When the business has been running for one year, we hope that we will be able to pay all the workers pay including a small salary for us, and to have broken even. Therefore we can the make profit from here onwards. I have calculated that if we sell 1000 flat packed furniture we will have made enough money to carry out all are aims.
Any money left over from good sales will be halved. One half being put into a bank, ready for investment in further years.The second half will be used to make the company better know to create more sales, for example a advertisement for the television and/or a billboard campaign. Year Two We hope to sell more of our product than last year, because the company will be recognised in a wider area. We hope this will lead to sales of about 1700. This will then give us profit of 14,000 working on the average price of i20 per item of furniture. This 14,000 will be but into a bank or building society depending on which will give use the most reward at the time.This money will be saved up unless it is needed to pay losses.
This should give a bit of a cushion to fall back onto is there is an economic slow down. If we sell more furniture than expected it will again be halved, with one half used to give a bonus to the workers to keep them happy and working hard. The other half will go into expanding. We could open another outlet in another city or town.
If there is not enough money to open an outlet it will be added into the savings with the profit. Year ThreeThis year we hope to sell about the same of furniture, amount if there was not enough money to open a new outlet last year. If there was enough money to open another outlet we will hope to sell 2400 items. This will mean we have broken even on the new outlet. If we exceed this number the money will be saved with the other profit from last year. If we make losses the money already saved will hopefully cover the loss.
Year Four This year we hope to sell the same amount of items as we did last year and hopefully make a profit and save the money. Year FiveIf we have done well during the last five years, we hope to have substantial amount money saved, so that we could expand into a new sector of the furniture industry and still have some money left over to cover for the unexpected. The industry that we are thinking of entering into is the slightly higher class of handmade furniture. If this is not possible to do we will have to wait a few years until we can offered to expand the company, however if we think we can do well in this market at this time we could always introduce a active partner or a sleeping partner. We will only do this if we are sure that we can break even within a year.