Entrepreneuring: Sweet Taste - Essay Example

You Are an Entrepreneur! The Business The business plan that the intends to undertake would be the opening up of an ice-cream shop in New York which would be named Sweet Taste. The location of the shop would be near a high school or college of New York which would help the business in attracting the kids and well as the teenagers of the nearby colleges. The young people would be the main target market for the brand. The company would make the pricing moderate so that it is affordable for the college and the school goers. Staffing for the business The business would need four tiers of staff. The lowermost tier would consist of the customer contact staffs that would take care of the customers and would be involved in a variety of activities like the serving of the ice creams, billing of the products as well as the general activities that need to be undertaken to run an ice cream store. There would also be a set of back end staffs who would be engaged in preparation of the products in the freezer and for maintenance of the machines and equipments. The floor managers would be required for ensuring that the activities of the shop are undertaken in a proper manner (Blythe, 2001). There would be requirement of a marketing manager who would be responsible for the branding and promotion of Sweet Taste (Pinson and Jinnett, 2009). Target Market The company would cater to the fast food market and would see a rise in the sales especially during the period when the classes would be going on in the schools and colleges. This kind of business would be a popular one because especially during the summer months the sales would go up. The pastries and the cookies are expected to sell in the winter months. Product lines for the business Since the business is a start up, it would prefer to focus on one particular outlet of the ice cream shop. There would be a number of products in the product line of the business. First of all, there would be a number of flavors in the ice cream section of the store, which includes chocolate, strawberry, mango, black current, butterscotch and many more. There would also be a low fat section in the product line which would be offered in a variety of flavors (Farris, 2006). Finally there would be pastries which would also be of different types to provide the customers with a variety to choose from. Chocó chip cookies would also be sold in the shop. Assets and Liabilities of the company The assets of the company would be the freezer and the machines that would be used for running the business. These would form a part of the fixed assets of the business. The other tangible assets of the company would be the furniture and the cutlery that would be used for the preparation of the products. The intangible assets of the company would be the brand name that the company would develop over time. The company would also have liquid assets in form of fixed deposits and cash at bank. This would be required for the company for the different types of working capital needs. On the other hand the liabilities of the company would include the long term debt that the company would get from the bank loans of the company. The company can at a future period go to the equity market for the collection of funds. In such cases the liability side of the balance sheet would also have the part of shareholder’s equity (Wiliam, 2005). However, in this case it does not arise. The business would also have the current liabilities like the accounts payable which the business would have to pay out to its different suppliers. The company would require paying wages and salaries to the employees. This would be considered as an expense to the company. This would be considered in the operating expenses of the company. The costs of maintenance of the equipments would be considered in the operating expenses of the business. Impact of GAAP and IFRS on the Business Most of the businesses that are operating in the United States are being affected by GAAP and IFRS to a large extent. The main reasons for this are that the vendors or the suppliers who the company has to deal with would follow a particular accounting standard. The impact of the adoption of IFRS in the companies of the suppliers and vendors would fall on this particular business. The IFRS has focused on the small and medium enterprise and there are definite procedures of accounting that would affect this kind of business. The good will of the company for instance would undergo amortization and would undergo impairment only if there is an event that is worth noticing and which would positively or negatively affect the goodwill of the firm. Since the small enterprises do not have the accountability to the shareholders or the common public the IFRS maintains that any deviation from the accounting standards in the entire process does not take place. Therefore when the company starts implementing a particular accounting standard it would be better for it to go for IFRS and ensure that the business has complied with all the accounting practices in the correct manner. Assumptions for the pro-forma Balance Sheet and Profit and Loss Account Since the business would want to cater to the students, there is a need for the pricing towards the lower end. The average price of the products is expected to be $15. Each day the company is expected to make revenue of $6000 (Weston, 1990). The company would go for a bank loan of $800000 for the financing of the various items that would be required for the business. Internal Control on the value of the assets The business has fixed assets worth $790000. This is a huge amount of money that the company would spend in order to start up. The bank would also be providing long term debt to the company. There are a number of ways in which the company can strive to preserve the value of the assets. The company can insure the products so that in case of any risk of fire or theft then the company would be able to recover the money from the insurance companies. In the day to day business dealings the company would be dealing with a lot of data of the suppliers. It is important for the company to protect such data and to maintain the level of confidentiality in the business dealings. Implementation of the strategies in the business environment The company would be able to overcome the challenges in a proper manner if there are stringent audit measures which would not only be related to the financial aspects but also the organization environment that the business would have. There should be systematic checks and balances of the entire process of corporate governance and the power and actions of the board of governors have to be reviewed from time to time. Impact of the regulatory environment In the present day it is mandatory on part of the companies to make SEC filings as per the Sarbanes-Oxley Act. The financial crisis of the US has resulted in such kind of regulatory framework which would be essential for the companies to maintain. As Sweet Taste would want to start its business it would be imperative for the company to show the mandatory filings in the Securities and Exchange Commission of US. This would mean that the company is abiding by the rules and regulations that have been set by the state and there is complete compliance in the corporate governance of the business. Most of the rules of the business in relation to the employment as well as in the market of the ice cream products there would be practically no deviation from the rules which would deem the business to be illegal in nature. Since the business is operating in New York the company has to follow the IFRS rather than GAAP. This is because it is a new company and most recent accounting technique which is the IFRS would be useful for the company implement for the first time. If it is going by GAAP it would not turn out to be beneficial for the company because in future it would have to converge into the IFRS form of accounting. So it would be better if from the inception the company operates using the IFRS methods. References Blythe, J. (2001). Essentials of Marketing. London: Prentice Hall. Pinson, L. and Jinnett, J. (2009). Steps to Small Business Start-Up. Chicago: Kaplan Publishing. Farris, P. (2006). Marketing Metrics. New York: Wharton School Publishing. Wiliam, C. A. (2005). The Marketing Plan. New Jersey: John Wiley & Sons, Inc. Weston, J. F., 1990. Essentials of Managerial Finance. Hinsdale: Dryden Press. Read More