The Legal and E-commerce Environment Today, Assessment Example
The presentation herein will examine the financial feasibility of a new venture created by a retired person. The author of the current review will focus on the cash flow, liquidity, potential return on investment, and the cost of setting up the business. The report shows that careful financial planning is needed in order to make the above project profitable and deal with potential threats of market instability. The cost of marketing in the case of a new venture and product on the market is considerable, as well as the costs associated with getting premises, equipment, and gaining approval, considering that the product to be marketed is a food item.
The internet -only sales structure has found to increase the profitability of the new business, as the owner saves money on premises and employee costs. Further, the cost of borrowing on a loan of $50.000 with arrears of one year would mean that the liquidity of the new company would be balanced throughout the first year of the operation. Further, the tax to be payable at 30 percent in arrears favors the liquidity of the company, too.
The market research shows that the profits would be surging between October and February, and this means that the number of orders will increase. It might be necessary for the company to increase working hours for this period, while reducing them in low season. This position would potentially suit a person with children who are off school in the summer, and save the company money on overtime costs.
The main assumption of the below financial analysis is that the company should budget its expenses carefully, and conduct a market analysis before it would invest in initial inventory and sign lease/loan agreements. Further, it is advisable that the company signs up for an online shopping cart system when creating a website that create daily, weekly, monthly, quarterly, and yearly reports automatically. This will help the future company with its financial planning, management of liquidity, and monitoring demand.
Main Findings of the Financial Analysis
The most important feature of the new business will be relying on one product group and internet sales only. The monthly cash flow during the first year of operation will be vulnerable to market trends; therefore, it needs to be monitored carefully. Unexpected expenses and those not in the report and market research need to be added, such as insurances, cost of FDA approval, and marketing. As mentioned earlier, the business would be dependent on food item sales through the internet. Given this fact gives an overview that the whole business would be relying on an internet-only based operation that would offer perishable goods; hence, timing and proper management of logistics is necessary. Ordering supplies beforehand might not work in this system. The incoming inventory ought to be just right for the market demand that is being served. Accordingly, it could be acknowledged that when it comes to these particular situations, the work of the manager of the order-taking activities completed through the internet should connive with the work of the order-supply-inventory keeper [if two persons are to work separately from such posts]. Just to make sure that the orders are accurate and sure on the part of the client, it would be necessary for the online order taker to take necessary steps in order to clarify matters accordingly. This will reduce the possibility of incurring waste-products along the way.
First-in-first-out policies should be necessary especially when it comes to storing and distributing perishable goods. It must be certain that when it comes to storing perishable goods upon receipt from supplier and upon release to the clients ought to have a specific rate of time-leeway; one that basically fits the product’s integrity and freshness that is to be the primary concern of the company.
Logistics should also be under careful management in accordance with the mentioned responsibilities of those that are expected to keep inventory records, take online transactions and finalize the schedule of release. Even though the operation would be all-internet based, the members of the personnel who would handle these particular conditions of business operation need to be connected properly and ought to communicate as needed. Hence, in this case, a personal network of company database should be available for the whole staff members. Relatively, this would mean having to pay for a customized program that would best fit the assumptive form of development that basically puts the business in the map of continuous operation in the internet-based-industries.
Handling all the budget-defined indicators in these particular assumptions of operation of business development is what makes the whole assumption of progress relatively possible. The way the organization sees such point of growth is what makes the whole operation expressive in terms of indicating a more directive form of vision on how an internet-based organization such as this one could actually flourish in the industry therefore serving what the market needs. Noticeably, allotting more time and effort in creating a definite distinction on the progress pattern of the organization would ensure the business of the adjustments it would likely have to undergo as it grows and embraces larger possibilities of serving a more defined market that has specific food choice demands. Creating food services that could be beneficial to particular target clients would also be a part of the expansion in later years of operation.
As mentioned earlier, although the business would be online-based, the need to operate it with full camaraderie among existing workers needs to be in full swing and under perfect scheduling. Hence, part of the costs that need to be considered when handling the cost issues of the business in its pre-establishment stage, the following financial considerations ought to be given attention to:
- Payment for a programmer to customize a database that would be shared between staff members:
The website creator of the business would have a separate responsibility from an online programmer who is expected to create a company database that could be accessed by staff members. This program ought to be divided into app-like mobile software that could be used by each staff on the go. The primary goal for this is for the members of the staff to work hand-in-hand with each other for the sake of creating mandatory responsibilities that would ensure product integrity, quality and freshness upon delivery to the client.
Hence, the database would be used as the main storage of information whereas the mobile app to be distributed to the field-staff ought to direct members of the workers towards how they are supposed to go about a particular task towards another. In this case, the cost of such work might amount between USD 800 to USD 950 investment.
- The initial inventory rate could amount to USD 1500 to USD 2000 [depending on the market that is targeted within firsthand of operation]. Operators who are dedicated to attending to online transactions are expected to come up with an estimate of needed inventories that will be communicated to supply and distribution managers [depending on how they gauge a particular average order-taking rate within a specific time required- this could be observed within the first two weeks of operation; as this time would be enough to take on a more considerable form of developmental assumption on how the business works at a regular basis including what particular products are mostly demanded for by the market sector served].
