Business Finance for Managers - Costed Business Plan for a Bridal Boutique

This report presents a costed business plan for a new business of opening a boutique for Bridal wear where there will be both online and offline modes available for selling boutique products. It includes a summary of the business idea, fixed and variable costs, budgeted profit forecast, cash flow forecast, calculation of breakeven point and margin of safety, and recommendations.

BUSINESS FINANCE FOR
MANAGER

TABLE OF CONTENTS
TABLE OF CONTENTS..............................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Summary of the business idea.....................................................................................................3
Outline and discussion of fixed and variable costs.....................................................................4
Budgeted profit forecast for the first year of operation...............................................................6
Cash flow forecast.......................................................................................................................7
Calculation of breakeven point and margin of safety.................................................................9
Key Performance Indicators......................................................................................................10
Recommendations.....................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
The present report is based on presenting a costed business plan for a new business of
opening boutique for Bridal wear where there will be both online and offline modes available for
selling boutique products. First of all, business idea will be described in terms of in which
industry the business will be starting. The nature of the competition will also be highlighted
along with analysing various risks from which the business is prone to. The sources from which
the business will procure their funds will be discussed accordingly. Further, the various fixed and
variable costs will be outlined and discussion pertaining to the same will be done. Also, budgeted
forecast of profit and cash flow for the first year of operation will be done along with the
calculation of breakeven point and margin of safety. At last, KPIs that facilitates the monitoring
of progress towards the achievement of business goals will be discussed along with the citation
of recommendations on the basis of results obtained.
MAIN BODY
Summary of the business idea
Gorgeous Bridal Boutique is a retail store located at United Kingdom offer premium
quality of various products for bridal weeding such as gowns, footwear and jewellery products
for the women or bridal. All these contain a premium range of product that will allow the bride
to enjoy the best bridal experience against the big dream that come true for the respective
couples. The company is not only sustaining to its bridal collection rather the venture further
offering the suitable attire for the groom mother, sister and bridesmaids (Wayman, 2020). All
this allow the company to entertain the vast number of potential customer in respective target
market. The key aim and objective of the company is to support the dream of bride and groom in
order to approach to the dream weeding destination. Weeding is a biggest festival in the life of
people and the associate family member of couple. In such a process this become a nostalgic
experience for all the people as well who attend the whole function especially the family
members of the bride and groom. This busies will only be located in United Kingdom as this is a
start up so the funding is a big issue which only allow the stakeholder to associate the operations
in United Kingdom only. The role of the business operation is to provide the best life time
experience for the bride and groom to support the fulfilment of all the dreams.

The business is also associate with the plenty of risk factor that immensely influences the
business venture to face various challenges. The competition in the market is massive and huge
in nature. That creates an issue related to the demolishment of the whole business venture.
Competition in the market will be a massive challenge that company will have to deal with in
against of delivering the all different business operations (Kwon, 2017). Further the Gorgeous
Bridal Boutique will have to face the issue of liquidity. In the initial stage of the business life
cycle liquidity is a big issue that businesses face. As the initial funding usually cost for the whole
set up but in the initial stage to execute the operations liquidity is the key need that business
venture need to look at. To arrange the sufficient working capital requirement this will be a
major issue the company will face. Risk of losing the capital and entertaining debt will also be
there in the whole operations. This is a massive level of risk involve in the business function
entertain by the organisation.
Arranging fund is a huge challenge that company face at the initial stage of the business.
Arranging the fund for both long term as well short term requirement of the company the
Gorgeous Bridal Boutique can approach to bank loan. This will allow the company to easily
entertain all its funding requirement at a very reasonable interest rate. Also government provide
tax benefit to the small business houses over a bank loan. This will further improve the liquidity
situation of the company. The business can further approach to private investors, investment
banking firm ad such like institutions.
Outline and discussion of fixed and variable costs
Every business generally have two types of costs that is, fixed and variable costs and the current
business is no exception. The fixed cost are those costs which does not vary with the level of
activity whereas the variable costs are those that varies with the level of activity (Akan and
Tevfik, 2020). With respect to the business of Gorgeous bridal boutique, there are many
expenses that the company is going to incur in the first year of its operation and these expenses
are categorized into either fixed or variable costs depending upon their nature or frequency of
occurrence.
List of fixed and variable costs are as follows:
Costs Nature of cost Description Amount £
Marketing cost Fixed cost The cost is being
incurred with respect to
15600

