Business plan for New Generation Consulting

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Table of contents

TopicsPages

Background1-2

Literature Review3

Objectives4

Methodology5

Understanding the sources of

finance available to a business6-9

Understanding the implication of finance

as a resource within a business10-11

Making financial decisions based on

financial information12-13

Evaluating the financial performance of

a business14-16

Analysis/Findings17-18

Recommendation19-20

Conclusion21

Reference22

Background

The New Generation Consulting Firm is a new business located at 5 West Street Port Antonio, Portland. Our opening hours will be 9am to 5pm Monday to Friday. We will focus on consulting services for small and medium sized firms. Our primary service will include market studies, business plans, strategic planning, seminars and workshop.

Our vision is to provide business and services to our clients to help them to become leaders and more successful to small and medium sized firms.

The New Generation Consulting firm is for private investors which consist of three partners with the principal owner Sheryl Lowe-Leigh. As the business expands it may develop a strategy with other companies. Additional staff will be obtained as the need arises.

The new consulting firm is at present in the process of obtaining a loan from Canadian Imperial Bank of Commerce (CIBC) for Three Million ($3,000,000.00) dollars to start up the business.

Our objectives for the first 12 months are:

  • To develop a profitable business
  • To develop a strong clientele through networking, by advertizing in the yellow pages,
  • Create brochures to distribute to lending agency and becoming active member of other businesses.

With this business we will associate with other small businesses, conduct seminars and workshops to attract prospective clientele. We will target business in the surrounding region because there is no other business that specialized in this type of business that is located in this region,

Literature Review

The most important aspects of business development sought in the literature selected, were strategies to increase the worth and capability of the business and location chosen. This particularly pertains to the business development of Port Antonio Portland through the use of automation and mechanization and the value added by improving the base of small business, customer service and products.

Observation was used by the company to see what was basically happening in the community as it relates to business patterns and level of services that are been offered to customers at different scale.

According to (hatten, 2011) small businesses have the capacity to generate a great deal of energy, innovation and profit. Hatten discusses strategies for both first time entrepreneurs and small business managers who want to focus on achieving and maintaining a sustainable competitive advantage as a small organization. He highlights current issues including global opportunities, service, quality and technology as important factors for small business’ prosperity.

According to (Griffith, 2012) we live in a time of rapid change. Innovation technologies from the latest media platforms to high-tech automated warehouse reinvent the way of business every day. She highlights not just two new technologies but also to processes and people and most crucially, to the way these strategic elements fight together.

Objectives

Outcomes:

  • Generating at least one new client a month through networking, conduct seminars and workshops for small and medium businesses and joining business and industry.
  • Generating a net profit of One Million Three Hundred Thousand ($1,300,000.00) dollars for the initial year by increasing a strong client’s base and keeping operating at a minimal cost.
  • Acquire a more efficient and effective communication system.

Output:

  • Obtain a loan for Three Million ($3,000,000.00) dollars from CIBC for startup cost and operating for The New Generation Consulting Firm.
  • Conducting twelve seminars and six business workshops to meet needs of our local business community.
  • Implement in stages advanced information technology systems to improve the methods of submitting report and to circulate other internal information.
  • Training of all categories of employees to facilitate a smooth transaction from using the existing system.

Methodology

Primary research

The methods that were use to gather the data were interviews, reading research and observation. High school students who are about to select their subject options to match their career choices, were the target. This was done to ascertain an estimated number of youths who were attracted to the opportunities now existing in the business industry. Older persons were also interviewed to ascertain the extent of the interest. A business currently provides the most employment opportunities in the parish due to the lack of other employment and tertiary educational opportunities. School and other business enterprises in the community were among the samples as well to ascertain if they have intentions of diverting, and if they had plans to improve and increase technology in the business industry.

Secondary research

Another method used, was Research from the internet, library and online sources to see what different writers have to say about small businesses. The research targeted business strategies and performance indicators used by current small businesses to increase viability by transforming weaknesses and overcoming threats.

LO1Understanding the sources of finance available to a business.

1.1The different sources that can be found in a business will be the internal and external.

In a business you can find both internal and external sources

Internal

This deals with the source that comes within the business it also looks at the short term, medium term and long term loans.

Short term: selling of stocks, retained earnings, debt collections and assets.

Medium term: retained earnings.

Long term: investment of cash.

External

This deals with the sources that comes from outside the business it also looks at both short term, medium term and long term loans

Short term: overdraft, trade credit, government grant, donation, sponsorship, debt factoring, leasing and hire purchase.

