The main objective of the report is to present a business plan to start a new three star hotel in Kuala Lumpur named “Insignia Hotel Suites”. The report is aimed to show the mission and the various types of success factors associated to this business. It further shows the company ownership, the start-up plan, company location, facilities and various types of products and services. It further shows the competitive comparison based on other operating hotels in the region. Some of the important sales perspective has been seen in terms of discussing sales literature; technology used in future products and services. The market analysis has been depicted in terms of market segmentation strategy, target market segment strategy, market needs, market trends, market growth, industry analysis, distribution patterns and main competitors. The study is further discussed about the strategy and implementation of “Insignia Hotel Suites”. Some of the other key discussions has been seen in terms of distribution pattern, sales strategy, sales forecast, organisation structure and management teams. The final section of the business plan has included a financial plan which has discussed the important assumptions, key financial indicators, breakeven analysis, projected profit and loss, cash flow, business ratios and long-term planning.
The main mission of the company is seen in terms of providing the best services for stay, dine, fitness and spa.
The main success factors of the hospitality industry have been identified in terms of customer oriented approach. The service quality in the hospitality industry particularly in Malaysia is highly competitive to meet the customer satisfaction of all kinds of visitor around the globe. Hence, the importance of customer service plays an important role in meeting the highly competitive customer demand. There are several factors associated to the success in this industry such as integration, modernisation, and discipline and relationship status. The key to success is identified in terms of providing prompt service in meeting the demand of the customer and ensure continuous survival in this highly competitive industry.
“Insignia Hotel Suites” will be located in Jalan Bukit Bintang 55100, Kuala Lumpur, Malaysia. The hotel will be a built in a 33-acre olive grove. The hotel is committed to preserve and create the most sustainable operation which will be customer centric in nature. The main operations of the hotel will be focused towards guests, colleagues and comply with the local community for the betterment of the planet. The various sustainability policies will comply with Bursa Malaysia guidelines focusing on enhanced transparency on environmental, social and corporate governance reporting. The hotel will further offer sophisticated comfort for 160 stylish living spaces which will create a unique opportunity for memorable moments against a backdrop of elegant simplicity. The main suites of the hotel will be segregated into “Insignia deluxe room”, “Insignia classic room”, “Insignia premiere suit with balcony”, “Insignia signature suite”. The restaurant service of the hotel will comprise of the most authentic flavours with a stylish and contemporary backdrop in the dishes. The spa will include several options to provide separate face spa, body massage and body scrub and wrap. In the gymnasium of the hotel will include some of the state of art fitness equipments which will ensure full body workout under trained conditions.
Nick Ruster and Symon Caprice are identified as the co owners of “Insignia Hotel Suites”. It has been further observed that both of the owners will operate the resort in the months of November to April. During the spring season and summer the hotel will operate as summer resort. During the months of September and October the order shall remain closed.
“Insignia Hotel Suites” is identified as a new start-up business and strives to be one of the best in the hospitality business of Malaysia. The main considerations for the start-up plan have been seen in terms of fixed costs, average monthly costs and inclusion of start-up assets. Some of the main forms of fixed costs of the company have been seen in terms of payroll tax, various, premises, retainer contracts, sales and marketing, website development expenses, logo design, lease payment and market survey. The average monthly cost has been identified in terms of print, lease payment, interest on loan, posters and telephone. The start-up assets have been shown in terms of owner funding, bank loan and assets. The breakup of the start-up requirements for “Insignia Hotel Suites” has been illustrated below as follows:
|
Start-up Requirements |
|||
|
Start-up Expenses |
|||
|
Fixed Costs |
Particulars |
Amount (RM) |
|
|
Premises (RENT & RATES) |
RM 23,000.00 |
||
|
Wages |
RM 60,000.00 |
||
|
Interest on loan 8% |
RM 2,327.50 |
||
|
Accountant Fees |
RM 21,000.00 |
||
|
Payroll Tax |
RM 2,800.00 |
||
|
Retainer contracts |
RM 15,600.00 |
||
|
Sales and Marketing |
RM 20,000.00 |
||
|
Postage & Telephone |
RM 1,350.00 |
||
|
Brouchers |
