Business Plan


Ganga Mineral Water Plant
Bhupendra singh of section -B


MBA Entrepreneurship Assignment

Faculty of Management


2.1 Background 2.2 Approach to the Plan 2.3 Mission Statement 2.4 Planned results


3.2 Location

3.3 Demographics 3.4 Infrastructur

3.6 Retail provision

4.1 Structure of the business

5.1 Strengths 5.2 Weaknesses 5.3 Opportunities 5.4 Threats

6.1 Management Strength 6.2 Key Success Factors

7.1 Risk Management

8.1 Overview 8.2 Promotional strategy 8.3 Distribution strategy: 8.4 Pricing Strategy: 8.5 Market Definition 8.6 Market Size 8.7 Main Competitors 8.8 Products 8.9 Marketing strategies

9.1 Production

10.1 Profit Target 10.2 The need for profit target 10.3 Key factors on which profit performance depends

11.1 Operating Results 11.2 Operating Results 11.3 Capital Expenditure 11.4 Business Ratios 11.5 Cash flow

The Ganga mineral water plant , that will be opened recently in the µMarketplace¶ shopping centre at JEWAR NOIDA. The plant has a strong management and entrepreneurial vision to make the venture a success. The plant offers above average quality water GMWP is an exclusive small business enterprise, ventured by a dynamic entrepreneur, whose core competency has been in the field of fmcg sect The Marketplace concept, developed by my friend, has become well known nationally for its population transportatio.This strategic location of the plant, is an ideal catchment area, and assures the free flow of customers for its exposure and use Wide range of products ³water to soda´, and a pleasant atmosphere and very comfortable taste arrangemet to consume, especially after the busy and exhaustive routine. Products are customs-designed to buyers taste, firms goals initially are set to satisfy the customers. Owners philosophy and culture, to fulfil the customers demand at reasonable price, is a competitive edge to command a good reputation. The plant management has developed its strategic planning to achieve, quality of product and services , to focus on marketing segments and to utilise the working capital in its right direction. The Plant assets build on its customers, plant capacity, reputation image and equipment involve in the shopping.The plant has the negative cash flow in its first month operation, due to the initial stage of the business, but the management is hoping the positive cash flow in its future operation Ganga water plant is fully financed by a bank loan at a competitive variable loan of 8.95%. The loan was utilised for financing : furniture and fixtures, high tech machines, and for day to day working capital requirements. The entrepreneurs did not utilise any of his/her personal finances in the business. It is the intention of the entrepreneurs to pay off the bank loan within eight years if not earlier if actual and projections match. There are a number of prevailing issues that should be considered in the formative period of the water plant operations. These should be closely monitored and acted upon to allow the business to consolidate and become successful. These include;
y y y y

Careful attention to Human Resource Management, especially as employees are a significant cost and the business relies on providing quality service. Continuous environmental scanning of the macro and micro environmental factor Continual monitoring of the adjacent competitor in the shopping centre Focus on methods of improving cash flow into the business

2. SUMMARY OF PLAN 2.1 Background
This plan provides an assessment of the strategy and operations for. The plan will help shape the future of the business and contribute to long term viability and growth, it en sures effective coordinated use of resources, minimises costly mistakes and failures, enables managers to anticipate and identify potential pitfalls and also identifies company strengths and weaknesses in relation to competitors. The GMWP is a new enterprise that has recently opened within a express highway at jewar noida Uttar pradesh India.

2.2 Approach to the Plan
The approach to the plan was to use a model that analyses the various influences that the GMWP operates within. These are indicated in the following diagram and explored upon in more detail. Figure 1 Approach to the Business Plan

Efficiencies Labour, Rent etc

Equity Premises Fair Lease, Personel Mgmt, Staff Relations, Supplier Relations, Customer Service, etc

Ganga mineral water plant

ROI How will it make the business prosper?

Unique Competitive Advantages

2.3 Mission Statement
This mission statement has been developed to reveal the long term vision of the organisation in terms of what it wants to be and who it wants to serve. The business vision is to focus on our future goals and objectives, and to achieve them we will concentrate on strategic planning to achieve them in short term and in long term period. The business vision is also to become a leader in mineral water industry around the Noida area through our affinity with customers in the chosen market. The market strategy is to provide wide range of quality products on daily basis to satisfy our customers needs, and promises to demonstrate consistently the superior service and quality to each customer. The plant will strive to develop competitive advantage to the value of our product and services, and to charge current market prices to our products and services. The objectives are to achieve a high standard of performance and quality of product, and to provide a hygienic, safe and clean environment to our customers. The plant will build a good team, working through mutual understanding, and respecting the aspirations of each employee, to empower them in decision making, in regard to provide excellent services. The plant will encourage and reward a high standard of performance from employees.

