Managing Financial Resources and Decisions Assignment 3 BTEC Nguyen Huu Phong 2017

Managing Financial Resources and Decisions Assignment 3 BTEC Nguyen Huu Phong 2017 tại University of Greenwich Viet Nam, đây là một trong những môn rất quan trọng và cần thiết cho những người muốn theo nghành businness cụ thể là human resource management như mình. Bài assignment này được mình làm tại trường. Các bạn có thể xem và tham khảo nhưng lư

Introduction 2

LO3 Be able to make financial decisions based on financial information 2

3.1 Analyze budgets and make appropriate decisions 2 3.2 Explain the importance of financial planning 4

3.3 Explain the calculation of unit costs and make pricing decisions using relevant information 6

3.4 Assess the viability of a project using investment appraisal techniques 8

Conclusion 10

References 11

Today, the drinking coffee have gradually become a habit of everyone from everyone to students, people of all ages People who like speed and an aromatic essence of coffee, this has gradually changed the way that people who sell coffee or do Instead of content makers to coffee now many places have espresso machine to do, you know those big coffee chain in the world such as Starbucks uses espresso machine Use the espresso for a delicious coffee and tasty more, because of this reason that gradually more people like to drink in places with espresso more than filter coffee Capture this trend, I open a small shop selling coffee espresso to serve everyone

LO3 Be able to make financial decisions based on

financial information

3.1 Analyze budgets and make appropriate decisions

Project name: My coffee shop is named "COFFEE in BLACK" which sells espresso coffee Location: On No.10 Street, District 6, Ho Chi Minh City It then the next Kinh Duong Vuong

- Galaxy Cinema and in dining area of district 6 This place is very crowded in the evenings and lasts until mid-late at night and during the day there are quite many employees work The ground we rent include a foothold to sell wide 10m2 in the middle of this bustling area

Segment: With cheap prices, great and fast, becoming an expresso coffees for everyone especially those who like the strong flavor of the coffee

Task 1 Ideas and concept

Task 2 Market search

Task 3 Search for supplier

Task 4 Production

Task 5

Search for location, decorate

Task 6 Buying equipment and tools

Task 7 Training employees

Gantt chart: the chart above is the weekly Gantt chart, after this period I will be able to start

my own business

Task description:

Task 1: Ideas and concept

I am a coffee lover and especially black coffee and milk coffee are the best coffee in Vietnam Vietnamese people sometimes like to drink coffee like that and have a little more modernity At present, there are many models selling coffee as fast as we do, but they use filter coffee and instant coffee These things take away the essence of coffee, so also with their business model but we instead use espresso machines to make coffee This will break the concept of coffee taken in the morning that it will not be delicious That is why "COFFEE

in BLACK" was born and brought the wonderful coffee to anyone at affordable prices

Task 2 & 3: Market search and search for supplier

As mentioned above, we refer to surveys of some friends in community groups We recognize that morning workers tend to enjoy coffee, but they are usually in a hurry, and we rely on them to bring them the best coffee in the mornings to bring to work place

Black coffee and milk coffee are also the favorite drinks of a large segment of consumers in Vietnam including young people Another special thing is, the coffee takes away as we sell very little in the evening although a large number of customers like to drink these kinds of coffee in the evening We will appear all day, all the time and in the future is everywhere so people can enjoy the fastest, cheapest and best coffee

Task 4: Production

Due to the quickest criteria, we will train employees to use espresso machines and make coffee that are designed to meet the needs of our customers at all times while maintaining the best quality The next job is to add milk, sugar and ice Customers just carry and enjoy In addition, we will give away our own ice cubes to keep our customers' best quality coffee while on the road

Task 5: Search for location, decorate

I have observed and visited many places around me live, luckily next to the place where I eat every day there is an easygoing owner whom I know They let me rent space and freely use electricity and water from their homes, of course included in the 10m2 rental price that I hired On decor, we will decorate the simplest of the two colors WHITE and BLACK This represents the culture for us "COFFEE in BLACK"

