- Washing up liquid (10 cars per bottle): - £2.50
- Water: - £0.20 (per car)
Total Variable Costs: - £0.45 (per car)
Breakeven
This is a table to show a break-even analysis for a high price of £4.00 per car.
This shows the number of cars we need to wash is about 18 to break even.
This table will show a break-even analysis for our middle price, £3.50.
This shows that the number of cars we need to wash is about 21 to break even.
This last table will show a break-even analysis for our lower price at £3.00 per car.
This shows that the number of cars we need to wash is about 24 to break even.
Our questionnaire indicated that £3 to £4 is a fair price to wash their cars. At a cost of £3.00 per car we would need to wash 24 cars to break even, this is the highest number of cars we need to wash to break even and our lowest price we thought. The highest price of £4.00 would mean that we would only need to wash 18 cars to break even, but the higher price may mean that our customers be put of by the higher price. But it would give us an increased chance of breaking even. We have decided that a price of £3.50 per car is a fair price, whilst giving us a reasonable break-even target the price is also reasonable as proven by our questionnaire. There is also a break-even graph shown in appendix A.
Financing The Business
The business will need to raise at least £63 to pay for the fixed costs and a further £4.50 per 10 cars we wash, approximately. So about £81 for the maximum sales expected. This money will be needed for the basic materials and equipment we will need to run our business, but with the expect sales we got from the questionnaires we should be able to at least break even.
We will be raising the money from our own savings so are committed to the success of the business as our own money is invested. Other options would have involved loaning money from banks, which was impossible because of our age, or maybe getting in a sleeping partner who could have provided money for our business but wouldn’t actually been involved in the decision making of our business. We couldn’t find anyone who wanted to invest the money into our business.
Business Structure And Internal Organised
We have decided our business is going to be a partnership, advantages in been part of a partnership are that the workload can be spread over the partners and the funding of the business can also be spread over the partners. The law states that partnerships have unlimited liability and the profits must be shared equally, unless otherwise stated in the deed of partnership. Unlimited liability is a big disadvantage in partnerships as trust is essential in the business, if one partner buys something for himself in the name of the company the rest of the partners have to pay for it as well. And could lose everything to pay of a debt that only one person may have caused.