RM 3,200.00 |
||
|
Website Development Expenses |
RM 12,000.00 |
||
|
Logo Designs |
RM 5,200.00 |
||
|
Market survey |
RM 7,400.00 |
||
|
Preliminary expenses |
RM 1,600.00 |
||
|
Lease payments |
RM 17,500.00 |
||
|
Total Fixed Costs |
RM 192,977.50 |
||
|
Average Monthly Costs |
|||
|
Rent |
RM 1,916.67 |
||
|
Lease payments |
RM 1,458.33 |
||
|
Interest on loan 3% |
RM 193.96 |
||
|
Postage & Telephone |
RM 112.50 |
||
|
Repairs and Maintainance |
RM 266.67 |
||
|
Salaries / Wages |
RM 5,000.00 |
||
|
Total Average Monthly Costs |
RM 8,948.13 |
||
|
x Number of Months: |
RM 12.00 |
||
|
Total Monthly Costs |
RM 107,377.50 |
||
|
Total Startup Expenses |
RM 300,355.00 |
||
|
Start-up Assets |
|||
|
Owner Funding |
|||
|
Owners Fund |
RM 100,000.00 |
||
|
Total Owner Funding |
RM 100,000.00 |
||
|
Loans |
|||
|
Bank Loan |
RM 35,000.00 |
||
|
Other |
|||
|
Total Loans |
RM 35,000.00 |
||
|
Total Start up Funds |
RM 135,000.00 |
||
|
Assets |
|||
|
Equipment |
RM 54,000.00 |
||
|
Vehicles |
RM 75,000.00 |
||
|
Computer |
RM 10,000.00 |
||
|
Total Fixed Assets |
RM 139,000.00 |
||
|
Total Start-up Assets |
RM 274,000.00 |
Table: Table showing start-up expenses
(Source: As created by author)
“Insignia Hotel Suites” will be located in Jalan Bukit Bintang 55100, Kuala Lumpur, Malaysia. The hotel will be a built in a 33-acre olive grove. As an initial business it will have only one operating facility. As the business continues to flourish several other facilities will be set up across different parts of Malaysia.
The main services of the hotel include providing accommodation for stay, restaurant for dinner, spa and fitness.
The main suites of the hotel will be segregated into four categories namely “Insignia deluxe room”, “Insignia classic room”, “Insignia premiere suit with balcony” and “Insignia signature suite”.
The deluxe room will offer 45 square metres of understated luxury and equipped with furniture which will be able to set the scene for a peaceful night’s sleep or simple, indulgent relaxation. This room will offer a king-size bed, separate chamber for shower and bathtub, personal butler station complete with private bar and individual coffee machine. It will further come furnished with a 40-inch LCD flat-screens, DVD players and multi-function workstations.
The insignia classic room will offer 70 square metres of signature understated luxury; with the added convenience of a separate entrance vestibule and private living room for superior comfort.
This suit will provide the occupants with 95 square metres of signature understated luxury and elegant refinement enhanced by a breathtaking view from your own private balcony. The room will further offer the latest technology own personal butler station and refinement of understated luxury.
The signature suite is a 235 square metres of comfort and convenience includes a spacious bedroom which offers a separate living and dining room and full service for bar, private study, pantry and a storage closet. The signature suite will further offer a king-size bed with an impressive 42 inch LCD flat screen TV.
The restaurant’s Asian cuisine facility of Insignia will offer a blend of Japanese cuisine with a vibrant setting out looking for iconic fountain view.
An individual will be able to Savour traditional Italian cuisine and modern interpretations of classic dishes along with the finest ingredients and authentic flavour.
Insignia strives to achieve time-honoured cooking methods, signature ingredients and the most authentic of recipes to recreate a true taste of India.
Insignia will offer a classic spa ranging from the collection of treatments for body, face and scrub. The face massage will ensure energetic, penetrating massage which will be able to awaken muscles while cool marble soothes the body, and specially chosen products enliven facial contours, stimulate radiance and promote suppleness. The body massage will allow the muscles to submit to deep, penetrative pressure-point massage that coaxes out deep-seated physical stress and tension. The scrub massage will provide a stimulating skin exfoliation using natural brushes that promote vibrancy and improve skin tone, is followed by a sensuous wrap of mineral-rich mud and linen body sheets to relax and refresh.
There are many popular three star and four star hotel/suites operating in Kuala Lumpur. Some of the main competitor of “Insignia Hotel Suites” will be seen in terms of Royale Chulan, Traders Hotel, The Majestic Hotel, Lanson Place Bukit Ceylon Serviced Residences, Aloft Kuala Lumpur Sentral, Hotel Istana and Mandarin Oriental.
Some of the main forms of sale literature has been identified in terms of brochures and sell sheets, spec sheets, price lists and order forms and media kits. The sale literature “Insignia Hotel Suites” has been seen in terms of
The main form of sourcing funds has been done from bank loans. The fulfilment of various types of services associated with the hospitality industry has been done after consulting with some of the most notable experts in this trade operating in Malaysia.