- Logistics operation is one of the key procedures that could ensure client satisfaction and improve the level of loyalty that first time buyers would have on the business on the long run. Hence an allotted amount of support and maintenance to logistics operations ought to be set at a monthly basis. As for this point, an allotment of USD 2,000 would be suffice enough to make sure that the operation goes smoothly.
- Initial cost for employee salary ought to be considerate on defining the role that each person takes into account especially in increasing sales and determining the rate of profit that the organization is likely to earn within a specific span of time. Among the personnel who ought to be paid for by the company includes the following:
- Online marketing officer-(maybe one to two individuals) who are to be in charged in boosting the marketing operations of the business thus getting the attention of the target market through social media and other online platforms available for the organization to take note of.
- Online transactions officer-order-takers and client-communicators ought to be the ones to close the deal. This could be one or two individuals [as needed for the incoming rate of orders that the organization gets]. With the peak period noted to be between the months of October to February, increasing staff members dedicated to this responsibility might be necessary.
- Website operator and maintenance officer-although the work on maintaining the website need not be tedious, an officer should be placed within the said responsibility to oversee the overall performance of the website; depending on how it could actually handle the case based on the concept of development that is needed by the website itself as it increases its function between client-to-business and business-to-staff operations. The website operator[s] shall also see to it that the passing on and storing of information in the company database is well-maintained and is accurate enough to respond to the responsibilities of each personnel involved in the exchange of information to be able to reach client-satisfaction.
In this case, the allotted budget for employee salary would be USD 4,500 per month [distributed to each member of the operation as mentioned in this section depending on the responsibilities they have for the whole operation to push through]. As the peak seasons approach, increasing the rate of such budget allotment would be necessary [changing USD 4500 and adjusting it to at least USD 5500 between the months of October to February may be feasible enough to consider].
How profitable could the business be? What makes the business profitable is its capacity to bring in more clients and prospected buyers into the website and turn each visit into a successful sales transaction. Through increasing attention given on this part of the operation, inventory officers are to be advised on what particular amount of products ought to be ordered from suppliers in order to match up with the demand. Perceiving the situation through recorded data of company performance between months would help a lot in keeping the inventory rate at a balance [thus avoiding the manner by which waste of food products could be incurred].
Intense keeping of record is necessary in order to protect perishable goods to establish the integrity that it should be noted for. Practical assessment of the scheduling process and the constant maintenance of the operation-programs used to keep the operation of the order takers and the inventory officers synced properly ought to be taken as a primary concern for the organization’s administrator to take note of.
Keeping loyal customers is necessary. Business operation managers are to be the ones to take note of how these operations ought to be synced together in order to make sure that loyal customers would remain loyal amidst the distinct challenge of competing with other online businesses of the same nature. Business operation manager responsibilities could be taken into account by the administrator himself [the owner of the business] as he personally oversees the operation and how it is protected from possible failures. There would be some downturns; nevertheless, this should not cause the operation to falter, but instead, these situations ought to teach the administration a vital lesson that will keep its operation at a steady in later years of growth and expansion that the business hopes to undergo in the near future.
Assets would have considerable high rate of liquidity during the first months of operation. Keeping such matter constant could only be determined upon the transition of transactions and operation from one month to the other. Considering this matter, the officers and key personnel who are expected to keep the profit at a growing rate ought to make sure that the business is at a go even during the lean months. Particular strategies ought to be adapted to even during these times especially with an aim to keep profits at an average through effectively managing the cash flow system and the elements that affect such standing of the organization.
Cash Flow Analysis
The cash flow of the business would be determined by the seasonal performance of the business based on the industry’s overall profit earnings. The organization ought to be able to catch up with the changing trends of operating online [including the process of reaching out to possible clients and serving already existing ones]. This way, the capacity to know when to let go of specific expenses would have a great impact on how the cash coming in and getting out into the system would be balanced accordingly, hence protecting the rate of profit earned every month.
Return on Investment /Breaking Even analysis
To make sure that the business is growing during the peak season and at a relatively balanced or stable state during the lean months, it is important to make take note of how investments used for operations could be replenished through heightened marketing and effective management operations. Keeping a good rate of inventories during the lean season and increasing such rate during the peak season could ensure of such balance. Hence, accurate record keeping should be adapted to and ought to be checked monthly in order to ensure proper organizational operation and transactions able to bring in higher revenues than losses [incurred through unnecessary business expenses].
Long term Feasibility Analysis
In the long run, the business is of course expected to grow into the system and would definitely create a distinct sense of operation that would be feasible enough for the business to thrive in. This growth is hoped to be incurred based on the development of client-focused operations that the organization ought to be known for. At this rate of the operation, increasing the variety of food inventories incurred by the organization is expected to happen. This means that the business looks forward to serving a much larger scope of the market through having an ensured increase of inventories that is characterized by a variety of new products that might appeal to the current scope of market being served and later on the new market to be assisted in the online business operations the organization hopes to take note of.
