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Ingonish Beach Company: Business Plan Research Paper

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Updated: Jun 18th, 2020

Executive Summary

The business plan that is presented in this paper corresponds to a proposed beach company, which will provide services and beach merchandise for the individuals who operate from this locality. The proposal for the business covers many areas that are relevant to the business, including the location, environment, the operating environment, and relevant political and social factors. The host of beach activities that the business will provide includes Jet Ski rentals, scuba diving, fishing trips, issuing diving licences, and selling water and beach supplies. The location for the business is the Ingonish Beach, Cape Breton Island, Nova Scotia.

This area was selected based on the serene nature of the beach, the availability of the untapped target market, and the favourable working conditions that guarantee profitability. The business proposal consists of the financial statement for the organisation for the period that it is going to be operational, including the expected performance for the next three years. The result of the proposal indicates that with effective utilisation of the available resources, the business will be profitable in the end. Partners in the business will provide the capital that will be sufficient for the operation of the business. A loan from a favourable organisation will also be obtained for funding the business activities. Any organisation with enough funding is likely to succeed if there is continuous investment into the activities that it undertakes. The profits obtained from the business venture will mostly go into the business activities.

The area in which the business is located has no other companies that operate in the same line of trade. The absence of competition allows the company to exercise monopoly, meaning that prices can be adjusted to ensure profitability. The three-year operational financial statements are provided in the plan. These statements provide hope that the business will be profitable for the next three years. Indications prove that the business will grow over the years, with most of the growth coming from the sale of beach supplies and/or rental of Jet Skis. The business will offer sustainable services to the community.

Industry Descriptions

The industry in which the business is to be situated in is the leisure industry that attracts millions of people worldwide. This industry is a lucrative one in Nova Scotia since it employs thousands of individuals directly and indirectly. The same industry contributes significantly to the local economy by creating wealth for the locals. The company enjoys the monopoly in the respective industry in the area that it is located since no other companies offer similar services. The company’s geographical competition is also nonexistent, with the competition only being expected in the future.

The size of the company is also significant in the industry description in this section. The services offered in the business include water and beach activities such as Jet Ski rentals, scuba diving, fishing trips, issuing of diving licences, and selling water and beach supplies. Therefore, the business will be a significantly small one. Most of the services will be offered in the area of operation, with only a single outlet for these services and goods on offer. The business will only have one sector of operation, with the rental outlet providing the only available outlet for the company.

The company competes geographically in the area of Ingonish Beach, Cape Breton Island in Nova Scotia. This area has numerous attractions for tourists and other visitors. The beautiful beaches are irresistible for most of the clients who visit this country. Ingonish Beach is among the most visited areas. Visitors frequent the beaches in the period between summer and spring due to the favourable weather that is experienced during this period. The weather forms the basis for the business that operates for six months in a year, with this duration being the period that the company can provide the services in an ideal weather.

The business is significantly small with few sectors except the aforementioned ones. The provision of training for divers, sale of beach supplies, and other materials and the Jet Ski operation is the main activity of the business. These activities will not be hard to manage in the favourable political and economic environment that is available in the area. The political environment is stable enough to allow investment in the area. The existing laws do not restrict activities that a business undertakes. The external factors operating on the business include the prevailing international and local economic conditions in Nova Scotia. The labour is readily available on demand, with a significantly high population of people in the country being interested in beach sporting activities.

Internal factors that are relevant to the growth of the business include the determination of employees and the motivation that they get. Companies with motivated employees are more successful. In fact, less motivated employees leave their respective companies for greener pastures. The other internal factors that affect the performance of the business include the available capital, management, resources that the company can access, and the determination of employees. The business has a large growth potential because there is limited competition in the area in which it operates.

SWOT Analysis

The strengths of the business include the large number of service that will be offered under its name. The activities include diving lessons, provision of diving licences, and other beach supplies. The business will also offer Jet Skis to the interested individuals at a fee. The other strength of the business is that it will not require significant amounts of capital to start since the company’s size is still small. The main weakness of this business is a short duration that it will be in operation in any year. The availability of only two seasons over which the business can operate means that there is a limited time for the company to operate in a year, meaning that the available profits will depend on this period of operation.

