Establishing a new business venture: Merzendich Garage

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1.0 Introduction

We will establish a new business which is a garage shop. The name for this businesses is the Merzendich Garage. It is a private and legitimate organization. This is because, before starting this business, this company already register with the Suruhanjaya Syarikat Malaysia (SSM) in order to get a business license. The aim for this company are to satisfy customer in term of provide them a good services, a best quality parts, a fair prices, as well as convenience and timely manner. The Merzendich Garage provide and sell a various of products such as, rolling work seat which is suitable for mobility because it is comfortable and reduce back strain. Other than that, this company also sells portable bubble balancer and manual tire changer. So that, it will help customer precise wheel service on-the-go and can help them to make a quick tire changes whereas at home or on the road. The Merzendich Garage also sells an engine support beam, engine stand and also a shop crane.

Furthermore, this company also provide a lot of services. For instance, 24 hours Towing Services for all type of cars and 24/7 comprehensive emergency outdoor service support. Moreover, the Merzendich Garage shop also provided an engine overhaul service and computer tuning or diagnostic which include fuel pump replacing, car wiring and so on. On the other side, this company provide air conditioning services, air conditioning pipe cleaning and vacuum and many more. Some more, the Merzendich Garage also offer a car suspension services and also a car tire services in term of servicing both new tires and used tires. But, the most important thing, this company also provide an insurance to the customers. The organization is run points of interest and wholesale business to products inside the focal and northern states to the merchant. There are included in wholesale stock to retailers, wholesaler’s organizations and institutional clients. A wholesaler can go about as mediators, to encourage exchanges between ventures. Frequently happens in an expansive number of wholesale stock is redesigned, sorting, repackaging and appropriation in littler spots.

2.0 Capital and Liability

Capital investment are the resources from the shareholders exchange to the business for the reason to attain to the business target in the future. It is including all of the equipment and machinery. Thus, in other to run this business, it need a huge amount of money. Expectations for this business is RM150, 000 in order to maintain it. On the other hand, the whole plan is out of our capacity so the amount that can only offer is RM90, 000 and whatever is left of RM60, 000 as liability which obtain loan from bank. The amount of capital is gathered by the shareholders in this company. The Merzendich Garage have four stakeholders which is, Sales and Marketing executive, Accountant, Maintenance and a worker. Hence, the share will be divided accordingly to the amount that each person share that are, Sales and Marketing executive (RM30, 000), Accountant (RM20, 000), Maintenance (RM20, 000) and worker (RM20, 000). So, sales and marketing executive will get 33. 34%, accountant, maintenance and the worker will get the same amount that is 22.22% each.

This company Sales and Marketing Executive are the one who responsible to be a main operator as she have the biggest share among the others in this company and it also will make a problem if there’s have many operators. So, the Accountant, Maintenance and also the worker will be an adviser. Loan will be portion into 10 months’ pay again to bank that is roughly RM5, 000 which is excluded bank enthusiasm of 5% yearly. Notwithstanding, the aggregate sum of long-term liability is RM61, 450.50. This part will demonstrate to in our financial plan industry standards to pay back and maintain our business. Liability implies the costs which is not yet clear and bring to one month from now. In this business, the liability included accrued payable, accrued wages and income tax payment.

Liability

Total

Current Liability

Accrued payable

RM50.000

Accrued wages (OT)

RM1,000

Non-Current liability

Loan from bank

RM61,450.50

Total

RM112,450.50

The stock is not deal yet. Thus, it hard to turnover in this business. So, the Merzendich Garage will ask the supplier pay back in one month from now. Along these lines, liability of accrued payable in after month. Over the long run needs time to figure with the goal that it can’t pay with the salary and wages together. Loan is a non-current liability and it needs pay into 10 months because of an expensive number can’t bear the cost of pay in one times.