The business is 100% on debt financing, and will focus more on increasing the sales volume and to reduce the burden of debt-financing, In doing this the cafe will establish market position, through publicity measures and good reputation. The plant will support environmental and community objectives, and participate in community services, through musical entertainment once a month in the premises. The long term goal is to thrive in the business, being able to pass the venture to the next generation.

2.3.1 The culture
The plant embraces developing the best in our services, respecting the aspirations of each employee, to empower them in decision making in regard to provide good customer service. The culture includes building worthy team work through mutual understanding and maintaining the highest standard of service whilst supporting environmental protection and other community objectives.

2.3.2 The Values
The plant strives to achieve the goals and objectives with equitable means. To focus on customer-needs to serve and cater them in the best possible way to their satisfaction. Simplicity and consistency will be the long term objective to gain unique competitive advantage. The cafe is optimistic in the investments in business being capable of meeting the criteria.

2.3.3 The Goals
The goals include being the best on measures of customers perception maintaining the profitability in future, and to grow, develop, and seek geographic expansion to attract our customers on our long term plans. The goals include making a respectable living and prosperous future of our business.

2.4 Planned results 2.4.1 Sales
The RCC has planned sales of 10000ltrs per day

2.4.2 Cash flow
Key features of planned financial position at of year - geared towards relationship between shareholders funds and outside borrowing¶s

2.4.3 Income & Expenditure Statement
The income and expenditure statement has been worked out with projected sales a contingency plan has also been made with projected sales in either case the venture is still profitable and the income more than matches the expenses leaving a surplus.

The Plant is located in jewar, which is a north eastern suburb of Uttar pradesh located 60 kilometres from the NOIDA , 30 Kilometres from PALWAL and 39 Kilometres from ALIGARH. Currently the business has plan of employs 2 full-time and 4 part-time personnel. The area is the excellent populated and demanding, servicing the needs of a growing population. The area include250 shopsand will include a approximately 48 specialty retailers,10,000 houses.

3.2 Demographics
The total population in a 10 kilometres primary catchment area IS 2,22,000 people. 67% of these people are habitual of drinking mineral water. Most area is undiscovered by such type of business there.

3.3 Infrastructure
The road infrastructure throughout the Region, although extensive, is congested and needs considerable upgrading, especially in the khair region. The pressures are typified by traffic congestion, poor bus networks, high dependency on private cars, and poor access to interstate rail . The lack of adequate water and sewerage to support the growth needs in some sub-regions will cap the rate of growth in the region.

3.4 Tourism Structures and Processes
The NWS Region is being presented with numerous tourism opportunities: Sydney 2000 Olympics; world heritage listing of the Blue Mountains National Parks by the UN; staggering growth rates in international and national visitors seeking authentic eco-tourism experiences in the Region's unique and vast National Parks and forests; growth in farm tourism; and National Celebrations during the year of the Centenary of Federation in 2001. These events will underpin continued and expanded growth in this sector. The tourist dollar is important to the Region and, as a consumer of tourism products and services, the modern tourist is becoming very discerning. Not only do average tourists travel more and further to reach quality and authentic experiences, but they have more disposable income and 'free' time to enjoy their travelling. To ensure that the Region continues to cater for such discerning customers, it must ensure that the soft infrastructure so essential for support of tourism products is well structured to meet customer expectations and that the tourism processes are meeting best practice and world -class standards. The philosophy of the restaurant will be welcomed by the anticipated increase in tourism as identified by NWSRDO, (1997).

3.5 Retail provision
The traditional retail provision in Richmond was based on the strip retail along the main road. The Richmond marketplace will provide a much needed modern retail facility, as well as a real community focus, for the expanding population of this well-established but under-serviced area. Refer Appendix 1. Richmond Income Distribution.

