Business Finance & Startup Planning

This assignment examines the crucial role of finance in successful business startups. It delves into various funding sources, emphasizing the significance of retained profit as a key driver of growth. The analysis explores how businesses leverage appropriate financing strategies to achieve increased sales turnover and enhanced profitability.

Business Plan Project
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Feasibility study...............................................................................................................................3
Overview of business plan...........................................................................................................3
Review of country........................................................................................................................4
External environment...................................................................................................................4
Financial information of proposed business................................................................................5
Business plan...................................................................................................................................7
1. Review of external environment and its impact of business plan............................................7
2. Reviewing marketing environment of country........................................................................9
3. SWOT analysis of new business............................................................................................11
4. Setting objectives based upon analysis..................................................................................12
5. Entry strategy to access market.............................................................................................12
6. Reviewing implementation plan............................................................................................13
REFERENCES..............................................................................................................................16
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INTRODUCTION
Business plan refers to idea related to new business concept which aids to start the
operation in the marketplace for the purpose of developing deep understanding. Present business
plan is based opening new venture for manufacturing writing instrument. It would cover different
products such as pencil, pen and pen cases etc. The current business will be situated in UK in the
particular location as Manchester. This business will compete with brands like Mont Blanc and
Cross which are operating at global level with wide range of products and services. Owing to
this, focus will be laid on production of different types of products and services in order to create
competitive edge of the business. However, current business is named as “P&K enterprise ”
which deals in higher quality products with relatively less prices. This will also offer customized
services wherein customers will be offered chance to select color, design of pen. This is the
unique feature of firm so as to create competitive edge in the marketplace.
FEASIBILITY STUDY
Overview of business plan
The current business named as P&K enterprise deals in different types of products and
services in order to cater need of different types of buyers. The produce range of business
consists of pen, pencils, bottled ink, pen cases as well as color set. These basic products are
highly needed in writing sector where authors or students need of all these aspects. However,
different range will be covered in each elements such as fountain, ball and gel pen will be
provided and designs of pencil will also be different with references to varied prices. In addition
to this, students or professionals will be provided chance to select design on the basis of their
requirement (Barringer, 2012). Therefore, customize products will also be availed whereby
customers can select, design, color and external layout of pen or pencil. It proves to be effective
for management to increase the attention of buyers and increase overall sales turnover.
However, reusable aspects of pen is considered by offering bottled ink also. It proves to
be effective to ensure value for money and meet expectations of buyers in an effectual manner.
However, pen cases are also in need for writers. In this regard, focus has been laid to covers
almost all need of consumers in affordable price. Furthermore, product price will not be
extremely higher as business focuses upon reducing cost of production and offering product in
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affordable prices. This shows that new business covers wide range of production. It can be
critically evaluated that in comparison of competitors, product range is low but the strategy
behind the same is to establish business successfully by setting relatively low price. Though,
P&K enterprise emphasize on quality of products and services through which it becomes easy to
create competitive edge in the marketplace by increasing customer base (Schaper and et. al.,
2010).
Review of country
The new business will be entered into UK; a key destination for tourism. It consists of
different tourist destination which in turn visitors schedule their holiday plan every year to visit
the same. However, this country can also be considered as key destination of study or
universities. For example, Cambridge is a university city based in England. It attract large
number of people across the world to select the preferred course and enrolled in the same.
However, many authors from India, France, Japan and Africa as Germany also schedule their
holiday plan which can be effective to increase sales turnover of new businesses like P&K
enterprise. Furthermore, current business will attract students, authors and other people who are
connected with such kind of respondents (Average uk office rents, 2016). For example, a mother
will definitely think to gift a pen or pen case to his son if is student or author.
Owing to this, UK will be selected to start operation of new business which in turn it
becomes easy to accomplish set aim and objectives. It reflects that corporation need to focus
upon different types of products and services so as to meet expectations of buyers. However,
other factors such as suppliers and trading aspect of respective country is very good which in
turn consistent flow of production can be maintained. In addition to this, the location of current
business is Manchester whereby students, researcher and other people can be targeted easily.
External environment
According to the collected information it has been found that during 2010 inflation rate
was 3.133% which are increased in the next year by 5.035%. It reflects that inflation was
increased which limits buying decision of consumers and propensity to save is developed among
them. However, inflation rate was reduced in 2013 by 2.132% where in 2014 it was 1.312. It can
be critically evaluated that inflation rate during 2015 went in minus and became -0.100%. It is
showing that variation are seen under the inflation rate. This proves to be effective to increase
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spending limit of buyers and support corporation to speed up the flow of production. However,
the current situation of UK inflation rate shows .897 thereby new business can effectively cope
up with changing scenario and good quality of services will be delivered to potential buyers. Not
only this, but company has scope to attract more buyers by bringing variation in the current
products and services as per the occasion (Inflation Great Britain - consumer price index (CPI).