3.0 Cost Structure

Based on the course of cost and management accounting, cost structures are related to fixed and variable costs from the business. This concept are refers to the types and relative proportions of fixed and variable costs that a business incurs. The idea can be characterized in littler units, for example, by accessories, benefits, product offering, clients, division, or even geographic. Furthermore, the concept is utilized as an apparatus to focus costs, on the off chance that you are utilizing an expense based valuing procedure, and to highlight territories in which expenses may conceivably be diminished or possibly subjected to better control locale (Accounting Tools, 2015). This concept can be acknowledge into 2 sorts which is variable and fixed costs. The variable cost is the expenses that is rely on upon utilization or benefit despite the fact that can be zero with no profit and working. On the other hand, fixed cost is an expenses which must pay despite the fact that don't have any profit and working.

These are some categories that our garage made based on fixed and variable costs:

Fixed cost

Variable cost

Salary (full-time)

Wages (part-time)

Rent

Utility cost

Insurance

Automotive Maintenance

Charge upon instalment

Technician

Vehicle Parts

Tools

4.0 Labor cost

As a garage business, labor that working with the garage is a must. These are a pecking order which visibly demonstrate that what number of and the amount of need to contract in our business.

* All the work in the graph above is full-time work no less than 8 hours and 1 vacation day every week.

Public holiday is counted as working free day that is on Sunday and also public holiday that are counted in Malaysia such as Chinese New Year, this will be a break-time for workers to have their break time with their relatives so that the measure of stress will be decrease. As for saving cost to the business, conducting environment friendly is our priorities such as less electronic usage upon the business hours. Moreover, regardless the needs of contracting some part-time labor in top consideration. Case in point, during the pick hours on the December possibly the business require extended labor. In that case, the business decided to hire more staff to deal with this situation such as the sale assistance and maintenance personal, both working as part-time. The wages for the part-timers are RM65 every day and we would not procure the part-timer deals aid on the grounds that director and stock boss can help in offering so that the business are accord concur that enough number of specialist for offering the services. Typically, contracting the part-timers for small amount of time for instance 3-4 days every week. Along these lines, it can accomplish more output with decline the expense of consecutively business.

5.0 Cost-Volume-Profit Analysis (CVP)

Cost-Volume-Profit (CVP) Analysis is an accounting tool that helps in planning and making decisions. This tool gives the behavior of total revenues, total costs and profit as changes occur in the units sold, the selling price, the variable cost per unit or the fixed costs of a product. (Cost-Volume-Profit Analysis, n.d.). This CVP analysis helps garage shop in numerous ways to reach its goals. It helps us mainly to make better decisions for our business. This tool provides one of the more questions that we should definitely analyze for our shop. Such as it examines our company’s breakeven point. This is a point where it is expressed as no gain no loss (Lewis, 2001). We believe this is a point very much imported for our business to reach our business goals. This is because when our managers figure the BEP, we can twerk spending and increase production efforts to increase our profits. From this analysis we believe we can enhance our productivity, because it allows our business to predict what will happen to the financial results. For our garage shop we specifically use CVP analysis to see any level of activity or volume fluctuations.

6.0 Cash Budget

Item

April (RM)

May (RM)

June (RM)

Beginning cash balance (in hand/in bank)

150,000

84,500

88,000

Expected Incomes:

Sale

30,000

40,000

50,000

Other Income

20,000

25,000

30,000

Total Income

200,000

149,500

168,000

Expected expenses:

Purchase (Inventory)

50,000

10,000*

40,000

Salary and Wages

15,000

15,000

15,000

Advertisement

5,000

0

0

Rent

3,000

3,000

3,000

Insurance

1,000

1,000

1,000

Instalment for vehicle

1,000

1,000

1,000

Utility fees

500

500

500

Petrol

1,000

1,500

1,000

Equipment expenditures*

10,000

10,000

10,000

Administration fees

2,000

2,500

2,500

Other expenses

1,500

1,500

1,500

Loans

5,500

5,500

5,500

Fixture & Decoration*

20,000

10,000

0

Total Expenses

115,500

61,500

81,000

Total cash surplus (or deficit)

84,500

88,000

87,000

To start with, the aggregate sum of RM150,000 originates from capital of RM90,000 and credit of RM60,000. Because of the organization simply begin, this company have not offer out with the goal that ask by the supplier to pay in after month. When buy in April, they request to pay $50,000 and whatever is left of $10,000 pay for next after month on the grounds that that is the first exchange with the supplier. Beginning from May, this company can pay on next after month rely on upon the month which this company buy, for example, in May and supplier permit to pay in June. By supporting, the charges of commercial can be spared. Thusly, this company don't have to speed cash on notice. That is part was plainly exhibited in later part - The Cost Control.

