Entrepreneuring: Business Post Enterprise - Essay Example

Running head: entrepreneur 15th November Introduction Based on the stiff competition that is currently being experienced in most of the sectors, it is essential that individual diversify their investment portfolio to distribute the risks that arises in the course of doing business. One of the ways that young people can utilize to increase their income is by converting their hobbies into income generating activities. As an individual who like writing a lot especially on the matters affecting the society including the business opportunities, my aim is to establish a magazine that will cover matters related to business as well as individuals who have excelled in businesses. My business will be referred to as Business Post Enterprise. With the increased demand for information relating to formation and running of enterprises, I realized that my writing hobby can be converted to a business that will involve writing business articles on a magazine that is known as Business Post. In this way, I will be in a position to provide the information that is needed by individuals who intend to venture into small and middle level businesses. Additionally, I am focused at creating advertising spaces that will create an opportunity for the existing and new firms to advertise their products. It is worth to note that with the current cut-throat competition, most firms have turned into extensive advertisement in order to create a strong customer awareness thus increasing their sales. In this regard, my objective is to capture that market segment and provide adequate advertising spaces that will meet the needs of my clients. In order to achieve my goals, I will require a workforce that is experienced and adequately motivated. Members of staff will include office administrator, advertising manager, sales executives, messengers, writers, information technology expert, receptionist, driver, an accountant and a cleaner. My duty will be to manage the whole business. The office administrator will oversee the general running of the office as well as the evaluation of the other workers. The advertising manager on the other hand will ensure that orders have properly been acquired by the sales executives, advertisement artworks are received on time, leading the sales executives as well as organizing interviews with the customers. The sales executives will be responsible for contacting the potential clients both the one seeking to advertise and those who need to purchase the magazine copies. Messengers will be responsible for taking the magazines to the customers as well as taking correspondents and letters to areas that they will be directed by the office administrator. Writers, who are the most important resources in my business, will be given the role of writing articles and interviewing individuals who have excelled in entrepreneurship. To ensure that Business Post operations are smoothly done and that any data is not lost, the firm will hire a qualified information technology expert. Receptionist on the other hand will be responsible to welcome and assist the visitors. The driver role will be to transport the sales executives and writers to the clients while the cleaner will be responsible for cleaning the office. The accountant, another key personnel in the business will handle all the matters related to finance including preparing monthly and yearly tax returns, preparing financial statements and keeping records among other duties. As a business whose main source of income will be from the advertising space as well as payment for articles done on various businesses, Business Post will offer ample opportunities for the employee’s development. First, the firm will offer training opportunities where each of the employees will be trained on how to write business articles, close a sale, leadership skills and communication skills among other areas. To the enterprises, Business Post magazine will act as the linkage between the businesses and the customers. As noted earlier, it will create a chance for the businesses to create strong customer awareness. Chart of Accounts In order to ensure that the business operations especially preparation and reporting of financial statements are effectively undertaken, Business Post will maintain various chart of accounts as discussed below Assets: Within the division of transport, an office will be established that will indicate the company assets account. Within the asset account, I will open various accounts that will indicate the various aspects of the assets. These includes Cash account Marketable Securities Account Prepaid Expenses Fixed assets Account Contra Account Liabilities and Equity: Liabilities account will indicate the sources of the assets. The account that I will establish within the credit section as indicated below Account payables Wages payable Accrued liabilities Notes payable Taxes payable Retained earnings Common stock Revenue: The revenue account will indicate my source of revenue. Notable accounts that I will open include; Advertising earnings Sales Expenses: Within the division of credit, I will open various accounts that will indicate the various expenses that are incurred in the process of doing business. By comparing the expenses incurred against the revenue it generates, I will be in a position to evaluate the significance of the expense. Notable accounts will be; Depreciation Expense Wages Expense Other Expenses Rent Expense Advertising Expense Payroll Tax Expense Utilities Expense Bank Fees Supplies Expense Business Post Enterprises Account reporting standard As an enterprise that values accountability and assisting the stakeholders to understand the financial statement, Business Post will use the International Financial Reporting Standards (IFRS). IFRS is important in the sense that as a system that offers common global language for small and large businesses, it will make the Business Post accounts to be more