Sim Venture Business Planning and Developement Essay
In hypothetical terms, the firm was bound to go into losses in the first few months of establishment. The objective we had prioritised was to establish the company quickly with minimal losses, which then could be easily recovered over a short time period. We firstly did the essential market research. This would give us a market audit, allowing us to precisely plan both short-term and long-term strategies, ensuring that we don’t have any confusion and see exactly what our goal is. Along with the research, we decided to build a premium website.
This was our first step into advertising, organising and brought up a channel of communication between stakeholders and us. Our next step was competition research. This should us what we were up against and how to establish our own USP, accordingly, we set our product specifications and price as well as an introductory promotional discount to attract customers if they enquired. We then did negotiations with distributors to establish channels of distribution. The reason for this is that a company needs revenue, but more importantly, profit to survive, which can only be established with sales.
By the third month, we had successfully established a channel of distribution, which was in our budget and produced good profits. We mistakenly forgot about the 30-day credit. We had consumed a majority of our capital, leaving us in money being owed to the bank. We therefore decided to apply for an overdraft to allow us a margin for error. Also as a reassurance as well as necessity, we needed to raise capital, so we borrowed surplus from friends and family. Customers continued not to pay money owed to us, leading in Microvault going in to debts of thousands of pounds.
This was not acceptable so we set up credit control to regain money owed to us. We had to take drastic measures to ensure the company’s survival. We were left with no choice but to take out a ? 10,000 loan from the bank to sustain our losses and maintain a working capital for production as we had contracted new distributors as well. This meant production line quantity increased as well as surplus to maintain production and overheads. Eventually, the debtors paid up and business was stable. Enquires were slowly increasing as well as individual orders.
We then decided to hold expansion for a while and focus on saving profits. This was to ensure that once research had been done and we did decide to expand, we would have the capital to sustain it. Meanwhile, we published a trade magazine advert. This was the first real promotion we had done. It helped the company’s reputation and status quite a bit. Enquires increased and sales were at an all time high. Eventually, we completed the formal setup of MicroVault Ltd. This reduced the risk of liquidisation and redundancy as well as improved the company status and reputation.
We then created an employment contract and made the individual full-time. Lastly, we relocated to a business park, as the demand was higher than the storage capacity. This saved us hours of labour put in, resulting in more time to focus on other things such as recruitment. Activity 2 MICROVAULT LTD COMPANY. Report to: Bank Manager Date: 4th February 2009-03-04 Report for: Bank Loan Title: Obtaining a loan for MICROVAUL LTD COMPANY to help finance expansion. Executive Summary This is an end-of-year trading report of MICROVAULT LTD COMPANY.
I am writing this report to show the success of the company so far, and explain its performance. The main point of this report is to obtain a loan from the bank to help finance expansion. Introduction We are a small limited company called MICROVAULT. MICROVAULT was established in 2009. We specialise in producing Computers. Our company is in a market for 14 months and we are looking forward to make it much more successful with some financial support form the bank. So far our company have a high reputation with its stakeholders and local community, we are looking forward to be better and stronger against our competitors.
By looking at our report you will see that MICROVAULT is extremely credit-worthy and have low debts. Main body In a past year our business came thru very hard time. At the beginning our company was reaching some losses in the first few months of establishment. By that time we knew that if we don’t come up with some good ideas our business will go bankrupt. In March 2009 our profit and loss account achieved minus 445 pounds. Our goal was to establish MICROVAULT as quickly as possible with minimal losses. We did a lot of market research, we build a premium website to communicate with stakeholders and other companies.
We also came up with some discount for a short period. Step by step our company profit was going up and as we sign contract with distributors, we got orders for reasonable price. When the company was in a good ‘shape’ we forgot about 30-day credit. We have spent most of our capital therefore we owned bank quite a lot of money. Leaving us no choice we decide to apply for an overdraft, and also borrow money from friends and family. After a month our company came back on race and starts to make very big profit. Our Enquires increased and sales were at all time high.
At the end of a year our profit and loss account look very promising as it reached 10615 pounds, and sales turnover reached 35404 pounds. At the end of the year where our company made some profits we did our very first promotion by publishing a trade magazine advert. It helped MICROVAULT reputation. One of the most important things we have done is we created an employment contact, and improves the company rank and reputation. By making it happened we signed more contracts with large distributors and orders from customers has gone up.
MICROVAULT is only a half way to be a successful limited company. We already make profits and grow our reputation. Our current profit margin is 33% and we will try to increase it by 10-15%, which make it go up to about 40-45%. Every month we are getting new orders and enquire therefore we need to focus on recruiting new employees. Our company will buy products in large quantities, which will gave us a bulk discount, and we will be able to save money. Recruiting new workers might be a quite expensive investment as it takes time, and money to recruit and train new workers.
We will need a bookkeeper to keep us up to date with our losses and profits and also if we owe someone money. Our company will put more effort on competition research, product specifications and price. In the future we will try to offer more discounts, and reasonable prices. We might think of better advertisement such as calling customers or by mailing them. Conclusion In conclusion, I believe MICOVAULT is at the right position to become a successful business. Our Company need more time and money to research and recruit new workers, which leads to extra costs. We already completed the ormal set up for MICROVAULT and we are ready for new opportunities. The company has many prospects for the future such as expansion of the business in many areas. Recommendations The reason why I am asking for a loan is that MICROVALT Company might not be able to afford recruitment process which is expensive and time consuming. As I mentioned above we need new workers in order to success. Without recruiting new employees MICROVAULT wont be able to meet customers demand, orders wont be on time therefore people will stop using our services which might leads to closing down the Company.
We will allocated loan money in advertising such as magazines, websites, news papers, weekly mails in order to increase the customer information about our company. We hope this report will provide you with a clearer view of MICROVAUL. Activity 3 In this report I am going to discuss the trade-offs my team come across in developing our small business called MICROVAULT. A trade- off is when we loose one quality or feature of something in return for gaining another quality or aspect. The SimVenture task took my team a little bit of time as we re-run the business few times. It was three of us me (Ngan Nguyen), Raxit and Nitesh.
All three of us had some good, and bad ideas, which not always make our Company making profits, and orders from customers. At a very beginning when we start our business we ware making losses, and we decide to recover them over a short-term period. We had to do a market research, which gave us clear market review. By doing that we had time to plan short-term and long-term strategies and prepare our goals. As a group we decide to put more efforts on profit rather than growth. Our goal was to make as much profit as possible within 12 moths. We had successfully established a channel of distribution, this gave us a good profit.
Our company income starts to go up after May 2009 we had gone up to 3160 pounds. Our business paid private consultant to find information’s about our competitors in the market in order to produce better products. In my opinion in order to succeed in a real small business you have to dedicate you time, your money, and yourself. You need set up a goals of the company, what you want to achieve, and be committed to the business, know how to recruit workers for right jobs and positions. Pay attention to every progress your business is making from finance, orders, advertising to researches, complaints, and enquires.
To run the business successfully you should know how to purchase the products and services, and also how to negotiate with your suppliers. You should be able to manage your finances. In other words experience is the key to success, we need to learn how to run the business and where to start it. In the SimVenture you can try at start all over again until you get some profits but in real life when you start you company, there is no coming back. Ether you will succeed or you will go bankrupt. Another key to success is to have a fresh idea for a product and determination, the willingness and energy to make it succeed