pamphlets, photos and
videos on social media,
magazines,
advertisement on TV,
etc. it is considered as a
fixed cost because
companies specifically
allocate money for the
expenditure they are
planning to made
towards marketing
during the particular
period.
Loan repayment Fixed cost Monthly 200 will be
paid towards loan
repayment.
2400 p.a.
Cost of dream bridal
wedding package
Variable cost Bridal Gown 33600
Bridal Footwear 8400
Bridal accessories
( headpieces, veils and
Jewellery) 6000
The sales gets doubled
during the month of
January, May, July and
December, so as the
variable cost of these
respective months.
64000 per year
Designer’s fees Fixed cost There are 5 designers
and each paid 5000 per
year
25000
Salaries to staff Fixed cost 20 employees are paid 16000

@ 800 per year
Insurance premium Fixed cost Paid annually 9600
Taxes and permits Fixed cost 5000
Accounting fees Fixed cost 14000
Others Legal expenses 1900
Total of variable cost per year = £64000
Total fixed cost per year = £89500
Budgeted profit forecast for the first year of operation
It will be assumed that the sales in the month of January, May, July and December gets doubled
due to the prevailing wedding season in these months. Accordingly, the variable costs associated
with these months would get doubled.
Profit forecast for the first year of operations assuming the sale of 10 units per month
Month 1 2 3 4 5 6 7 8 9 10 11 12 TotaL
A Month name Januar
y
Februar
y
Marc
h
April May June July Augus
t
Septembe
r
Octobe
r
Novembe
r
Decembe
r
B
Dream Bridal
wedding package
recast
Sales forecast £9600 £4800 £4800 £480
0
£960
0
£480
0
£960
0
£4800 £4800 £4800 £4800 £9600 76800
C Dream Bridal
wedding package
(variable cost)
£8000 £4000 4000 4000 8000 4000 8000 4000 4000 4000 4000 8000 £6400
0

D contribution 800 800 1600 12800
E Less: Fixed cost 1600 800 800 800 1600
Marketing cost
Loan repayment 2400
Designer’s fees 25000
Salaries to staff 16000
Insurance
premium
9600
Taxes and permits 5000
Accounting fees 14000
Others 1900
F Net profit / (loss) -76700
Cash flow forecast
Month Pre-start 1 2 3 4 5 6 7 8 9 10 11 12 Total
A Month
name
Decembe
r
Januar
y
Februar
y March April May June July Augus
t
Septembe
r
Octobe
r
Novembe
r
Decembe
r
Money in
(£)
B
Funding
from The
Prince’s
Trust
60000 0 0 0 0 0 0 0 0 0 0 0 0 60000

Funding
from
90000 0 0 0 0 0 0 0 0 0 0 0 0 90000
other
sources
Own funds 30000 0 0 0 0 0 0 0 0 0 0 0 0 30000
Incomes
from
Sales
9600 4800 4800 4800 9600 4800 9600 4800 4800 4800 4800 9600 76800
Other 0 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 19500
C
Total
Money in
(£)
180000 11100 6300 6300 6300 11100 6300 11100 6300 6300 6300 6300 11100 27480
0
Money out
(£)
D
Loan
repayment
s
200 200 200 200 200 200 200 200 200 200 200 200 2400
The
Prince’s
Trust
Personal
drawings 14000 0 0 0 0 0 0 0 0 0 0 0 0 14000
Cost of
dream
bridal
wedding
package
8000 4000 4000 4000 8000 4000 8000 4000 4000 4000 4000 8000 64000
Fees to
designer 25000
Cost of
equipment 20000 0 0 0 0 0 0 0 0 0 0 0 0 20000
Payroll to
staffs 16000
Business
insurances 800 800 800 800 800 800 800 800 800 800 800 800 9600

