Business Idea
Provide a brief overview of your business and the services /products you will produce.
Establishing your business
Prepare an itemized list of assets needed to establish your business (and explain what they are needed for and how much they will cost)
Discuss how you will finance the purchase of these assets ie Debt/Equity Consider how much of each you will need and why-consider grants and loans that may be available to your business organization – and the application process – consider interest rates if loaning from banks and also the terms agreed)
Managing Your Assets
Discuss methods /procedures you will use to manage your assets – evaluate business asset purchases eg cost/benefit analysis (choose an asset within your business and apply a cost benefit analysis to that showing how much it costs and the benefits over time to repay the cost)
Discuss methods/procedures you will use to manage your working capital ie cash inventory, accounts receivable , accounts payable
how will you receive income – cash or credit payments – what methods will you use to record income and expenditure ?
what will you be spending money on
how will you keep your records ?
what sort of software will you use ?
will you keep petty cash records?
How will you ensure that debtos pay you on time ?
What forecasts will you produce to help you manage your accounts ?
How much stock will you hold ?
This list is not exhaustive – consider how best you can manage your accounting function to ensure good management of working capital ( refer to text books !!)
Income Statement ( Profit and Loss )
Estimate your sales and expensive ( exclusive of GST) for each month, for the first year of your business ( including a total column) and the resultant profit( loss)
Note : you will need to explain your sales and expense estimates
Sales:
Your sales estimate should include an explanation of the selling price ( what price are you charging? What is it based on ?)
This explanation should refer to the costing of your service/product and a comparison to competitor pricing ( consider more than one competitor if possible)
You also need to give details on the volume of your sales eg number of customers ( this may have to be an estimate but should be based on the market research or competitor research)
You should also explain when you expect to receive your sales in cash ( for use in your cash flows budget- will you be paid in month of sale or month later ?
Expenses:
A brief explanation for each of your expenses will suffice
Don’t forget to include depreciation( explain which method of depreciation that you will use ) and insurance costs
You should also explain when you expect to pay these in cash ( for use in your cash flows)
Cashflows:
Estimate your cash receipts and payments ( including GST) for each month for the first year of your business ( including a total column)
Note Assume that you are on the 6 monthly GST payments basis Use your sales and expense estimates to calculate when you will receive/pay cash Don’t forget to include establishment costs ( assets) loan finance and drawings
Cost Volume Profit Analysis:
Using your forecast income and expenses classify the expenses into fixed and variable costs.
Calculate the breakeven point for your business.
Provide a contribution margin statement to prove your calculations are correct.
Using the variable cost percentage and fixed costs calculated for breakeven point above prepare a forecasted income statement ( contribution margin format) based on the most likely, most optimistic and most pessimistic outcomes for your business.
You must ensure that you :
Appropriately research the business area that you are considering – using both desk and field research ( eg accounting text books , competitor information, current interest rate, bank rate information, appropriate sourcing of finance and application process ( including any grants that may be available for your business type if relevant ) You may also interview business owners or other people that may be able to help with your research – but they must be acknowledged in your referencing appropriately.
Appropriate referencing needed to acknowledge any sources of information used within the body of your assignment . ( books, quotations, articles , websites must all be referenced appropriately )
Present accounting information as appendicies
