If a business sells shares then obviously all of the shareholders will also have an interest in the business and how it is doing, its future plans and its current operations therefore it is the businesses job to let them know exactly what is going on.
Most stakeholders become involved with a company because it needs those business resources. While this is typically thought of as capital for expansion and hiring, a business resource can also be the workers themselves. Of course, the company must give up something in order to acquire these resources. In some cases, partial ownership is given. In the case of creditors, interest payments are made. Source: ()
The employee’s are very interested in the business as their job security depends on how well the business does, if they are involved with the business and know what is going on they will also feel safer about working within the business.
Our customers are obviously one of our very important stakeholders as they are the ones that we need to keep happy so that they keep returning to our business, a lot of our customers will also be part of the local community so they will have a little bit of extra interest in any building work or expansion plans as it will effect them more. In the case that we do receive any complaints then we will obviously need to assure and compensate the customer and also in some cases we will need to re-train our staff. We need to make sure that our customers are fully satisfied so that they return to our business and then they are also more likely to recommend and word-of-mouth is a free but good way of advertisement for the business.
The government are also an important stakeholder in the business as they will be taking tax and VAT from them so they need to assure that the business are paying the correct amounts. As we are also in a recession employment is a massive problem so therefore the more businesses that open the more jobs that will become available making the government in a better place.
Examples of a company stakeholders:
What will our stakeholders expect from us?
The owners of the business are obviously expecting profit for themselves out of the overall profit of the business. The shareholders are looking for the business to succeed so that the money they have invested is safe and that they are also making money from their shares. The government are also interested in my business doing well so that they can take taxes and VAT from me. There are also suppliers who will want us to do well so that we need to buy more stock therefore we are using their business and both benefitting from each other doing well, the suppliers I will be using to begin with is Bookers ()
My customers will only re-visit my business if they are satisfied with the service so therefore we will need to make sure that we meet their needs as this is what they are looking for.
My employee’s will expect the business to do well so that they get paid at least minimum wage, they will also want to express their opinions on some decisions made within the business and involving them in important decisions will also make them feel valued and important.
The community have an interest in the business as they have to live around and near where we will be operating and therefore will be involved in things that are going on.
Why do I need to consider my stakeholders when setting up?
It is very important that we consider our stakeholders when setting our business up because the more interested they are in the business the more successful we are likely to be. The customer’s happiness as a stakeholder is very important as the happier they are the more likely they are to come back and use our business again. I need to consider my employee’s thoughts and feelings towards the business and more importantly their pay when starting up my business, some employee’s might not be happy with just minimum wage as they believe they are not being paid enough for the skilled work they are doing.
AO5 - Analysis and research of the market
The business that we have chosen to start is a ‘mobile chef for hire’ which is similar to a catering business but we will also be offering people the extra thing of actually going to their house, cooking a casual meal for them and then cleaning up afterwards.
It is important that we research who our competitors are and find out about them, this way we can assure that we are in good competition with them. If we do not research our competitors we can be in danger of doing things such as setting our own prices which could be a lot higher than our competitors and then we will then be loosing customers as they will soon realise themselves that we are charging higher prices for the same service.
Who will my competitors be?
The competitors of our business will be other small catering businesses, also other businesses which offer a home cooking service, I have been looking on the internet and I can’t find any which offer a similar service as what we wish to offer. I used yell.com as one of my main sources of research, here is a screenshot of my findings for a ‘home cooking service’
I used to find out about other local catering services in Medway, as there are no other businesses that offer the same services as us the closest thing to look at was catering services. Above is some of them that I found.
There are many different factors which we need to focus on to try and be better than our competitors, they will obviously be able to focus on the fact that they have got more experience than us. But there are things as a new business that we will have which will be better than theirs, such as the fact we will have all new equipment.
The market that I will operate within
We will be operating in many different markets as a catering/cooking service as we are providing a service for people in those different markets. As we are only a small business we will only be providing for small parties therefore we are not aiming at such a big market, we are looking to provide home visits for a casual meal, for dinner parties and for small parties. For a small party we are not going to provide for more than 20 people, if there is a special request and there are 25 people attending the party then the cost will be more per head. The markets that we will be operating within are:
- The wedding market
- The small party market
I have done some research into the wedding industry, as you can see it hit a massive high in the year of 1990 and since then has begun a steady decline. This shows that it would not be beneficial to just focus on the wedding market as we will not have a chance of not being in such high demand. As we are focusing on various different markets we should not have many problems finding customers.
()
Currently the economy is in a bad state as we are going through a recession; our business is a very good way of having a nice meal and a good night without spending too much money on transport and on the meal itself. This is good for people who have less disposable income. Disposable income is the money that people have left over after paying their bills and essentials from their wage packet, people tend to use this on luxuries. As the economy is in such a bad state, people disposable income is sometimes reduced as they could loose their job or they may have to spend this on some other essentials for example, if their bills are raised.
Questionnaire
We are currently thinking about setting up a catering service in the local area and wanted to do some customer research to see what people actually want from us, this will help me to meet the customer’s needs. If you could be kind enough to fill out the following:-
- Do you think that the local area is in need of a catering service?
Yes No
- Which events do you think that the community will use our catering service?
Small Parties Home visits Dinner dances/parties
- Where do you think it would be appropriate for us to advertise our business?
Websites Magazines Local Paper Billboards
Leaflets Posters
- Which age group do you think I should be aiming our business at?
16-20 21-30 31-40 41-50 51-60 60+
- What price are you willing to pay for the following:
A home cooked casual meal, with the chef then cleaning up after
£____________
Catering for an organised event such as a small party
£____________
Cooking for a dinner party, in your home or in a function hall
£____________
6) If we were going to provide add-on’s what would you like us to provide?