Insignia will offer a fully Wi-Fi infrastructure and the guests will be able to experience a seamless connection without any interruptions. On special request, “Insignia Hotel Suites” will offer the facility of Digital conference through which guests coming from business houses will be able to access audiovisual and digital facilities for conferences. The hotel further incorporates mobile communication and automation, NFC technology, infrared sensors, smart room keys, feedback on social media, cloud services, Converse lands to support multiple services and ensures technology integration for seamless experiences of the customers
The future technology has been identified in terms of entertainment on tap via robots. The robots will be able to deliver the items ordered through room service to a guest’s door. It will be further able to move items such as toothbrushes, chargers and snacks to guests from one floor to another.
The market analysis of the of the Hotel has been discussed with the relevant discussions which are made on the main products and services, the pricing strategy for the respective products, dining services, target market segment strategy and industry analysis. The part of the market analysis has been able to address the strategy and Implementation process.
The main market segmentation is seen with focus on three key areas associated to product, pricing and distribution strategy.
The main products and services of the hotel are mentioned below as follows:
The pricing strategy for the respective products listed below as follows:
Stay:
Dining services:
Spa services: RM 600-700 per session
Fitness services: RM 100 for a single day membership
The target market strategy has been seen by including business professionals, solo travellers, students and visitors with family want to spend quality time by visiting Kuala Lumpur, Malaysia. The restaurant service will be a special attraction to all the local community as it will be able to offer food of different tastes and preferences which will be unique from other restaurants of Malaysia.
The main requirement for the market has seen in terms of understanding the seasonal changes of the demand pattern among the consumers of Malaysia hospitality industry
In order to understand the market trends it is important to know about the geographical climate of the region. Kuala Lumpur is hot and humid throughout the year, temperatures range from 22ºC to 32ºC year round and with a tropical climate, showers occur almost every day. The best time for the increasing market trends is seen in the month of December. As during this month more number of travellers will be willing to visit the country and more opportunities for the market to serve the customers.
The market growth has been seen in terms of weakening Malaysian Ringgit, which is the main cause for encouraging an influx of international tourists but discourages domestic traveller spend, as shown in statistics from The Department of Statistics Malaysia (DOSM). The superior accessibility from India and China makes Malaysia a holiday destination of choice for tourists from both the countries. The increase accessibility is seen in terms of frequent flights between India and Malaysia with an increase of 20,000 seats for a week. In the recent times, there have been several advancements in the local infrastructure which has led to the growth in supply by more than 81% from 2010 to 2015 (Apac.aonhewitt.com, 2017).
Based on the data In 2010, published by the World Travel & Tourism Council (WTTC) reported the total GDP contribution of Malaysia’s tourism industry at a sizeable 11.8% with RM124 billion. In the last year, projected figures show a total contribution of 13.5% with RM 163 billion to the overall nation’s GDP figures and employment rates have followed with the same flow. The various depictions made from the Aon Hewitt Malaysia 2015 Hotels & Hospitality Industry Survey has been able to state that both employment rate and attrition rate in Malaysia’s hospitality industry is high. Support staff in the hotel and hospitality industry, the attrition rate of 18% is double that of the general Malaysian workforce. For the challenges the industry has been further put up by the Malaysian government by putting forward to bring into effect Minimum Wages Order 2016, this provides the mandates that all organisations provide a minimum wage of RM 1,000 a month to all employees in Peninsular Malaysia, and RM 920 to all employees in East Malaysia & Labuan.
The key participants have been seen in terms of the government, stakeholders, customers and the community at large. The main form of the industry participants has been further identified in terms of the shareholders and the role of the owner’s in guiding the business to a success. Some of the main consideration of the report has been seen to be related to the suppliers, retailers, wholesalers and distributors of the service. Some of the various types of the other participants of the service has been seen to be further related to the different types of the competitors who are directly associated to the hospitality industry. Some of the other industry participants has been seen to be related to the changes in the government policies which is related to the changes in terms of the hospitality industry.
The main distribution network is seen in terms of consisting travel retailers selling to clients, to operators of purchase blocks of seat and its supply network consisting of complex set of specialists at each airport serves. It further includes checking of agents, cataracts, baggage handlers and technical engineering support service and flight preparation services. The company further aims to provide each of the services at all the airports of Malaysia from the different airlines on base.
The increased competition in the hospitality sector of Malaysia from both business point of view and talent has been able to be identified as the main challenge is to attract and retain new customers. With the launch of ‘AirBnB model’ pose a threat to hoteliers’ market share—with 5,542 registered homestays in Malaysia in 2016. It has been further decided that the buying pattern of the various consumers has been seen to be related to the people who belong to the upper middle class. These are main population of the people who are identified as the main buyers of the service.
