sole trader is one of the simplest ways to run a business. There are no registration fees to be paid, accounts and records are straight forward and all profits are kept by me. However I will be personally liable for any debts that the business runs up, means I will be personally liable for any debts my business runs up. Meaning my home and other personal belongings may be in danger if my business runs into trouble. All decisions on managing the business are down to me, the business owner. Also, Sole Traders must raise all money for the business themselves and/or with loans from banks and lenders.
There are many advantages and disadvantages to be considered when starting up a business as a Sole Trader.
Some Advantages are:
- As the business is small less money is needed to set up the business
- All decisions are down to the owner
- Profits all go to the owner
- Financial information does not have to be made public
- Needs of local people can be catered for as the owner will know the local market
Some Disadvantages are:
- If the owner becomes ill or goes on holiday the business will suffer. (Unless a manager is employed)
- Long hours to be worked and usually no holiday.
- Loans can be more difficult to get as many banks tend not to give loans to sole traders as there is higher risk of bankruptcy.
- Cost of materials is often higher, this is because larger organisations can buy in larger bulks and benefit from lower price offers.
- The owner has complete responsibility for debts of the business. Therefore if the business goes bankrupt the owner’s personal possessions may be taken from them to compensate.
Sources of Finance
As a business owner I need to be aware of sources of finances available to me. As my liability is limited and I am a new business with no financial history to support me it can be very hard to seek finance from external sources. This is why when seeking a bank loan for example it is extremely important to ensure I have a detailed business plan to show how successful my business will be.
Some external sources of finance available to me are:
- Personal Savings – Owners may invest some of their own money into the business, this is seen as a source of finance as it is assumed that the money will go back to the owner through profits.
- Loans – This is a long term source of finance and usually used when starting up a new business.
Some internal sources of finance available to me are:
- Reducing stocks – This is done by limiting the amount of stock bought and therefore in some cases wasted. Stocks should be calculated so only the correct amount is purchased and there is no waste, this will not only save money but it will also reduce waste.
- Trade Credit – When items are bought they do not always need to be paid for instantly, though, business owners should always try their best to pay off these bills as soon as possible.
Potential costs of equipment, supplies and staff
In order for me to keep up with costs of my business I will need to be aware of the costs that will be going out for things such as:
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Equipment – these will usually be one off costs (start up costs) for the business in order to set it up... these costs will not come back around in the business unless repairs are needed to be made on equipment or equipment is broke and new equipment needs to be bought this means that after several months these costs will no longer be a concern for me.
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Supplies – these costs are also known as running costs, this is because they are regular costs that needed to be made in order for the business to carry on, these are likely to be weekly costs as the business is a food service business. These costs will need to be considered every month as they are running costs and are essential to my business.
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Staff – these too are running costs, this is as staff are usually paid wages monthly, if a business does not employ staff then wages will not need to be paid out meaning this will not be something to take into account but if staff are employed then this well be something that must be considered in the running of a business.
It is also important that I produce the required financial documents, this will measure the level of success my business currently is working as, has had in the past and also future level of success. Also these documents are legal requirements for the running of the business.
- Pricing Policies – A pricing policy is a procedure carried out by a firm to set prices for its products or services. This is usually done by working out the cost of production plus a profit. This is done to ensure a profit is made on products and services and also that a reasonable price that customers are willing to pay is set for products.
- Break-Even – This is the point where total revenue is equal to total expenses therefore there is no profit and also no loss. These documents are produced so a business is aware of how much money is needed before the business is at a safe survival level or a level that it can make a profit. Also if a loss is to be made then actions can be taken to try to prevent a loss from being made.
- Cash Flow Forecast – This is a financial document that shows cash requirements for the future (usually over one year). The document looks at accounts payable and future purchases so business owners are aware or cash requirements or shortfalls. If there will be any areas where more financial help is needed then business owners will be aware to seek more support before the problem occurs.
- Profit and Loss Account – This document compares sales to expenses to measure profitability of a business. It takes into account all money that comes into and goes out of the business.
- Balance Sheet – This is a financial document that reports a business’s assets and liabilities to a certain date. This document is important to my business as it keeps regular report on the performance of my business.