__________________________________________________________________________________________________________________________________________________________________________________________
7) In your opinion how could our business be as successful, if not more than, some already existing catering services?
8) Even though we are a new starting business, would you be happy to hire us?
Yes No
9) Which gender do you think will be more likely to use our services?
Male Female Both
10) If you make use of our service what is your preferred method of payment?
Credit card Debit card Cheque
If other, please state ________________________
Thank-you for taking your time to fill out my questionnaire, this will be a great help for me in deciding key features of my business!
Analysis of results
I have asked a variety of different people from different age groups and of different genders, to fill out my questionnaire. These are the results which I have found. Market research is essential to all businesses if they want to succeed; it is a primary aim to meet the needs of the customers.
This tells me that basically all of the people who I asked believe that the local area is in need of some kind of catering services, there was only one person which said no.
The next question which I thought was important to find out what the local community would like to use our service for, the most popular one was, home visit as you can see, I think that this is because this is a new individual service which not many people offer, with the clearing up after.
This is another important question; we need to know which age group to aim our business at to be successful. As you can see most people have chosen the 31-40 group, this is mid-age and what I expected people would say, as these are the people who will appreciate the food and have the money to spend on good quality.
We obviously needed to find out if people would actually use our business before we set it up, as if everyone said no then there would not be much point setting up our business as it stands, if we knew beforehand that people were not happy to use our business we would need to change things so that we would be more likely to get customers.
I thought it was essential that we found out where the public thought we should advertise, this way we can find out where it would be best for us to advertise and therefore where more people would see it and decide to use our business.
The next question I asked was about which gender would be most likely to use our services, this is important as if there was for example, a high female percentage we could aim our services more at women. The high percentage said both, so this could mean couples, meaning we can aim our business at couples or either male or female. To make sure that we are fair to our customer we will more than likely keep it so that we are advertising towards both male and female, this will ensure that we are not discriminating towards a particular gender.
From this I can see that people are willing to pay £11-£25 this is good for us as a start, as if we keep are prices reasonable then once we have established our business in the market and we have got good feedback bringing us more customers, meaning that we can gradually and slightly raise our prices.
This is telling me that people are most likely to pay from £26 to £50 per head for catering at a small party, the customer will give their requests to us so that we can work out their prices differing on what they want, for example – table decorations will mean that the price will differ.
As you can see people are willing to pay more for a dinner party, as this will include them and their friends so they will want to impress. This proves that the customers are willing to pay more for good service and good quality food.
The last question I asked was what the customers preferred method of payment was, I believe that this is important as we will need to prepare for all types of payments, for example – we will need a card machine to accept card payments.
Why is important to carry out market research?
It is important to carry out research and analyse the market when setting up a business as we will need to know what the general public want from us before we start to provide a product otherwise we will not get enough custom to survive as a business. We will need to be constantly keeping up with the general public and what they want otherwise we will lose customers which will lead to us failing as a business and losing money. We need to always be understanding of the customer’s needs so that we as a business can make the right move to meet them. By understanding the customers’ needs, we can also keep ahead of the competition by bringing the customers what they want, before other businesses do. To understand our customers’ needs, we will need to communicate with them this will help us to work out the exact expectations, it is important for us to know these as we will then be able to provide to them what they want, meaning they will be satisfied with our business, bringing us repeat custom.
Assessment criteria B
AO1 – Business activities
Human resources
My business is going to be within the catering industry and therefore my cooks will obviously need to be doing a lot of cooking, I will also need a secretary to do filing and taking calls and a van driver that will drive the cooks and their equipment to where they need to be. It is very important that I train all of my staff properly so that they are able to undergo their job properly. My role within the business is going to be manager therefore I will be dealing with day to day managerial duties, and I will have myself and all of my staff trained so that they can do work in other various area’s of the business just in case someone calls in sick. As my secretary will be permanently based at our office in Gillingham she will be taking most of the phone calls and doing the majority of the filing, as she will also be there when there is deliveries of the products she will be checking the deliveries and also alerting me of anything that we may need in the shopping. I will be paying my chefs £6.21 an hour which is more than minimum wage but the more training that they go through then they may get a pay rise. I will be paying my van driver £7.25 an hour because this is seen as quite a ‘boring’ job so I need to entice them with something to keep them working for me. My secretary will only be on £5.40 an hour which is still above minimum wage but again the more training she does she will receive a pay rise.
The two cooks that I need to hire will need to be fairly skilled in the cooking department but there will also be training courses we can send them on to improve their knowledge and skills. The secretary will need to have basic admin skills, she will be expected to organise files and financial documents efficiently.
I will need to advertise the need for staff somewhere, I have chosen to advertise in the job centre as this will be free of charge but I will also be putting posters up in the local area so that local people can apply. It will be better for my business if local people apply and get the job as it is easier for them to get into work so even if there are for example extreme weather circumstances like snow and ice they will still be able to make it into work in case we need them.
To find out and average on what to pay my employee’s I used a website which tells me the minimum wage for the exact job that they will be doing within the business. ()
My employee’s will be working roughly 6 days a week with 5 week annual holiday.
Here is my spreadsheet of how much I spend on wages.
Physical resources
We will need physical resources in our business to set it up. These will include things that we will need to buy to help our business run efficiently. The three main things that I need to look at will be equipment, vehicles and furniture.
As a business we have decided that it will be best to lease a van as we can use the van but after a certain amount of months the lease is up and we then get a brand new van. The van which I have found is £149.99 per month; this is a good deal as the van is relatively new and in good condition. The lease lasts for four years, by which time we will probably need a new van anyway.
