Assignment Sample on Business Finance for Managers
Summary of Business idea
Here, the main business idea to make available in Uk market new range of “AraBiC preschool books which could be considered as good collection with high quality, latest designed books for the toddlers and baby. It will be the unique product. For the purpose of this market, the target consumer will be young mothers in UK who found to be interested for teaching their kids Arabic being second language due to high preferences. As per the study shown, it has been found that for the child up to the age of 7, it seems much easier to learn new languages. Arabic, being a language hard to pronounce and read as comparison to English, therefore the same found to be hard for the parents in order to compete with fun and hence all around there will be English language. His is the reason it would be found crucial for the parents for being introduction of Arabic language in the early stage, especially preschools i.e. before entering nursery.
The main purpose behind the business idea has been to provide m=and make the people understand the need of this second language for the growing toddler instead of just making high turnover (Waterstones (2016). Further, we will briefly analyse the financial plan of business which depicts that forecast for next three years would involves net surplus expected to be arise if Year 1 is approximately £1040 , year 2 is £19560 and year three would be £28580. The expected profit in Year 1 is low due to low expectation writ number of books to be published. Practically this new book even by new author does not seems to provide great return but however being unique market as per need it would surely help to open doors writ future expansions.
Long term stated Goal of the business plan so designed is as follows:
| Time Scale | Goals |
| 1st year | At least to reach Breakeven and if possible to earn small surplus |
| 2nd year | To create health demand for the product inclosing online with objective to reach forecasted figure ( discussed later) |
| 3rd year | As above |
| 4th year | Evaluate and try to add new collections in the product range |
| 5th year | Try to enter the Arab Market |
Products and Services available for sale in the form of books
The business plan would be designed in a way that the consumer can get / purchase the books online from preschool book online store initially for at least 3 years. The above stated website would clearly provide the required details about its usefulness and how to unities etc. for the target consumers. It is also to clarify that books would be of high quality which can be easily used more than twice i.e. can be transfer to sibling which in result help consumer to make investment as well justifies the price so paid.
Let’s discuss about the collections expected to be part of Business plan along with their expected price in the market with a motive to reach breakeven with slight profit.
COLLECTION 1: Two types of cloth books. It would include various interested or attractive categories such as food, animals, with attractive colouring. These books are designed in a way that is soft as well as safe to chew. Also, the books are so light with no edges to harm the toddlers. The expected retail price of this cloth book would be of £12
Images have been taken from the Jelly cat baby cloth books, (Jelly cat, 2019)
COLLECTION 2:
Attractive board books it high quality. The collection would have 400gsm thick paper and it also consist of white card in order to provide grace and finishing to the production with high quality along with vibrant colours. It will be available at £24 which includes set of 4 books such as colures, numbers, alphabets and animals.
Images shown above have been taken from the ladybird first learner’s collection, (Water stones, and 2019)
Risk Associated
- The risk associated with the stated business plan is that due to innovative way or different language there may be risk of non-demand.
- Economic Risk- since their capital contribution and fixed expenses, there may be risk that target customer as expected did not shows interest
- Legal Risk
- As this new business will be based on crowd funding, there would resultant restriction in the quantity & size as per demand. It clearly reflects that printing cost could be higher than expected in at least year 1. Therefore it is required to adjust the retail price in way that it could achieve the breakeven and ear atheist fair profit (Brodie, R.J, 2018).
- As this business idea being unique and mainly focuses to retain or make customer, it is implied that time scale for achieving goal will be long and resultant the business can be threatened by new competitor by entering the same market in the crucial initial period. Therefore it is necessary to keep up to provide high quality services it regular innovation in collections in order to mitigate the risk of competition.
Initial Source of Funding
Capital contribution by three partners is the source of funding which will be approx. £150000/-.there does not seem requirement of any credit or external help. Of 100% crowd Funding. It refers to the concept the business will never be in losses since the books so published are being paid before they even printed. It can also be stated that finance of the stated business plan is not complicate since there seems to be cost lamination being project manager has been the entrepreneur, designer and publisher for the business with management power.
Key Fixed and Variable Cost
As we all are aware that cost classification is mainly into fixed cost and Variable cost.
Fixed cost as the name suggest do not vary with the change in the production or any other factors on the other hand Variable cost refer to the cost that fluctuate writ change i.e. increase/ decrease in level of production. For instance, the graph could be as follows:
In the business plan for publishing of new range of Arabic books for toddler,
The Fixed expense forecasted for next 3 years scenario can be as follows:
Thru above clearly stated that it has been decide to run the business on rental premises. Further, the expense writ salary to staff including labour, insurance as well as amount withdrawn by management is fixed (Sisco, J., 2021).
The Variable expense forecasted which change on production or other factors for next 3 years scenario can be as follows:
A budgeted profit forecast for the first year of operation.
For base, please find below some rice list for calculation of Revenue & directly associated expense for publication of books. The price vary due to change in quantity higher the quantity lower the price per item. These assumptions on the basis of prevailing market is necessary in order to understand the future of business (Sisco, J., 2021)
Prancing list is as follows:
| Book type | Total quantity of the first order | Printing fee per book |
| Board books | 1000 | £6.76* |
| 2000 | £5.68* | |
| Cloth books | 2000 | £4.40* |
| 4000 | £3.03* |
*Prices include product testing and delivery
A budgeted profit forecast for the first year of operation.