2016).
On the other hand, changing phase of society also create demand of such kind of
products. This is because government of UK is putting efforts to ensure development of general
community and addressing poor people. This aspect assists people to access educational
facilitates and accordingly purchase products and services offered by the business. Therefore,
new business entering into field of written instrument will be effective in creating competitive
edge in the marketplace. Apart from this, technological changes in the nation make it possible to
market for products and services (Minimum wage for different types of work, 2016). This in turn
P&K enterprise will have good performance. However, other legal changes must be addressed by
management on time to time so as to ensure ethical conduct of business with increased rate of
return.
Financial information of proposed business
The current business will be opened in UK with wide range of products and services.
Accordingly, financial information of business has been presented by focusing upon overall
aspect of the respective country.
Year 1 Year 2
Revenue 286890 329924
Less: Cost of goods
sold 63115.8 72583.17
Gross profit 223774 257340
Expenses
Marketing expenses 14345 16496
Administration
expenses 22951 26394
Rent of the building 5000 5400
salary and wages 162352 178587
Depreciation on
equipment 1250 1250
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Insurance cost 500 500
Other operating
expenses 5738 6598
Interest 3000 2000
Sum of expenses 215136 237226
PBIT 8639 20115
Tax 1728 4023
Net profit 6911 16092
Assumption related to customers
 It has been assumed that average customer per day for different types of pen will be 15
 Potential buyers for pencil in a day will be 8
 Bottled ink will be purchased by 7 customers in a day
 5 customers will be there for purchasing pen cases Average five customers will be there to purchase color set
Other assumption
 Sales turnover will be increased by 15% in each year
 Marketing expenses will be increased by 5% in each year
 Administration expenses and rent of the business will enhanced by 8%
 Salary and wages of business will be increased by 10%
 The rate wage will be charged on 6.95 per hour
 The working hours in a day will be 8
 Depreciation of equipment will be charged by 5%
 Insurance cost of business of business will be 2%
 Operating expenses of business will be increased by 2%
 Tax rate of business will be charged by 20%
 The interest will be charged 2% per annum on loan taken from bank
The aforementioned income statement of P&K enterprise show positive cash flow. It is
showing that company can easily recover its cost of production and rate of return generated from
the same will be positive. Owing to this, business need to shed light on production facilities and
changing need of buyers. However, during the first operating year net profit of P&K enterprise
will be 9311 whereas for next year profitability will be 17692 which is neither low nor high. It
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proves to be effective to recovers entire cost of production and retained profit can be increased in
the same way.
BUSINESS PLAN
1. Review of external environment and its impact of business plan
The business is made with internal and external environment which must be considered
by management while implementing different strategies. The selected market will be UK where,
researcher must focus upon external environment consisting different following factors- Political-It is the most important factor which affect overall performance of the business
to a great extent. However, political party has direct impact on operation of corporation
because of changing rules and regulations. For example, political aspect of UK is
influenced by EU which is considered by the same in order to start new firm or entry of
corporation from any outside business. Owing to this, political party might affect
company's overall performance in term of strict regulation related expansion, tax policy
and others. For this purpose P&K enterprise takes into account changing phase and its
direct impact om revenue of the business (Finch, 2010). For example, current
performance & growth demands for 20% tax wheres other regulated regulations are also
set out. In addition to this, the government of UK is dedicated towards the growth and
development of nation by focusing upon tourism activities. Etc. In this regard, proposed
business will also get favorable results from the key authorities or parties. Economical-Economic factor also plays important role in development and growth of
new business. However, economic system of company is governed through policies and
regulation of government. It includes two major aspects such as monetary and fiscal
policies which tend to affect purchasing power of buyers and their influence on overall
development of business. At present the inflation rate of country is relatively low which
in turn consumers can effectively increase their spending limit in order to meet their own
expectations. It can critically evaluated that high interest rate and tax rate hamper
performance of new business (Neck and Greene, 2011). It is because management face
issue in getting cost effective finance. However, at the same time higher tax rate would
reduce the income of people and they will develop mentality to save money rather
making expenditure on costly products and services. However, they will still invest in
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products like pen and pencil etc for meeting requirement of students. Therefore, P&K
enterprise will get benefit out of current economic situation of UK and accordingly
overall rate of return will be increased. Social-Social factors shed light on changing preferences of buyers and accordingly they
approach cost effective products which in turn value of money can ensured. Generally,
consumers like to use good quality of products and for the same they remain ready to pay
high. By taking into account the same concept, price of products and services are kept
low in comparison to competitors. It would be effective to retain buyers and do not allow
them to switch form one to another brand (Brinckmann, Grichnik and Kapsa, 2010).