4. BUSINESS STRUCTURE AND ORGANISATION 4.1.1 Matching Organisation Structure to Strategy
Every firm¶s internal organisation has different pattern of structure to employ for each and every strategy. Invariably it is grounded on own set of key success factors and critical tasks. Eventually it is the part of the top management to design the internal organisation structure around the key success factors and critical tasks to execute the strategy. In this case the following points serve as a useful hints: y detailed and clear job description will enable each employee to perform their task efficiently y flat structure (not very vertical) for the flow of easy communication and information y flexibility for the change, as when required y employee empowerment will enable the staffs to take quick decision and suitable action

4.1.2 Human Resource Management
Every industry unique in its own way. Every technological process and each type of service does present different problems to its HR managers. In the case of hotel and catering industry, uniqueness is lot more conspicuous. With all those uniforms, strange sounding job titles, tipping, and unsocial hours, not to mention the high levels of entrepreneurship and labour mobility. The unsocial hours factors alone suggests that at least as mineral water management is out of the ordinary. Mineral water industry like any other business, have to make profits and maintain cash flow and, therefore, can be run on business principles. Unlike usual and routine manufacturing industry, managers in these types of service industry requires to anticipate, adjust or react in a time span for the following features: y constant fluctuations in short-term customer demand Business fluctuates by the week, the day, the hour. For the worker, this means is that his or her job has an irregular work flow. For the business, this means a problem of adjusting labour supply to demand and hence the use of part time and casual labour and a pay system which alters earnings by customer demand, ie. tipping or some appropriate surrogate.

y The demand for labour is direct In the mineral water industry labour is demanded for what it can produce, people are not machine minders. This means that productivity is based on personal ability and effort. Consequently, there are great individual differences between worker¶s output. Concepts of productivity are therefore, about judgements of human capacity. y The subjective nature of standards Concepts like µhospitality¶, µservice¶, µcleanliness¶ are all matters of subjective judgement. This means that every worker¶s output is judged subjectively. This has the effect of making the actual relationships between managers and workers crucial to standards. y Transferability of skills The kind of skills that workers in the mineral water industry possess are generally confined to that industry. This makes for an efficient labour market between the various sectors of the industry. This, together with the relatively unskilled nature of some of the work, encourages the high labour mobility pattern which is often such a conspicuous feature of the industry.1

4.1.3 Organisational commitment
Commitment is a conscious affirmation of loyalty to something or somebody. Organisational commitment is to draw a picture of the behaviour that is likely to be found in an employee who is specifically committed to an organisation. Besides the obvious likelihood of punctuality, reliability and cooperativeness, three deeper aspects of commitment may be present and visible. These are: 1. An emotional attachment to the aims and values of the organisation. This attachment is often expressed through pride in the name of the company. 2. A willingness that goes beyond normative expectations. 3. Being prepared to push instrumentality into the background In a sense, commitment has one advantage for management over motivation, in that while motivation has to be demonstrated to be acknowledged, commitment actually has to be openly declared in some way by both parties. Commitment implies going public.

4.1.4 Empowerment
It is a new form of organisational behaviour and structure which has come about because of a perceived need for organisational responsiveness and which is itself the mechanism that enables organisations to be responsive. Empowerment is incorporating into an employee¶s role the authority and means to be responsive to customer requirements. It enables the employees to be responsive by ensuring that the necessary rules of order within the organisation do not interfere with the performance of a task which the customer requires.

5. SWOT ANALYSIS 5.1 Strengths 5.1.1 Work force
y y

The strength of the work force is underpinned by the strong management and ownership of the plant Local staff who are familiar to local community

5.1.2 Market share

It is very early in the life of the GMWP, but initial indications and sales show that the business will achieve significant market share.

5.1.3 Reputation

Although the plant has to be recently opened it has already assumed a good reputation, significantly due to the reputation of the manager who is known locally as a community player.

5.1.4 Management Skills
y y

There prevails confident management skills with entrepreneurial spirit, having a vision of where he wants to get to The owner had undertaken a feasibility study, including environmental analysis

5.1.5 Quality of Service
y y y

Guests welcomed and receive personalised Quality is emphasised and delivered in the plant products and services. Quality of water - fresh and refreshing to order, quality water

5.1.6 Macro Locational Factors
There are a number of strengths in the physical location including; y The only mineral water plant in jewar y Close to university - population of 8,000 y Close to palwal and faridabad3000 employees y Located in identified strategic growth area

5.1.7 Micro Locational Factors
y y y y

Location in community based area Ergonomic environment for successful retailing Friendly atmosphere and bright building design Well serviced by public transport

5.1.8 Product/Delivery
y y y

The water is fresh and passed by iso9001 Casual and relaxed atmospher Competitive pricing

5.1.9 Infrastructure
y y

The GMWP is a new premise in a modern recently opened . New equipment installed, which is well laid out

5.1.10 Advertising

Promotional activity by shopping centre including on-going marketing programme

5.2 Weaknesses 5.2.1 Facilities
Initial start up problems due to centre not being open . Short term hitch that does not appear to have influenced business. Limited in its location within the area, in terms of supply.

