1.0 Business Idea
Trusted Dealers Technologies Ltd. is a firm which deals with assembling computers, installed with systems which suit the specified users. Besides, the company deals with installing other devices such as surveillance cameras, door lock systems and business software to form a larger system that operates all key areas within an organization. The company will be relying on the specifications provided by our clients in order to build customized systems. Moreover, we will be providing training services to the employees of the specified organizations which we sell our products so that we show them how to operate the system.
The business is as a result of a research we conducted that demostrated how various businesses and different organizations are having a hard time when deciding the type of systems and the quality to embrace on their operations. Hence, the business will offer viable solutions to this issue, including provision of advice when choosing the right systems.
1.0.1 Aims and objectives of the business
To increase the profit margin of the company by 15% in the next two months of its operation.
To optimize service delivery and high quality products to our customers.
To open another branch by the 6th of July 2019.
To ensure that the company is naturally recognized and far beyond its competitors.
1.0.2 Mission and vision of the business
The increase and diffusion of technology
To diversify the world of business into a technology era in order to maximize profits with minimal strain.1.0.3 Product and service
Stocks: The business deals with importing parts of computers and others technological accessories with the aim of assembling them to form a huge system which suits the needs of the customers.
The business will provide training services to the clients on how to operate the system. The business will be operated six days a week, starting from 8:00 am to 6:00 pm as from Sunday to Friday.
2.0 Establishing the business
The business will be required to budget on the following facilities to ensure a streamlined flow of its activities:
ITEMS QUANTITY UNIT COST TOTAL COST
Computer 10 $ 200 $ 2,000
Calculator 5 $ 10 $ 50
Photocopier machine 3 $ 300 $ 900
Stapling machine 3
$ 2.5 $ 7.5
Telephone 3 $ 30 $ 90
FURNITURE Chairs 17 $ 30 $ 510
Tables 6 $ 25 $ 150
Total $ 3707.5
3.0 Funding the business
Every business requires funds to get started. There are many sources of funds that can help a business person to get the starting capital. However, an entrepreneur should make wise decisions when deciding on the source of funds to choose. Trusted Dealers will use the following sources of funds to finance the business in funding of initial assets; personal savings, family and friends contributions. Also, I will use investors, and a bank loan in funding the business.
3.1 Funding of initial assets
3.1.1 Personal savings
Personal savings are very crucial for any starting business since it gives the entrepreneur ownership and motivation. Apparently, I have been making savings from the previous ventures and college endorsements. As the first investor in the business, I will prove to the other sources how committed I am towards ensuring the business will grow, especially the investors and bankers will require prove about the effort and seriousness I am putting into the business. This will depict that I am ready to take risks, thus they will be convinced to risk their funds too.
Advantages of Personal savings
Personal savings make a great source of capital since you will enjoy more profits since you won't be paying any interests or sharing returns with investors
If you put all your personal savings into the business, you might lose it in case something goes wrong with the business.
Some assets may be at risks, especially the retirement accounts, more so when you are approaching the retirement and you do not the time to rebuild the finished accounts. Hence, such assets are safe from bankruptcy and creditors.
3.1.2 Family and friends' contribution
Family and friends play a great role in the business. They can enable one to either succeed or fail in business. Friends and family are the first members to build trust on the idea of starting the business. By building the inner circle, it will be easy to expand the horizons to the outside world since the investors would like to see the real skin in the game. Family and friends are the most trusted, and will support genuinely into the funding of the business.
In case the business falls, the family and friends can write off the debts, hence it has a more flexible repayment terms.
There are lower interest rates as compared to external sources.
The business may affect the personal relationship with the family and friends, especially if they develop interests in the company.
There is a lack of clarity on that one can treat funds given from family and friends as informal transactions.
3.2 Funding of growth
After the business has begun, the investors can now easily come in since they have proven about the existence of the business. Investors are very important to any growing business since they take the business into the next level. The investors are wealthy people who directly invest in firms owned by others. Thus, investors can either contribute capital or provide management knowledge. Trusted Dealers will actively involve loyal and accountable investors who will risk their capital into the business and oversee the operation of the business by supervising the business progress.
Preserves the owner's resources by allowing one to use the internal resources for other different purposes.
Investors enhance company's growth since they are able to finance business projects, leading to the growth of the business.
They claim company ownership in exchange of the funding.