However, some consumers focuses upon durability aspect so by taking into account the
same P&K enterprise also introduce bottled ink. It aids to enhance life of pen and render
good quality of services to potential buyers. However, company conducts detail analysis
or survey through which it becomes effectively in assessing their expectations of needs in
an effectual manner. Technological-It is another factor affecting performance of corporation due to
technological innovation and creation in the marketplace. However, latest technologies
such as internet, social media and e-mail are used to approach buyers, suppliers and
other related stakeholders of the business. For this purpose, internet and other latest
technologies are used for the purpose of delivering good quality of services to large
number of buyers. In this regard, proposed business tend to focus upon use of new
technologies so as to accomplish desire and wants of buyers. However, social media will
be used to approach buyers and do the marketing of offered products as well as services. Legal-Legal aspect is considered as one of the most important elements due to its impact
on entire business operation. In this regard, UK government impose different types of
regulations related to management of workforce. For example, law related minimum
wage, salaries and working hours are considered. Furthermore, work place safety is also
ensured n accordance with requirement of UK government. For this purpose, it is
essential for company to comply with regulatory framework so as to assure about smooth
flow of production (Kwong, Thompson and Cheung, 2012).
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 Environmental-It is another factor of PESTLE which plays important role in determine
successful operation of business with increased rate of return. Under this, sustainable
business aspects need to be focused by business. It shed light on optimum utilization of
limited natural resources. However, emphasis is laid upon delivering good quality of
services through which it becomes easy to ensure long run survival of corporation. Apart
from this, external environment or general community must not be harmed because of
production activities of current or proposed business.
2. Reviewing marketing environment of country
Market environment plays important role in the business due to its significance in
approaching potential buyers. It consists of different variants such as culture, buying behaviour
and income level and market segmentation. These are explained as follows-
Income levels
Income level refers to the capability of business to pay for products and services.
However, regulations of UK reflects that minimum wage rate of country is appropriate. In this
regard, customers do not face issues in spending their money on different activities. However,
P&K business has assesses the income level of consumers and accordingly strategies are formed
to set prices. For example, neither high nor low prices are kept to meet the interest of customers
in an effectual manner. However, it is important for management to assess the preferences of
buyers that whether they are willing to pay or not. At this juncture, organization shed light on
changing preferences of buyers and accordingly special offers are also provided. It aids to
expand business with increased rate of return (Jasra and et. al., 2011). This is because buyers
generally seek for better quality with reasonable price. For this purpose, affordable price of
products are set in order to attract large number of buyers. Therefore, following table is showing
price of each element produced by the business. However, it is the average price where
corporation has possibility to change the same in accordance with quality and type of product. In
this manner, people with higher and lower income group both can be targeted.
Products Average price (£)
Pen 23
Pencil 20
Bottled Ink 8
Pen cases 30
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Color 15
Culture
Culture reflects values, beliefs and norms of individual or group of people which tend to
affect their buying decision to a great extent. Generally, business like P&K enterprise needs to
focus upon culture values of consumers so as to attract them accordingly. It includes several
elements such as status, gender and religion. However, Muslim community uses Urdu and other
language where they need special kind of market to write something. On the other hand, Hindu
might not need specific kind of pen and pencil and they will accept the norm as per the trend.
The main reason behind the same is requirement of culture and accordingly buyers take decision.
Apart from this, class of people such as upper, middle and lower is considered in turn variety of
pen and pencils is provided. For example, people with higher class may not face issue in
investing higher amount for purchasing fountain pen at higher price. It can be critically evaluated
that, lower class people prefer the product at lower price. This reflects their choices to save
money or make expenditure. Apart from this, choices and need of male and female varies to a
great extent. Here, some of the males do not prefer to use bottled ink and just buy new pen. On
the other hand, female tend to focus upon buying bottled ink also along with purchasing costly
fountain or gel pen.