The main opportunity that the above business may utilise to its advantage is the monopoly that it has in Ingonish Beach of Cape Breton Island in Nova Scotia. No businesses in this part of the island offer similar services to what the business is offering. This situation is an opportunity for the company to capture the market and/or offer prices that are suitable for its productivity. However, threats of competition from other companies that plan to offer similar services on this part of the beach are evident. Nevertheless, they can be addressed. For instance, competition may be eliminated through the provision of goods and services that are cheaper and appropriate to the clients in relation to those of the competitors (Huang, & Zhang, 2012). The other threat to the business is a relatively new market that it is engaging in and the nature of the market that allows little prediction of performance.

Business Description

The business is centred on the provision of leisure activities to local citizens and visitors to Cape Breton Island in Nova Scotia. The region has beautiful beaches that remain untapped, with an environment that has a host of other beautiful sceneries. The evident many wild animals are a tourist attraction. However, the fishing is also an important activity in the area. The business is centred around the provision of beach activities for people who are willing to spend on the same activities. Although the area has an attractive coastline, no company offers skiing services to the many visitors who tour the place. The proposed business will provide these services at a fee with the aim of attracting more visitors from other places.

The different species of fish in the waters around the island are unique to this part of the country. They provide an opportunity for tourists to discover the different species. Therefore, the business will have a special section that will deal with scuba diving. Interested parties will receive diving equipment from the business at a fee. Divers will also receive lessons on the best ways of having fun underwater and the best places to experience the bottom of the ocean. Nova Scotia is well known for scuba diving. A large number of enthusiastic fans will provide a large market for the venture. Divers will pay on an hourly basis for the rent of the diving instruments. This strategy will provide the much-needed revenue.

The other part of the business includes the fishing trips that are common in this part of the world. Fishing is an important economic activity that provides food for millions of people. The industry also contributes to the economies of many nations, especially those that are bordered by large seas and oceans or lakes. Fishing as a pastime activity and a sport is also practiced in many parts of the world, with tourist practicing the same. The company will offer fishing equipment for the tourists as a way of raising funds and/or generating revenue. The water around the business location is infested with different species of fish and crustaceans, thus making rental fishing equipment a key attraction in the business.

Fishing trips will be new to the business venture as well as the area. The target is to attract local and international tourists who are willing to engage in fishing as a sporting activity. The area that the business is to be located is serene for individuals who want to engage in sporting activities. The business will offer sporting events for the fishing parties by creating challenges and targets that they should achieve. Aside from the fishing trips that the business will offer, other activities will include training clients on the best fishing methods and other fishing activities. The long-term plan is to provide training for parties that are interested in the fishing trips. The training will be part of the activity of the business in terms of aiming at propelling the business to profitability.

Diving is one of the other activities to be undertaken in the business venture. It will offer an excellent opportunity to add to the profitability of the business. The business is located in an area where diving is an important pass time activity and sporting activity.

Provision of diving lessons to the business clients will add to the available revenue to propel the organisation to profitability. Therefore, the other activity for the proposed business will be the provision of diving lessons to any individual who is willing to part with the charges that the business will decide. After training the divers, the next activity will be the provision of diving licences for the area around the main outlet. Traditionally, the issuance of diving licences in the area had been the preserve of the local authorities. However, the provision of training services for the divers and/or the provision of licences for the same will work to boost the local business.

Ingonish Beach is one of the most popular beaches in the world with tourists and revellers flocking this place from different parts of the world and from Nova Scotia. One of the basic requirements in the beaches includes fresh drinking water. Individuals who attend diving classes along with those who are on the beach also need other supplies such as refreshments and swimming attire. The demand for these services forms the basis for the other activity of the business, namely the provision of these supplies.

The main reason for the entry into the above business is that there is an available gap in the area and in the market in terms of the provision of the above goods and services. The area is an attractive one for any investor who is willing to provide services and goods in the area. The expected sales volume in the first few days of operation will not be large, with the organisation targeting profitability by the third month of operation. The management will initially be simple to correspond with the size of the company. Hence, it will consist of a single manager in-charge of the general operations of the organisation, with subsequent management positions stemming from the different departments that will be created.

