Financial Plan – Happy trip Motel
Capital Requirements and Feasibility Projections
Financial planning of the Happy Trip Motel will focus on the financial standards that are expected to achieve the set business goal. The main focus of the business that will assist in gaining competitive advantage will be lower prices and provision of high quality goods and services. To achieve these two strengths the financial sector will play an important role in ensuring that most funds attained focus on quality improvement and less extravagancy. In that light, the benchmarks of the motel and the financial ratios will focus on cost reduction, profit maximization and lower equity. By so doing the business will attain the best quality and market for the lowest cost possible. For instance, the income statement of the business will portray capital funds as follows: 60% equity financing, 20% partnership financing and 20% loan financing. This means that most of the business capital is attained from the business owner and another 20% from a temporal partnership that the owner accepts. The move is to ensure that the business does not increase its strain though interest attained from external loans which are later likely to reflect on the sale prices. By monitoring capital investment the owner will be able to anticipate that the debt ratio will be 1/5, profit margin will also range between 1/8 of the capital cost. These assumptions are based on the fact that the owner plans a simple business that is quality oriented and one that he can personally finance.
Source of funding
The main source of capital funds will be owner’s personal saving, however a few extra funds will be attained from a temporal partnership that he enters with a friend. In addition, he will get a loan of $2000 which will act as 20% funding of the business. The source of loan will be a small bank in the region, and the choice is based on the banks low interest rate especially on business loans.
Accounting and bookkeeping systems
Accounting and bookkeeping systems are an essential part of the business, this is because it will assist in monitoring the motels areas of strengths as well as in identification of the weak areas. In Happy trip Motel accounting system will include recording of ledgers, maintaining a cashbook and a balance sheet. In addition, a weekly profit and loss account will be maintained to monitor the stability of the business. The bookkeeping system will be done on a daily basis during the opening and closing time of the business and this will call for filling in all related ledgers especially the a purchases and sales accounts.
Financial Evaluation Measures
Constant evaluation just like in other large and small business the motel will embrace frequent financial evaluation technique. To begin with, the owner will monitor that return on investment is attained using a specified period of time. For instance it is expected that after the first year of operation the business will have attained enough sales revenue to counter any capital investment. Evaluation will also be on the basis of inventory turnover, since the business maintains detailed sales and purchases inventory records, it will be easy to ensure that target customer level does not depreciate without management attention. In addition, regular monitoring of customer satisfaction level will be another area to evaluate business performance. Bottom line, well structured and continuous financial planning will not only assist Happy trip Motel provide low prices and high quality but will guarantee competitive advantage.