The main competitor of “Insignia Hotel Suites” will be seen in terms of Royale Chulan, Traders Hotel, The Majestic Hotel, Lanson Place Bukit Ceylon Serviced Residences, Aloft Kuala Lumpur Sentral, Hotel Istana and Mandarin Oriental (Tripadvisor.in, 2017).
The strategy pyramid formula for the company has been able to focus on maximising the profitability for the hotel owners. It has been further observed with rigorous financial discipline and a constant benchmarking to push and maintain the best operating margins of the industry (Pyramidhotelgroup.com, 2017).
The company further aims to follow a strong value proposition strategy for being able to convert most business propositions into sales. This will be done by clearly stating the benefits provided by the hotel and the perceived serviced by the customers.
The competitive edge has been seen in form of maintaining minimum rate, tax incentive and policies for old and new hotel dilemma. Some of the main forms composite of it has been further seen in terms of having a technological edge towards how the business operates in the hotels.
The main form of marketing strategy will be maintained with digital presence on social media. The various information of the booking system of the hotel will be available in trip advisor and various types of information on Facebook and Twitter pages. In the aforementioned social media platforms and businesses will be able to quickly get an insight on what customers think and how the business strategies can be improved. Another marketing strategy adopted by the company is seen in terms of customer insight marketing. This will be done by asking the customer to fill up a quick survey form and know about the specific details of their requirements.
“To enhance state of art holiday experience and at the same time contributing most to the society by following sustainability guidelines”.
The main pricing strategy to be adopted in terms of the suites for stay is identified in form of market skimming pricing strategy, along with this, the spa and the fitness centre will follow the same strategy. The restaurant services will follow a market penetration strategy for a more competitive edge.
The primary distribution network is seen in terms of consisting travel retailers selling to clients, to operators of purchase blocks of seat and its supply network consisting of complex set of specialists at each airport serves. It further includes checking of agents, cataracts, baggage handlers and technical engineering support service and flight preparation services. The company further aims to provide each of the services at all the airports of Malaysia from the different airlines on base.
The main goal of any hotel is to have all of its rooms occupied, all year-round. In general aspect this is not seen to be viable in nature and there have been several types of ways identified in which hotels can bring about more guests throughout the year. The main types of the sales strategies have been seen to focus on one target: to increase room nights. The main form of the sales strategy which can be adopted by the company has been listed below as follows:
Multiple Fronts:
The hotels can be seen to be advertised the same property in different ways which will be able to attract main areas of the market and they will be able to attract main parts of the market that the hotel would like to gain as customers. The company may show off the advertisement in a glossy fashion magazine advertisement showing the suite-level rooms. Insignia can further feature the club level rooms in the similar hotel may then appear in a financial magazine with a completely different presentation to attract the business traveller.
Travel Agents: The travel agents have been seen to be an integral part of the sales strategy in the hospitality industry. It has been further seen that Insignia can tie up with advertising agencies and annual brochures, promotional fliers, TV and radio commercial and signage that feature key properties in key destinations.
Membership Rewards: The hotel can further seen to be having a membership programs that will provide the guests with extra amenities, upgrades and free nights. It has been further identified that loyalty is seen as a significant factor for the sale of the tool for hotels, especially large chains with locations around the country or even the world.
Online Discounts: If the hotel is seen to adopt special rates for the smart phone bookings and online bookings. By adopting the policy of the online booking, the company will be able to save the time and effort of a real person at the hotel who must answer the phones and take the reservation. It will be also able to attract younger customers who are additional tech savvy and who have a long life filled with potential hotel stays to come (Gin Choi et al., 2013).
The hotel will be able to thrive majority of the rooms by the opening majority of the rooms which are seen to be operating in the low period. The rates of the hotel may be kept at a lower degree and the rates may be considered to be lower than the seasonal price. Insignia may also recoup the difference from the various types of the other charges and purchases, such as room service meals, parking fees, tours and concierge services and in-room Internet fees. None of these fees would be collected if there were no bargain-rate guests present (Smallbusiness.chron.com, 2017).
