SMALL BUSINESS case study

For the past ten years, you have worked in a range of businesses within the manufacturing
industry. However, you have always been filled with ?entrepreneurial spirit? and have always
dreamed of starting your own small business. Deciding the time is now right to do so, you
have left your employment to start-up your own small business.
With all your manufacturing knowledge, you know that you want to set-up your small
business in the manufacturing industry. However, you have not decided on the product you
want to manufacture and sell, nor do you know about the procedures and decisions necessary
in setting up a small business. Your product will be sold online only.
This case study steps you through a number of the key considerations you are required to
make when you start your own small business, and during the first few years of operation.
(a) Describe the product to be manufactured and sold (also discuss your competitive
advantage and why you think there is a market for your product)
(b) What trends are occurring in the industry which the product is selected (i.e. is the
industry growing)
(c) Who is/are your target consumer(s)
(d) Prepare a brief marketing analysis. Discuss your SWOT and methods of advertising
and promotion
(e) Warehouse operation and inventory process ? efficiency is key
(f) Initial e-commerce considerations (for selling online) ? website development and user
interface testing, domain name and registration, shopping cart, delivery and freight
tracking, online payment methods and other.
(g) Internal controls
(h) Insurance
(i) Employing staff (consider number and nature of employment. Also, consider how you
will motivate your staff)
(j) Business structure considerations
(k) Record keeping and compliance
(l) Develop a set of Key Performance Indicators for your small business upon start-up

Starting a new business is not easy. Research confirms that a large proportion of new small
businesses in Australia fail in the first few months of operations. Lack of planning, little
knowledge of business costs and the associated lack of cash flows are the most cited reasons
of failure. In this section of the assignment you start the process of operational planning by
understanding the true costs of your business, in particular the ?true? costs of labour and
production. You will also prepare a budgeted Profit & Loss Statement and Cash Flow
Statement. Analysing business costs and expenses will enable you to engage in serious
operational planning.

prepare the following
(a) Labour costs
Calculate weekly and hourly labour charge rates for your employees. You are to
research the relevant award and complete this part using Worksheet 1 (available on
UTS Online)
(b) Budgeting (refer Section Two: Budgeting information available on UTS Online)
You are to complete the following:
(i) Prepare a monthly and annual budgeted profit and loss and cash flow statement
for the period July 2012 to June 2013 using Worksheet 2 (available on UTS
Online)
(ii) Calculate the minimum revenue to break even
(iii) Calculate the gross margin on sales to achieve a net profit equal to seven
percent of gross sales
(iv) Discuss expected financial results. Make appropriate use of tables where
necessary
(v) Discuss the different types of budgets available for use by small businesses.
What are the advantages/disadvantages of each and select which one you
would implement in your small business. Also consider the process of
implementation and include in your discussion.
It is now 1 July 2017, and your small business has been operating successfully for the last five
years and is looking at expanding into newer (and bigger) workshop premises.

prepare the following
(a) Forecasting revenue (refer Section Three: Forecasting information available on UTS
Online)
(i) Analyse a time-series of revenue using adjusted regression analysis technique
and estimate a forecast of revenue during the year 1 July 2017 to 30 June 2018.
Complete this part using Worksheet 3 (available on UTS Online)
(ii) Discuss the reliability of forecasts estimated by using relevant statistical
techniques. Explain the other factors which should be taken into consideration.
(b) Finance proposal (refer Section Four: Finance proposal information available on UTS
Online)
(i) Prepare a report detailing initial finance proposal considerations. Such
decisions may include (but are not limited to): financial institutions, loan
financing, interest options and minimum repayment analysis.
(ii) Prepare a comprehensive finance proposal including detailed description(s) of
qualitative information and financial data. You are to include a description of
assets to acquire with the loan, list of benefits to the business deriving from the
acquisition, historical and current information on your business, its ownership
and management, historical, current and future financial data and analysis
including both profit and loss and cash flow statements. You may consider
showing the bank that by financing the proposed building acquisition and fitout
you will be able to improve your future profits and cash flow balance. Also
ensure you obtain and complete all relevant application forms required by the
financial institution of your choice.
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