Creating Dynamic Entrepreneurial Capabilities MyAssignmenthelp.com

Question: Discuss about the Creating Dynamic Entrepreneurial Capabilities. Answer: Introduction Generally, the main aim of this research paper is to create and develop a formal business plan to start up a new business. Moreover, it is also important to know that, a business plan is a well written description of the business's future that explains business strategies. Additionally, in the context of this research paper, Funky Caf is selected as a business unit that would provide different products and services to their customers. The main products and services of the company would include Take away coffee, Sandwich; Take away coffee bean and Cheeseburgers. Along with this, the business structure of the new startup company would be sole proprietorship merchandising firm. In addition to this, the new business would be treated as retail firm. Moreover, the size of the retail business would be 12.5 to 17 metres so that more than 50 customers can stay in Caf at once. At the same time, the new business firm would be an organization of restaurant industry. In the context of selected business, the legal form of the business would be sole proprietorship. This legal form is chosen because it is one of the simplest, common, and flexible as compare to other form of business. Moreover, the legal form would provide a complete managerial control to the owner of the firm. Additionally, the owner could take all the specific decisions regarding the business operations and functions (Crawford, 2014). At the same time, all the kinds of financial obligations related to the business would be done by the owner of the company. Apart from this, this legal form of business would also provide accountability and flexibility to the owner of business because he/she has to pay fewer taxes. This form is also characterized with the fewer legal controls so this legal form of business selected for the Funky Caf business (Fontana, 2010). Different Financing Options to Set Up business In the current time, there are several types of financing options are available that can be used by an individual or group to start up a new company. For example, small business loans from the Online lending companies, loan from Angel investors, venture capitalists, crowd-funding, own capital/funds, and loans from commercial banks /financial institutions etc are the major financing options that could be used by an individual to set up a new business. But, in order to set up Funky Caf business, own capital of $50,000 would be used. On the other hand, approximate, $100,000 would be borrowed by the bank as small business loan for the five years in order to fulfill the current financial needs. Finance from the bank would be more cost effective than others. For case, today, there are several banking organizations that provide short and long term business loans at the less interest rate, so the bank business loan financing option would be a most appropriate decision. Moreover, the other fi nancing options are more costly and complicate that requires more paper work (Jones, Macpherson, and Jayawarna, 2013). Accounting would bring innovation, flexibility, accountability, creditability within the entire business process and systems. For example, the financial accounting would help Funky Caf in summarizing all the financial activities and tasks in the business in the different financial statements. Moreover, the management accounting would play a key role in executing the business functions (Planning, Organizing, Coordinating, Motivating, and Controlling) properly. At the same time, accounting would help the business in improving the current process by bringing innovation and development. Accounting would also provide specific information to the user of company such as stakeholder. In the same way, accounting would offer a wide range of tangible and intangible benefits to the company (Rogerson, 2011). Usefulness of Financial Statement Analysis for the Management of the Business The new startup firm would use different types of financial statement analysis including balance sheet, income statement, cash-flow statement, profit loss statement, and statement of changes in equity in order to analyze the financial position of the company. In addition to this, the financial statement analysis would be more important for the management of newly Startup Company to take specific financial decisions. For case, with the help of Financial Statement Analysis, the management of the new business would be able to make investment decisions, develop long term plans and strategies for the total success of the firm (O'Regan, 2015). The following table suggests the property plant and Equipment Assets for the new start-up business such as: Equipment Inventory item Others Assets Coffee grinder Coffee Bags Refrigerator Coffee maker Sugar Food case Expresso Machine Fresh Bread Shelves Microwave Cups Telephone Instruments Toasters Disposal Utensil rack Dishwasher Water glass Laptops/Computers