Executive summary

This is a business plan that focuses on the establishment of a new business venture relating to food truck business. Food and beverage industry are gaining importance in recent times than ever before. Hence, to explore in this industry can be profitable as well as competitive for the entrepreneur. Food and beverage industry is increasing in popularity and hence, growth opportunities seem to augment as well. Exploiting such opportunities in an intense competitive environment can yield advantages and profits if the business promises to create business value for its customers in terms of quality, services, creativity and sustainability. The business does not only aim to generate quantitative results but also promises to abode by sustainability and safety standards to ensure its longevity and trust maintenance from its customers. The business will promote a cleaner and environmentally friendly business model.

The business plan specifies briefly about several aspects relating to the initiation and daily operations of the business. It states the nature of the business, the owners of the business, its future prospects and longevity through its business operations, the kind and type of suppliers required for this business, Capital requirements and reasons for additional funding through bank loans.

Idea and Name of the business 

The core idea behind this innovative business is to cater quick food services to those who cannot prepare lunch and meals for themselves due to personal reasons. Restaurant on wheels business is useful in this high rapid business development environment. The name of the business shall be Health Junction. As the name signifies, the food served shall be quick, healthy and fresh. We, at health Junction, understand the need of new and modern urban lifestyle (Alexander, 2016). The need for Healthy food has gained momentum and hence to cater their needs, it is important to satisfy their taste buds along with augmenting their healthy quotient. Every food delicacy served will clearly state its ingredients with proper descriptions of its food attributes to help its customers understand why and how that particular ingredient would help in their physical well being.

Owners and capital of the business

Four of us, graduating from the Institute of Health and Nutrition have decided to carry on a business with food catering on wheels. Andrew, Nick, Mathew and Adam (me) are the owners of this entrepreneurial business. We are graduating with an M.Sc degree. We have knowledge about food by taste, quantity and quality. We have also worked as a full time intern in McDonald’s and Subway (Kew & Stredwick, 2017). The current capital requirements can be broadly divided into fixed and working capital aspects. (Simona Alfiero, November 2017) The details are as follows-

Particulars	Amount (AU$)
Truck	50,000
Kitchen equipments	100,000
Chimney	25,000
Computer	25,000
Kitchen utensils	35,000
Paper plates and cups	15,000
License and permits	35,000
Water storage and purifier tank	15,000
Microwave, Juicer, hand blender and oven	50,000
Gas cylinders	50,000
1 accountant	100,000
4 service staff	100,000

From the above details, it is quite clear that the total capital requirement for initiating this business requires a sum of AU$600,000 (Choy, 2018). The business currently has only AU$100,000 and the rest can be obtained via proposing a bank loan. For this loan, we will be approaching the banks and financial institutions to get the loans at the cheaper rate of interest. Furthermore, we will also be trying to get the funding from the venture capitalists as well as start-up funding companies as it will help in reducing the cost of interest and thereby having no burden of interest on the business in the initial 2-3 years.

Suppliers 

The suppliers of the business shall include the following –

• Local grocers and supermarkets that will provide Raw materials in terms of vegetables, fruits, dairy products, etc.          
• Cutlery will be required for chopping of vegetables and fresh ingredients
• Kitchen appliances vendor to purchase necessary kitchen equipments that will be helpful in making food quick and easy (Trieu, 2017).
• Vendor organisation for buying new truck for the food business
• Since no food can be prepared with water, it is quintessential to order a storage tank and purifier for the same
• Microwave and oven shall be purchased from authorised dealers (Herciu, 2017).
• Hardware organisation for purchase of computer for billing and accounting services

Nature of the business

The nature of the business is food and beverage industry. The importance of healthy and quick preparation food is gaining importance in this era of fast pacing modernisation and rapid development. Since the business will offer good quality food options at affordable prices, it is assumed that the business will survive in this competitive industry (Linden & Freeman, 2017). Fast food services and options have increased manifold in recent times but they compromise on health severely. To serve the general public with healthy and fresh food items without compromising on quality and taste will be innovative enough to attract new customers in the city. For this purpose, all the products produced and sold would have the proper research on nutritional aspects and impact on health and this would be one of our unique selling propositions.

Location of the business

The business shall be located at the most busiest industrial area in Melbourne to attract as many customers as possible. Since employees will high in this zone, it is estimated to be profitable for the business (Visinescu, et al., 2017). The exact location would be 21, Hardware Lane at the Melbourne City. We aim to target this section particularly because of the dense working population and also because of the way read section of the employees working here. A food offerings varies from as low as AU$5.0200 AU$ per mile. This is inclusive of juices and other food beverage items as well. We understand food in terms of combinations and health quotient on terms of its effect on digestion, metabolism and absorption by the human body.

Future prospects

As all businesses are based on the assumption of continuity and future foreseeability, we also believe that a food truck business will survive in the industry for a minimum of 10 years. It will provide internal management as well as the stuff with clear guidelines on how to function according to set goals and develop strategies accordingly. Also, we set to achieve 5 more establishments in the near future in the city at different locations. This would be our expansion strategy (Sithole, et al., 2017).

