- Writing a Business Plan
- Financial Statements
- Business Forecasting
- Business Checklist
OPERATIONS SECTION of the Business Plan
(Scholarship Information Services)
Under this section, we will discuss the production process, the resources needed to produce the product, and our capital equipment requirements.
THE PRODUCTION PROCESS:
Initially, the production process will take place at the home of Josh Johnston in Toronto, Ontario. This location was chosen mainly due to the lack of resources in which this company portrays. However, as a capital base is formed, a new location will be considered.
The production process, itself, is rather simple. A computer will be in operation that contains a database of all the educational funding programs collected. Customers will order our product through a service bureau. (A service bureau is business that answers calls, takes orders for products, etc). When orders are "received" from the service bureau, a computer operator will scan through the scholarship database and print out all scholarships available to each customer (order). The next procedure is to make a printout of general information. Included in the general information section is an introduction to the Scholarship Guide, how to "use" the Guide, how to apply for financial assistance, the steps necessary before applying for aid, and lastly, a note of encouragement. The print-out is then bound and placed into an envelope. The filled orders will be mailed the same day.
The entire process takes approximately 20 minutes depending upon the size of the order. For example, an order from the province of Nova Scotia may take 26 minutes while an order from the province of New Brunswick may take only 14 minutes to process. Thus, the production time depends on the number of funding programs available for a specific region. To reduce the production time, we plan to generate and retain a small inventory. This inventory level is essential for any unseen increase in demand. During slow periods, where few orders are received, the company's required inventory level will be replenished.
RESOURCES NEEDED TO PRODUCE THE PRODUCT:
The resources needed to produce the product are quite limited. Moreover, the only direct materials required in producing each product include; a binder and cover, paper, and an envelop. Costs for the direct materials are considered to be variable costs and therefore, will fluctuate with each sale made. The 200X cost for each direct material needed to produce one finished product is presented below.
Therefore, the 200X cost to produce each product is $3.00 (1.80 + $1.10 + $0.10). We are forecasting a 10% increase in direct material costs for 200Y. Therefore, the cost to produce one unit or product in 200Y is forecasted to be $3.30.
CAPITAL ASSETS REQUIRED
Scholarship Information Services will require minimum capital assets since the production process involves information. Below discusses the capital assets Josh will personal invest into the company and the capital assets that must be purchased by the company in order to successfully carry out the production process.
Capital Assets Invested by Owner:
The following capital assets, along with their appraised values, will be invested by Josh Johnston on the company's inception date (July 1, 200X).
|Capital Asset||Appraised Value|
|1 desktop computer||$1,000|
|1 workstation||$ 300|
|1 mini photocopier||$2,600|
The automobile is a 1990 Chevrolet, Impala. It will be used for business purposes only. The appraisal was conducted on April, 13 200X by the "A-1 Appraisal Company". For complete details on the appraisal, refer to figure 5 under the appendices.
The desktop computer, the workstation, and the mini photocopier were all purchased by Josh in May 200W. As indicated above, the total appraised value of these items amount to $3,900. These appraisal was performed over the phone with a local retail outlet - "Frank's Computer and Things".
Capital Asset to be Purchased:
Below lists the company's required capital equipment purchases, after tax cost of the equipment purchases, the suppliers chosen for each piece of equipment, and the anticipated purchase date of each capital asset.
|Capital Asset Budget Required for 200X:|
|1 Notebook Computer||$ 2,000||Computer Isle||June, 200X|
|1 Laser Printer||$ 900||Computer Isle||June 200X|
|1 Fax Machine||$ 500||Premium Office||June 200X|
|2 Workstations||$ 1,100||Premium Office||June 200X|
The above office equipment is essential to carry out operations and will be purchased in June of 200X. Payment of the equipment will be made in July of 200X. Computer Isle Inc. will be our main supplier of computer equipment while Premium Office Inc. will be our main supplier of office equipment and furniture. These firms have been chosen based on their quality brand names, competitive prices, and after sale service. We feel that these suppliers will greatly compliment our business and provide additional corporate balance. Please refer to the quotation in the appendices for further details on the above capital assets.
In January 200Y, Scholarship Information Services plans to purchase a desk-top computer from Computer Isle. The budget allotted for this purchase is $1,200 . Financial treatment of the above capital assets are provided under the financial statement section entitled "Notes to the Financial Statements". This concludes the operations section of the business plan.