Ned Kelly Business Plan Essay Example | Topics and Well Written Essays - 1000 words

Ned Kelly Business Plan - Essay Example Budgeting in business is beneficial not only because it enables projecting the yearly expenses to be incurred while following a certain plan, but it also allows to determine how costs will incur and how can they be controlled resulting in efficient operations (Dury, 2008; Albrecht et al., 2008). As for instance, without doing any budgeting of the business activities, an entrepreneur may only be able to visualize to a certain extent that what expenses will be incurred and how they will be financed and what revenues would be required to keep the business profitable. But, on the other hand, with budgeting the entrepreneur is in fact able to foresee that what expenses will be incurred and how much revenues will be required to cover those expenses and at the end make profits. This in turn allows not only setting up targets for revenue generation, but also allows ascertainment of cost controlling techniques (Jiambalvo, 2010; Horngren & Harrison, 2009). In this regard, cash budgeting is con sidered as one of the most beneficial and important procedure to forecast the results of a certain business approach or plan on monthly basis (Horngren & Harrison, 2009). ... Keeping in view these benefits, cash budget can also be prepared for taxi business and revenues and expenses can be forecasted, which can be then used to ascertain the required working capital to be raised. Apart from this, as it has been noted that the owner of the taxi business requires the amount of money required to be taken from bank to be ascertained prior to starting the business. In this regard, it is pertinent to ascertain the cash inflows and outflows expected from a year’s operations and the net profit or loss which will be earned by the business. Having taken into consideration the information provided for the case, income statement and cash budget has been prepared and presented as follows for the business to be started by Ned Kelly. Income Statement The income statement forecasted for Ned Kelly’s business has been presented as follows: Forecasted Income Statement Amount Sales ? 417,312.00 Less: Â   Diesel (15 % of Total Sales Revenue) - ? 59,875.20 Mainte nance Costs (? 120 per taxi per month) - ? 4,320.00 Annual Road Tax and Licence Fee (3 x ? 600) - ? 1,800.00 Drivers' Salaries per Month (9 x ? 24,000 / 12) - ? 216,000.00 Drivers' Social Security (10 % of Gross Annual Salary) - ? 21,600.00 Cost of Sales - ? 303,595.20 Gross Profit ? 113,716.80 Depreciation - ? 12,000.00 Office Staff's Salaries per Month (4 x ? 16,000 / 12) - ? 64,000.00 Office Staffs' Social Security (10 % of Gross Annual Salary) - ? 6,400.00 Utility Costs - ? 6,000.00 Rent - ? 18,000.00 Local Property Tax Charges - ? 5,000.00 Drawings - ? 30,000.00 Advertisement - ? 6,000.00 Net Profit - ? 33,683.20 Sources: (Albrecht et al., 2008; Dury, 2008; Horngren & Harrison, 2009; Jiambalvo, 2010) It can be observed