Prepare a brief video discussion summarizing your Business Plan and answer the following questions: 1. What potential problems could arise? 2. How likely are they? 3. How do you plan to manage these potential problems? 4. What timing have you projected for this project? 5. How have you set your objectives? 6. Have you set up your deadlines for each stage of your venture? 7. Is there a relationship between events in this venture? 8. Are there any other factors and/or contingency plans?
Definition of Business Economics
The business owner will integrate the aspects of business economics including quantitative methods and economic theory to the relationship of the business with capital, product market, and labor.
Revenue Stream/ Sales Forecast
Through the process of sales forecast, the business owner will estimate the future sales of snicker chocolate based on the US economic trends including GDP, retail sales worker productivity, consumer confidence, and inflation. Thus, the primary revenue stream will be sales of consumer goods to target to retail shops, groceries and, shopping malls
The business owner will adopt the market penetrating pricing strategy to attract consumers by charging lower prices on snicker chocolate product to reach wider market. This approach will be ideal in the sense that it will enhance brand awareness and draw consumers from existing organizations that produce similar products. The cost of each product wills depend on weight ranging from $5.68, $4.35, and $8.79. The business owner anticipates realizing a margin of 30 % from sales within the first year of operations. Some of the expenses that will be incurred include advertisement, license fees, rent, utilities, salary and wages, Insurance and other miscellaneous expense.
The initial start-up costs will entails items needed to get the business running which includes licenses and permit, marketing materials, office supply, inventory, production equipment, and other recurring costs.
License and Permit $85
Marketing Materials $142
Office Supply $1555
Production Equipment $6580
Other Recurring cost &150
The business owner estimates that $11, 962 will be required to initiate the business,
To break even, the business owner will ensure at one point the sales will cover the expenses. This will be achieved through establishing the value of the fixed and variable costs of the product of the business. The fiancé department will establish the product units needed to be sold at a particular price point. The fixed rice will include overheads while the price and variable cost will depend on the value for each product unit sold. Thus, break even will be determined b the below formula
Fixed Cost ÷ (Price – variable costs) = Breakeven point (in units)
Funding Sources and Spending Of Borrowed Finance
The capital will be sourced from equity and debit sources including personal savings, loans from fiends, and bank loans. The loan money will be used to purchase office supply, production equipment, and inventory. The debit source, loans, will account for 75 % of the borrowed money, which translates, to $ 7,775.30.
The business owner will secure the loans using future paychecks whereby the future income will be used to repays the amount borrowed and interest. In the successive paycheck, the borrower will start repaying the lenders the agreed amount until the due debt will be cleared.