The next thing that we looked for was a property where we could run our business from. We will need a property which can be used as an office, we will not need to use a shop front to sell our product and this is why we have decided to rent out the back area of another business who will be using the shop front, this is very helpful to us as we do not need the whole space of the shop and this will save us money. We will be paying them £150 to rent out the room and this will also cover gas and electric, we will still need to pay for our own telephone line but this will not be a high charge.
Here is a small picture of the shop from the front. ()
We will not need to worry about gas and electric bills as these will be covered through our rent to the other business. We will however need to set up our own phone line, I have had a look at some different websites and found the best deal for us, BT offer a very good phone and broadband package, which we would need if we were to set up our own website, this is one of the things we aim to do so that our customers can get contact details and look at what we offer online. The package includes business phone line and broadband for £26.60 per month, this package also includes a free wireless router meaning that not only our main computer will be hooked up to the broadband but the managers can also have a laptop which they can use to check on the business and do their work through.
We have also decided that we would like to have a ‘taster day’ before we actually launch our business, this will involve us hiring a local conference room where we can set up our cookware and provide samples for the general public to try. We will put up posters and use the local paper and radio to advertise this ‘taster day’. We are going to hire out a conference room at the Roffen hotel on new road in Chatham () they will charge us £45 for half of a day and £75 for a full day, I think that we should take the opportunity of using the whole day as this will benefit us more.
Furniture
We will need to decorate our office so that we can invite customers into it to discuss their requirements if they wish.
- Work desk - £88.99 (http://www.ikea.com/gb/en/catalog/products/S19861339)
All three of us managers and the secretary will need a desk to work at when they are in the office
()
Obviously we will also need a chair for each of us to sit at and be comfortable.
()
We also need filing cabinets to keep all of our information in one place and tidy; we chose these ones because they have got the facility of a lock meaning that we can store confidential information in them.
- Chairs for customers - £19.00
()
The customers will need a place to sit if they choose to visit our office; these chairs are perfect for us as when there are no customers in the office we can stack them away safely.
Electrical equipment
- Desktop computer - £449.99
(http://www.pcworld.co.uk/martprd/product/seo/633580)
We are going to purchase one desktop computer which will be our main computer, this will be at the secretary’s desk and this will be the computer which she will use.
(=)
We will also be buying three laptops; this is one each for the managers. We will need these to keep in control of the business and be constantly reviewing where we are and how we are going to improve.
- Office telephones - £5.99
()
We will also need a telephone each so that we can all make and receive calls when we need to. This means that we can also speak to customers and receive calls from different customers on our own telephone line.
- Streamline machine - £12 per month
()
We will need a streamline machine so that we can accept card payments from all of our customers; this will make it easier for customers to use our business.
Cooking equipment
()
We will need stock pots to cook different types of foods in, these ones are ideal as they are stainless steel and come in a variety of sizes.
- Multi function cooker - £39.95
()
This multi-function cooker will be used, for example: to steam vegetables, this will be necessary when we are cooking to perfection with our meals.
()
We will need a wok to create various dishes but this one in particular will be great for us as it is carbon steel and non-stick.
- Deep roasting pan - £19.95
()
We will need a roasting pan for cooking various meals such as a joint of beef for a roast dinner, we have chosen the ‘deep’ roasting pan as this can be used for all different shapes and sizes of meat.
- Non stick frying pan - £13.95
()
- Stainless steel sauce pan - £12.50
()
- Medium to large sauce pan - £19.95
()
- Complete knife set - £79.95
()
We will also need a knife set to prepare different types of food in a safe manner.
()
Even though this is quite expensive we will need to ensure that we cater for everyone’s needs, buying enough fresh stock to be used for our customers. Also by paying this price we are ensuring that we are providing good quality food for our customers.
- Jar, lid and bottle opener - £4.95
()
- Kitchen utensil kit - £32.72
()
- Silicone glove mitt - £4.95
()
We will need this silicone glove mitt to collect hot things from their cooking area.
I have deliberately chosen these suppliers as they are all very reliable and also offer free home delivery which will be much easier for us as our secretary will be able to be at the office when they deliver everything.
Financial resources
What capitol I need
The capitol that I need for my business is going to be quite a large amount as I need to take into account everything that I need to buy and the fact that I will not be making a profit for the first few months. I need to take into account the food I will have to buy, the rent I will have to pay, my physical resources and the wages that I need to pay.
- The rent will be £150 a month
- My other various, including food, monthly outgoing costs will be £149.99
- The starting up costs and physical resources will be £3491.76
- The wages I will be paying monthly will come to £4624.83
Possible sources of getting this capitol
There are a few various ways which I could look at getting this capitol, one of the most popular ways to do it is a bank loan which I could make monthly payments back to and also get the kind of money that I need, also if I get a business loan the interest will probably be quite low. Although I will need to pay this money back over quite a quick period of time and if I don’t pay it back then I could end up in quite a lot of debt. The other place I could consider getting a loan from is a building society they have the same terms as a bank but the re-payment times are normally longer but then at the same time they may not offer me a lower interest rate.
AO2 – Quality
As a business it is very important that we provide a good quality service for all of our customers. It means that hopefully we will meet the customer’s needs and they will re-use our business again, if they have a good experience with us they are also more likely to tell their friends any family about us meaning we get more customers. It is the businesses responsibility to assure that their staffs are providing a good service at all times, if not this can lead to complaints and bad reviews from customers.
I need to assure that my business is providing good quality service/product; I will do this by being friendly and looking after our customers so that they feel they are important to us as a business. If we treat them in this way they are more likely to trust our business and therefore will probably use us again.
