Cash carried forward
You can see above both the prediction of how well our business would do and the reality of the amount we ended up with. As you can see, the figures are completely different and we, as a business, made a lot less money than we first hoped we would make. We started out with a lot less capital at the beginning than we thought we would receive. This was as some members of the group found it difficult to come up with the funds in time. However, we saved money on some of the stock purchasing as some of it we already owned. We didn’t meet our targets in terms of how much money we would make when we actually went out.
There are many factors that would be changed when running a real business, in comparison to the mini business that we ran for a six-week period. Firstly, a real business would be run forever (or as long as it survived) rather than a few weeks, so it would be taken more seriously and would be fatal if it failed. The people who ran the business would not have to worry about other schoolwork and could focus totally on the business.
A business failing could ruin people’s lives and get them into debt if they didn’t have limited liability. Therefore, people would take more care in trying to make it work, e.g. they would make sure that all paperwork was handed in on time and all the equipment was in full working order. Also, they would meet deadlines exactly or at least try to in order to help the business run smoothly.
Because our groups were working in a team without hiring any staff, recruitment wasn’t necessary. This would mean that rather than spilt all of the profits between our group, according to how many cars that were washed, they would have to be used for other things. Therefore, paying employee’s wages wasn’t an issue and we didn’t have to give granted leave to anyone. Training our staff also wasn’t a problem, as we didn’t have any staff to train.
Letting members of the team go on courses to improve their work such as going to a spa for the weekend, again wasn’t an issue, as we hadn’t employed any extra staff. Less money would be lost from sick pay and maternity leave too, and this would mean our profits would remain higher. Also, dismissing employees wouldn’t happen as we were in our set groups for our business. Time and money would be lost in a real business if this was to really happen, but we did not have to experience this.
Staff meetings would take a long time in a real, long term business as there would be a lot of individuals to talk to and a lot more issues to sort out. This would make a real business more stressful, while ours wasn’t. When our group talked we worked everything out quickly as we all knew what we were meant to do and we weren’t all from different departments. In a real business all the people in one team may not all keep in contact and inform other members of certain things.
More capital would be invested into the business and this would be used for advertising and stock buying. Better advertising strategies could be used such as television advertising and radio promotion. Therefore a wider range of customers would hear about the company. Also, more stock and better stock could be purchased. This would raise the quality of service we could offer and people would then be more inclined to pay higher prices.
If at the end of their business, after it had closed, the firm could afford to throw away any unused stock, or they could sell it on. This would mean that they wouldn’t lose the money that they put into buying the stock. Paying tax was another thing that we didn’t have to worry about. However we did have to give 20% of our profits to charity. This was acting as tax payment. Our group didn’t really make enough of a profit and so we did not pay this 20%. As well as tax, insurance and VAT would be another payment a real business would have to make. Again, our small groups did not have to pay this.
When our business closed, we didn’t have to tell anyone, as no one was relying on us weekly to wash cars. However, a bigger business may have had deals with customers and may arrange to wash their cars on a weekly basis. A real business would have to worry about setting up a place to work from. Our groups were fortunate that we could use our school and our houses for this purpose. Though, if we were a proper business then we would have needed much bigger premises to work from, possibly a large storage area and offices too.
Real businesses would have major decisions to make such as whether to expand their company overseas, in another country or have any franchises. Also, smaller decisions such as to increase any prices of certain services if one was doing exceptionally well or whether to decrease the prices if some where not as profitable. If a method was also not working so well and this was a cause for a loss of profits, then there would also be a chance for a real business to change a method of work, in order to make the business do better. We were not working for long enough to see any pattern in our profits in relation to how we worked. Therefore, we didn’t see any point in changing our prices or method.