understandable. In future, Business Post will enter the neighboring countries. Based on the fact that IFRS allows comparison of the accounts in different companies, Business Post will therefore have the advantage of using the IFRS once it establishes outlets in the neighboring countries. This implies that the enterprise will follow the rules as stipulated by IFRS that requires that the accounts be comparable, reliable, understandable and relevant to the internal as well as external users (Bradshaw et al 2010). The IFRS / GAAP convergence will positively impact on my business. For example, the corporate management will benefit by the streamlined rules as well as practices that are applied worldwide. To the investors, they will be motivated to invest in Business Post since they will as a result understand Business Post financial reports. The credible Information that the books will provide will positively impact the lenders thus resulting to the expansion of Business Post as well as increased profit. One of the major changes that I will initiate in my books and records will be to recognize the intangible assets including the advertising costs if only they will have future benefit. In this way, the business will be saved from using funds on not generating revenue expenses. I will also change the method of recording the inventories from LIFO to FIFO (James, 2014). This will not only allow comparability between outlets in different countries but also it will eliminate the need to undertake adjustment of LIFO inventories. This will further reduce the expenses and use the time that could have been used for inventory comparison to undertake other duties. Pro Forma Balance Sheet Business Post Enterprises For 2014 Figures are in (USD 000) Assets Current Assets Cash 64 Net account receivable 435 Inventory 205 Temporary investment 12 Prepaid expenses 2 Total current assets 718 Fixed Assets Long-term investment 46 Motor vehicle 727 Building 1,021 Equipment 654 Furniture 72 Total fixed assets 2,520 TOTAL ASSETS 3,238 LIABILITIES Current liabilities Accounts payable 277 Short-term notes 28 Current part of the long-term notes 15 Accruals 14 Total current liabilities 334 Long-term liabilities Mortgage 1,021 Others 576 Total long-term liabilities 1,597 SHAREHOLDERS EQUITY Capital stock 300 Retained earnings 1,007 Total shareholders equity 1,307 TOTAL LIABILITIES AND EQUITY 3,238 Income Statement for the Year Ended 31st December 2014 Advertising revenue 120,000 Cost of Sales 65,000 Gross Profit 185,000 Other incomes 17,000 Cost of distribution (10,000) Administrative expenses (15,000) Other expenses (2, 000) Finance charges (500) Profit before tax 174,500 Income tax (10,000) Net Profit 164,500 Internal controls To protect the company assets and resources, I will establish 2 major internal controls. First, the assets will be kept in a secured place that will be guarded by a local security guard. In this way, unauthorized person will not be allowed to access the assets while they are not being used. Secondly, data that relates to customer information will be stored in a computer that will require a password to start. The password will be limited to advertising manager. Given the freedom that workers need during their activities, the limitation will possibly generate resistance by some employees. To deal with this problem, I will hold a forum where I will educate the staff on the benefits of guiding the company assets. These include gaining the investors trust, and avoiding misuse among others. Similarly, I will indicate to them the importance of customer privacy especially where they are charged different prices for the same product possibly after negotiation. In this way, the employees will understand the limitation to accessing computer storing customers’ information. Impact of the regulatory environment Business Post Enterprises will first register with the registrar of companies as a way of complying with the stipulated company registration process. In this way, the enterprises will be in a position not only to sell for individual customers but also it will get an opportunity to supply its products to the government. One the certificate of registration is obtained. Business Post will then register for Value Added Tax as well as with the local authority (Shane, 2013). As away of ensuring that the investors are protected from fraudulent accounting practices, I will act as per the Sarbanes-Oxley Act. As indicated by Section 302 of the Act, I will be certifying the accuracy of the financial statement before they are reported. Similarly, I will follow Section 404 which directs the establishment of internal controls and methods of reporting their effectiveness (Stephen et al, 2004). This will include getting the secret feedback from employees and customer who visits our premises. Conclusion Based on the above discussion, it is clear that for any business venture to achieve its goals, it requires capital. By providing the investors with a viable business plan that incorporates budget, income statement and ways of reducing risk, entrepreneurs are in a position to get the funds. Once the business starts to operate, it is vital to introduce internal controls to safeguard the interest of investors and customer data. Additionally, by following the Sarbanes-Oxley Act requirements, senior managers will greatly impact on the transparency of the financial statements. References Bradshaw, M., et al (2010). Response to the SECs Proposed Rule- Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards (IFRS) by U.S. Issuers. Accounting Horizons (24)1. James, W. (2014). Your Small Business Adventure: Finding Your Niche and Growing a Successful Business. New York: Huron Street Press. Shane, S. (2013). The genetics of entrepreneurial performance. International Small Business Journal 31 (5): 73–95. Stephen, M., Michael, D and David, K. (2004). Whistleblower Law: A Guide to Legal Protections for Corporate Employees. New York: Praeger Publishers. Read More