Staff members will be recruited based on the different organisational needs that correspond to the activities and services in the organisation. The first staff members to be recruited include trainers and divers who will run the training function of the organisation (Gupta & Sharma, 2004). The human resource department in conjunction with the other departments in the organisation will determine the number, qualification, and training of employees who will be recruited in the various departments. The team will be managed using the best-proven methods of managing employees, including the provision of the best employee working conditions.

Opportunities

The beach business that is proposed above has a number of opportunities that will make it attractive and successful. The market for the services that are offered by the organisation is readily available since many individuals are willing to participate in the beach industry. The area of Nova Scotia where the business is to be set up is rich in the number of tourists and party enthusiasts. The business will engage the locals through aggressive marketing techniques to ensure a constant supply of clients. The international market is performing better contrary to what was observed in the last few years.

People around the world have more money and resources to spend in leisure activities (Balderson, 2003). The world economic crisis that occurred in 2007 led to the collapse of different institutions, laying down of employees, and a reduction in organisational profits. Tourism and leisure activities declined at the time. However, with the improved economic status of the different places, the market for the proposed business is likely to improve.

The population of Nova Scotia is relatively high. Its proximity to large markets of Canada and the United States makes it a good area to set up a business. Many individuals are willing to spend on leisure activities in the area. These people will provide the market for the proposed business. The other source of market for the business prospect in Nova Scotia is the large international population that is present in the area and the different counties in the area. The weather allows high numbers of tourists in the large beaches, including Ingonish Beach in Cape Breton Island. The large population of the cities near the island will also provide the large market that is required to make the business more prosperous.

With the large available market, the business has a high probability of attracting a significant proportion of the business to the target market. This observation can be described in the form of its geographical distribution. The number of elderly individuals in the area is high. These people will be the main target for the fishing part of the business where a large proportion of the revenues is expected.

The young population in the area is known for the preference for beach parties. As such, with their large purchasing power, the business will gain from selling fresh water and refreshments. Throughout Nova Scotia, a general preference for water sport activities is evident as opposed to other types of sporting activities. This preference will ensure that the business travels on a success path and that it is able to operate profitably.

The available market will provide resources that are necessary for the propagation of the business, including the provision of revenue to pay employees and other overhead costs. The provision of Jet Ski rentals will attract the young population of Nova Scotia that prefers these types of sporting activities. Scuba diving and fishing trips are activities that attract the older population. The available market in Nova Scotia as well as the surrounding areas will provide this population with the necessary services from the market. There is also a large population of individuals who have little experience in diving. The provision of diving licences at a fee for this population will create another unconventional market. Many other individuals who prefer water activities such as those that the company is offering will provide the source of the other part of the market.

Production Plan

The business will mainly offer services at the beach as indicated above. These services will require several facilities to house and operate from. The main facility that the business will operate from is a small outlet that will be rented from one of the available houses on the beach. This facility will house the beach and water supplies that will be sold by the business, which will operate over a period of six months in a year. The small outlet is readily available over Ingonish Beach in the Cape Breton Island, with the price being favourable for the business venture. Staffing of this outlet will be a significant part of the venture. A minimum of one employee will be required to run the outlet. The size of the outlet and the success that is to be realised in the first few months will dictate the number of employees in the outlet.

The other asset that the business will own is a spot from where to operate while offering the rest of the services. The available space along Ingonish Beach in the Cape Breton Island will be rented from the different companies that will be operating along the beach. These companies will have to rent a space from where to operate since many companies are competing for the available space on this beach. The space will be rented for a period of six months every year, which is the period through which the company will operate. Ingonish Beach has beautiful beaches from where the business can operate. The initial activities will involve looking for the best position.

The other part of the business is the provision of materials and supplies to run the business for the period that it will be in existence. The main materials that the business will require include fishing vessels, the scuba diving equipment, training materials, and other items that will be on sale in the outlets. The purchase of the materials that will be required to run the business will require significant amounts of capital, which will be the main resource for the business at its start.

