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- QUESTION
Write a 525- to 700-word paper in which you identify and describe estimated costs and revenue projections for your product(s)/service(s), and include the following:
Sources of funding or revenue (e.g. bank loans, investments, expected sales)
Fixed costs (e.g. a physical business location or warehouse lease, utilities, transportation, security, insurance, technology, equipment, or tools)
Variable expenses (e.g. raw materials, packaging, personnel, shipping, marketing)
One-time purchases (if any)
Total projected income
Create a business budget spreadsheet and include your projected revenue, costs, and totals.
PS My business is a construction business that does home remodeling
Daddy's Home Improvement is a construction business with a combined 25 years of carpentry and handyman fix-r-upper experience. Daddy’s Home Improvement is a registered Limited liability company in the state of Oklahoma and is also locally licensed to conduct business within Bartlesville city limits and surrounding areas. We will be offering a variety of remodeling services such as basic framing, insulating, drywall, Interior and exterior painting, siding installation, flooring installations, foundation work, fence installations of all types, deck building, custom woodworking, and metal roofs. Prices will vary by the job but the basic handyman job will in some cases be charged at a rate of $30.00 an hour. The company will conduct business year-round and will require knowledge and up to date pros and cons of a variety of products.
Construction remodels and upgrades will be a continuously on demand market by homeowners and business owners. In An attempt to catch the attention of potential local business and to keep fresh on the mind of the unmet consumer, yard signs will be designed and placed in the lawns of current and past customers lawns for 30 days upon the approval of home owner. Daddy’s Home Improvement will offer competitive rates alongside the guarantee to beat any creditable competitors’ price by 10%. There will also be discounts for veterans and active military members of the United States Armed Forces as well as a discount for Senior Citizens
The target market will be directed towards both business to business and business to consumers within the 50-mile radius of Bartlesville, Ok. We expect to gain trust and remembrance in order to gain the customers future business through good practice in etiquettes. We will highly rely on word of mouth, free Facebook ads, and a low-cost Google ads campaign. We pride ourselves in producing quality, skilled craftmanship and having a reputation as a builder of excellence. 7 minutes ago
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| Subject | Business | Pages | 3 | Style | APA |
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Answer
The success of a business organization hinges highly on its ability to attract customers and keep its costs as low as possible. The costs incurred by an organization as it strives to produce the services offered reduces its profits margin as should, therefore, be managed and reduced. Daddy's Home Improvement, a construction company, incurs both fixed and variable costs as it offers house remodelling services to its clients. Fixed costs refer to expenses incurred by a business that do not change in value over a short time regardless of the business level of operations. Such costs remain the same over a specific period of time.
Daddy's Home Improvement incurs the following fixed costs; first, rental obligation. The company as a lease contract for its office and storage space. The contract stipulates that the company will pay $550 monthly for the next four years. The contract, therefore, makes the rent a fixed cost as it will not change before the contract lapses. The second fixed costs come from the salary the company will pay its employees. The company has four employees. A receptionist to handle incoming calls for the orders, a cleaner to ensure the office is neat, one handyman and the manager. The salaries paid to the four employees will cost the company $10,000 monthly.
The company will also pay utility costs. This cost will cater for expenses such as electricity, water, garbage and telephone costs for the office. The utility costs are governed by contractual obligations and are therefore fixed. The company will spend $1500 on the utility bills. Also, the company will spend on insurance premiums. Being in the construction industry, the company must have insurance such as liability insurance to safeguard it from any operational risk. The business will pay a monthly insurance premium of $1000.
The company will also pay interest expense on financial loans it will acquire from commercial banks in the city, the company intends to acquire a loan of $10,000 to invest in new equipment to increase its service delivery. The loan comes with a fixed interest rate which will make the company pay monthly interest of $1200. The company will also need an assortment of equipment necessary for handling construction work. The company will pay $10,000 for the equipment.
Apart from the fixed costs, the business will also incur variable costs. These are cost whose value change in relation to the output made. The first cost will be raw materials. The quantity of material will depend on the volume of work needed. The company projects to spend $2000 on raw materials. Secondly, variable costs will also stem from piece-rate labor for the workers hired to help the company accomplish a given task. The number of employees will vary depending on the size of the work. However, the company projects to spend $5000 on such payments. The company will also incur costs to cover its marketing expenses. Even though it is mainly relying on google adds, the cost of marketing increases depending on the number of advertisements placed. The company, therefore, projects to spend $2000 on marketing monthly
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Daddy's Home Improvement Monthly Budget |
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Category |
Budget Amount |
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Sales Revenue |
50,000 |
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Other Income |
10,000 |
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Total Income |
60,000 |
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costs/Expenses |
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Fixed Costs |
|
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Rent |
550 |
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salaries |
9,000 |
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utilities |
1,500 |
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insurance |
1,000 |
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interest expense |
1,200 |
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equipment |
10,000 |
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variable Costs |
|
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Raw Materials |
2,000 |
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Piece Rate Labor |
5,000 |
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Marketing |
2,000 |
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Total Expenses |
32,250 |
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Projected Income |
27,750 |
References
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Appendix
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