5.2.2 Undercapitalised
The plant is undercapitalised

5.2.3 Workforce
Staffing structure - new to everyone y Poor work culture, especially from drinking mineral water in area. y Little motivation/initiative in work force - have to be told minute details/hand holding y The employees have not looked after the assets

5.2.4 Customer relations
Customer relations sometime suffer due to mispromotion .

5.2.5 Production methods
Filtered by reverse osmossis process. Production fluctuation Not industrialised procedures/processes

5.2.6 Location
Away from populated area.

5.2.7 Variability
Limited months of business - ie peaks at summers simultaneous production and consumption.

5.2.8 Restricted Hours
Being in a mineral water the plant is faced restricted in winters

5.3 Opportunities 5.3.1 New and changing customer needs
Distinctive image strategy- the approach being unique and distinctive in way that are highly visible to customers. This can take a variety of forms depending to the changing environment and to suit the needs of the customers: lower prices achieved through cost reductions, prestige quality at a good price, superior customer services, unique product attributes, or unusually creative and novel way of advertising.

5.3.2 Changing economic factors

Better road system

5.3.3 Development of new products or services
y y y y

Soda water Home delivery Different types of packing Take aways

5.3.4 New technologies 5.3.5 Government policies 5.3.6 Weak competition 5.3.7 Capacity:
5000 ltrs per day

5.3.8 Longer Hours

Extending hours - could open till late evening in line with the trading hours of area

5.3.9 Location

Unique selling proposition.

5.3.10 Product Standardisation

Standardise product and service by restricted by modes. To adopt ³Ours-is-better-than-theirs´ strategy, by using a combination of focus-differentiation strategy keyed to product quality. Sales and marketing efforts are focused on the individual customer basis, to suit their requirements and taste, to develop the superiority perception in customer¶s view.

5.3.11 Takeaway Prospects

Opportunity of sell on basic areas

5.3.12 Catering opportunities
y y

Offices within the areas University

5.3.13 Indoor functions
eg. birthdays, Office luncheon, marriages

5.3.14 BYO - opportunity.

Possible future BYO opportunity attracting evening customers

5.3.15 Discounting prospects

Market penetration through offer discounts eg y 10% discount to UWS students y Discount to pensioners

5.3.16 Regional Demographics
Neighbouring community, university and area besides - an assessment of the our potential customers - find their needs.

5.3.17 New communications infrastructure
Proposed M2 freeway will attract travellers, change in gravity model

5.4 Threats 5.4.1 Competitors
Adjacent Takeaway plantsetc water cheaper and easier. Loyalty of community . Future tenants - Could be new tenants that come in.

5.4.2 Pricing
Prices will be cheap.

5.4.3 Special Offers 5.4.4 Discounting
Not applicable

5.4.5 Promotions 5.4.6 Strategic Alliancesr 5.4.7 Product enhancement 5.4.8 Legal Issues
y y y y

Legislation - national and state by - laws (local) Contract Law Other legal issues

5.4.9 Customer preferences and trends
y y

Novelty value of centre. Customers may be trying once and going elsewhere There is a reported return to strip, ³High Street¶ shopping away from noisy and in personal shopping centres

5.4.10 Economic factors 5.4.11 Shortage of resources - staff
Unskilled staff

5.4.12 Infrastructure changes

6. UNIQUE COMPETITIVE A DVANTAGE 6.1 Management Strength
The management team plays an important role, in the failure or success of the business future. The management strength is also depend on its employees to facilitate the process of achieve business goals and objectives in future. The plant has developed a good culture within the organisation that the management and employees work side by side to understand the needs of the customers, and developed a good communication system among the management, employees and customers. The incentives scheme on good performance would be helpful, to give motivation to drive and sense of achieving business goals and objectives. The whole team would be responsible to problem solving, and to maintain plant image, also decision making in certain areas and speciality. Increasingly competitive environment the team would seek the winning strategies and review them.