The operations of this business will mainly be aimed at satisfying the various needs of the clients who visit the enterprise. The main operation will be to train the individuals who are interested in diving lessons, with these clients also enjoying the services of diving in the rich waters around Nova Scotia, especially Ingonish Beach of the Cape Breton Island. The operations will involve the supply of beach appliances and equipment for the people who will be performing different activities at the beach together with those who come to enjoy the cool waters during summer and spring. Jet skiing is the other activity that the business will undertake as part of the efforts to raise revenue and/or generate significant profits.

The personnel at this business depend on the undertaken activities, especially the different operations in the organisation. The training part will require experienced divers who will be willing to divulge the secrets of underwater diving whose skills may be utilised to arrive at the different diving areas. The other requirement in the area of personnel is an individual who can operate the outlet where the beach supplies will be sold. Initially, the business will require one individual as the start is likely to see few clients to these outlets. The other personnel will be in the area of sales from where the main products from the outlet will be distributed. The supplies of these products for sale in the company’s outlet will come from the different manufacturers around Nova Scotia.

Marketing Plan

Every successful company or organisation has an effective marketing plan and place that allows it to reach its customers and clients in different areas. The target population in the area is discussed above, with the main population being tourists and other beach-loving individuals. The elderly population around Nova Scotia and other parts of Canada is also a key target market since this population is known for the fishing activities that are popular among them. The area provides a large population of individuals who like engaging in fishing activities. This population is the main target for the business. The other target population comprises tourists who are characteristic of Ingonish Beach in the Cape Breton Island.

Competition in any industry determines the success of an organisation, including the sales volume that the company achieves. The above business is the only one of its kind around Ingonish Beach in the Cape Breton Island. Hence, competition is not available. The absence of competition is beneficial to the company in that clients have a limited option in terms of the outlets that they can access. The opportunity of the business gaining a large customer base is evident based on the provision of services that are unique and/or exploiting the untapped market in this area of the country.

The application of technology in this business is crucial to its success. This strategy is evident in the technology that is applied at the institution. Fishing boats that are utilised in the fishing activities at the business incorporate the latest communication and navigation equipment. Clients can enjoy a wide variety of services while fishing in these vessels. The business also incorporates technology in the training of divers. The provision of the best areas to carry out the diving and the Jet Ski equipment will be the latest in the field. The technology incorporated into the organisation also includes the communication equipment that will be used to communicate with the tourists on the beach whilst advertising the different products that are available for them.

The socio-political environment for the region that the business is located can be considered ideal for this kind of business. The political environment is ideal because of the stability that the area enjoys. The area is secure to carry out the business without interruption from any of the external forces. Many laws are aimed at protecting businesses of this form. The other reason for the preference of the area as a business centre and the location for the business is the favourable climate that allows the activities to be run seasonally. The geography of the area is the main attraction for the large group of visitors to Ingonish Beach. There are large forests and beaches in this part of the country. Visitors to these adjacent areas frequent the Ingonish beach as part of their adventure.

The action plan in the marketing arrangement consists of a series of activities in the marketing of the business. The target market is significantly large. Different marketing strategies allow the company to reach this market. The main marketing tool that is utilised is direct marketing where the company will market itself at the beach using the personnel who are employed for the provision of the different services. A market uses a variety of marketing materials to achieve the desired effects and attractiveness to the products and services that are on offer. The combination of different marketing strategies produces a marketing mix, which is the elaborate plan of how an organisation engages the market to promote the uptake of its products and services.

In the case of the above business, different marketing strategies will be employed to achieve the best results of the marketing campaign. Many areas of the beach can be reached through the simple word of mouth. The business will initially use this method to reach the many consumers. Print media is another marketing platform that the business will employ in the marketing of the different services and goods. Banners and fliers will be available in strategic positions on the beach to advertise the different services and goods on offer. For visitors who get to know about Nova Scotia through the internet, the business will advertise itself online for some of the services it offers such as diving lessons.