Taxes and
permits 5000
Accountin
g fees 14000
Software
installation
cost
5000 0 0 0 0 0 0 0 0 0 0 0 0 5000
Advertisin
g and
promotion
1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 15600
others 1900
E
Total
money out
(£)
39000 10300 6300 6300 6300 10300 6300 10300 6300 6300 6300 6300 10300 19250
0
F Balance
(£) 141000 800 0 0 0 800 0 800 0 0 0 0 800 82300
Opening
balance 10000 15100
0 151800 15180
0
15180
0
15180
0
15260
0
15260
0
15340
0 153400 153400 153400 153400
Closing
balance 151000 15180
0 151800 15180
0
15180
0
15260
0
15260
0
15340
0
15340
0 153400 153400 153400 154200 15420
0
Calculation of breakeven point and margin of safety
Breakeven point indicates the level of sales at which the company neither earns profit nor incur
losses. According to the forecast made for the first year of operations, it has been recognized that
the new business “Gorgeous bridal boutique” is incurring losses in its first year of operation
(DeWitt and Koh, 2020). So, with the help of breakeven point calculation it will be determined
that how much more sales that company should make to cover all its expenses and generate
profits as well by crossing the breakeven point.
Sales price per unit of the company in the first year = £76800
Variable cost per unit per year = £64000
Fixed cost per year = 89500
Contribution margin = (i) – (ii) = 76800 – 64000 = £12800
Breakeven sales = fixed cost / contribution margin * Sales = 89500 / 12800 * 76800 = £537000
In order to breakeven, this business needs to make sales of £537000.

Calculation of margin of Safety
MOS = Actual sales – Breakeven sales = 76800 – 537000 = (£460200)
Thus, from the negative value of MOS, it has been determined that the company has to generate
£460200 more sales revenue in order to breakeven and to earn profits, the sales must be above
£460200.
Key Performance Indicators
Gorgeous Bridal Boutique can use the various key performance indicators. Sales of
company will be the prominent indicator that will allow the business venture to measure the
success of the whole idea. Profit will further be a strong basis to measure the overall
performance of the organisation. The working capital management of company is another
suitable factor that can indicate about the performance standard that company is following
(Fourati, 2021). All these will be the key performance indicator that Gorgeous Bridal Boutique
may use in order to execute the whole business operations. The performance indicator will also
allow the company to take necessary steps for overcoming all different challenges and issues
associated with the business operations executed by the organisation.
Recommendations
 Company can look forward to improve its liquidity situation by controlling the creditor
and debtor of the company.
 The organisation can further support its performance from the digital media marketing
and social media promotions to support the overall growth and development of the
business venture (Saranya and Anithaashri, 2020).
 The strategic alliances with all the suppliers of company are also crucial for the venture
to maximise the overall growth and development of the business venture.
 This is also recommended that company should give emphasis over innovation and
creative ideas to create a unique brand image.
CONCLUSION
From the above report it has been concluded that as per the forecasting done, the business is
operating below the level of activity which is required to earn profits. Therefore, more

advertisements should be made or discounts should be provided in the initial years of operation
in order to sustain in the highly competitive market or clothing industry.

REFERENCES
Books and Journals
Wayman, Z., 2020. Wayman Designs.
Kwon, S. H., 2017. Green can be the new white for wedding dresses. The Design Journal. 20(5).
pp.595-616.
Fourati, H., 2021. Ownership concentration Dynamic trade off theory And debt funding of
business start-up. The Journal of Entrepreneurial Finance. 23(1). p.3.
Saranya, M. and Anithaashri, T. P., 2020, November. Novel approach to enhance network
security using key performance indicator in business analytics. In IOP Conference
Series: Materials Science and Engineering (Vol. 992, No. 1, p. 012015). IOP
Publishing.
DeWitt, D. and Koh, E. H., 2020. Promoting knowledge management processes through an
interactive virtual wall in a postgraduate business finance course. Journal of Education
for Business, 95(4), pp.255-262.
Akan, M. and Tevfik, A. T., 2020. Fundamentals of finance. In Fundamentals of Finance. De
Gruyter.