6.2 Key Success Factors
Management strength lies in the closely knit family members and their commitment, and dedication of all the staffs, will prove to be a good team work, to focus on the customer needs and demand. With the flexible and flat structure of the management and mutual understanding amongst the team will ensure the changes required to suit and adapt in any demanding circumstances of the Plant Strong leader associated with numerous other qualities, to achieve change and sense and desires of others for the firms effectiveness. Persuasion is a word which conceals an enormous amount of effort, which not only clarifies the risks, but also ensure to create credibility.
y y y y y y y y y y

Quality of product and services. Discount savings available to the employees. Moderate capital investment. Services and product have comparative advantage Recognition and good image. Strong customer base relationship. Good management team. Quality of team-work and performance. Product not re-cycled. Influential marketing.

Risk, says Rescher (1983), is the chancing of a negative outcome.To measure risk we must accordingly measure both of its defining components, the chance and the negativity. Lack of perception of risks contributes to unexpected systemic failures .It is therefore essential for a business plan to clearly make an assessment of primary and secondary risks ..The major risks in this business are Primary risks y Financial risk; -investment risks; mortaging the only financial asset -owner µs labour -return Secondary Risks y Risk relating to environment - Health hazards being food industry - Fire -complying with legal stipulations -security risks y Risk Dealing with organizational issues -handling human resources -administrative problems - availability of devoted human resource y Psychological Factors y Uncertainties The management perceives these risks and is well aware of these risks .They have the capability and fortitude to tackle various risks facing the plant.

7.1 Risk Management
The Management of GMWP has the Entrepreneurial ability to taking the risk and foresee it. In future operation management has defined clearly the strategy to analyse, assess and manage the all types of risks.

In order to maximise the company's present net worth and make satisfactory profit the estimated turnover looks attractive but in order they provide an orderly and agreed basis on which to conduct its business in an ever changing competitive market environment any business should have its marke ting objectives stated. For GMWP to have successful life cycle could state its marketing objectives as follows:y Market research - survey questionnaire . y Create awareness of the firm's service among potential users y Build the firm's image among existing and potential users . y Advertising by various methods; y local papers, community radio y direct mail y discount vouchers and deals y advertising in area.

8.2 Promotional strategy
Build awareness and interest in the service product and the service organisation.

Differentiate the service offer and the service organisation from competitors. Build and maintain the overall image and reputation of the service organisation. Promotional tools via : y Direct mail y Signage in front of the shop y Local paper advertising. y Allowing the display of young budding artists from local university thus attracting university

8.3 Distribution strategy:
Due to the nature of the product a great awareness is to be created locally and nearby suburbs of the existence of the cafe and accessibility.

8.4 Pricing Strategy:
Price level - maintain price level in all segments at 10% higher than competitors to reinforce the quality image with the quality set up of the cafe and the seating provisions which are not available elsewhere. This gives the cafe exclusiveness and justification of the higher or premium price ran ge. This is based on perceived value in pricing as well as psychological pricing reinforcing "quality". In addition focus on standard price and takeaway price which is cheaper through a cash system with no credit provision

8.5 Market Definition
Area has an expanding population which is well-established but under serviced. Cornucopia will seek to identify the needs of the customers who are: Present Customers? Potential Customers?
y y

People who come to area 500-600 people who work in area(Other shops)

Who are majors customers? What are their buying motives? Do they have common characteristics?

8.6 Market Size 8.7 Main Competitors
What is their share? How will it be counteracted? ie how will the cafe protect its market share Customer Needs Do they buy on price? Sometimes yes. Some go on package. Do they buy on service? Yes Do they buy on quality? What is their price range? 6-8

What services do you provide? Wide range from light to heavy meals

8.8 Products

Product advantages Design Pricing Reliability Versatility Support/Service Market testing Innovation Time to produce

8.9 Marketing strategies 8.9.1 Product features 8.9.2 Level of Customer Service
Be active part of community of area eg festivals provide free at places

8.9.3 Product Quality 8.9.4 Price - which must be profitable 8.9.5 Pricing Strategy:
Price level - maintain price level in all segments at 10% higher than competitors to reinforce the quality image with the quality set up of the plant and the seating provisions which are not available elsewhere. This gives the plant exclusiveness and justification of the higher or premium price range. This is based on perceived value in pricing as well as psychological pricing reinforcing "quality". Pricing: Major focus on standard price and takeaway price which is cheaper. Cash system no credit provision

8.9.6 Action and implementation program
Evaluation and control. After implementing the above action program which covers the different aspects of marketing and which major concerns this particular type of business a through evaluation should be done in the time period. On the results attained further action program should be prepared. Competitor analysis . Where competition is strong and intense . Where competition is promoting heavily . Where competition is launching new services. List all the competitors and update information for all the competitors.

