Financial Management for Small Business wk1 - Case Study Example

1. SMALL BUSINESS According to the U.S. Small Business Administration (SBA) a small business can be defined as a firm having 500 or less employees with annual income below $5,000,000 (homepage)1. The financial management of a small business involves two basic things, financing the business and managing its operations. This is done by employing a bookkeeper or an accountant, buy an accounting software package to harmonize all business transactions and register the business with a commercial bank (homepage)2.

My definition of a small business differs from that of the book because my definition emphasizes on two things, the number of employees and the annual income realized by a company. The difference of the definition exists because different conditions have been taken into consideration to define a small business. 2. Joe’s Company Break Even Point $ Revenue 5,000 Cost of goods sold 250 Profit 4,750 Variable costs Cash costs 0,000 Administrative expenses 0,000 Marketing expenses 0,000 Fixed cost Depreciation 0,000 Break Even Revenue (Profit – Variable costs - Fixed costs) $4,750 In Joe’s company, the revenue ascertained for the period is $ 5,000.

The cost of goods sold was $ 250. The operating profit for the period was $ 4,750. It was assume that there was no variable or fixed costs. The break even point and revenue (Profit – Variable costs - Fixed costs) was ascertained to be the same amount as the operating profit $4,750. TWO EXAMPLES OF SMALL BUSINESSES 1. Benkay Japanese Restaurant and Sushi Bar (homepage)3 2. Mi Ranchito restaurant (homepage)4 THREE EXAMPLES OF LARGE BUSINESSES 1. Microsoft (homepage)5 2. Chevrolet (homepage)6 3.

Volvo (homepage)7 CHARACTERISTICS OF SMALL COMPANIES The U.S. Small Business Administration (SBA) defines the various conditions for a small business; ``500 employees for most manufacturing and mining industries, 100 employees for all wholesale trade industries, $6.5 million for most retail and service industries, $31 million for most general & heavy construction industries, $13 million for all special trade contractors $0.75 million for most agricultural industries´´(homepage)8. CHARACTERISTICS OF LARGE COMPANIES Firms meeting conditions above those outlined above by U.

S SBA are classified as large businesses. A BUSINESS PLAN FOR AFEA HOME HEALTH CARE AGENCY The information contained in this business plan is fictitious and it is my imagination of a home health care business plan. Executive Summary AFEA is a home health care agency is a modern home health care agency that has just been created to supply quality home health care and social services to its clients. We have competent, well trained and qualified staff, who are ready to sacrifice their energy to serve invalids.

We also market modern ultrasonic portable health equipments like the infra red thermometers, modern digital blood pressure machines and digital wheel chairs. Market Summary Situation analysis AFEA home health care agency offers advanced services in two geographic segments. The company focuses on easy-to-use products that support people to attain a more healthy and convenient life style. This year AFEA we intend to increase our segments and lower the cost of our health care services. AFEA Electronics focuses on consumers with a relatively high interest in new technology and who in their everyday life are looking for solutions for increased health efficiency.

Market demographics Territory 1 is the most important market and also the largest. Territory 2 is very similar to Territory 1 but smaller, about half the size. The consumers on these two markets have a relatively high income and are interested in modern products. Market need The basic product (product 1) is in a mature stage and it will soon be a standard in every home. People will be able to read their body temperature instantly without holding on for some minutes, blood pressure would be read electronically with 8 seconds, wheel chairs will be able to transport invalids conveniently and safely in their homes and surroundings with no body assisting the invalid.

Market Trends AFEA home health care agency wants to take advantage of some specific market trends: Computerized society. We see an increase need of modern and fast reading health devices to detect instant body temperature, immediate reading of the blood pressure and digital wheel chairs to transport patients conveniently with no assistance. Market growth We see a foreseeable market for high-tech health care equipments in the future Source of business plan’s format: (http://www.quickmba.

com/marketing/plan/) REFERENCES [Cited 2008-01-13] www.delawarecountybrc.com/glossaryterms.htm [Cited 2008-01-13] www.smallbusinessnotes.com/operating/finmgmt.html [Cited 2008-01-13]www.sushiman.com/index.html [Cited 2008-01-13] www.mi-ranchitorestaurant.com [Cited 2008-01-13] www.microsoft.com [Cited 2008-01-13] www.chevrolet.com [Cited 2008-01-13] www.volvo.com [Cited 2008-01-13] www.sba.gov/services/contractingopportunities/ sizestandardstopics/faqs/index.html [Cited 2008-01-13] (http://www.quickmba.com/marketing/plan/)