Buying behaviour
Buyer behavior shows sentiments, behaviour and influences or attraction of consumers
towards a particular product. Under the current scenario, P&K enterprise assess buying
behaviour of by conducting online survey and analyzing the environment effectively. This
proves to be effective to insight into meaningful information and draw valid outcome in the same
direction. Similarly, buying behaviour of personnel consumers is also assessed with the help of
purpose, income, availability of options and delivery options etc. Here, company take
appropriate strategies to assess consumer behavior of conducting competitors analysis. For
example, Mont Blanc and Cross are offering products online at lower price then it becomes
essential to provide the same kind of services to grab their attention. In addition to this,
consumers will be offered products at physical store with relatively less price. It would be
effective to for seller to assess buying pattern. It enables corporation to ensure long run success
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with increased rate of return. Apart from this, options in each product will be varied so that
respective consumers can get their desired product.
Market segmentation
Market segmentation refers to the process of dividing entire market into different parts.
However, basis for the segmentation may be varied. In the present business plan segmentation
will be done as per occupation and income group. For example, middle, lower and higher income
status people are targeted. On the other hand, students, professionals and corporate worlds are
taken into considered under the segmentation basis as occupation (Market Segmentation, 2016).
These selected segments are provided information with the help of latest technologies like
internet and social media. However, selected parts of market is appropriate through which new
business can easily approach potential buyers. On the other hand, businesses are also approached
so as to provide products in bulk. It aids to reduce the risk to a great extent and ensure well being
of business in the marketplace. Therefore, marketing environment of UK will be appropriate for
P&K enterprise.
3. SWOT analysis of new business
SWOT analysis reflects internal as well as external aspect of business through which
appropriate strategies can be selected by business. According to the following table, P&K
enterprise is very good in term of variety of products and services along with tag of reasonable
prices. Furthermore, profitability is also good as company can easily invest its retained profit in
coming financial year. It can be critically evaluated that local presence and low price strategy
might affect sales turnover of the business. However, customized products or design will also be
invited by new firm in order to beat competition with Mont Blanc and Cross. However, changing
economic or political situations are threat for P&K enterprise due to its bad impact on purchasing
power of buyers and its direct impact on sales turnover of company.
Strengths
 Deals in variety of products and
services
 Offer reasonable price products
 Good profitability
 Control over expenses
Weaknesses
 Local presence
 Comparatively small range of products
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 Customized products
Opportunities
 Joint venture with leading companies
 Increase range of products
 Enter into other writing instruments
such as eyes wear etc
Threats
 Low price strategy
 High competition
 Less favorable environment
4. Setting objectives based upon analysis
The objectives of new business are set with clear focus upon survival and profitability as
well as recovery of cost of production. It assists business to carry out its operation by opting
appropriate strategies. These objectives are listed as follows-
 To increase the sales turnover by 25% till the end of 2017
 To increase customer base by 20% till the mid of 2017
 To create competitive edge of the business
 To improve service quality of service
According to the aforementioned aspect it can be said that efforts are put to adopt
appropriate strategies in order to increase sales turnover and meet the expectations of buyers.
Furthermore, competitive edge of the company is created by focusing upon different activities of
marketing. It proves to be effective to cater need of personnel and entire organization. This in
turn rate of return is increased and in the same manner potential issues are resolved. In addition
to this, service quality of P&K enterprise will be improved as per the views and suggestions
provided by consumers. Therefore, set objectives serve as the guideline for management of
corporation and accordingly appropriate strategies are formed.
5. Entry strategy to access market
The entry strategy of P&K enterprise is effective because UK business environment is
most appropriate. However, inflation rate is also in control whereby buying decision of
consumers will not be affected to much. However, external environment such as technological
innovation and good scope in term of tourist hub and city of university determines successful
entry of the business in new market. The selected market entry strategy is wholly owned under
which P&K enterprise will operate as sole trader. However, new business will be operating at
lower scale where it is possible to start operation as sole trader business. This aids to ensure
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effectiveness of company in the marketplace. However, owner belongs to the same country so
UK country has been selected. However, selected country is growing economy where chance of
development and growth is higher. It aids to deliver good quality of services to large number of
buyers,. However, other related aspects such as rent, rates and taxes are also moderate through
which cost effective aspect can be ensured (Wentzensen and Wacholder, 2013). It tends to cater
need of all related stakeholders and create competitive edge of the business in the marketplace.
In this manner, selected entry strategy as sole proprietorship is the most effective to meet the
demand of buyers and other related parties of business in an effectual manner. Moreover, sole
proprietorship tends to focus upon management of business at his own without accessing other
strategies such as partnership and franchising etc.