Cross Promotion
Some of the main consideration of the sales promotional strategy can be further considered by combining various types of the promotional offers. The hotel will be able to use the various types of the popular events and travel packages. This will also mean that in case the guests take the restaurant facility of insignia then they will be able to get substantial amount of discount on the travel packages.
|
(1) SALES FORECAST |
||||||
|
Year |
0 |
1 |
2 |
3 |
4 |
5 |
|
Projected Sales |
370,000 |
666,000 |
1,198,800 |
2,157,840 |
3,884,112 |
|
|
(b) Cost of goods |
180,000 |
216,000 |
259,200 |
311,040 |
373,248 |
|
X-Axis Label |
Sales |
Gross Margin |
Net Profit |
|
Year 1 |
RM 370,000.00 |
RM 365,275.00 |
RM 4,725.00 |
|
Year 2 |
RM 666,000.00 |
RM 497,274.80 |
RM 168,725.20 |
|
Year 3 |
RM 1,198,800.00 |
RM 730,861.70 |
RM 467,938.30 |
|
Year 4 |
RM 2,157,840.00 |
RM 1,118,049.28 |
RM1,039,790.72 |
|
Year 5 |
RM 3,884,112.00 |
RM 1,772,038.93 |
RM2,112,073.07 |
Some of milestone of the company has been shown below as follows:
Nick Ruster and Symon Caprice are identified as the co owners of “Insignia Hotel Suites”. They their restaurant career at the age of 15 working in a quick-service food-service operation and earned their way through college as a server and bartender. After earning his degree, they worked for a regional restaurant chain and an independent fine dining restaurant. In these organizations Nick Ruster and Symon Caprice both held the positions of Assistant Manager and then General Manager (Seilov, 2015).
Some of the main gaps of the management team are related to cost accounting, inventory management and payroll. The consideration of point of sale is seen to simplify communications between kitchens and wait staff. The orders are seen to both computer directly to the kitchen printer. And the benefit in terms of POS program is seen with easy tracking of the food usage (Sirakaya-Turk et al., 2014).
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
|
RM |
RM |
RM |
RM |
RM |
|
|
Manager |
85000 |
102000 |
122400 |
146880 |
176256 |
|
Assistant Manager |
56000 |
67200 |
80640 |
96768 |
116121.6 |
|
Deputy Assistant Manager |
45000 |
54000 |
64800 |
77760 |
93312 |
|
Lodge Staff |
23000 |
27600 |
33120 |
39744 |
47692.8 |
|
Food Store Staff |
40000 |
48000 |
57600 |
69120 |
82944 |
|
Rental/Clothing Store Staff |
23000 |
27600 |
33120 |
39744 |
47692.8 |
|
Maintenance Staff |
16000 |
19200 |
23040 |
27648 |
33177.6 |
|
Cleaning Staff |
10000 |
12000 |
14400 |
17280 |
20736 |
The main assumptions has been seen in terms of lower profits in the first year due to loan taken from the bank and various types of initial start-up costs. But as the business continues to grow from the second year onwards it is a cover up the cost for the initial capital invested in the business.
The key financial indicators of the projected sales have been able to show that there is a linear growth in terms of the projected sales in the five years. This has been seen to evident in form of the increasing projected sales, This has been seen to be evident in form of the RM 370000 in year 1, RM 666000 in year 2, it further increased to RM 1198800 in year 3, RM 2157840 in the fourth year and in the fifth year it has been seen with RM 3884112. Some of the other key financial indicators has been seen with computation of some of the key financial ratios ranging from debt ratio, current ratio, working capital ratios, and asset to equity ratio and debt to equity ratio. It has been further seen that in the first year the company will be able to maintain a current ratio of 1.62 and this was further seen to be increased to 2.06 in the second year. Insignia will be further maintaining a positive debt to equity ratio. It has been further discerned that in the 1st year the debt ratio was 0.81 and it was further able to improve this ratio to 0.71 in the second year. The company was further able to improve the debt ratio to 0.71 in the second financial year. The various assortments made in the study has been further able to show that the company has been able to increase the working capital from 181325 to 412863, which is also observed as a positive sign. It has been further seen that as the business is able to progress with lower reliance on the long term borrowings. This has been seen to be evident with a decreasing debt equity ratio of 4.66 to 1.17 (Jakada & Gambo, 2014).
Some of the other considerations have been further seen with increasing amount of the break even revenues from the second year. The various types of the other assumptions of the break even has been able to suggest that in the first year if the company earns a revenue of RM 370000, then the profit of the company is RM -118666.4. It has been further observed that second year onwards if the company is able to earn revenue of RM 666000 then the company will be able to earn a profit of $ 29333.568. This point is identified as the break even of the company.
The various considerations of the of the fixed cost has been seen in terms of the rent of premise rent of RM 23000 which is to be paid for yearly basis. The various types of the variable cost have been associated to the electricity, wages, payroll, logo designs and preliminary expenses. The total fixed cost of the company has been seen with RM 303666.43. The total break even of the company has been seen with revenue of RM 666000 and a profit required of RM 29333.568. It has been further seen that the total profit from the break even sales has been seen with a profit of RM 29333.568.