Please refer Appendix- 1 for detailed information in spreadsheet
A budgeted Cash flow
Cash flow statement typically shows how he changes in financial stamen of the company impacts the cash & cash equivalent or how much cash outflows or inflows during the year with net impact (Corporate Finance Institute. 2021)
The expected cash flow of the business idea on the basis of forecasted Profit & Loss account is as follows:
| (GPD) | Year- 1 |
| Beginning Cash Balance | 35000 |
| Sales | 60000 |
| Total Inflow | 95000 |
| Cash Expenditure | |
| Printing fee | 10000 |
| Marketing expense | 1000 |
| Barcode ISBN | 3000 |
| Rent | 4000 |
| Other Operating expenses | 20000 |
| Tax | 312.00 |
| Total Cash Expenditure | 38312 |
| Net Cash Flow | 56688 |
Please refer Appendix-2 for detailed information in spreadsheet
Break-even analysis
It refers to the situation which defined how many units of particular product or range of product to be sold in order to arrive in at least no profit/ no loss situation (Corporate Finance Institute. 2021).
The required calculation for these business ideas is as follows:
Breakeven= Fixed cost / Contribution margin
Contribution Margin- Product prove less VC i.e. variable cost
Here,
Contribution margin= £45-£18.82 i.e.
Therefore breakeven= £20000/£18.82 i.e. 1062 books
Margin of safety
Current sale less breakeven point / current sale
In the stated case, the margin of safety will be (3000-1062) books/3000 *100 i.e. 64% approx.
Key performance Indicators
KPIs reflect the set of quantifiable measurement that has been used to understand about the long term goal or performance of business. It mainly helps the management to have basic idea or also helps for deterring the strategy, operational and finical achievement especially in competitive market (Sisco, J., 2021). In the stated case of business idea, being non- completive market, we have chosen the following the KPI
| S.No. | KPI | Reason for chose | How to measure |
| 1 | Revenue | the very basic reason for business set up | it is very essential for this business idea to have prominent view on planned revenue which can be measure on the basis of forecasted demand in initial stage and later based on various study as per the market requirement |
| 2 | Pacing | time scale is essential for any business plan | It is very crucial to measure the actual figure over the planned. Hence here the forecasting figure in future need to be analysed on regular basis once the business set up. It can be monthly, quarterly etc. |
| 3 | Fill rate | marketing is very essential in the initial stage of business | It refers to analyse the ad request received on the basis of actually sent. This could be improved by having ad on multiple pages over the time |
| 4 | Printing cost | being the basic & essential cost of this business idea | the quotation is required to be asked from various dealer so as to arrive at reasonable price with quality target |
| 5 | Website Engagement | since online purchase permitted through website in initial stage | the quotation is required to be asked from various dealer so as to arrive at reasonable price with good quality target |
Conclusion and Recommendation
On the brief discussion held above writ product, it quality, range etc. along with target consumer, it can be concluded that the business idea would be safe that will bring in the baby market new & unique feature. This business idea is initially a start in order to relate implementation of Arabic language being second language need of an hour and to meet the market trends. The concept of crowd funding has been one of the effective and base mode to continue the business although it will requires lot of promotion in initial stage. Since this business ideas being a non- competitive business at present stage resultant provides the business an upper hand simultaneously being unique characteristics help it to remain being leading brand in future with continuous innovation. Therefore it has been recommended that the business idea keeping under consideration the target consumer and objective is sound effective and should go ahead with the same.
References
Arabic archives – parenthood: Muslim style (2019) Available at: http://parenthoodmuslimstyle.com/category/arabic/ (Accessed: 5 May 2021).
best start resource center (2020) Available at: http://www.beststart.org/resources/hlthy_chld_dev/BSRC_When_Families_Speak_fnl.pdf (Accessed: 5 May 2021).
bookseller (2019) Available at: http://www.thebookseller.com/news/children-s-book-market-grows-32-313319 (Accessed: 5 May 2021).
mintel (2016) Available at: http://academic.mintel.com/display/775461/?highlight#hit1 (Accessed: 5 May 2021).
Crowdfunder (2020) Crowdfunding, UK fundraising website for community, business and creative projects. Available at: http://www.crowdfunder.co.uk (Accessed: 5 May 2021).
Imago (2020) Imago: Working with Imago. Available at: http://www.imago.co.uk/uk/products-and-services/working-imago/ (Accessed: 5 May 2021).
Jelly cat (2019) Available at: http://www.jellycat.com/soft-books/ (Accessed: 5 May 2021).
Smith, J. (2016) Email to Sarah Azzuz, 5 May 2021
Waterstones (2016) Available at: https://www.waterstones.com/book/my-first-numbers-ladybird-learners/9780723297079 (Accessed: 5 May 2021).
References
Bench. 2021. Cash Flow Statement: Explanation and Example | Bench Accounting. [online] Available at: <https://bench.co/blog/accounting/cash-flow-statements/> [Accessed 7 May 2021].
Corporate Finance Institute. 2021. Fixed and Variable Costs – Overview, Examples, Applications. [online] Available at: <https://corporatefinanceinstitute.com/resources/knowledge/accounting/fixed-and-variable-costs/> [Accessed 7 May 2021].
Datorama. 2021. 8 KPIs Every Publisher Should Track | Datorama. [online] Available at: <https://datorama.com/blog/2018/01/10/8-kpis-every-publisher-track/> [Accessed 7 May 2021].
Sisco, J., 2021. ENODO Global | Premier Social Risk Advisory Firm | Fairfax Virginia. [online] ENODO Global. Available at: <https://enodoglobal.com/> [Accessed 7 May 2021].
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