One of the main risks associated with international trade and import are related to the volatility of the currency market. Given the fact that the Euro/USD exchange is vulnerable to political conditions, and there are worrying news from the Eurozone countries, it is important that the company maintains price advantage by securing a fixed term deal with the Belgian manufacturer. While the new company will have exclusive rights to retail the same product on the market, the threat of substitutes in the United States is high. Therefore, constant monitoring of the market and the business activities of main competitors is needed. Another condition to take note of is the integrity of the existing inventory. With perishable goods being the main product of the organization, it is vital that keeping an integral inventory be one of the main concerns of designated administrators.
Organizational Growth Analysis and Perception
The business, being internet-based is something that can present both a challenge and an opportunity for the organization to grow accordingly. Given that the organization has a relative [and unlimited access] to a wide range of customers and prospective buyers, the administrators and specific officers could use the opportunity to perfectly handle the challenge of reaching out to a whole new group of customers every quarter. Practical assumptions of responsibilities on the part of every assigned leader on particular departmental concentrations of the operations ought to give a more constructive process by which the different challenges of expansion is further handled from one particular time of operational growth towards another; this insists on the considerable manner by which leaders are given the possible option of indication on how they are to affect the whole organization especially in increasing the rate of market sectors influenced by the business through proper research.
Investing on market research strategies could later on be considered by the administrators of the business. Perhaps after six months of working through the industry and addressing the needs of the target market, it would be essential that a recorded data on how the organization operates further and how it could expand further in later market performances be kept well and used later on for progress-dedicated strategies. Allotting budget for this particular point of growth is an essential process of strengthening the capacity of the organization to face the challenge of changing trends in the market thus responding accordingly to the goal of growth and progression as well as expansion through adapting the possibility of serving the market with other forms of food choices [especially the ones that are pre-ordered or customized according to specific client groups].
The specificity of the pattern of growth that the organization wants to engage with creates a more expansive form of visualization on what the organization would be like after three to four years of operation and how it could embrace the different options of development that it can actually be noted for in the market it hopes to influence. Food products are perishable, but it is also a commodity that everyone else needs in order to survive. Relatively, it could be realized that when it comes to handling the commodity of the society, the desire to make a definite form of imposition on how the market ought to realize the value of the business in accordance to responding to the demands of the clients ought to create a distinct form of established pattern of growth for the business. Food choices that are diversified enough to face the overall demands of the growing population around the globe could improve the concept of operation that the organization especially in determining the name that would best create an acceptable reputation for the business [thus increasing the rate of profit that the business gets from the operations it engages with and the transaction it closes accordingly]. Relatively though, these approaches have risks; hence proper planning and management of operations would be necessary for good results to come from these options of growth and expansion. Increasing inventory rates is what makes this particular process risky; nevertheless, with proper record-keeping the assumption of increasing inventory rate would be better developed especially for the sake of determining the added sectors of the market that needs to be served by the organization accordingly.
Creating mobile-friendly apps dedicated to the customers of the business would of course create a more determined assumption of profitability for the organization. Noticeably, it is the aim of the organization to make use of the internet fully in order to serve its clients effectively. This would again cost a relative amount of investment on the IT operations that the organization would be based upon. Understandably, the practicality of the operation would depend on how much the organization is willing to risk online to engage more with the clients thus establishing a more defined pattern of improving the ways by which the business relates to the whole population it hopes to influence with the products that it offers [and later on with the services that it would be offering in line with the products the business is basically noted for.
The need to establish organizational stability in internet-based business operations is highly necessary especially if particular conditions of development in the business ought to be noted for. Relatively, this rate of organizational growth ought to be the focus of operation. Of course, during the first months, the primary aim is to simply gain ample profit from the market. Nevertheless, the need for the business to take on new challenges within each new step of development is an essential point of progress.
The dependability of the organization in the internet [even including in the process of connecting its personnel from one employee to another] should not be a hindrance for expansion. The business basically hopes to serve a larger scope of market in the coming years and attaining such goal is not an easy task to take into account. Nevertheless, it is not impossible either. The administrator of the business ought to seek possibilities to improve operations now and then and later on, when the ground has already been established for growth, entering new heights of operations could be possible. Relatively, this would mean that designated market researchers ought to be assigned every now and then during the lean season and the peak season to seek particular operational advancements that could be taken into account by the organization [especially relating to its marketing campaigns and increased inventory diversities] in order to set the foundation for organizational growth that would be hosted through proper channels of organizational expansion.
Kotler, Philip (2009). Marketing Management. Pearson: Prentice-Hall.
Miller, Roger (2002). The Legal and E-Commerce Environment Today (hardcover ed.). Thomson Learning.
Nissanoff, Daniel (2006). FutureShop: How the New Auction Culture Will Revolutionize the Way We Buy, Sell and Get the Things We Really Want (hardcover ed.). The Penguin Press.
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