Task 6: Buying equipment and tools

Because my friends have opened cafes, they should introduce me to buy products and tools from Khoinghiepcafe.com The facilities and equipment for making coffee here are of good quality and I choose them

The other items I buy at the market and stores for convenience and maximum cost savings

Task 7: Training employees

Because our menu is simple and they are drinks that any Vietnamese can make it Of course,

I have individual formulas with appropriate levels so that the coffee is always delicious and impressive The training of staff took place quite quickly in 2 days

Week 1: Instruct the staff to use the Espresso machine, mix the coffee by the formula available Of course I will give them a try and the drinkers are me and my friends If all accepts more than 90%, then the employee meets the requirement

Week 2: Learn how to greet and take care of your customers Smile, talk briefly with them and pay attention to the habits of frequent customers I will supervise them in the later working sessions Absolutely not emotionless

3.2 Explain the importance of financial planning

Cash shortage

situation in which the physical amount of cash on hand differs from the book recorded amount of cash When a business is involved with over-the-counter cash receipts, occasional errors may occur in making change The cash shortage or overage is revealed when the physical cash count at the end of the day does not agree with the cash register tape Assuming that the count is $600 and the cash register reading shows $620, the cash shortage and overage account would be charged for $20 It is shown in the income statement

The reasons for cash shortage in my project is not enough capital to sustain operations To this project can work well I need some more money in reserve to handle the unwanted happening such as fires, the equipment of the crash, theft, To prevent these issues, I will install the camera, fire extinguisher, and the medical box

Cash surplus

Cash surplus or deficit is revenue (including grants) minus expense, minus net acquisition of nonfinancial assets In the 1986 GFS manual nonfinancial assets were included under revenue and expenditure in gross terms This cash surplus or deficit is closest to the earlier overall budget balance (still missing is lending minus repayments, which are now a financing item under net acquisition of financial assets)

Cash surplus is the excess money that I have gained during the project operation With this money, I will send save and use to handle these situations unfortunately happen

Cashflow problem

Cash flow problems mean a business spends more money than it earns If you spend $4,000

on rent, supplies and payroll this month, for example, but only take in $3,500 in sales you have a cash flow of negative $500 You also have projected cash flow problems If your expected expenses outpace anticipated sales, you have a projected cash flow problem

Most businesses that have cash flow problems do so because they fail to look at their financial statements until problems become too big to handle Even a company that makes a profit can have a negative cash flow because of the lag time shipping out products, when the customer pays and the posting date of the funds

This problem happens with my diner if has few customers To solve this problem, I will take out the promotions such as discounts, advertising or buying one meal get another drink free

Overtrading

Overtrading takes place when a business accepts work and tries to complete it, but finds that fulfilment requires greater resources - ie more people, working capital or net assets - than are available This is often caused by unforeseen events such as when manufacture or delivery take longer than anticipated, resulting in cashflow being impaired

Overtrading that I may encounter is when the number of parking space are not enough for diner’s area served Then the only workaround is to get food order over the phone so that customer my diner won’t often out of parking space and the customers don’t have to go to my diner to order meal

Financial distress

Financial distress is a condition where a company cannot meet, or has difficulty paying off, its financial obligations to its creditors, typically due to high fixed costs, illiquid assets or revenues sensitive to economic downturns A company under financial distress can incur costs related to the situation, such as more expensive financing, opportunity costs of projects and less productive employees Employees of a distressed firm usually have lower morale and higher stress caused by the increased chance of bankruptcy, which would force them out

of their jobs

My project using capital borrowed from relatives and when Financial distress situations occur If this case happens only when my Gym business loss, then I will borrow more money

to pay for staff and other pay intervals Fortunately, Thanks to my capital was borrowed from relatives, so I will easily convince extends the repayment period

3.3 Explain the calculation of unit costs and make pricing

decisions using relevant information

According to BusinessDictionary stated that: “In cost accounting, unit of product or service

for which cost is computed Cost units are selected to allow for comparison between actual

cost and standard cost, or between different actual costs.”

