Renu Rattan Business Studies Coursework
To: News Agent
From: Renu Rattan
Re: Setting up a News Agency – Task 1
You have chosen to set up a News Agency in Southall. You will be selling newspapers, magazines, as well as confectionary, stationary, occasional cards etc. The name of your business is ‘Rattan’s News Agency’.
- – Fixed Costs
These costs are ones that remain the same, even when demand and sales levels change. You will have the following fixed costs:
- Property/Rent – This is the cost to buy or hire the property you wish to sell your products at. This is a fixed cost, as the price of rent will remain the same no matter how much you sell, as it is not affected. This will be about £500 - £1000 a month (depending on where the property is situated), you will only need a small property.
- Till/Account Books – You will need these to keep a track of sales and money (expenses and revenues). The price you will pay to buy or hire these will remain the same no matter whether sales increase or not, meaning it is a fixed cost. These will probably cost about £110 to buy, or to hire about £10 a month, you will only need one book and one small till to start off with.
- Insurance – Money kept aside for if an accident (like a fire) takes place in which case you will be covered and can claim money back to help you. This is a fixed cost because insurance fees do not change even if sales do. You will normally have to pay about £200 a month. I would suggest you get a standard plan that covers fires, burglaries etc.
- Counter – This will be needed to hold your till and to help serve your customers. It is fixed as you will only pay one price when you buy or rent it. It will cost about £450, or about £20 a month if rented, and you will only need one. The counter will not have to be too big as it is a small property, so I suggest a small or medium sized counter.
- Shelves – You will need these to display your goods and keep them organised to help your customers find their desired products. These will remain the same price as you will be paying one price for them that will not change when sales do. These will cost about £800 to buy or £50 a month the rent, you will need medium sized and about 10 to place newspapers, magazines, confectionary, cards etc.
- Advertising – You will need to advertise to make people aware of your business. The cost of advertising is fixed as it is not dependant on sales. I would suggest you go for more local and cheaper advertising, as your target market would be the local residents, an advert in the local gazette or leader would be most appropriate, and no bigger than half a page. This will cost about £100 - £200 depending on size and place of advert. You may need to advertise for the first couple of months to get your business known.
- Wages – This is what you will be paying the people/yourself for working. I suggest that at first, if you work yourself that you split the wage, where you get 50% and the business gets 50% of profits. The percentage of what you get, or pay will not change whether sales do making it a fixed cost.
- Fridge – You will need a fridge to store your drinks and milk etc. You won’t need a very big fridge, however may need to use it a lot in the summer, I suggest you buy one tall medium sized fridge, which will cost about £80 a month to hire, or about £1500 to buy. This will not change when sales do making it a fixed cost.