Blender Water cooler Office furniture (Source: Ryan, 2004). Suitable Depreciation Method According to the nature of business, Funky Caf would adopt Straight-Line Depreciation method. In addition to this, it should also be noted down that, it is one of the most common, simple, and flexible method of depreciation. With the help of this method, depreciation of assets can be easily and effectively calculated and this method offer more flexibility to the business firms. As per this method of depreciation, the new start-up company would be able to charge a same amount of depreciation expense every accounting period throughout an asset's useful life. Moreover, with the help of this method, the new organization would be able to depreciate net scrap value or zero value. Moreover, the company would also not require to hires any special accounting staff or professional to calculate the deprecation. It would save costs and time of the company and improve the profitability. So, it is most cost effective as compare to other method of Depreciation (Stickney, Weil, Schipper, and Francis , 2009). Unearned revenue is defined as deferred income or deferred revenue that shows revenues are already collected but not yet earned. There are several examples of unearned revenue. For case, if Funky Caf introduces membership programs for their customer for the sum of $600 for one year, the company would get this money in 12th months but it would be unearned revenue for the company (Warren, and Reeve, 2006). Generally, prepaid expenses are the expense that are paid by a company in advance to a third party but which has not yet been incurred. In addition to this, several types of prepaid expenses may occur for the Funky Caf such as: Prepaid Insurance, Prepaid Tax, Prepaid Rent and Prepaid Legal Fees. Additionally, if the new business paid their insurance premium in advance for multiple future periods, it would be prepaid expense for the Funky Caf (Warren, Reeve, and Duchac, 2016). For case, if the Funky Caf would pay rent in advance to the lease property owner, it would be unearned revenu e. For example, if Funky Caf would take magazine subscription and the company have to pay for the two years in the advance. But, the Caf would not actually get all the magazines at a time. It shows that, the company would get one magazine in a month until the end of the year. This would be treated as Prepaid Expense for the new startup company (Warren, and Reeve, 2006). The following is the list of the items that a bank would be interested in making of decision to grant business loan such as: Nature of Business Character of the Borrower Loan Documentation Collateral (Wewege, 2017). Credit History Cash Flow History and Projections for the Business Existing Relationships with the Bank Individual financial strength Strengths of Business plan (Abrams, 2003). Capacity to repay the loan amount Knowledge of current business Future business opportunities As it Funky Caf would be an independent and sole proprietorship organization so all the decisions would be taken by the business owners. In addition to this, it is assume that, the business owner of the Funky Caf would retain the profit into the business in order to expand the business. Moreover, all the profits earned during the years would be invested in the use of new instruments, technologies, assets, and tools to grow and expand the business in the future. It is because it is a new start up business firm so the owner should expand the business operations and functions to earn more profit (McKeever, 2016). Conclusion On the basis of above discussion, it can be concluded that, it is essential and significant to develop and create a formal business plan to start up a new business because it provides guidelines to the business owner what should be done and how should be done. On the other hand, a business plan should also provide a clear picture about the overall business strategies, methods and techniques that would be used in the business in the future. Finally, it can be concluded that, a business plan should provide accurate, appropriate and meaningful information. References Abrams, R.M. (2003). The Successful Business Plan: Secrets Strategies. USA: The Planning Shop. Crawford, T. (2014). Business and Legal Forms for Fine Artists. USA: Skyhorse Publishing Company, Incorporated. Fontana, P.K. (2010). Or Corporation. USA: Atlantic Publishing Company. Jones, O., Macpherson, A., and Jayawarna, D. (2013). Resourcing the Start-Up Business: Creating Dynamic Entrepreneurial Learning Capabilities. UK: Routledge. McKeever, M. (2016). How to Write a Business Plan. USA: Nolo. O'Regan, P. (2015). Financial Information Analysis: The role of accounting information in modern society. UK: Routledge. Rogerson, A. (2011). Successfully Start Your Business. UK: Rogerson Business Services. Ryan, B. (2004). Finance and Accounting for Business. USA: Cengage Learning EMEA. Stickney, C.P., Weil, R. L., Schipper, K., and Francis, J. (2009). 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