We need to make sure that the service we provide is fast so that we deal with our customers needs as quickly as we can, this is where our time management will come in because our cooks and van drivers will need to be at customers houses within a certain time scale. Although we are trying to be quick we also need to make sure that we still provide good quality food to the standard that our customers will expect.
We have decided that someone whether it be myself or the secretary will meet with the customer so that they can discuss any needs or wants that they may have, this will help us to outline anything that they are looking for from us.
I have also decided that once we have got a few customers it is a good idea to produce a questionnaire asking our existing customers what more we could do for them.
We will need to be honest and fair to our customers at all times so they know exactly what they are going to get from us and do not expect anything that we can not provide, we will also be providing them with good food for the lowest price we can get.
By being quite flexible and offering our customers the chance to tell us any special requirements we are making it easier for the customer meaning they are more likely to return making us more successful. Also if the customers are satisfied then they are going to be loyal to our business so the more understanding we are the more comfortable they will feel using our business and will come back for repeat custom.
The higher quality of our products we will be paying more for them and therefore we will have to charge our customers more, but we need to be careful because if we chose to use low quality product bu we had really cheap prices this is not what everyone is looking for. We need to have reasonable prices so people can regularly use our business but also we need to be using the highest quality products that we can. We will also need to be constantly researching the market in case there are any other businesses that set up like us and if they offer lower prices then we may risk losing our customers.
Producing quality products or offering a service which is better to that of competitors, is the main reason why some companies thrive throughout generations of family ownership, while others quickly plunge into bankruptcy.
Source: ()
When arranging meetings with customers we need to make sure we use our time management skills so that we always look professional. We will also keep our customers updated with any special offers so that they are more likely to come back to us.
We will also be sending out letters to our customers making sure that we are giving our customers what they want and if they feel their needs are being met.
There are various different methods to use when checking quality.
There is the traditional method which involved checking the quality at the end of the chain of production, it is left to one person whose job is to thoroughly check the product. The workers in this method will be on a piece rate so they get paid for what is made correctly.
The other method is completely different; everyone is responsible for the quality control. Quality will not be checked at the end of product but at regular intervals throughout the productions line, therefore everyone is involved with checking the product. This method has proved better for employees as they are paid a fixed rate and are not rushing to get things done therefore making fewer mistakes.
AO3 – managing, monitoring and reviewing business performance
Managing my business comes with many various responsibilities that I as a manager will need to keep up with. I need to make sure our supplies are ordered on time and at the right quantity, keep track of employee’s and review their performances, keeping control of our advertisements, banking, customer relations and human resources. Although this is a big workload my secretary will be able to help me with a lot of different aspects of it all. If all of the employee’s within the business work to the best of their ability it will turn out to be quite an enjoyable experience. It is also very important as a business that we monitor our credit profile, as we can gain a lot of information from it. We will be able to tell how well we are doing from our credit file but this also indicates to banks whether or not they should go ahead with giving me a loan and if they do what kind of interest rate they should give us. Insurance companies will also look at our credit report to decide on our insurance premiums which could be an expensive factor within the business.
Once our business is established and running well it is important that we are still reviewing and researching everything about the business so that we can constantly be better than our competitors, this will also help us to identify how we can make the most of the position we are in.
When I review i will also need to go back and update my business plan with any key things or new strategies I have decided upon.
With respect to the issue of injuries on the job, employers need to make certain they are complying with their business compensation act. While workers' compensation is not truly "insurance," every business has an act with laws that provide for compensation for loss resulting from injuries received at work. Although each business workers' compensation laws are different and constantly changing, the general purpose of these laws is to afford workers a right to relief for injuries received on the job. Depending on the business, workers' compensation laws can be either compulsory or elective. Under elective laws, an employer may choose to accept or reject the act, but if he rejects it, he loses certain defences if a worker is injured on the job. So they know that what ever happens to them whilst on the job they are covered. Source ()
Assessment criteria C
AO1 – research
Research
I am going to do some research into different banks and what they suggest that you require when setting up and running your business.
The first bank that I have had a look at is Lloyds TSB; I found their website quite easy to use with very relevant information included. The first area I looked at was the ‘legal basics’, we will obviously need to assure that we have got all legal documents in place as otherwise we can end up in trouble with the law. They suggested some legal documents which are vital when setting up:-
- Insurance
- Health and safety checks
- Terms and conditions
- Licenses
- Refunds and returns policies
- Agreements and contracts
They also give different suggestions on things such as writing up an agreement with your partner and even though it is not ‘law’ as such, if you do not write one up then you are bound to a certain aspect of the law.
“You don’t have to do so by law, but it is wise to have a written partnership agreement (even with a spouse) and get it checked by a solicitor. If you don’t, you will be bound by the terms set out in the Partnership Act 1890, which allows a partner to withdraw without giving notice, and to insist on the immediate return of their capital contribution.”
Agreements and contracts
Contracts form the basis for business relationships. Such agreements can be oral or even implicit, but for clarity it’s best to have them in writing. If you breach a contract, the other party will be entitled to damages.
A binding contract must:
- Include an offer and an acceptance.
- Include an obligation to pay or a promise to provide something in return.
- Be clear about what all parties are expected to do.
- Include an intention by both parties to be bound by the contract – even if it is an oral agreement.
()
We as a business have decided to rent a small part of a property and pay them each month for this office space, we decided that we should write up an agreement just to state the terms of use and have them to sign it so that they can not then change the agreement without consulting us. This is also helpful on their side of the agreement as we need to sign to say that we are going to pay them £150 a month for rent, gas and electric.