Financials

The proposed business will have an elaborate accounting system once it is established. An accounting department will take charge of the different financial decisions. The operations will mainly be in a period of six months in a year, with the reason being the seasons that are experienced in this part of the world. The balance sheet for the business includes the period after inception of the business, which is the opening balance sheet, which contains the financials for the first year, which is the period of six months that the business will operate for this period. The capital required in any business is equivalent to the money that is required to buy the initial stock whilst providing the necessary appliances for the running of the business.

Opening Balance Sheet

The opening balance sheet for the business consists of the capital raised for the initial activities in the business. The available capital comes from the founders of the business. This amount is roughly two hundred thousand Canadian Dollars. The bulk of this money will go towards the buying of crucial instruments and supplies for the tourists. The initial amount for running the company will also be used in the purchase of supplies for sales in the outlet that the business operates. Some of the money will be the cash at hand, which is required to ensure continuity in the organisation.

The amount of money that is required as capital for the business will be obtained from different partners within the business, with banking institutions providing a loan for the remaining amount. The exact amount that can be raised is approximately a hundred thousand Canadian Dollars, with the rest coming in the form of loans. The money will be used to pay for the first rent of the business premise, buy the Jet Ski equipment, diving equipment, and fishing equipment. The capital will also be used to buy the merchandise for sale at the beach, including the water for swimmers at the beach.

Different organisations require different amounts of capital depending on the size of the business, the activities that they engage in, and the target market. For an organisation the size of the one discussed above, the seasonal nature of the business means that the required capital is significantly small and manageable. Entrepreneurs should not engage in business ventures that demand large amounts of capital. They should be assured of returns on investment before investing this money. The opening balance sheet provides an opportunity for investors to estimate the amount of money that is required to operate the business. It allows the assessment of business success over a period.

In the case of the above business, more than half of the capital will be used in the acquisition of assets for the business venture. Fishing boats are estimated to cost about fifty thousand Canadian dollars, with the rest of the money going to the purchase of the Jet Ski equipment. The estimated cost of purchasing the Jet Ski equipment is fifty thousand, which is also a quarter of the capital required to start the business. The rest of the money to purchase the equipment will be used to purchase the supplies for the business outlet, especially the water and refreshment that will be sold to individuals along the beach.

Many successful businesses start their investment in small ventures, which guarantee returns (Cavaleri, 2004). The risks involved in smaller businesses are significantly reduced compared to the establishment of very large investments in a single industry. The above business can be described as being diversified based on how it provides different services and goods for Ingonish Beach. The main products that are sold for the original part of the business include the beach merchandise such as the provision of water for swimmers and the refreshments that they frequently require.

Apart from the use of capital to purchase the necessary equipment and supplies, the other area that the money will go to is in the payment of initial salaries and overhead costs. The local authorities have a requirement that an annual fee is paid for any business operating along the coastline. The outlet fee, which is the amount of money that is paid for the rental outlet is part of the capital. The spot from where other services will be provided is also a rental place. The combined cost of the overheads for the first month is less than forty thousand dollars. The estimated financial cost for the business over the first one year is about a hundred and eighty thousand, which is enough to cater for the expenses in the first few months of operations.

The investment in any business should be carried out with the returns in mind (Casadesus-Masanell, & Zhu, 2013). Projected returns should cover the capital whilst ensuring that the business is profitable as soon as possible. Effective business ventures are known by how fast they are able to achieve profitability and returns on investment that the investors attain within a given time. The returns on investment within the first few months are sufficient for the business.

The relatively small size of the venture means that it can attain profitability within a short duration of time. The seasonal operation of the business is another factor of consideration in the opening balance sheet. The business will operate from April to September since this duration corresponds to the two favourable weather seasons for the area. The seasonal nature means that the first year of operation and subsequent years will only have a period of six months. This period is a challenge because the business may still be less profitable by the time of closing the first year.

The salaries of employees within the first year of operation will constitute the largest overhead cost for this business because the business focuses on the motivation of employees to ensure that they are able to achieve their goals at the organisation while at the same time attaining other relevant organisational goals. The number of employees at the start of the business venture will be small. Hence, other overhead costs will include the money used to pay for the rental outlets. The additional costs for the operations within the first month include the money that will be required to set up an aggressive marketing campaign for the business and its products. The marketing campaign will not be expensive upon considering the local nature of the business and its relative size.

