Business Plan for Bed and Breakfast - Term Paper Example

? Bed And Breakfast Business Plan Bed And Breakfast Business Plan Business Overview The business plan proposes a bed and breakfast business to be situated in Tybee Island. The core objective of the proposed business is to become one of the leading and most preferred temporary lodging centres in Tybee Island. The business intends to capitalize on personalized services, and its unique location to attract new customers and retain the existing customers. The business also intends to create an environment that will facilitate a pampered comfort that is far beyond the projected business competitors. The business will as well incorporate contemporary technology in its operation to holistically renovate the flow of tourism in Georgia. Services The business plans to create rental units that will target foreign tourists. Secondly, the proposed bed and breakfast business also projects to tender a guideline services to foreign tourists on the most eye-catching tourist sites in the areas. The business as well projects to work together with others tourists’ agencies and businesses in order to offers packing slot at a special rates. A part from offering tourism services, the business also plans to offer breakfast services such as preparing breakfast foods to its customers as well as preparing high quality and delicious meals to its customers. General Staffing For a starter, the business plans to employ 91 employees. Among them, seven professionals with be mandated with the responsibility of the general management of the business will the others will be regular employees with specific responsibilities. The business intends to employs over 40 well qualified and trained chefs. The business will recruit 20 tour guides who will be responsible of guiding tourists in the business’s area of coverage. The recruitment exercise in the business will purely be based merit and experience. There will be not favors in the business recruitment and promotion exercises. Rationale Lodge and hotel businesses have over years played an exceptionally decisive role in the success of tourism activity in Tybee Island and in the entire world. However, despite the encouraging benefits of tourism business in the Tybee Island, there are awfully limited hotels and lodging services in the area. Therefore, the new bed and breakfast business intends to offer a prevalent, quality, and affordable rental facility to foreign and local tourists. On the other hand, the local government also intends to advance tourism business in the area by encouraging entrepreneurs to invest in hotels and development of rental units. Therefore, the projected business will to some extent be acting in response to the local government proposal to invest in hotels businesses. Benefits of the Business The business is projecting to attract more tourists in the area by offering quality services to foreign and local tourists. Moreover, tourists in the area will increase the Island income thus minimizing the poverty level in the area. The business will create more employment opportunities in the area. Most of the business employees will be proficient members of the surrounding communities. Finally, the business will benefit the area residents by offering quality and affordable breakfast services to the interested community members as well as local and foreign tourists. Chart of Accounts The rationale Based on the reality that, most small businesses relies on lenders and creditors to develop their operations, the choice of Charts of Account is incredibly essential in the analyses of the business available resources, the expected resources and how the business intends to use the available and borrowed resources. Charts of Account are as well especially vital in providing the interested parties with adequate understanding of the financial position of the proposed business. Assets Assets Amount Cash $ 4, 538 Accounts receivable $ 740 Other current assets $ 670 Long term assets $7, 000 Accumulated depreciation $9, 413 Total assets $12948 Liability and equity account Liabilities and equity Account payable $ 467 Current borrowing $0 Other current liability $0 Long term liabilities $3,000 Paid-in capital $ 10,000 Earnings $154 $13621 Sources of revenue Sources Amount Loan $ 81, 000 Personal savings $9,000 Total amount $90,000 Expenditure Expenditure Amount Construction expenditure $ 40,000 Development of production line $2,000 Information technology expenses $20,000 Insurance expenses $20,000 Construction of business units $3,000 Pay roll expenses $5,000 Total expenses $ 90,000 Generally Accepted Accounting Principles (GAAP) To necessitate accountability and transparency in its operation, the business will use Generally Accepted Accounting Principles (GAAP). The Generally Accepted Accounting Principles (GAAP) will be remarkably essential in the preparation and standardization of effective financial statements. The Generally Accepted Accounting Principles (GAAP) will as a result be effective in the providing information required by the business lender and other creditors. Moreover, Generally Accepted Accounting Principles (GAAP) will make the business financial information understandable and comparable. This will assist the lenders in making rational decisions that will be based on the accurate facts. The Generally Accepted Accounting Principles (GAAP) is basically based the evaluation of business activities in an organization, the time and the cost of business activities as well as the preparation and presentation of the business information in form of financial statement. Therefore, based on the Generally Accepted Accounting Principles (GAAP), any change in financial records should be incorporated in the financial book by composing another financial record to rectify the incorrect record (Estache & Goicoechea, 2005). Some of the Generally Accepted Accounting Principles (GAAP) changes in the business financial records may include: effect of possible financial crises, resources