Business insurance
If you employ anyone, even on a casual, part-time basis, you are legally required to have employer’s insurance.
Other insurance can also be useful as a sensible business precaution:
- If you sell products, product liability insurance will protect you if someone is injured by a defect in your product.
- If you offer services or advice, consider adequate professional indemnity insurance. The effects of a mistake in a service or product you have provided can be out of all proportion to the initial error. Indemnity cover may be needed for years after the work has been done, because it has to be in place when the claim is made.
()
We will need to have insurance for different aspects of our business, not only our employee’s but we are selling products to the customers (the food produce) we as a business need to be insured in case anything happens to the customer in case they try to blame it on our business. To prevent anything happening to our customers we will assure that all of our suppliers are fully health and safety checked and that our storage is also fully health and safety checked.
The next bank that I looked at was Barclays; I did not find their website very helpful at all. However they do make a point that you can pop into your local branch for any advice that you need and there are a variety of start up packs also available to order from the website or available if you ask at your local branch. I have decided that I am going to go into my local branch to find out what help is actually there for me and see if I am able to pick up a start up pack with some more information in.
()
I then went onto the HSBC website, they give some information on their ‘knowledge centre’ website but if you want more information then you need to order a start up pack so I have done this and I will look to see what extra information they offer within this.
Although the information that they do offer on their website is very helpful, they offer different kinds of advice and opinion on various things such as what kind of business to set up and the advantages and disadvantages of such things. They offer advice firstly on marketing your chosen business and talk about how important business research is when setting up, I believe that we carried out enough market research to find out what people want within the community that we will be working in.
They then talk about product options, as a business we had already chosen what we wanted to offer before we did the market research as we had already noticed the gap in the market. Although if we had carried out the research and no-one was interested then it would not have been worth us setting up our business.
Pricing is the next thing that they are offering their advice on, “Generally speaking all businesses are keen to keep their costs to a minimum and there is likely to be pressure on you to keep your fees low.
However, you must make sure that the fees you charge for your services are enough to cover all of your operating costs, including staff wages and your own drawings.
You are likely to set your fees by reference to:
- the time each task will take
- the complexity of each task
- how much responsibility you have agreed to assume
-
any expenses you incur (for example traveling, postage and so on)”
()
When setting our prices we covered all of these things, complexities and other occurrences were taken into consideration. We have decided that our prices will start off reasonably low and then slightly increase each month throughout the year so that by the end of the year we are still not charging too much to our customers but we will be assuring that we are breaking even. Also when we start to expand our business we will be getting more produce from local farmers rather than from the cash and carry, this means we will be providing better quality foods for our customers.
Then they start to talk about finance for your business, grants from the government are discussed:
“You may be able to get some help in the form of a grant, for example to cover the cost of training for a small business management qualification.
You can get information on grant aid available throughout the UK from:
- Business Gateway in Scotland
- Business Link in England
- Flexible Support for Business in Wales
- Invest Northern Ireland”
()
For the business that we are setting up it is unlikely that the government will offer us a grant, there is always a chance that they might offer to pay costs of extra training for our staff and we can apply for this, but for the type of business that we are we will be lucky to receive a grant from them.
The next thing that they offer is information on different qualifications that you should look for in staff that you are hiring to do administrative jobs for you:
- “Diploma in Computerised Book-keeping, for those who have gained a qualification in manual book-keeping
- IAB levels 2 and 3 Certificates in Manual or Computerised Payroll
- Diploma in Small Business Financial Management
- IAB level 3 Diploma in Cost and Management Accounting
- IAB level 2 Certificate in Business Enterprise
5.2 Institute of Certified Bookkeepers qualifications
The Institute has established a number of qualifications for book-keepers, including:
- Certificate in Basic Bookkeeping
- Certificate in Manual Bookkeeping
- Certificate in Computerised Bookkeeping
- Diploma in Bookkeeping
- Diploma in Payroll Management
- Small Business Financial Control”
()
From here they begin to talk about legal matters, they list things that may affect your business:
- “the anti-money laundering systems that should be put in place
- the customer identification procedures to follow
- the records that must be kept
- the internal reporting procedures that must be set up
- The National Minimum Wage Act
- The Working Time Regulations
- The Employment Rights Act
- The Disability Discrimination Act
- The Health and Safety at Work Act
- Employment. You must make sure that you do not treat a disabled employee or job applicant less favorably than someone else
- Accessing goods and services. You must make sure that disabled people are not treated less favorably and that they can access any
services you provide. You may need to make physical changes to your premises to ensure this.”
()
Legal issues are obviously a very important issue we would need to be constantly concentrating on, as a business we will need to make sure that we are always abiding by the law in everything that we do. If not then not only us as a company will be in trouble but also all of the managers.
AO2 - Costs of our business
Start-up costs
Start-up costs are costs that are non-recurring and will be used for the setting up of our business.
There are obviously a lot of things that we need consider when thinking about our start up costs. These are the things that we have decided to include in our start-up costs:-
Work desks, we will obviously need work desks for our office so that we can work from them in a professional manor. We decided that we would need 4 work desks, one for each of us managers and then an additional one for our secretary.
Office chairs, we will also each need a chair to sit on whilst we are at our desks.
Filing cabinets, these are essential for us as we need to assure that we keep all of our customer’s details safe and secure.
Desktop computer, this is for the use of our secretary she will need to use this to carry out general administration tasks.
Laptop, as managers we will also need access to the business so that we can keep control over different happenings and to be constantly reviewing and monitoring what is going on within the business.
Office telephone, we will also each need a telephone at our desks so that we can make and receive phone calls.
Chairs for customers, these will be needed for our customers to sit on if they come to our office for any kinds of meetings or for any other reason.
