The Finances objectives of Siccus Solutions
Financial objectives
The take-over of Siccus Solutions has given a great opportunity to generate a huge percentage of revenue.
The key financial objectives are as follows:
- Buying quality raw materials for as cheap as possible without compromising the integrity of the material bought.
- Reduce the amount of energy consumption used by the previous business owner (go green and/or invest in energy efficient equipment.
- Reach target profit margins of 40% above the previous business owner.
- Reduce the amount of wastage within the production line (better trained workers or a supervisor to overlook the operation).
- Increase the productivity rate of the workers (potential incentives, bonuses, etc.)
Finance required
Based on the start-up cost given on Table 1, the initial amount of money needed to over-take the business is $545,000. Since there are four business partners, the money saved up by these four individuals have made it unnecessary to borrow or loan any money from banks, investors, etc. However, depending on the success of the business money may need to be borrowed but for the first year of running the business it is not necessary to obtain any more money. These four business men are putting all their savings into this business so the urgency in a successful business is a must.
Assumptions
The financial tables on the subsequent pages are based on the assumptions listed below:
- Siccus Solutions will undergo a take-over rather than starting-up a whole new business.
- Due to the continuation of the previous business, all other start-up costs are assumed or are not included in the start-up cost.
- Assumed the remaining inventory from the company will be included in the take-over.
- Expected number of employees at a given year is 15.
- An average of $18/hour was assumed for the employee wages (taking note that there is a variance in salary between the office employees and the factory workers.
- All figures are approximations and are a brief preview of the expected running cost per year.
- New suppliers were brought in to the company (previous suppliers were replaced).
- There is a 3% increase in rates per year for the employee wages.
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