Some of the other considerations have been further seen with increasing amount of the break even revenues from the second year. The various types of the other assumptions of the break even has been able to suggest that in the first year if the company earns a revenue of RM 370000, then the profit of the company is RM -118666.4. It has been further observed that second year onwards if the company is able to earn revenue of RM 666000 then the company will be able to earn a profit of $ 29333.568. This point is identified as the break even of the company (Lashley, 2013).
|
Breakeven Analysis |
|||
|
Breakeven Sales Value = |
average fixed cost/% contribution |
||
|
Average fixed cost |
303666.43 |
||
|
Contribution % |
50% |
||
|
Revenue |
Contribution |
Fixed Cost |
Profit |
|
370000 |
185000 |
303666.43 |
-118666.4 |
|
666000 |
333000 |
303666.43 |
29333.57 |
|
759166.0805 |
379583.04 |
303666.43 |
75916.61 |
|
910999.2966 |
455499.65 |
303666.43 |
151833.2 |
|
(4) PROFIT AND LOSS FORECAST |
||||||
|
Pre operating |
||||||
|
Year |
0 |
1 |
2 |
3 |
4 |
5 |
|
Revenue |
0 |
370,000 |
666,000 |
1,198,800 |
2,157,840 |
3,884,112 |
|
Cost of sales |
0 |
180,000 |
216,000 |
259,200 |
311,040 |
373,248 |
|
Gross profit |
0 |
190,000 |
450,000 |
939,600 |
1,846,800 |
3,510,864 |
|
Gross Margin |
365,275 |
497,275 |
730,862 |
1,118,049 |
1,772,039 |
|
|
Expenses/overheads |
||||||
|
Premises (rent, rates) |
23,000 |
23,000 |
23,000 |
23,000 |
23,000 |
|
|
Wages and salaries |
60,000 |
90,000 |
135,000 |
202,500 |
303,750 |
|
|
General expenses |
5,200 |
5,876 |
6,640 |
7,503 |
8,478 |
|
|
Accountant Fees |
21,000 |
21,000 |
21,000 |
21,000 |
21,000 |
|
|
Payroll Tax |
2,800 |
3,500 |
4,375 |
5,469 |
6,836 |
|
|
Utilities |
15,600 |
20,280 |
26,364 |
34,273 |
44,555 |
|
|
Sales and Marketing |
20,000 |
23,000 |
26,450 |
30,418 |
34,980 |
|
|
Postage & Telephone |
1,350 |
1,620 |
1,944 |
2,333 |
2,799 |
|
|
Repairs and Maintainance |
3,200 |
5,440 |
9,248 |
15,722 |
26,727 |
|
|
Website Development Expenses |
12,000 |
13,440 |
15,053 |
16,859 |
18,882 |
|
|
Preliminary expenses |
1,600 |
1,808 |
2,043 |
2,309 |
2,609 |
|
|
Lease Payments |
17,500 |
21,000 |
25,200 |
30,240 |
36,288 |
|
|
Total expenses/overheads |
183,250 |
208,964 |
271,117 |
361,385 |
493,617 |
|
|
Profit before tax |
6,750 |
241,036 |
668,483 |
1,485,415 |
3,017,247 |
|
|
Tax @ 30% |
2,025 |
72,311 |
200,545 |
445,625 |
905,174 |
|
|
Profit after tax |
4,725 |
168,725 |
467,938 |
1,039,791 |
2,112,073 |
|
|
Transfer to reserves |
6,750 |
241,036 |
668,483 |
1,485,415 |
3,017,247 |
|
Balance Sheet |
||||||
|
Assets |
FY-1 |
FY-2 |
FY-3 |
FY-4 |
FY-5 |
|
|
Current Assets |
||||||
|
Cash |
$106,050 |
$137,050 |
$124,650 |
$110,900 |
$116,650 |
|
|
Accounts receivable |
$370,000 |
$666,000 |
$1,198,800 |
$2,157,840 |
$3,884,112 |
|
|
Total current assets |
$476,050 |
$803,050 |
$1,323,450 |
$2,268,740 |
$4,000,762 |
|
|
Fixed (Long-Term) Assets |
||||||
|
Vehichels |
$75,000 |
$43,200 |
$37,800 |
$32,400 |
$27,000 |
|
|
Furniture |
$54,000 |
$48,000 |
$38,400 |
$30,720 |
$24,576 |
|
|