The bulk of returns from the business is expected from the sale of the beach supplies. The expected returns within the first six months of starting the business are in the excess of four hundred thousand Canadian Dollars. This figure is twice the investment amount for the business. This case means that the expected profits from the first year of operation are two hundred thousand Canadian dollars. The bulk of the money will be re-invested into the business, with an addition of more supplies and the purchase of more equipment for fishing and diving operations. This money will also be used to pay for the year that follows, including the provision of additional employees to handle the projected increase in the operations of the business. The monopoly that is established on Ingonish Beach will be important to maintain since it ensures that the business remains profitable in the absence of competition. Despite the absence of competition, some of the money from the first year of operation will be channelled to marketing the business and/or providing the necessary operating funds.

Three Years of Income Statements

The income statement is a statement of the costs incurred in a business against the revenues for that organisation. The financial statements of the organisation are incorporated in this document to provide important information on the performance of the business. Income statement demonstrates how the business converts its revenue into net income. This document indicates whether the company made money for the stakeholders, or whether money was lost in the process of operations. The company’s revenue is indicated in the income statement alongside the costs of goods that are sold within a given period.

In the case of the above business venture, the three-year income statement can be made for each of the six-month period that the business will operate. For the first year of operation, the collected revenue is targeted at one hundred Canadian dollars. This money will be obtained from the sale of the beach merchandise and the other beach supplies. The revenue is derived from the total cost of the goods sold from the business. The gross sales profit is expected to be in the range of fifty to one hundred Canadian dollars. This figure is calculated from the purchase and delivery charges of the supplies after taking away the cost of the goods sold. The company is expected to make a sales profit in this first year of operation, especially given that there are no other businesses of its type in the beach.

The expenses that the business will undertake are in the range of a hundred thousand for the first year. These expenses include the payment of employee salaries, advertising, and marketing of the business, and the provision of other services such as waste disposal. The business will also spend significant amounts of the revenue in the payment of rent for the outlet, which will consume a large proportion of the money that is available for the organisation.

The other part of the income statement is the source of income apart from that stated above. The company will generate income from other activities such as the issuing of diving licences, provision of diving lessons, fishing activities, and other jet skiing services. The provision of diving licences will be expected to raise about ten thousand Canadian dollars over the first year. This figure is small due to the relatively small size of the operations. The diving licences will be obtained from the local authorities, with the training being conducted by a team that will be working for the business.

The provision of diving lessons and expeditions will generate about twenty thousand Canadian dollars for the organisation, which will be another source of income for this first year. Fishing activities by the business for its clients is expected to provide at least 50,000 Canadian dollars. The biggest source of revenue for the business will be the Jet Ski activity that the business will focus on since there is a large market for the activity. The company hopes to raise C$ 50,000 for the first year. Therefore, the total profit for the first month is expected at C$150,000, with this figure being the net income.

The second year of operation will also have similar expenses in the form of rent, employee salaries, and rewards, and the payment for the space from where the services will be offered. Rent and other expenses are expected to reach C$ 50,000 for this second year of operation, with the proposed increase in the number of employees causing the increase in the expenses. The business is also expected to increase the stock of goods available at its outlet, and hence the expense from the purchase of extra supplies. The revenue that is expected from the sale of goods in this year is C$ 100, 000. This amount is mainly from the sale of beach supplies that the business will offer over this period.

The expenses from the other activities such as the fishing activities, diving, and issuing of licences will generate an extra C$100,000 for this year, with the bulk of the money coming from the jet skiing that will be provided by the business venture. This diversification in the organisation ensures that the business is profitable and better placed to achieve profitability in the future. The absence of competition and other business enterprises in the area of operation also allows the company to undertake these different activities. For this second year of operation, the profits from the operations of the business are expected to reach C$150,000. These earnings will mostly be reinvested into the business venture, with the bulk going into the purchase of more jet skis and fishing equipment.