Additional capital requirement

From the capital requirement details already mentioned above, it is clear that the business would require a capital investment of AU$600,000. Currently, the owners have only US$100,000 for investment. They have decided to propose for a bank loan to obtain the additional funds amounting to AU$500,000. Since the bank details on the following five aspects with in-depth analysis and critical examination, the owners think they will need these requirements- (Baiden, June 2011)

1. Character – we have a good reputational character in the society as we have repaid all our dues on time in the past.
2. Capacity- we wish to borrow the sum within our capacity to repay them back jointly and severely
3. Capital- the capital requirements of AU$500,000 is adequate and does not cause the body limit of the bank to finance of business (Grenier, 2017).
4. Conditions– our financial status jointly and severally is stable enough to repay the loans back on time. We have invested in shares of several listed companies which are performing well on the stock market index. We have also invested in several bonds and gold rating options.
5. Collateral security- We played a motor bikes and personal cars As a Collage and security against the sum we wish to obtain via the loan (Jefferson, 2017).

Conclusion

We hence conclude that our business plan looks feasible on all aspects concerning technical, economical, financial and cost grounds. It will increase the success and growth viability of the organization. The company will take some time to break even once the business is started and eventually during the course of the business, it is start making profits.

QUESTION 2: PROBLEM SOLVING

1. The contribution margin per bottle of hand sanitizers for Freshiana has been calculated below:

Freshiana Ltd.
Calculation of contribution per unit and BEP
Particulars	Amt. ($)	Amt. ($)
Selling price per bottle		12
Less: Variable cost
Plastic bottle cost	2
Chemicals	6
Total Variable costs		8
Contribution margin per bottle (a)		4
Total fixed costs (b)		60,000
Break-even point (in bottles) (b/a) – in units		15,000

• The number of sanitizers bottles that Freshiana needs to sell to reach the break-even point has been calculated above and it is 15000 bottles (Arnott, et al., 2017).
• The profit of Freshiana on sales of 25000 units of sanitizer bottles will be $40000

Freshiana Ltd.
Calculation of profit for 25000 bottles sold
Particulars	Amt. ($)	Amt. ($)
Per unit	Total
Selling price	12	3,00,000
Less: Variable cost
Plastic bottle cost	2	50,000
Chemicals	6	1,50,000
Total Variable costs		2,00,000
Contribution margin		1,00,000
Less: Total fixed costs		60,000
Profit for the year		40,000

• The number of units that should be sold by Freshiana to earn the total profit of $160000 has been calculated below.

No. of units to be sold = (Fixed cost + Total required profit) / contribution per unit

= (60000 + 160000) / 4

= 55000 units

• Considering the increase in fixed costs to $80000 and consequent increase in the selling price to $16 per unit, the revised calculation has been shown below:
• The contribution per bottle would be $8 per unit.
• The Break-even point would be at 10000 units as shown below.

Freshiana Ltd.
Calculation of contribution per unit and BEP
Particulars	Amt. ($)	Amt. ($)
Selling price per bottle		16
Less: Variable cost
Plastic bottle cost	2
Chemicals	6
Total Variable costs		8
Contribution margin per bottle (a)		8
Total fixed costs (b)		80,000
Break-even point (in bottles) (b/a) – in units		10,000

1. The revised profit would be $120000 as shown below:

Freshiana Ltd.
Calculation of profit for 25000 bottles sold
Particulars	Amt. ($)	Amt. ($)
Per unit	Total
Selling price	16	4,00,000
Less: Variable cost
Plastic bottle cost	2	50,000
Chemicals	6	1,50,000
Total Variable costs		2,00,000
Contribution margin		2,00,000
Less: Total fixed costs		80,000
Profit for the year		1,20,000

1. The number of units sold to make a profit of $160000 has been shown below.

No. of units to be sold = (Fixed cost + Total required profit) / contribution per unit

= (80000 + 160000) / 8

= 30000 units

These changes are going to be good for Freshiana as this will result in increasing the overall profits, bringing down the break-even point considerably and bringing in economies of scale for the firm (Belton, 2017). However, some of the concerns that the company should consider before raising the selling prices is that whether the product would be acceptable by the customer and competitive enough in the market considering the prices by competitors, what is it that the company is providing extra for charging the premium prices, whether the increase in selling prices impact the overall sales volume, etc.

QUESTION 3: BUDGETING

The purchase budget for RSPCA for bags of pet food for the second quarter of this year and show cash payments for the months of April, May and June has been shown below.

RSPCA Pet Shop
Purchase Budget
for 2nd quarter of the year
Particulars	March	April	May	June	July
Estimated Sales		2400	2800	3000	3300
Add: Required Closing Stock of FG	240	280	300	330
Total number of units required for the month		2680	3100	3330
Less: Opening stock of FG		240	280	300	330
Purchases required during the month		2440	2820	3030
Cost per bag	12	12	12	12	12
Cash Payments		26340	29280	33840	36360

References

Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp. 411-431.

Arnott, D., Lizama, F. & Song, Y., 2017. Patterns of business intelligence systems use in organizations. Decision Support Systems, Volume 97, pp. 58-68.