Equipment |
$10,000 |
$6,400 |
$5,120 |
$4,096 |
$3,277 |
|
|
(Less accumulated depreciation) |
$22,400 |
$19,000 |
$16,280 |
$14,104 |
$12,363 |
|
|
Intangible assets |
$50,700 |
|||||
|
Total fixed assets |
$167,300 |
$78,600 |
$65,040 |
$53,112 |
$42,490 |
|
|
Total Assets |
$643,350 |
$881,650 |
$1,388,490 |
$2,321,852 |
$4,043,252 |
|
|
Liabilities and Owner’s Equity |
||||||
|
Current Liabilities |
||||||
|
Accounts payable |
$24,000 |
$25,000 |
$27,000 |
$25,000 |
$27,000 |
|
|
Accrued Rent |
$23,000 |
$23,000 |
$23,000 |
$23,000 |
$23,000 |
|
|
Bank Charges Payable |
$3,000 |
$3,000 |
$3,000 |
$3,000 |
$3,000 |
|
|
Short-term loans |
$10,000 |
$10,000 |
$10,000 |
$10,000 |
$10,000 |
|
|
Income taxes payable |
$2,025 |
$72,311 |
$200,545 |
$445,625 |
$905,174 |
|
|
Accrued salaries and wages |
$60,000 |
$90,000 |
$135,000 |
$202,500 |
$303,750 |
|
|
General Expenses |
$5,200 |
$5,876 |
$6,640 |
$7,503 |
$8,478 |
|
|
Lease Payment |
$17,500 |
$21,000 |
$25,200 |
$30,240 |
$36,288 |
|
|
Current portion of long-term debt |
$150,000 |
$140,000 |
$130,000 |
$140,000 |
$130,000 |
|
|
Total current liabilities |
$294,725 |
$390,187 |
$560,385 |
$886,868 |
$1,446,691 |
|
|
Long-Term Liabilities |
||||||
|
Long-term debt |
$35,000 |
$90,000 |
$80,000 |
$70,000 |
$60,000 |
|
|
Less: Loan Repayment |
$7,000 |
$7,000 |
$7,000 |
$7,000 |
||
|
Deferred income tax |
$189,500 |
$154,200 |
$176,290 |
$109,982 |
$84,946 |
|
|
Total long-term liabilities |
$224,500 |
$237,200 |
$249,290 |
$172,982 |
$137,946 |
|
|
Owner’s Equity |
||||||
|
Owner’s investment |
$100,000 |
$125,000 |
$156,250 |
$195,313 |
$244,141 |
|
|
Net Profits |
$4,725 |
$168,725 |
$467,938 |
$1,039,791 |
$2,112,073 |
|
|
Reserve and Surplus |
$6,750 |
$241,036 |
$668,483 |
$1,485,415 |
$3,017,247 |
|
|
Total owner’s equity |
$111,475 |
$534,761 |
$1,292,672 |
$2,720,519 |
$5,373,461 |
|
|
Total Liabilities and Owner’s Equity |
$630,700 |
$1,162,148 |
$2,102,346 |
$3,780,368 |
$6,958,098 |
The main form of the financial ratios has been seen with computation of some of the key financial ratios ranging from debt ratio, current ratio, working capital ratios, and asset to equity ratio and debt to equity ratio. It has been further seen that in the first year the company will be able to maintain a current ratio of 1.62 and this was further seen to be increased to 2.06 in the second year. Insignia will be further maintaining a positive debt to equity ratio. It has been further discerned that in the 1st year the debt ratio was 0.81 and it was further able to improve this ratio to 0.71 in the second year. The company was further able to improve the debt ratio to 0.71 in the second financial year. The various assortments made in the study has been further able to show that the company has been able to increase the working capital from 181325 to 412863, which is also observed as a positive sign. It has been further seen that as the business is able to progress with lower reliance on the long term borrowings. This has been seen to be evident with a decreasing debt equity ratio of 4.66 to 1.17.