In the third year of the company’s operation, the profits will have stabilised with the amount that had been invested into the venture reducing. This outcome will allow more money to be used in the purchase of better equipment and/or engage in more diversification. The net profit for this year is expected at C$200,000, which is the largest net profit for the three-year period that the statement covers. The revenue available for the organisation will be generated from the sale of goods and merchandise from the organisation, including beach supplies. Net sales are expected to have increased from the previous value to over C$150,000. The cost of goods sold over this year of operation is expected to increase. During this period of operation, the net profit is expected to be C$250,000, which is the largest profit for the three years.

Three Years of Balance Sheets

The above business is a small one that operates in a significantly small area of Nova Scotia. A small business balance sheet consists of the assets that are available for the business, the receivable accounts, liabilities, and the equity that is obtained from the difference between the assets and liabilities. The first year of operation incorporates the cash invested into the company in the form of capital. This amount is C$200,000. The receivable accounts are C$ 50,000 while the equipment and tools that are required for the start of the business total to C$120,000. The total liabilities for the business can be obtained from the sum of the payable notes and accounts for the business.

The owner’s equity is the other part of the business that is considered in the balance sheet for the above business. The business will not have made earnings for the first year of operation. Hence, the owner’s equity is obtained from the capital stock only (Shepherd & Katz, 2009). The balance sheet will then balance since the sum of the assets and the liabilities equate to C$200,000. The balance sheets allow the estimation of the profits that are available to the organisation, including the losses that the organisation incurs.

The second year of operation will also obtain the same balance in assets and liabilities, meaning that the business is operating efficiently as required by law. The profits that are expected over this year are in the range of C$200,000, which is adequate for the business of its size. The third year of operation will generate C$250,000, which is equivalent to the target profits for the same year. The business will generate enough income to oversee investment over the next few years and the provision of finance to pay the employees and purchase additional equipment to replace the aging ones.

Cash Flow

Cash flow is an important consideration for any business that aims to increase its diversity and/or ensure continued profitability. It is possible to provide the cash flow for the above business over the next three years of its operation. Cash flow allows businesses to estimate their value while depicting the financial situation of the company over the period it is operating. The rate of return of a company or its operations can be determined accurately through the cash flow since it establishes the input and outputs of the business activities.

Liquidity is an important part of an organisation or a business of any size. Profitability in the absence of liquidity is not a positive sign for an organisation (Mantecon, Conover, Altintig, & Song, 2012). The quality of income that a company generates can be estimated using an elaborate cash flow. Some of the parameters that are incorporated into the cash flow of any business include the sales made in cash, the materials bought, and the available labour that makes up the operations cash flow. The cash flow from financing constitutes the other part of the incorporated cash flow. The components of financing cash flow include the loans that are available to the business, the repayment of the loan, and taxes. The last part of the cash flow is the flow from investments that mainly consist of purchased capital.

The illustration of a cash flow is often made in the form of a table where the above values are tabulated. The values should add up at the end of the table that provides the relevant information in the company’s operation. The table below represents the cash flow for the business.

Description Amount (C$) Total value (C$)
Operation flow +20,000
Cash sales +60,000
Materials -20,000
Labour -20,000
Financing cash flow +80,000
Incoming loan +100,000
Taxes -10,000
Investment cash flow -20,000
Purchased capital -20,000
Total +80,000

Conclusion and Final Review

The above proposal consists of a business that operates on the beach in Nova Scotia dealing with the provision of services and specific merchandise for individuals in this region. The business will operate for a period of six months in any given year, with the reason for this being the seasonal variation of weather. No businesses offer similar services and products in the area, and hence the high possibility of profitability. The financing of this business will depend on the contribution from entrepreneurs and loans from financing institutions. The cash flow for this business has been provided, with the balance sheet and financial statements for the next three years showing that the business will be profitable.

Reference List

Balderson, W. (2003). Canadian entrepreneurship & small business management. Toronto: McGraw-Hill Ryerson. Web.

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IvyPanda. 2020. "Ingonish Beach Company: Business Plan." June 18, 2020. https://ivypanda.com/essays/ingonish-beach-company-business-plan/.

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