Experienced interior designers Jason and Amelia Case Study:
Experienced interior designers Jason and Amelia decide to go into business together. Although neither of the two friends has ever worked in a business before, they decide the time is right for them to start a business.
They enter into a partnership, with each of them investing £2,500 into the business.
Based in London, their “product” is a home-makeover service, modeled on the popular daytime television programmes where ordinary households are transformed through small building work and decoration.
Experienced interior designers Jason and Amelia Revenues:
Jason and Amelia expect to get two projects per month for the first 6 months of trading; each project will generate £5,000 of sales. Customers will be expected to pay 25% of the price as a deposit with the balance on completion. Each project is expected to last one month.
The main costs associated with the start-up are:
Equipment
£4,000 (month 1) and £2,500 (in month 4), a total investment of £6,500
Marketing
£400 per month
Legal and accounting costs
£1,550 (month 1 only)
Project materials
£2,000 per project. It is assumed that suppliers will allow Jason and Amelia 30 days to pay for these costs
Sub-contracted labor (other tradesmen)
£4,300 per month. These will be paid in the month incurred.
Sophie & Jack will pay themselves a salary of £900 each per month whilst the business is established.
Other sundry costs
£500 per month have been assumed.
You are required to complete an analysis of the above case study using the following questions as SUBHEADINGS:
- Prepare a 6 month cash-flow forecast for the business ñ you may estimate if any numbers are missing, but you must highlight/show your estimates.
- Considering the cash-flow forecast you have created, would you offer Jason and Amelia any advice? Give your reasons.
- Consider what other types of information Jack and Amelia might need to run their business. Suggest the types of information they need and why they need it.
- Jason and Amelia have set aside £400 per month for marketing. Using your knowledge of the marketing mix (4Ps) give them advice on marketing their business.
- Jason has met a local businessman who knows some laborers who are prepared to work for below minimum wage and without paying any tax. Using the laborers would reduce his project costs by 50%.
- Do you think Jason should take this offer? Explain your answer.
- Discuss other ethical issues that might affect the business.
- Considering the case study overall give your opinions on whether you think that their business will be a success. Explain your reasoning. Do you have any other advice for them about their approach to starting a new business?
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