Project size:

THINGS TO PURCHASE TO START THIS PROJECT

Quantity(unit, kg)

Price

BREVILLE BES 870XL – AUSTRALIA (Espresso

Specialized car for selling coffee and espresso

Plastic Bag 1000 65 65.000

The total amount of money to buy related equipment is 31,863,000 VND

In addition, the space rent is 2,000,000 VND / month and we have to deposit 3 months is 6

million

BUSINESS SPACE

Location: No.10 Street, District 6, Ho Chi Minh City

Space: 10m2

I hired a bright employee from 5am to 8pm with a monthly salary of 1.500.000VND and an

employee working with a midday employee from 11am to 2pm with a salary of 1.500.000

VND In the evening, I will stand for sale due to not busy learning, thus saving part of the

cost of hiring staff So in total, I spend 3,000,000VND per month for 2 employees

employees

As a coffee shop, we will continue to operate all day except for big holidays The total

amount calculated above is 5.000.000 VND

Working capital in the first three months is 15,000,000 VND In addition, because of the curb

sale, we need some small fees to be allowed to trade about 500,000 VND

TOTAL INVESTMENT

Equipment and tools 31.863.000

This is my total investment cost for this project The above cost will help my project to

operate in 3 months, 3 months is the time that I have to ensure the project operation smoothly

and smoothly

Pricing strategy:

Prices of ice coffee and hot coffee are the same and milk coffee is higher than black coffee

2,000 VND Milk coffee will cost 14.000 VND and black coffee is 12.000 VND This is the

reasonable price for a cup of coffee in Viet Nam

3.4 Assess the viability of a project using investment

appraisal techniques

CASHFLOW

Sales growth rate in the first

Variable

Discount

0

Breakeven analysis is the analysis between price, revenue, profit and cost to calculate break-even point and generate profit Based on these calculations, we set up a table to find out the breakeven point

Based on this table, I can see the sales calculated by the formula (Revenue = Selling Price x quantity) With each cup of coffee we make is priced at 6.000 VND, this is the cost of sales,

we have calculated the reasonable price for each cup of coffee sold 12,000 VND, suitable for the majority of people in Vietnam

It is estimated that we will sell 600 cups in the first month and reach sales of 7,200,000 VND, then 9 months continuous will have a growth rate of 20% By the third month, we sold 864 cups and achieved a turnover of 10,368,000 VND and profit of 184,000 VND, at which we will maintain the operation without loss

Quantity 850

revenue

10.200.00

0 fixed cost 5.000.000

variable

profit 100.000

From statistics, it can be seen that if the growth rate of 20% is continuous for 9 months and stopped at the highest level, then after 11 months, we will pay back in 12 months

NPV = net

present value 107.029.485

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows NPV is used in capital budgeting to analyze the profitability

of a projected investment or project

Internal rate of return (IRR) is a metric used in capital budgeting measuring the profitability

of potential investments Internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero IRR calculations rely on the same formula as NPV does

Payback period: I reached the breakeven point of my project in 12th month when I sold 2580 cups per month with sales of 30,958,682 VND and profit of 10,479,431 VND

Thereby, we can see, my project has the potential to grow and be able to recover capital in just 12 months with the standard set

Conclusion

Through this report, we can realize that it can be seen that setting up a clear business plan will tell us what needs to be done and what needs to be done to evaluate whether the project

is viable and potential In addition, during project implementation, it is necessary to continuously monitor and adjust deviations from the plan

 Khoinghiepcafe (2016) How to open Cafe Espresso, Available at:

http://khoinghiepcafe.com/tu-van-mo-quan-cafe-espresso-voi-30tr/?v=e14da64a5617 (Accessed: 29 April 2017)

 Caphenguyenchat (2017) Coffee price, Available at: http://caphenguyenchat.vn/bang-gia-nguyen-chat-coffee (Accessed: 29 April 2017)

 Dungcubarcafe (2017) Knock Box, Available at: https://dungcubarcafe.com/san-pham/knock-box-nhua-110mm/ (Accessed: 29 April 2017)