Stock pots, this is part of our cooking equipment which will be a basic need when cooking various meals.
Multi-function cooker, this can be used whilst cooking and steaming different kinds of foods and vegetables.
Non-stick wok, this is another cooking utensil that we will need.
Deep roasting pan, another thing we will need when preparing the dinner.
Non stick frying pan, this is one more of the cooking utensils that we will need.
Sauce pans = cooking utensils.
Complete knife set, used for preparing different foods.
Silicone glove mitt, this is used when handling hot equipment.
Conference day at the Roffen, this is when we will be holding our ‘taster’ day, it will be a chance for potential customers to come and experience what we can offer them as a company. We will have samples of our food being made at the time so that people can see what we are capable of, there will also be menu’s available for the customers to have a look at and also if they want to they will be able to book a date that they may want to use our services on.
Fridge freezer, we have decided that we will need a couple of fridge freezers to keep most of our products nice and fresh, these will be situated in our office area but placed so that they can not be seen.
Running costs
Streamline machine, we will need to have the use of a streamline machine to make it less stressful for our customers. They do not need to worry about paying us via cash as we will have this mobile card machine that they can pay on.
BT line phone and broadband, we will need the use of the internet and a phone line so that customers can contact us and/or we can contact them if need be. We will be using the internet for various reasons such as email, research or even purchasing goods.
Rent for office area, we have decided to rent an office area in which we can work from and also use to store food. We will also be meeting with clients whilst in here.
All food supplies, this includes all of our food supplies for each month. We will need to be purchasing different foods at different times as there are a lot of foods which are perishable and therefore we will need to insure that we are buying fresh produce all the time.
Advertising, this will cover all of our advertisement costs. This is on the local radio (km FM) and also in the local paper (Medway messenger) they will use an article about us in both at least once a week.
Business insurance, as a business it is essential that we have business insurance. This will cover not only us as a business but also our employee’s.
AO3 – Budgets
Budgets are very important for businesses to setup and then monitor as they go along, they use them to plan for future activities and to set their various goals and objectives within the business which they believe they can achieve.
“Cash flow budgets-The cash flow budget is a prediction of future cash receipts and expenditures for a particular time period. It usually covers a period in the short term future. The cash flow budget helps the business determine when income will be sufficient to cover expenses and when the company will need to seek outside financing. This is good for a business to know because you will need to know what your income and outcome is and by having a cash flow budgets you will be able to see exactly what your profit is.
Marketing Budget - The marketing budget is an estimate of the funds needed for promotion, advertising, and public relations in order to market the product or service. So your business will use this to know how much they can spend on advertising and promoting your business, they will know exactly how much is needed for anything to do with making sure the customers know about your business.
Project Budget - The project budget is a prediction of the costs associated with a particular company project. These costs include labour, materials, and other related expenses. The project budget is often broken down into specific tasks, with task budgets assigned to each. Any product that the business needs will go under project budget because any outgoing expenses can be easily managed.
Operating budgets- reflect day-to-day expenses and depreciation (the current portion of capitalized expenses). They typically cover a one-year period.
A capital budget- (or investment appraisal) is the planning process used to determine whether a business long term such as new products, replacement machinery, new equipment, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures.Outline planned outlays for investments in your business, equipment, and product development. Capital budgets may cover periods of three, five, or ten years.
Project budget: The project budget is a prediction of the costs associated with a particular company project. These costs include labor, materials, and other related expenses. The project budget is often broken down into specific tasks; with task budgets assigned to each with would be very useful.
Revenue budget: The Revenue Budget consists of revenue receipts of government and the expenditure met from these revenues. Tax revenues are made up of taxes and other duties that the government levies.” Source ()
AO4 – Cash flow forecasts
Cash flow forecasts are very important within businesses; it is an easy way to keep a check on my incomings and outgoings and we can also see roughly what is going to happen within the next year or so.
Receipts: These are the estimated predictions of my sales revenue for each month. It is found by multiplying the amount that the business thinks it will sell by the price they are going to charge.
Payments: this will include all of the payments that the business expects to make during the year. It will be added to the ‘total payments’ box for every month.
Net Cash Flow: This is the amount of difference between the total payments and the receipts.
Opening Balance: This is the money carried over from the previous month it may be taken from the ‘closing balance’ box.
Closing Balance: This is the final figure that we have at the end of the month, the difference between my net cash flow figure and my opening balance.
This will help us as a business as we can see how we are doing each month and if there are any amendments we need to make. It is good for us to know the figure so that we have something to work towards, like a goal.
We will be paying £100 back to our bank loan each month so by the end of the year we will have paid back a total of £1200, as our business becomes more successful and starts to make more of a profit we will be able to make bigger monthly payments. Our purchases are £427.60 but this will also include the food we buy throughout the month.
AO5 – break even
How a break even analysis will help you monitor your business performance.
Break even analysis will help me to monitor my businesses performance by showing me at which point I will be making a profit. I will also be able to see how slow/fast I will start to make a profit and how much it will increase by.
Break even chart.
Break even chart 1, normal.
This is my businesses first break even chart, it shows exactly what will happen if all of my financial forecasts are correct. I can see that I will begin to make a profit after just 4 units.
Break even chart 2, food prices go up.
This is a break even chart showing what would happen if food prices suddenly rose, here we will not be making a profit until roughly 5 units.
Break even chart 3, rent goes up.
This break even graph shows me that I will not be making a profit until roughly 6 units if our rent price rises.
The limitations of using a break even analysis
A break even analysis only shows the costs and does not tell me exactly what our sales are likely to be, it also assumes that my fixed costs are constantly the same. It also assumes that my variable costs are the same for every unit which they might not be.