Promotional strategy: - build awareness and interest in the service product and the service organisation. Differentiate the service offer and the service organisation from competitors: Build and maintain the overall image and reputation of the service organisation. . Promotional tools would be : direct mail leaflet drops - with a feedback coupon Signage in front of the shop Local paper advertising Allowing the display of young budding artists from local university
y Distribution strategy:

Due to the nature of the product a great awareness is to be created locally and nearby suburbs of the existence of the plant and accessibility.

9. STRATEGIES FOR OTHER KEY AREAS 9.1 Production 9.1.1 How to deliver in quality
y y y

The plant provides good quality in water preparation and presentation Casual and relaxed atmosphere Through reverse osmosis

9.1.2 Relationship with suppliers
Currently developing an exclusive network and range of known suppliers from the previous experience and clientele. Building up of good rapport amonst the suppliers, by regular and promt payment. never to give a chance for them to develop a bit of disappointments.

9.1.3 Leasing arrangements 9.1.4 Product Monitoring
Monitor number of product sold per day to obtain break even?

10. PROFIT PERFORMANCE 10.1 Profit Target
The profit target is to meet all costs

10.1.1 Planned level of profit for the year 10.1.2 Comparison of target to actual profit 10.2 The need for profit target
y y y y y

To meet interest and principle payable on loan Payment of income tax Share in the profit for the owners in the business Finance future capital expenses pay back bank loan - the amount borrowed

y y y y y y y

Long term plans Meet loan repayments Pay company tax - don't avoids this ! Remunerate the owners of the business Finance purchase of fixed assets Finance growth in capital terms - stock/debtors Plough profit back into company

10.3 Key factors on which profit performance depends
y y y y y

Customer - being more than able to satisfy customers (good food, service and good atmosphere) Meet the needs of the community - for which extensive market research is being carried out Controlling costs - always being cost conscious and ensuring that actual expenses do not cross budgets Meet the needs No of customers

11. FINANCIAL PROJECTION S 11.1 Operating Results
Notes 1. Interest is payable @ 8.95% on a bank loan of 20,00,000. 2. Advertising - advertises in 3 local newspapers; on radio 2ws and drops brochures t o the local community . 3. Wages currently cover 5/8 employees and there is a move of one of the partners joining the business on a full time basis 4. Telephones 5. GST

11.2 Operating Results 11.3 Capital Expenditure

ITEM Furniture Equipment Stock Fixtures Total

1997 11,000 3,00,000 20,000 1,70,000 50,1000

11.4 Business Ratios 11.4.1 Liquidity Ratio
We have looked at GMWP ability to meet short-term obligations. its financial projections show that it has enough short-term (or current) resources available to meet obligations. We have looked at the current ratio (current assets/current liabilities) and the Acid-test (or quick) ratio (current assets-inventories/current liabilities) and we can safely say that RCC has the ability to meet current liabilities with its most liquid assets.

11.4.2 Return on Investment (ROI)
This ratio relates profits to investments. It is the rate of return on investment. Net Profit/Total Assets As per industry standards a return of 7% is acceptable. gmwp return on investment exceeds industry standards.

11.4.3 Net Present Value 11.4.4 Cost of Capital
The cost capital is the required rate of return that will satisfy all capital providers. The cost of debt (capital) is the required rate of return on investment of the lenders of a company. In GMWP case the lender is the bank, which has loaned money @ 8.95%. RCC`s earnings from the income and expenditure statement clearly shows at the end of the day it makes a profit of over 15%.

11.4.5 Break Even Point
11.4.6 Reward for the risk: The profit The profit incentive is essential part of private enterprise. Adam Smith, the founder of formal economic study, argued that the right to make a profit is the strongest form of business motivation. In an economic sense, profit is the reward that an owner receives for assuming the risks of investing capital in an enterprise. Since the entrepreneur, the person who initiates and organises a business, risks time, money, and effort, some argue that he or she should be allowed to make as large a profit as possible. It is generally agreed that the entrepreneur is entitled to a return on investment, and should enjoy a margin of profit to cover possible losses in future, and a reward for efficiency and ingenuity in management. Profit is not an end in itself; it can be just a beginning. Profit can provide seed money for more products, more plants, more dividends, more tax payments, and more jobs. Profits can advance the well being of everyone--businessmen and entrepreneur, consumers and producers, investors and non-investors.

11.5 Cash flow

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