Baiden, J. E., June 2011. The 5 C’s of Credit in the Lending Industry. SSRN Electronic Journal , p. 1.

Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat International ltd.

Choy, Y. K., 2018. Cost-benefit Analysis, Values, Wellbeing and Ethics: An Indigenous Worldview Analysis. Ecological Economics, 3(1), p. 145.

Grenier, J., 2017. Encouraging Professional Skepticism in the Industry Specialization Era. Journal of Business Ethics, 142(2), pp. 241-256.

Herciu, M., 2017. Financing Small Businesses: From Venture Capital to Crowdfunding.  Studies in Business & Economics, 12(2), p. 63–69.

Jefferson, M., 2017. Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland. Technological Forecasting and Social Change, pp. 353-354.

Kew, J. & Stredwick, J., 2017. Business Environment: Managing in a Strategic Context. 2nd ed. London: Chartered Institute of Personnel and Development.

Linden, B. & Freeman, R., 2017. Profit and Other Values: Thick Evaluation in Decision Making. Business Ethics Quarterly, 27(3), pp. 353-379.

Simona Alfiero, A. B., November 2017. Street food and innovation: the food truck phenomenon. British Food Journal 119(11), p. 1.

Sithole, S., Chandler, P., Abeysekera, I. & Paas, F., 2017. Benefits of guided self-management of attention on learning accounting. Journal of Educational Psychology, 109(2), p. 220.

Trieu, V., 2017. Getting value from Business Intelligence systems: A review and research agenda. Decision Support Systems, 93(1), pp. 111-124.

Visinescu, L., Jones, M. & Sidorova, A., 2017. Improving Decision Quality: The Role of Business Intelligence. Journal of Computer Information Systems, 57(1), pp. 58-66.

1. The basic rule of accounting is that Assets will always be equal to sum of liabilities and owner’s equity. Now, how does it work. As per the golden rule of accounting, there are 3 types of accounts – namely personal account, real account and nominal account.

For personal account, the rule is to debit the receiver of benefits, credit the giver of benefits. For example, the debtors and the creditors.

For real accounts, the rule debit what comes in and credit what goes out. The example of these type of accounts will be all the tangible accounts like fixed assets, inventory, cash, bank, etc.

Lastly, for nominal accounts, the rule is debit the expenses and the losses and credit the gains and incomes. For example, rent, sales, cost of purchases, taxes, loss/gain on sale of fixed asset, etc. (Bromwich & Scapens, 2016)

All the accounts will fall under the scope of these 3 types of accounts and then it is to be determined what is to be debited and what is to be credited and the total of debit should always match the total of credits (Fay & Negangard, 2017).

Here in the given case, in each of the below line items, it is proved that assets = liabilities + owner’s equity.

ASSETS                            = LIABILITIES                          +              OWNERS’S EQUITY

DateJan.	Cash	Office Fittings	Inventory	Office Supplies	. GST Paid	Office Eqpmnt.	Accnts. Payble	Notes Payable	GST Recvd.	Capital	Rev.	Exp.
1	23000									23000
3	-21450			19500	1950
5					70		770					-700
12	-1300				300	3000		2000
15	-385						-385
18	-7700		7000		700
28	440					-400			40
30	990		-500						90		900	-500
31	-440				40							-400
31					12		132					-120
31	-600									-600
Balance	-7445	0	6500	19500	3072	2600	517	2000	130	22400	900	-1720

Here in the first equation, the capital is introduced in business in the form of cash and hence one side, cash increases (asset) and on the other side of equation, capital increases (owner’s equity). Similarly in second equation, the office furniture is purchased by paying cash. Here once asset increases and another decreases with the same amount and therefore the net effect on asset side is zero as well as on liabilities side it is zero (ICAEW, 2011). Similarly, for all the transactions covered above, the left hand side (asset) will always be equal to the right hand side (sum of liabilities and owner’s equity) of the equation.

• In case the totals of all the accounts are added, we would find that the total of all the asset balances comes to $24227 (sum of balances of Cash, Office Fittings, Inventory, Office Supplies, GST Paid and Office Equipment) and similarly the total of liabilities and owner’s equity is $24227 (sum of Accounts Payable, Notes Payable, GST Received, Capital, Revenue and Expenses). Now here the revenue and expenses are not balance sheet line items – they are profit and loss account line but the result of the profit and loss accounts which is revenues less expenses, gets added to the capital at the end of the period since it is a part of capital and so it has also been mentioned in the template (Deegan, 2014).

References

Bromwich, M. & Scapens, R., 2016. Management Accounting Research: 25 years on. Management Accounting Research, 31(1), pp. 1-9.

Deegan, C., 2014. Financial Accounting Theory. Australia: McGraw-Hill Education (Australia) Pty Ltd.

Fay, R. & Negangard, E., 2017. Manual journal entry testing : Data analytics and the risk of fraud. Journal of Accounting Education, Volume 38, pp. 37-49.

ICAEW, 2011. Measurement of Financial Reporting. Financial Reporting Faculty, pp. 6-22.