AO6 - Accounting documents
How I will monitor the financial performance of my business.
I will monitor the financial performance of my business by using my break even analysis and my cash flow forecast. The secretary will check my bank statements to double check that everything is in order and nothing strange is happening.
Profitability and liquidity is important for any business because if they are making any kind of big loss then they can sell some of their stock of physical resources so that they stay out of debt. The most important liquid asset would be cash which some businesses keep separate money in a safe just in case of any occasions like this.
The differences between assets, liabilities, expenses and revenues are that assets are an economic resource owned by my business. A liability is anything that is a hindrance for my business for example a bad harvest.
An expense is outgoing money and revenue is the income the cook for hire will receive.
Assessment criteria D
AO1
There are many different ICT packages which can be used when setting up and running a business, you need to ensure that you are using the right ones to help you the most. When thinking about choosing a software package you need to analyse each one, looking at both advantages and disadvantages this will help you to choose the one that is best for you. In the present, businesses rely heavily on ICT for making documents, keeping files and making calculations. We will be using ICT within the administration, finance and communication sections of our business.
Within my business I will be using ICT packages to be efficient and save time, by producing documents on an ICT package I can assure that I am not only doing things correctly but that also it will be saved on the system so anyone else in the business will be able to access it and have a look. It will help me save time as it is much quicker to produce the document on the computer than writing by hand. The computer will also be able to run a spelling and grammar check on the work which I produce; this will ensure that there are no mistakes throughout any of the work. By doing all work on the computer we are able to store of our files in one place knowing that they are safe, it is always good to save your work to a memory stick or something as a source of backup. ICT packages will also help my business to save money, for example we can email people for free, this in the long term will help us save money and therefore bringing us more profit.
In our business we will need the use of spreadsheets to produce documents such as a cash flow forecast, profit forecasting, budgeting and a break even analysis. Using spreadsheets is not hard but we will have to give all staff basic training so that they are aware of how to use the software correctly, using spreadsheets is good for my business as I can work out all of my financial proceeds and make sure that I am making a profit throughout the year, this helps us to be in control of all of the money which is going out of and coming into the business. The spreadsheet software should come for free when you buy the PC which is an excellent advantage; the only disadvantage is giving
up time to show the staff how to use the software correctly however this should not take long. In our business we will specifically be using spreadsheets to produce our cash flow forecast, our profit and loss account and our break even analysis. Using spreadsheets is obviously a lot more efficient for our business and will be a lot clearer to look back at for all members of staff. Also if there are any adjustments that need to be made, they easily can, where as if it was written by hand then the whole thing would need to be drawn out again.
We will also be using word processing in our business to produce letters, memos, leaflets and business cards. Word processing allows easy creation and storage of a range of useful different documents. Word processing is really easy to use, you can choose different types of fonts, size of fonts and colours. Once all staff have been given a basic demonstration they will be able to use this for themselves which will help my business greatly as it will be easy for any of them to create certain documents for the business which will give other staff members more time to concentrate on other aspects of the business. Word processing comes free with any PC package bought, but if it does not then you will need to purchase a Microsoft office package which will come with all kinds of software such as PowerPoint, excel etc, all of which will help me within my business. Again the only disadvantage to this software is that some staff may need to be shown how to use it, although this should not take long as it is quite straight forward.
Database is another ICT package which we will be using, this can be used to store records of suppliers and staff/customers records. When dealing with peoples personal details we will need to make sure that we always amend to the database law and that the person is aware that we are keeping information on them, what information and for how long. In our business we
will be using database to store the following details form our customers:
- Name
- Telephone number
- E-mail address
- Address
- Their previous use of our service
This makes things easier for us as a business and for the customer, if they should decide to return and use our services again then we will already have the important details from them and they will not have to tell us it all again. However if the customer is not happy with us keeping this information then we will need to appropriately dispose of it.
AO3
Businesses all over the world are now using computers to create all of their documents, computerised accounting software just give them a little extra bit of help by using manual-based theories in customised packages. By using the computer the business can control funds coming into and going out of the business and using accounting software makes it much more efficient. Accounting software greatly improves accuracy, especially when trying to store large amounts of data. The book keeping systems can supply reports and account balances much more quickly and accurately, such as stock values and payroll analysis. One major advantage of accounting software is that the manager of the business can, whenever they choose, to have a look at how the business is doing financially. If a business purchased accounting software it would help them in all different aspects of the managing of the business like updating customer’s accounts, updating supplier’s accounts, recording bank receipts and payments, printing out invoices, automatically making payments to suppliers and paying out for expenses and adjusting all records immediately. There are many different accounting systems which can be purchased and used in different environments, there is a company called SAGE who provide very good accounting packages for all kinds of businesses, big and small, a quote from their website
“At Sage, we live and breathe business every day. Through our people, business software, services and our partners, we are passionate about helping businesses of all sizes achieve their ambitions by helping them to overcome the day-to-day practicalities of running a business, so that they can do business the way they want to.”
SAGE offer a very wide range of business software and services. They are continually evolving all of their software as they individually grow as a business. The range includes software to manage your business' finances, run the payroll, manage customer and supplier relationships, plan the business and support your HR function. In the UK, they provide software and services to over 760,000 small and medium-sized businesses.
This software ranges from accounts, payroll, forecasting and business intelligence to customer relationship management, e-business and help for start-ups.
Their services include Excel Support, HR Advice, Health and Safety Advice and training courses. In addition, their award-winning SageCover service provides help for customers when they need it.