They require a return on their investment hence sharing company profits.
3.2.2 Bank loan
To expand the business into the next level, Trusted Dealers Technologies will want to involve bankers in providing capital to ensure the business grows. Many businesses commonly adopt this source of funding given that banks can support the business to ensure they have their returns according to the agreement. Hence, our business will look for a viable and flexible bank that will meet our specific needs. To ensure this happens, the business will keep a sound track record with an excellent record.
Banks do not take the ownership of the business.
The bank loans' interests are tax-deductable.
It is difficult to get loans from banks.
4.0 Managing the Assets
4.1 Liquidation value
This is the total amount of money that would be collected if all the company's assets are sold. Nonetheless, the liquidation value depends on the time when the assets are sold. Hence, this method can easily be used to assess our company's asset purchase.
Relief from royalty
Given that Trusted Dealers Technologies will be generating softwares and other intangible assets, this method will be the best in measuring the company's assets. This approach entails estimating the assets according to the value our company would use to pay for the rights of the softwares to acquire the license from the third party.
4.3 Book value
This is the amount which the shareholders could get if we decided to sell the company's total assets, stock, and liabilities at exactly the same amount as they show on the records of accounts. However, this method may not be reliable since the market price may vary from the price in the books of record.
4.4 Enterprise value
This method entails selling all the shares on the open market and using the money to pay the debts, and use the remaining money on the business' balance sheet. This would be used to measure the company's asset value since this technique does not affect the market price of the company's stock.
4.5 Discounted cash flows
Discounted cash flows is one of the most justifiable and detailed methods to measure a firm's assets. Under this technique, the acquirer will construct a discounted cash flow on our business through extrapolations of its past cash flow and expectations of another firm and combining the two businesses. Then, the cash flows of the two firms are applied with a discount rate to determine the company's value of its assets.
4.6 Multiple analysis
The technique involves compiling our firm's financial information and collecting information about the publicly-help companies' stock prices, then converting the information into the valuation multiples to determine the firm's asset value.
5.0 Managing working capital
Any successful business should, whether small or big, take working capital as a crucial aspect in assessing a business' long-term financial health. The management should control the working capital as a top priority since the main aim of the working capital is to ensure adequate cash flow is maintained so that the business meets its objectives. Some of the methods Trusted Dealers Technologies will take to ensure the working capital is well managed are;
5.1 Pay the suppliers on time
Suppliers are important stakeholders in the business since they ensure continuous flow of products. Many a time, suppliers give goods on credit and demand payment later, as per their agreement. Trusted Dealers Technologies will ensure the suppliers are paid quickly and they will have no time to waste chasing invoices to demand for payment. Hence, they will be more flexible in terms of prices and commitment. To maintain a good working relationship with the suppliers, the management will enable effective negotiation to build the trust.
5.2 Control expenses carefully
All expenses, both small and big, will be taken into consideration since it can affect the company's working capital. To ensure this method is effective, we shall set clearly understood rules and regulations on how the resources will be allocated and used. Besides, the finances will be allocated according to the various departments so that every individual be will reliable and responsible for the resources allocated to them. Also, a corporate card program will be introduced to the management to evaluate the expenses in depth.
5.3 Talking to alternative lenders
To grow the business, we shall consider other ways of acquiring funds. For instance, we shall embrace bank overdrafts as a way of managing shortfalls in the business' working capital. However, this may attract extra interest rates to the business, but we shall negotiate for best interests with the lender, who may give emergency loans, discounting and invoice factoring.
5.4 Watching the stock
Piling up the stock can affect the company's profits since they will tie up huge amounts of money. Hence, we shall ensure that the incoming and the outgoing products are consistent according to the demands of the customer. Therefore, it's clear that overbuying of products demonstrates a poor habit of communication within the respective departments. Regular check ups will be initiated to ensure correct ordering is embraced to save on the company's capital. Also, shortages will be avoided to ensure the customers' demands are met and satisfaction is enhanced.
5.5 Managing inventory and embracing e-procurement
To make the most of Trusted Dealers' working capital, we shall take the inventory management as a fundamental factor. E-procurement will greatly reduce costs. This technology will give the company good time to make the correct choice of products, quantity, and the best deals by comparing the suppliers to determine the suppliers who can accommodate longer payment terms. This technique will boost the business' working cap...
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