6. Reviewing implementation plan
The current business plan will be implemented with team of skilled and competent
personnel as well as necessary resources to ensure smooth flow of production. For the P&K
enterprise following resources are used-
Physical resources
Physical resources are the most important part of business which are accessed at first. It
consists of different resources such as land, machinery and other tools applied for production of
pen, pencil and pen cases etc. However, P&K enterprise lays emphasis on purchasing cost
effective land and machinery from appropriate source which charge less at initial stage. In
addition to this, other material used in the production of different products and services are
served from suppliers. Apart from this, machinery worth 25000 will be taken for manufacturing
of different products. Though, retail shops or companies are accessed for getting raw material
and finishing aspects of product range. This in turn production activities are maintained with
increased rate of return.
Human resources
Human resources are directly involved with production process and actively take part in
producing, marketing and delivering the products. According to the following table, 4 staff who
will directly be associated with production activities are hired. Furthermore, 2 marketing
managers will be selected along with 1 finance manager. In this manner, team of 8 people will be
involved in the new business plan so as to accomplish all related activities in an effectual
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manner. On the other hand, all personnel are highly skilled and have knowledge about the
selected sector through which they can effectively contribute towards long run success.
Similarly, focus is laid upon selection of one chartered accountant or finance experts so that he
or she can provide valuable suggestions to improve current performance. Apart from this,
management as owner of P&K enterprise will handle all other aspects related to building good
relationship with customers and contacting to suppliers. However, all team will work on the basis
of integrated approach whereby issues can be resolved on right time. Not only this but structured
meeting will be organized to have clear communication with different parties. It proves to be
effective to deliver good quality of services respective buyers. However, clear flow of
communication is maintained by using updated technologies like internet, E-mail and others.
Staff 4
Marketing
manager 2
Finance manager 1
Management 1
Financial resources
Financial resources are considered as the most important aspect behind the success of
business. Basically company uses different sources like bank loan, leasing companies, issues of
share and retained profit. It reflects that, personal finance and bank loan are accessed. Here, bank
loan worth 100000 pound will be taken whereas personal finance worth 50000 will be
considered. This would be effective to reduce overall cost of production and increase rate of
return. However, company will have to pay for loan taken from bank. The rate of interest will be
2% per annum. This reflects that cost effective sources of finance are accessed whereby
necessary resources can be purchased. Moreover, in near future one more source of business will
be generated in the form of retained profit (Wentzensen and Wacholder, 2013). It can be re-
invested in the business for making huge profitability. Therefore, appropriate sources finance are
accessed for catering need of current business with motive to increase sales turnover and enhance
profitability.
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REFERENCES
Journals and books
Barringer, B., 2012. Entrepreneurship: Successfully Launching New Ventures.
Brinckmann, J., Grichnik, D. and Kapsa, D., 2010. Should entrepreneurs plan or just storm the
castle? A meta-analysis on contextual factors impacting the business planning–performance
relationship in small firms. Journal of Business Venturing. 25(1). pp.24-40.
Finch, B., 2010. How to write a business plan. Kogan Page Publishers.
Jasra, J.M. and et. al., 2011. Determinants of business success of small and medium
enterprises.International Journal of Business and Social Science. 2(20).
Kwong, C.C., Thompson, P. and Cheung, C.W., 2012. The effectiveness of social business plan
competitions in developing social and civic awareness and participation. Academy of
Management Learning & Education. 11(3). pp.324-348.
Neck, H.M. and Greene, P.G., 2011. Entrepreneurship education: known worlds and new
frontiers. Journal of Small Business Management. 49(1). pp.55-70.
Schaper, M. and et. al., 2010. Entrepreneurship and small business.
Wentzensen, N. and Wacholder, S., 2013. From differences in means between cases and
controls to risk stratification: a business plan for biomarker development. Cancer
discovery. 3(2). pp.148-157.
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Average uk office rents. 2016. [Online]. Available through: <http://www.20sixltd.com/uk-
offices/average-uk-office-rents/>. [Accessed on 24th November 2016].
Inflation Great Britain - consumer price index (CPI). 2016. [Online]. Available through:
<http://www.global-rates.com/economic-indicators/inflation/consumer-prices/cpi/great-
britain.aspx>. [Accessed on 24th November 2016].
Market Segmentation. 2016. [Online]. Available through:
<https://www.managementstudyguide.com/market-segmentation.htm>. [Accessed on 24th
November 2016].
Minimum wage for different types of work. 2016. [Online]. Available through:
<https://www.gov.uk/minimum-wage-different-types-work/paid-by-the-hour>. [Accessed
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