The deal build months by months lead to the recurrence of carriage increment and use of petrol increment. Organization charges incorporated the stationery, mobile utilization expenses, and so forth. The aggregate sum of fixture and decoration in shop is $30,000. Then again, it is an expansive number and excessively expensive with the goal that they permit we pay isolated by 2 times however up front installment is $ 20,000 in April and $10,000 in May. Subsequently, all the fixture and decoration working just barely 1 time that is before running business and pay in 2 times. The Merzendich Garage will buy the equipment consumptions isolated by 3 times because of procurement every one of the 3 plant and supplies in one time will expand budgetary trouble. Hence, this company have to buy 1 equipment in 1 month. In top, the deals will expand approach the end of the year. Plus, the other pay incorporated the administration and upkeep will increment too. So, wage expand month by month and ready to cover or the consumption by utilizing expected money plan.

7.0 Business Control Costs

In running business, a savvy broker ought to accomplish 'high benefit and low costs' condition. Hence, we can search for the supporter to lessen our ad expenses. Case in point, those backer can be printing shop manager, we can do 'coordinate promote' to accomplish our normal promoting impact, for example, front of the flyer is the data or advancement of the garage and behind of the pamphlet can be the printing shop data. It prompt decrease the costs and attain to the same viable level or above. Besides, we can attempt to request picking up markdown from the assembling parts or car accessories from the factory. It is on the grounds that it can diminish the expenses of the parts and keep up the obliged unit. Lastly, the best approach to control expenses was exhibited in the CVP analysis above is on obligation by turns. By turning working can diminish the over time (OT) recurrence lead to spare expenses. So, there are a few ways we can take for attaining to same benefit level or above by diminishing costs.

8.0 Recommendation

To wrap things up, improving pay and benefit by the needs to require more clients that are consistent to the garage are at top priorities. By giving an advantage of cordiality to treat the clients may give the clients a thought of becoming a regular customer to the Merzendich Garage. As usual for a business, giving the clients a proficiency administration to raise some feedbacks from client is one of the business assurance. Moreover, this would enhance the business extraordinary accomplishment. Likewise the business needs to gather more experience, the feedbacks would help the company so that the clients would ask for more repairs from the easier level to moderate level and the difficult level. Along these lines, we can keep on utilizing the repairs much better for the clients so that they will have the satisfaction upon the service given. Consequently, the benefit of organization can increment when the clients accept and supports to keep an eye on the Merzendich Garage.

9.0 Conclusion

Taking everything into account, being a beginner to a business is not effortlessly. Thus, accounts education is the key for applying to the working business. These are the ventures to open the business as taking after:

Cost and managerial accounting made us learn to discover how to work a business. Case in point, we ought to know the amount of capital contributed that are required. We realize which risk is brought about in view of the accounting education. Thus, this subject acknowledge how to distinguish between fixed cost and variable cost and how to be able to relate it to the business. Fixed cost are the cost that are consistent despite the fact that without utilizing and variable cost is relying upon our utilization. In benefit, we require specialist to work at the point when work surplus causes the expense increment to relating business with the goal and show gauge the quantity of laborer that are needed and the salary that support the payments for attaining more productivity and effective to the business. Additionally, the cash budget are made for the plan the whole operation of the business.

It is on account of we must make the income more exactness for decreasing squandering or pointless costs. After that, attaining more effectiveness and proficient to the business by using the controlling cost method. More benefit less costs is the business way by yearning for diminishing the squandering and pointless costs. We take in a considerable measure from cost and managerial accounting that how to gauge and working a business without shortage.

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