Business

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  • Created by: SBDL
  • Created on: 09-12-12 10:46

How would business software help Wade manage his b

Database:

  • hold information of contacts, suppliers - Allow him to contact them if about promotion deals or if there is any difficulties with equipment.
  • Staff contact; hours, wages etc. keep on track

Spreadsheet:

  • financial costs can be calculated
  • helps him with a financial plan
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Benefits of a business software to Wade?

  • Wade can keep database info up to date and refer to any records.  - He can then base his decisions on previous records
  • Reduce his working hours - only wanted to supplement pension. Wade not experienced so would naturally work long hours. This is cut.
  • Draw up forecasts from spreadsheet and avoid cash flow crises
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Why would Wade's cash flow forecast be inaccurate?

  • difficult to measure competitor's behaviour (new or old - 39% growing market)
  • costs higher than expected eg tax or inflation
  • knock-on effect with paying loans
  • no experience
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Problems Wade could face in forecasting his cash f

  • seasonal business. slow inflow
  • 5,7,12 days means slower inflow
  • external factors; interest rates, competitor behaviour
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Affects on BEP

  • VC increase/decrease
  • 'As a result' contribution per unit increase/decreases
  • Therefore 'BEP' increase/decreases
  • Which means Wade should raise prices/can lower prices
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For/Against BEP analysis

FOR:

  • 'What If' - sensitivity analysis on changing variables
  • support fund, investors will know when they get a return

AGAINST:

  • inaccurate - variable costs
  • difficult 5,7,12 to sort 'average price'
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Why make profits?

  • investors will wait to see a return
  • made a loss already
  • supplement pension
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2 Resources Required

Information:

  • research data; building firms, en-suite etc
  • competition; establish price and promotion
  • Business Links provide legal info

Human:

  • flexible staff
  • fully trained
  • high quality
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Resources about the Market

  • trend sales
  • Ladyline action = estimate sales potential

Suppliers

  • cost
  • reliability
  • quality
  • delivery
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For/Against Minimal Resources

FOR:

  • lower costs = low sp = price sensitive = encourage customers
  • lower costs = lower loan = low interest = reduce cash outflow

AGAINST:

  • low quality = questioned = unhappy = reputation harnished
  • safety paramount = accidents = litigation and insurance prem
  • negative word of mouth - legal action

EVALUATE:

  • resources can't be comprimised
  • harm image
  • destroy proposed USP
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Budgets

Calculate Variance;

  • actual - budget

Benefits:

  • control and monitor = set up costs are high 
  • sums = dining, en-suite etc are costly = manage finances and prevent over spending
  • raise money to fund = investors want to see plan and financial evidence of effective management
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Budgets 2

Benefits of VA;

  • identify unexpected costs
  • corrective action - adjust costs
  • assess sales forecast accurate?

Drawbacks of Budgeting

  • accuracy - no experience/ start-up
  • other factors - price, competitors, quality

EVAL:

  • economic trends affect sales
  • budgeting crucial short-term
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