|
Common Financial Ratios |
||
|
Debt Ratio (Total Liabilities / Total Assets) |
0.81 |
0.71 |
|
Current Ratio (Current Assets / Current Liabilities) |
1.62 |
2.06 |
|
Working Capital (Current Assets – Current Liabilities) |
181,325 |
412,863 |
|
Assets-to-Equity Ratio (Total Assets / Owner’s Equity) |
5.77 |
1.65 |
|
Debt-to-Equity Ratio (Total Liabilities / Owner’s Equity) |
4.66 |
1.17 |
|
Sales Forecast |
||||||||||||||
|
Particulars |
January |
February |
March |
April |
May |
June |
July |
August |
September |
October |
November |
December |
Total Units Sold |
|
|
Sales |
30000 |
40000 |
35000 |
30000 |
35000 |
45000 |
35000 |
50000 |
40000 |
45000 |
50000 |
45000 |
480000 |
370000 |
|
Cost of Goods sold |
25000 |
30000 |
25000 |
25000 |
25000 |
25000 |
30000 |
30000 |
25000 |
35000 |
35000 |
20000 |
330000 |
180000 |
|
Gross Profit |
5000 |
10000 |
10000 |
5000 |
10000 |
20000 |
5000 |
20000 |
15000 |
10000 |
15000 |
25000 |
150000 |
190000 |
|
Particulars |
January |
February |
March |
April |
May |
June |
July |
August |
September |
October |
November |
December |
Total Units Sold |
|
|
Sales |
30000 |
45000 |
35000 |
35000 |
45000 |
40000 |
30000 |
40000 |
40000 |
60000 |
75000 |
45000 |
520000 |
666000 |
|
Cost of Goods sold |
25000 |
35000 |
30000 |
25000 |
35000 |
30000 |
25000 |
25000 |
25000 |
50000 |
35000 |
35000 |
375000 |
216000 |
|
Gross Profit |
5000 |
10000 |
5000 |
10000 |
10000 |
10000 |
5000 |
15000 |
15000 |
10000 |
40000 |
10000 |
145000 |
450000 |
|
Particulars |
January |
February |
March |
April |
May |
June |
July |
August |
September |
October |
November |
December |
Total Units Sold |
|
|
Sales |
45000 |
40000 |
55000 |
50000 |
75000 |
45000 |
50000 |
60000 |
55000 |
50000 |
50000 |
50000 |
625000 |
1198800 |
|
Cost of Goods sold |
15000 |
20000 |
45000 |
40000 |
60000 |
35000 |
45000 |
40000 |
40000 |
40000 |
40000 |
40000 |
460000 |
259200 |
|
Gross Profit |
30000 |
20000 |
10000 |
10000 |
15000 |
10000 |
5000 |
20000 |
15000 |
10000 |
10000 |
10000 |
165000 |
939600 |
|
Particulars |
January |
February |
March |
April |
May |
June |
July |
August |
September |
October |
November |
December |
Mar-11 |
|
|
Sales |
50000 |
50000 |
65000 |
60000 |
55000 |
55000 |
65000 |
60000 |
50000 |
50000 |
50000 |
50000 |
660000 |
2157840 |
|
Cost of Goods sold |
30000 |
35000 |
40000 |
45000 |
50000 |
25000 |
45000 |
30000 |
40000 |
40000 |
40000 |
40000 |
460000 |
311040 |
|
Gross Profit |
20000 |
15000 |
25000 |
15000 |
5000 |
30000 |
20000 |
30000 |
10000 |
10000 |
10000 |
10000 |
200000 |
1846800 |
|
Particulars |
January |
February |
March |
April |
May |
June |
July |
August |
September |
October |
November |
December |
Jan-07 |
|
|
Sales |
55000 |
60000 |
65000 |
55000 |
65000 |
45000 |
75000 |
60000 |
65000 |
50000 |
55000 |
50000 |
700000 |
3884112 |
|
Cost of Goods sold |
45000 |
40000 |
50000 |
45000 |
55000 |
30000 |
55000 |
30000 |
35000 |
35000 |
25000 |
35000 |
480000 |
373248 |
|
Gross Profit |
10000 |
20000 |
15000 |
10000 |
10000 |
15000 |
20000 |
30000 |
30000 |
15000 |
30000 |
15000 |
220000 |
3510864 |
Reference list
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Gin Choi, Y., Kwon, J., & Kim, W. (2013). Effects of attitudes vs experience of workplace fun on employee behaviors: Focused on Generation Y in the hospitality industry. International Journal of Contemporary Hospitality Management, 25(3), 410-427.
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Malaysia’s Hospitality Industry—What Are the Talent Challenges? | Aon Hewitt APAC . (2017). Apac.aonhewitt.com. Retrieved 15 July 2017, from https://apac.aonhewitt.com/home/insights-at-work/talent-challenges-malaysia-hospitality-industry
Oskam, J., & Boswijk, A. (2016). Airbnb: the future of networked hospitality businesses. Journal of Tourism Futures, 2(1), 22-42.
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Seilov, G. A. (2015). Does the adoption of customer and competitor orientations make small hospitality businesses more entrepreneurial? Evidence from Kazakhstan. International Journal of Contemporary Hospitality Management, 27(1), 71-86.
Sirakaya-Turk, E., Baloglu, S., & Mercado, H. U. (2014). The efficacy of sustainability values in predicting travelers’ choices for sustainable hospitality businesses. Cornell Hospitality Quarterly, 55(1), 115-126.
The 10 Best Hotel Deals in Kuala Lumpur (Jul 2017) – TripAdvisor. (2017). Tripadvisor.in. Retrieved 15 July 2017, from https://www.tripadvisor.in/SmartDeals-g298570-Kuala_Lumpur_Wilayah_Persekutuan-Hotel-Deals.html
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