Budgeting Strategies for Sarah's House Student Accommodation Expansion

This report provides a detailed analysis of Sarah's House, a UK-based hospitality company, and its proposed expansion into the student accommodation sector. The report begins with an evaluation of the expansion proposal, highlighting the potential benefits for the company and the economy, particularly in light of the growing demand for student housing. It then presents a 12-month operating budget for 2021, closely aligned with the company's activities and objectives. The budget includes revenue projections, variable costs (meals, Wi-Fi, medical, room service), and fixed costs (rent, fitness equipment, car hire, depreciation). The report examines the budget as a crucial tool for planning, control, and decision-making within the business, emphasizing how it supports strategic goals. The financial data reveals the revenue and expense projections, and the impact on the firm's profitability. Overall, the report underscores the importance of budgeting in facilitating informed decision-making, resource allocation, and performance evaluation, ensuring that the company can effectively manage its expansion and achieve its financial goals.

Budgeting for business

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Detailed evaluation and analysis of the proposal that the company has chosen to do its
expansion so that it can prove useful and beneficial for the company and the economy too......1
Preparation of operating budget for the year 2021 for 12 months that are closely related with
the activities and objectives of the firm.......................................................................................2
Examination of the budget which acts as a tool of planning, control, as well as decision
making in the business.................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................6

INTRODUCTION
Budgeting is one of the most important as well as crucial aspect for each and every firm that
is operating in the market irrespective of the industry in which it is operating as it helps in setting
standards so that actual performance can be compared with it in an appropriate manner which
will add to the value of the firm in the long run (Alleyne, Armstrong and Chandler, 2018).
Sarah’s house is a firm that is run by a British family and is operational in the UK and mainly
deals in hospitality and other related services of it like accommodation, food service, banquets
and events, etc. The firm is performing commendable well in the competitive market conditions
that are prevailing in there and thus has captured a larger share of customer base because of it. In
this report there is a brief discussion about the expansion of the existing business that it wants to
do that in student accommodation as it is high in demand due to increase in foreign students in
the universities that are working in the UK. Apart from that this report also includes preparation
of operating budget and its detailed analysis and evaluation so that the expansion can prove
beneficial for the firm in the industry in which it is operating.
MAIN BODY
Detailed evaluation and analysis of the proposal that the company has chosen to do its expansion
so that it can prove useful and beneficial for the company and the economy too
As it can be seen from the above that Sarah’s house is a company that is doing well in
terms of growth and sales as it have acquired major proportion in the market of the UK’s
hospitality sector. It employs more than 800 employees and works in 12 different regions of the
country and is considered as one of the most prestigious firm in the UK. Since the firm is
planning to do expansion in student accommodation sector too as there is a huge demand of that
in the industry because of increase in the universities and enrolment of more number of foreign
students in that universities (Yator, 2018).
Since it is doing well in the market and does not require much marketing for it expansion
as it already enjoys a loyal customer base and is geographically located at a place which is called
the centre of the city. It is also performing well in its sales as well as profit terms as it has
maintained a considerable amount of profit in all the past years which can act as a base while
expanding its business as it can invest a huge amount in which will subsequently increase the

growth of the company as it is operating in a highly competitive business environment
(Dewantoro, Hidayat and Sulasmiyati, 2017).
As student accommodation is in huge demand in the UK and if the company that is Sarah’s
house expands it in an efficient and effective manner it will help it to grow as well as prosper in
the long term. It will also prove beneficial from the economy’s point of view as it will help the
universities to enrol more and more number of talented individuals that are able and willing to
study there and thus simultaneously increasing the per capita income and gross domestic product
of the country which is very important for every nation. Also in the current scenario quality
education is regarded as one of the most powerful tool that has the potential to change the world
and if the organisation expands in a sector that is accommodation of students it will give scope to
millions of students to live and acquire quality education that will help them to grow as a
professional as well as a person in the long run (Messer, 2020).
Preparation of operating budget for the year 2021 for 12 months that are closely related with the
activities and objectives of the firm
Budget is an integral part of each and every business as it helps in analysing and evaluating
the performance of the company after comparing the set standards with the actual facts and
figures of the company so that necessary as well as appropriate measures can be taken for
rectifications. There are different types of budgets and different companies use it according to
the needs and requirements of the firm so that it can add to the value of the firm in the market in
which it operates and also gives an upper hand to the business so as to sustain in the industry for
a much longer period of time as compared to its competitors (Hijal-Moghrabi, 2017).
The company Sarah’s house is one of the most impactful firm in the market because it
gives high quality products and services to its customers so as to stand ahead of its rivals that are
operating in the similar market conditions. As it is planning to expand in student’s
accommodation sector so as to capture a wide area which will result in its growth and
development in the future by increasing its sales and profitability in the long run. As the cost is
rising for Sarah’s house so it is the best option in front of the firm that is to expand in the above
mentioned sector so that it will provide sustainability to the organisation to operate in the market
that is highly dynamic in nature.
Since the firm is in expanding process it is very important as well as essential to prepare a
budget that is operating in nature so that a detailed analysis can be done for the revenues and the