Integrated accounting systems immediately store all information on the computer, when a business transaction takes place and is input into the computer it is recorded into the accounting record at the same time. For example, if a sales invoice is generated for a customer the customers account will be updated with the invoice total, the sales account will increase and VAT will be applied and stock records will be automatically updated to their new total.
SAGE is a well recognised business and I believe that it will be very beneficial for our business to use this type of accounting software. It will help with many different aspects of the business. At any time any of the managers or the secretary can easily decide to look at how the business is doing financially and all they will have to do is open the accounting software and it will all be saved in the same place so that it can be accessed from the various computers/laptops within the business, this is very helpful for everyone as it is so easy to access and understand that no one will need any kind of special training.
The integrated account system that they also offer within their package would be also be a great help for us, at any point any member of staff can look on the computers and see any kind of information, for example, when hosting a dinner party and the payment is processed all stock that was used will also be updated on the system so at any time any of the members of staff can access
This kind of information and see how much stock we have got left and therefore we can always know that we have got sufficient stock levels to host a dinner party at any time. This will also let us know when we need to buy more of things that we may be running low on.
All invoices that are sent out will also automatically update the customers records, this makes it so much easier for us otherwise we would have to go into every customers account and manually update it where as this will be much quicker and a lot more efficient.
AO4 – how is the internet a good source of information
The internet is a very good source of information for my business as we can use it to look at other businesses and their prices and try to compete with what they are offering.
The Internet is a global system of interconnected that use the standard to serve billions of users worldwide. It is a network of networks that consists of millions of private and public, academic, business, and government networks of local to global scope that are linked by a broad array of electronic and optical networking technologies. The Internet carries a vast array of resources and services, most notably the inter-linked documents of the and the infrastructure to support . The Internet carries a vast array of information resources and services, which would help cooks for hire as we can have customers on the internet as well and normal The Internet can now be accessed almost anywhere by numerous means, so we will be able to go on the internet with our phones and also when on the go. The Internet is a great resource, but it is also a public forum, where anyone can make a claim or an assertion. If you find an article that provides relevant information for your research topic, you should take care to investigate the source to make sure it is valid and reliable. It is your responsibility as a researcher to find and use the trustworthy sources. There are several ways to investigate your source. The World Wide Web offers information and data from all over the world. Because so much information is available, and because that information can appear to be fairly “anonymous”, it is necessary to develop skills to evaluate what you find. When you use a research or academic library, the books, journals and other resources have already been evaluated by scholars, publishers and librarians. Every resource you find has been evaluated in one way or another before you ever see it. When you are using the World Wide Web, none of this applies. There are no filters. Because anyone can write a Web page, documents of the widest range of quality, written by authors of the widest range of authority, are available on an even playing field.
Excellent resources reside along side the most dubious. The Internet epitomizes the concept of Caveat lector: Let the reader beware. This document discusses the criteria by which scholars in most fields evaluate print information, and shows how the same criteria can be used to assess information found on the Internet.
The real value of the Internet to your business Can it reduces your expenses; generate new business; help develop new business opportunities; and improve operations Yes. Will having a website answer my business needs, Can it: provide customers awareness of my products and services; offer ready information and support; extend my trading hours capability; expand my markets; increase my income; and, ensure private and secure communication between me, my staff and my best customers. With paths already well worn, the benefits to having a website are apparent everywhere. Source: ()
We could also use the internet to gain new customers; if we have a website then it will be easier for customers to find out about us meaning that they are more likely to try and use our service if they can.
AO5 – Using email as a form of communication
Email would be quite a good form of communication for my business as we will be able to keep in contact with all of the staff and customers. It is a fast and easy way to communicate any information but then it can also be misinterpreted.
“Email as the top method of communicating was unchallenged. This is due in no small part to the advent of high speed mobile broadband connections
Experts say that it is the versatility of email which makes it so popular. Users can contact each other from a variety of devices, regardless of what software or hardware they are using. Email is free and unlike SMS and Instant Messaging, users are not limited to a certain number of characters in each message
As the technology in Blackberry, PDA’s and other mobile devices develops, alongside mobile broadband, there is scope for email to overtake text messaging as the most used means of communication. A study by Habeas showed that 67 per cent of those asked found email preferable to other methods of internet communication such as instant messaging. A spokesperson for Genesis communications, providers of Microsoft exchange email hosting solutions commented:
“Email has firmly established itself as the most versatile and accessible means of communication. With the rapid uptake in mobile devices, which are becoming more and more advanced, this is set to be the case for years to come. At Genesis we provide a range of email solutions with Blackberry Business phones and dedicated exchange email hosting.”
Email writing has become a large part of modern communication, particularly in business. The world has become much smaller now that we have the ability to send and receive email messages over great distances at an incredible speed. Due to the ease of use it has the potential to be abused and you should try to keep the following points in mind when writing email this will easy to now look at us using email to communicate, its becoming world wide used with makes it very popular.” Source: ()
AO6 - how can I use e-commerce as a method of trading
My business is a catering service and once we have expanded a little more we could consider offering a service where the customers order the food they wan the cooks to cook for their dinner party. Then it automatically goes through online.
Customers that order food online can keep track of their food at any time of the day; the payment would still be collected by the cook when they are working.
This means that our customers can order food any time of the day and it lets them keep track of their order.
If the customer is not in at the scheduled time the cook will stay there for ten minutes a ring the customer but if they still do not get any response they will leave and the customer will still be charged the full price.
To assure that we will receive a payment from the customer we will take their credit details so that if they do not provide us with the payment then we will be able to withdraw it from their bank account.
Pay-Pal is an e-commerce business allowing payments and money transfers to be made over the internet; I will use this within my business as it is also an easier way for some customers to pay us.