Medium term: government grant, bank loan, mortgage, hire purchase, and sponsorship.

Long term: preference shares, ordinary shares, bank loan, debenture, hire purchase and leasing.

1.2Assessing the implications of the different sources.

In implications of different source we have to look at sale of stocks, retained earnings, owners’ investment, government grants/ subsides, trade credit, mortgage and preference shares and the advantage and disadvantage of each.

Sale of stocks:

Advantage: is a quick way to raise fund reduction in holding cost.

Disadvantage: discounted in sale price in order to get a quick sale.

Retained earnings: this is the net profit available for payment to company

Advantage: interest free and there is no demand for repayment.

Disadvantage: earnings are only available to existing business and it is limited for large project.

Owners’ investment: money from owners’ savings investment or for expansion.

Advantage: interest free no demand for repayment.

Disadvantage: limited of amount of money the owners’ can invest.

Government grants/subsidies payment:

Advantage: government aids given without need for repayment and allow production at a cheaper interest free.

Disadvantage: no easily obtain and most time insufficient.

Trade credit:

Advantage: deferred for goods received less strain on cash float.

Disadvantage: discount for cash purchase less.

Mortgages:

Advantage: low interest, set repayment spread over long term period, immediate use of assets.

Disadvantage: high risk loan secure on assets if default will valuable to loss asset for repossession.

Preferred shares:

Advantage: shares yield fixed amount of dividend preference over ordinary shares cumulative payment.

Disadvantage: don’t have voting right.

1.3Evaluating appropriate sources of finance for a business

First understand the nature and size of the business. Large organizations may be able to use a wider variety of finance sources than are small businesses. However “A small business can… borrow from families and friends. In contrast, large companies [can] raise finance by issuing shares. Large companies often have thousands of different shareholders.”[1]

LO2.Understanding the implications of finance as a resources within a business

2.1Analyzing the cost of different source of finance.

2.2Explaining the importance of finance planning.

The importance of a financial planning is to see the potential of the business and to insure that the business will succeed, in financial planning can think about the cash need and decision on how the business can raise cash such as borrowing or the issuing of additional shares.

2.3 Assessing the information needed of decision maker.

In assessing the information needed the business need to consider the resources required or the sources of finance which we will think about the cost of finance, cost of developing the business, as well as the revenues and profit to develop or justify the business.

2.4Explaining the impact of finance on the financial statement.

In explaining the impact on the financial statement we have to think of setting a goal, examining the current financial status.

When think of setting goal us talking about the long term and short term plan and the importance of the business.

The long term plan that created for this business such as:

  • The expansion of the business.
  • Development of new product of the business.
  • The creating of jobs and different activity.

The short term plan financial target will be set for junior management and middle management to measure against their actual performance, which will be monitor.

LO3Making financial decision based on financial information.

3.1Analyzing budgets and make appropriate decisions.

Analyzing the budgets and making decision,

3.2Explaining the calculation of unit cost and make pricing decisions using relevant information.

3.3Assessing the viability of a project using investment appraisal techniques.

LO4Evaluating the financial performance of a business.

4.1Discussing the main financial statement take from (From Walden University Online. Start Towards A Better Future!) Statement of Financial

Position[Balance Sheet]

Statement of Financial Position, also known as the Balance Sheet, presents the financial position of an entity at a given date. It is comprised of three main components:Assets,liabilitiesandequity.

Statement of Financial Position helps users of financial statements to assess the financial soundness of an entity in terms of liquidity risk, financial risk, credit risk and business risk.

4.2Comparing appropriate formats of a financial statements for different type of business taken from. (From Walden University Online. Start Towards A Better Future!)

Following is an illustrative example of a Statement of Financial Position prepared under the format prescribed by IAS 1 Presentation of Financial Statements.

Statement of Financial Position as at 31stDecember 2013

Notes

2013

2012

USD

USD

ASSETS

Non-current assets

Property, plant & equipment

9

130,000

120,000

Goodwill

10

30,000

30,000

Intangible assets

11

60,000

50,000

220,000

200,000

Current assets

Inventories

12

12,000

10,000

Trade receivables

13

25,000

30,000

Cash and cash equivalents

14

8,000

10,000

45,000

50,000

TOTAL ASSETS

265,000

250,000

EQUITY AND LIABILITIES

From Walden University Online. Start Towards A Better Future!

http://accounting-simplified.com/financial/statements/statement-of-financial-position.html 15/4/2014 4.1

1


[1] http://businesscasestudies.co.uk/business-theory/finance/sources-of-finance.html#axzz2zBHRwph4

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