5: Financial Resources
Estimated cash (£) coming into the business during the 1st year
Cash sales excluding VAT 284,778
VAT invoiced 60,408
Directors loans 10,000
Share capital investment 10,000
Bank loan 30,000
Total: £395,186
Running costs (£) of the business during the 1st year
Premises (rent, rates) 12,000
Power (light, heat, electricity, gas) 6,904
Telephone 1,726
Insurance 3,452
Postage and carriage 227
Interest and bank charges payable 1,800
Marketing / Advertising 10,000
Wages, or salary 66,966
Equipment hire 3,600
Motor bike expenses 600
Accountancy fees 1,000
Legal/professional fees 200
Depreciation 1,726
Food purchases 82,845
Drawings 46,881
SubTotal - Operational expenses: £239,926
The food purchases were mainly supplied by Wing Yip - who allowed C.H.D.S a 60 days credit facility: http://www.wingyip.com/page-494.html
The stated drawings are money taken out of the business to fund the expansion of additional home delivery units.
The wage bill is allocated to mainly 8 full-time working during the 1st year - some staff being multi-function to accommodate the roles outlined in the hierarchical structure stated in business plan i.e. Step 3: Human Resources.
Running costs (£) continuation:
Bad-debt provision 600
Plant and other capital expenditure 7,750
Loan and financing repayments 15,000
Repayment of directors loans 15,000
VAT payment due to Customs and Excise 34,519
Total outgoings: £312,795
The pricing policy of the company - to generate sales - is primarily based upon the average cost of competition pricing (Pizza) to average cost of chinese and demand-oriented pricing. However, cost-plus pricing is employed to establish base profit level i.e. Gross profit (61%) = Sales Revenue - Cost of sales (39%).
Promotional Pricing: may be used to encourage database customers to repeat business.
Penetration pricing: Will be used to undercut local Chinese competitors in particular produce ranges i.e. bulk-buying of pawns will allows us to undercut competition in this product range.
Skimming: will be used at Xmas period for "Chinese Hamper Product" and on 14th February for Valentine's Package of Flowers, Meal and Champagne.
The company's record keeping will be used to generate the following financial spread-sheets and charts.
Click link: Business ventures break-even-analysis (Fig. 5.1)
Click link: Estimated profit and loss account (Fig. 5.2)
Click link: Estimated cash-flow analysis (Fig. 5.3)