expenses of the company thus providing valuable information regarding the working of the
business. It will also prove useful as well as beneficial in allocating the funds effective and
efficiently so that all the available resources can be fully utilised and that too without any
wastage (Hodgson, Pengilly and Jovevski, 2020). Though there will be expenses at starting while
expansion of firm in student accommodation sector but it will fetch greater profits in the near
future as it will carter the needs of many students that are willing to study in the UK. Below is an
operating budget prepared with the context of the firm that is Sarah’s house-
Particul
ars Jan Feb March April May June July August Sept Oct Nov Dec Total
Revenue
s
generate
d (a) 1000000 1500000 2590000 3120000 990000 900000 1120000 1180000 1050000 1250000 1500000 1450000 16200000
Variable
cost-
Meal 300000 606600 1100000 1000000 300000 200000 300000 400000 400000 500000 500000 400000
5606600
Free wifi 226000 312400 500000 700000 300000 300000 200000 200000 200000 200000 300000 300000
3438400
Medical 130000 68400 146000 122000 78000 98600 92000 60500 81000 74000 91200 129400
1041700
Room
service 144000 300000 489000 589000 247000 238900 225000 247000 200000 267000 379000 381000
3325900
Total
variable
cost 800000 1325000 2285000 2411000 925000 837500 817000 907500 881000 1041000 1270200 1210400
13500200
Contrib
ution 200000 175000 305000 709000
-
826000 -747500 303000 272500 169000 2090000 229800 239600
2879800
Fixed
cost-
Rent 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 110000

Fitness
Equipm
ent 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000
220000
Car hire
deprecia
tion 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000
220000
Total
fixed
cost 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000
550000
Profit 150000 125000 255000 659000
-
876000 -797500 253000 222500 119000 159000 179800 189600
448800
Profit
margin 15% 8.33% 9.85% 21.12%
-
88.48
% -88.61% 22.59% 18.86% 11.33% 12.72% 11.99% 13.08%
-0.453
Examination of the budget which acts as a tool of planning, control, as well as decision making
in the business
Budgeting is one of the most crucial as well as important tool as it helps the organisation to
achieve its goals and objectives that are set at the starting of the business (Kengatharan, 2016).
Different types of budgets helps in different ways but the main objective and aim of each one of
them is to help in decision, planning, and control which are an integral part of each and every
business that is operating in the industry. There are various ways by which it helps in taking
appropriate decisions by formulating plans well in advance so that necessary controlling
measures can be taken well within times so that it can add to the market value of the firm in the
long run aspect. Sarah’s house also makes various types of budgets that help it in improving the
position of the firm in the industry and all the impacts and importance is described below in
detail-
 Planning- It is the foremost function as different plans are formulated on the basis of the
requirements of the business so that it can lead the company towards its goals and
objectives and that too well within a limited period of time. It bridges the gap between
present that is the current standing of the business and the future that is the expectations

of the organisation. Sarah’s house evaluates its plans in a systematic as well as precise
manner so that it can strike the exact point on which the firm wants it to strike which will
further helps the firm to grow and prosper at the same time in the hospitality industry.
 Decision making- Budgets helps in decision making and that too in an effective and
efficient manner so that it can help the organisation to do well in the current situation by
reducing the time taken in taking decisions (Manafe and Setyorini, 2019). Apart from it
also helps in improving and increasing the performance of the individuals that are
working in the organisation by taking appropriate decisions that are within the reach of
everyone. The firm that is Sarah’s house deploys a team of experts in this regard so that
they can take exact decisions that are important for the firm’s growth and development so
as to add value to the activities of the company which will subsequently affect its
performance in a positive way.
 Controlling- Budgets helps in controlling the wastage of resources by comparing
standards with performance so that it can lead to effectiveness of the functions that are
performed by the organisation in the industry. Sarah’s house keeps a strict vigil on every
activity that is performed in the firm so that it can take necessary measures to control
various aspects that are critical from the firm’s point of view (Mauro, Cinquini and
Grossi, 2017).
From the above it can be concluded that Sarah’s house is performing quite satisfactory in the
market as its profit remained good, though there are difference in revenues and expenses that
results in change in profit but still it is positioned in a much better place as compared to its
competitors. In May and June months the profit of the firm was not good but in April and March
it was highest due to enrolment of new students as new sessions begins in that period only. While
in Jan, Feb, Oct, and Nov the profit was satisfactory as compared to the profits of Sept, but in
July, Aug, and Dec profits of the organisation was good enough to sustain in the market for a
longer period of time (Mentari and Daryanto, 2018).
CONCLUSION
Budgets are an integral part of every system and for business it is highly important as it
initiates many aspects that are essential for it. From the above it can be concluded that the firm
Sarah’s house that is operating in the UK is placed at a good place in the market and is
expanding in a sector of student accommodation that is in huge demand in the country due to the

quality of education that it imparts. Also it can be concluded from the above that it is performing
considerably well except some of the months in which the demand is not as expected but in other
months it recovered quickly earning a huge amount profits that are an essential part of the
business. Further it can be concluded that budgeting helps in various other aspects too like
decision making, planning, as well as controlling which helps the organisation to grow and
prosper in the competitive market conditions that are prevailing in the current scenario

REFERENCES
Books and journals
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zero based budgeting.
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Yator, B. C., 2018. The Effect of Capital Budgeting Techniques on the Financial Performance of
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