shortage that is below the proposed resources, negative environmental impacts as well as delays in the disbursement of resources thus leading to setback in the implementation of the proposed plan. Monthly Pro forma balance sheet Feb Mar April May June Jul Aus Sep Oct Nov Dec Jan Sales 3000 2700 2800 2500 2900 2500 3000 2800 3000 2800 3100 2700 Cogs 100 120 110 100 120 120 100 80 120 120 120 100 Gross profit 2000 1800 2000 1800 2100 2400 1800 1400 2000 1800 1800 2000 Salaries 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 Advertisements 15 19 19 18 16 18 19 15 10 10 10 - Licenses 800 _ - - - - - - - - - Rent 30 30 30 30 30 30 30 30 30 30 30 30 Electricity bill 10 12 14 15 13 12 10 15 15 15 15 10 Banking 100 17000 2100 1600 2000 2100 2000 2100 1800 1700 2200 2000 Insurance 10 10 10 10 10 10 10 10 10 10 10 10 Loan repayment 150 150 150 150 150 150 150 150 150 150 150 15 Miscellaneous 500 200 200 - - - - -- - - - Profit before taxes 2000 1800 2000 2100 1800 2100 1700 2000 2100 1800 1800 2000 Taxes 120 230 250 250 210 230 200 200 230 200 200 210 Profit after tax 5800 5800 59000 5800 6100 5700 6200 6400 6000 5900 6100 6000 Internal Controls to Protect the Company’s Assets and Resources Preventive and Detective Controls Proper execution of both detective and protective controls will play an extremely vital role in the prevention of the business assets and resources. Protective controls function in a proactive capacity to protect undesirable business activity. This control therefore entails physical control of the company’s assets, segregation of duties in accounts as well employment of measures relevant in necessitating effective documentation and authorization (Marsden, 2010). Detective control is used to detect the effectiveness of preventive controls as well as providing prove to conform the existence of an undesirable business activity. Therefore, this internal control gives adequate assurance to the management by significantly contributing in the detection of any unpleasing activity. As a result, the management is guaranteed of maximum safety of the company’s assets and resources Segregation of Duties Segregation of duties in the accounting department is significantly an essential internal control mechanism in a business (Butler, 2009). In this mechanism, all the activities that are directly related to the management of resources are distributed to numerous members of the department. Therefore, according to the regulation, the initiation, approval and recording of the business transaction should involve several professionals in the department. A group of people will as well be involved in the reconciliation of the business reports and the business balance. This plan will as a result assure the management on the security of the business assets by reducing chances of fraud since any financial fraudulent must involve the participation of many people. It also quickens the process of discovering any fraud or mistake in the business financial records. How to Implement the Internal Controls To ensure maximum benefit from preventive and detective control, the business will ensure that the duties of accounting are segregated to several entities to minimize fraud. On the other hand, the business will also ensure proper mechanism to authorize the transaction of the business financial activities. Caretakers will as well be employed to provide security to the business permanent assets. On the other hand, the business will as well adopt the most effective means of reviewing, analyzing, and auditing of the business financial accounts. The possible challenges in the implementation of the plan will be consumption of a lot times in the entire process. Secondly, some employees may resistant the plan due to its procedural requirements. On the other hand, in the implementation of segregation of duties plan, the business will sub-divide the fiance department into three interdependent entities, the preparation subdivision, the approval section and recording of business transaction sub-department. Each department will have a unique responsibilities and powers. However, the implementation of the plan is likely to be time consuming and expensive as it requires recruitment of several professionals from different areas. Regulatory Environment The business will fully comply with regulatory environment by ensuring that, all its employees are aware of the regulatory requirements including Sarbanes-Oxley Act. The business will as well encourage external auditor to evaluate its financial records to facilitate total compliance with the legal requirements. The company decision on financial matter will as well be focused on the adoption of mechanism to abide by the set legal requirements (Kimmel, Paul, Jerry and Donald, 2011). This as a result will significantly reduce any conflict between the business and other legal entities in the country. Total conformity with regulatory environment requirements will result to the adoption of proper recording keeping mechanisms. Abiding by the prevailing legal requirements will as well significantly reduce fraudulent in the business. However, despite its encouraging input to the business full observance of Sarbanes-Oxley Act will to some extent increase the cost of operation in the business (Stephen and David, 2004). References Butler, M., (2009). Understanding Internal Controls: A Reference Guide for Managing University Business Practices. California: University of California Estache, A. & Goicoechea, A. (2005). How widespread were private investment & regulatory reform in infrastructure utilities during the 1990s?” World Bank Policy Research Working Paper 3595. Washington, D.C.: The World Bank. Kimmel, D., Paul D., Jerry J, and Donald E. (2011). Financial Accounting, 6th Edition. New York, NY: Wiley Marsden, S., (2010). Australian Master Bookkeepers Guide. 3rd ed. Sydney: CCH Publishers. Stephen M., and David K. (2004). Whistleblower Law: A Guide to Legal Protections for Corporate Employees. 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