FINANCE FOR BUSINESS

Finance for Business



Finance for Business - Assignment

The small business project that I have been operating for a year is a Bakery & Confectionary shop. The major products that I keep in my bakery are cakes, snacks, sweets, biscuits, and bread and general items. I have opened my first outlet in the posh area and then after few months I want to open the second outlet in the low income area in order to cover the cross section of the public. For this expansion, I need bank loan. Like my first bakery, the second bakery outlet will only be a retail outlet where I will purchase my items from the specialized bread manufacturing units. This particular business segment is labour intensive as the timings for my bakery will be from 6 am to 12 pm and I will run 2 shifts for the convenience of the employees. The number of employees that I will keep are 20 and 10 employees will be required per shift. Although the pure working hours in both the shifts will be 3 to 4 hours but because of the customer's availability, the single shift will cover 8 working hours.

The plants and machinery that I will require for my bakery will include variety of ovens to meet the requirements for the usage of different items like the cakes, pizza, pastries etc. The initial capacity of the bakery has been decided on the basis of aggregate sales over different periods of time. The bakery will even have to face fierce competition due to the presence of other famous bakeries in the city but my Bakery will certainly try its best to establish it's self in the market. In order to remain competitive, it will be necessary to meet the change in customer demands of both the bakery and general items. The proportion of sales of both the items can even vary. The bakery will be started as a sole proprietorship and the source of start-up capital would be 50% from Debt Financing such as the loans from the banks and 50% would be from Equity Financing.

The key success factors that will be very crucial for my bakery would be the range for the selection of products, the sitting area for customers, the innovative ideas and quality in the products, the location selection, the strategy for pricing, the identification of target customers, hygiene factor etc. The small business like the bakery are easy to manage and can be very profitable as well if the correct strategies are made for the operations. Therefore, as an Entrepreneur, the opening of a bakery will be a challenge for me because it will provide me an opportunity to present my ideas and knowledge for the successful operation of the bakery.

The key financial statement of my first bakery outlet is

Opening Balance Sheet

£

£

ASSETS

NON-CURRENT ASSETS

Machinery

7500

Office Equipment

6500

Vehicle

14000

 

 

28,000

CURRENT ASSETS

Cash

2000

Bank

15000

Inventory

10000

 

 

27,000

TOTAL ASSETS

55,000

CAPITAL AND LIABILITIES

Share Capital

45,000

Profit

 

45,000

NON-CURRENT LIABILITIES

Loans

7,000

CURRENT LIABILITIES

Short Term Loan

3000

 

 

 

 

3,000

TOTAL CAPITAL & LIABS

55,000

Income Statement

Month

1

2

3

4

5

6

7

8

9

10

11

12

Total

 

 

Sales 1

3,700

4,300

4,500

5,300

5,700

6,300

6,700

8,700

7,300

7,500

7,700

8,100

75,800

 

 

 

 

 

 

 

 

 

 

 

 

 

0

Total Sales

3,700

4,300

4,500

5,300

5,700

6,300

6,700

8,700

7,300

7,500

7,700

8,100

75,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases

3,000

3,500

3,700

3,700

3,900

4,100

3,800

4,300

3,600

3,400

3,500

3,300

43,800

Other Direct Costs

700

300

800

300

400

800

900

1,000

150

230

250

330

6,160

Total Cost of Sales

3,700

3,800

4,500

4,000

4,300

4,900

4,700

5,300

3,750

3,630

3,750

3,630

49,960

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross ...