Discuss the below:
Q: Create a balance sheet and an income statement for your business using the information given in below:
Business Innovation: Best Practices in New Business Development
To settle on what to charge for my products, I have to consider how competitors in the market are charging their products so that I may have a vivid estimation of what I will charge. I will also consider charging a price which covers direct and indirect operation cost. Value-based pricing is my primary method of determining what I will charge for my products. After doing my analysis, I settled to charge my clients average of $250 per product. My business targets to attract about 112 clients daily and it will be operating five days a week hence serving approximately 560 clients with the product. This means that out of 52 weeks, my business will serve about 29,120 clients with the products in one year. Expected income will be calculated by multiplying estimated number of client (29,120) with $250. Potential revenue to be generated therefore becomes $7,280,000 million in a year.
Amount of capital required to start this business is estimated to be $3 million. The figure is reached after factoring contingences cost of about $1 million, $1.5 million startup cost which will cater for recurrent expenses, fixed costs such as internet and utility charges, suppliers, projects and subscription fees. Office furniture's and technology like computers, printers, telephone, fax machine, scanner and soft wares are also factored in. Remaining $0.5 million will be used to settle renting of the office and acquiring relent licenses necessary for business operation. To finance my business, I will use seek a family donation, and in a situation where the required amount will not be raised, I will consider applying for a bank loan.
Reference
Albrecht, W., Stice, J., Stice, E., & Swain, M. (2007). Accounting: concepts and applications. Cengage Learning. DRURY, C. M. (2013). Management and cost accounting. Springer.