Discuss the Report for Patisserie Shop in Dubai.
Part 1: Stating the objective
In the near future, I intend to get involved in pastries or bakery. Particularly I would like to open a Patisserie shop in Dubai. I picked this trade since I appreciate preparing and cooking a wide range of nourishment, I mainly appreciate preparing and eating pastries. I might want to prepare wedding cakes for weddings, birthdays, and for any uncommon event. I would likewise appreciate contending in cake appears. At that point, when I am prepared to resign I want to have the capacity to write a book on my experience to help any other person that might need to open up his or her patisserie shop business.
Part 2: Identifying costs/benefits and the method
Identifying Costs
According to Baumann & McAllister (2015), each business is distinctive. From costs to staff necessities, a business’ needs are exclusive, as is the measure of cash invested to get it off the ground. Opening a pastry kitchen may be perceived as easy; in any case, one should take the opportunity to draft a plan appropriately to guarantee a bread shop is effective. The financial plan for each pastry shop is distinctive, contingent upon an assortment of components including size, area, items and the technique. By evaluating salary, estimating costs and arranging for the unforeseen, anybody can plan a strategy that will lead a pastry kitchen/patisserie shop to achievement.
Thomas (2014) puts it better that various startup costs are connected with opening a pastry shop. For instance, someone has to acquire nearly all of the materials needed to begin a patisserie shop. Additionally he/she needs to guarantee the instruments required in order to be fruitful, for example, blenders, stoves and other fundamental necessities. The overall costs include office related costs, for example, development and rental charges, startup supply in addition to diverse resources essential to begin the bread shop.
Whilst creating a budget to open a pastry kitchen, the key thing to front is to discern the sum of money required to invest in the venture by offering pastries to the market. One key segment of drafting a budget is thinking about items that will have a set of cost, for instance, rolls of bread, treats and biscuits. The valuing system must work while finishing custom orders for individual customers; for instance, outlining and heating in an oven a custom wedding cake. The measure of profits anticipated will give an estimation of the amount of cost a pastry shop can have without losing cash (Baumann & McAllister, 2015).
Identifying Benefits
With wild rivalry from basic sellers and other box retailers such as supermarkets, an effective pastry shop must be set up to meet the requests of its clients with the same accommodation as the other retailers, however, it should be of higher quality. To make and keep up progress in such a challenging industry, a new pastry shop must be arranged well before its grand opening. Working a bread shop can be a troublesome endeavor with startup hardware costs, generation due dates, holding fast to security and upkeep directions and overwhelming nearby rivalry for clients. There are, nevertheless, some key advantages of running a patisserie shop. The main benefit is having control over a retail business in which someone can build up a reliable client base and extend to other places when the time is correct (Thomas, 2014).
One of the geniuses of running a pastry kitchen is having control on the items and their sums (Zimmerer, 2010). Moreover, there is an array of alternatives including a practically perpetual assortment of breads, cakes, cakes, brownies and pies. Concentrating on a specific product offering in order to have practical experience is usually recommended so that that pastry chef can idealize the formula and assembling of it. Additionally a pastry chef can pick ‘things of the month’, for example, pumpkin flavor biscuits and bagels amid October to pull in clients. This depends on the way that individuals need to eat and countless appreciation. Therefore, they will pay for crisp items. Heated things are solace sustenance that can be set up as exceptionally nutritious and wonderful (Zimmerer, 2010).
The pastry shop business offers potential for extraordinary imagination. A pastry chef and his staff can try different things with unique formulas, energizing presentations of items and can express the bread shop’s style with improvements. Representatives who are permitted to express their thoughts are more fulfilled by their work than the individuals who are required to create the same things all the day (Laporte and Le Tallec, 2012).
An advantage of running a pastry shop is that an investor can regularly extend the business as required. Occasionally, there is a chance to move into a bigger region or to add on to present office. Regardless of the fact that an investor does not amplify the physical size of the pastry kitchen, he/she regularly can build the quantity of various items on offer and the sums prepared in a session. Cautious observing of offers and considering the costs of fixings are basic in figuring out whether or when to grow and extend to other towns.
In a book by Harold and Seymour (2012), the Payback time is the period necessary to restore from the outlay of a project. The Payback period of any project or venture is an imperative determinant of whether to try the project, as extended Payback time spans are regularly not appealing for speculative arrangements. Therefore, this is a suitable method for estimating the payback period for a patisserie shop.
Payback time spans are exceptionally uncomplicated to compute. It is an evaluation of risks absolute in an investment project. Given that risks that come about soon after capital injection in the duration of a project or a venture are observed as more dubious, the Payback time span gives a sign of certainty of revenues in a project or venture. For businesses facing liquidity matters, it points a straight arrangement of projects that will return money in a timely manner (Avi, 2010).
Payback method fails to test out the Time Value of Money; this is a real shortcoming because it can prompt erroneous pickings. An array of Payback techniques that tries to expel this shortcoming is known as the reduced or discounted Payback strategy. It does not check the cash flows that are realized following the Payback period (Williams, 2012).
Part 3: The Analysis
The projected costs and revenues for a pastry shop are shown in the table below.
|
Year |
Cost |
Revenue |
|
Y 1 |
$ 50,000 |
$ 40,000 |
|
Y 2 |
$ 55,000 |
$ 50,000 |
|
Y 3 |
$ 55,000 |
$ 70,000 |
|
Y 4 |
$ 60,000 |
$ 100,000 |
|
Y 5 |
$ 60,000 |
$ 120,000 |
As indicated in the table above, the pastry business starts to take off from the third year of operations. This is due to many favorable microeconomic and macroeconomic factors. The fiscal setting include outside components in an industry as well as the overall economy that may affect a venture. The macroeconomic setting affects an entire economy in addition to the larger component of its projects or ventures. Boardman, Reinhart and Celec, (2012) concur that various monetary components carried out as external requirements on a business; this means that an investor has partial management of external factors.
The inflation rate in the U.A.E has been rising gradually since 2013 and it is expected to stabilize around 1.50 in the coming years. The CPI is also expected to settle at 150. Price increases in the overall economy have been due to escalating housing and utility cost (The National, 2016). Using sensitivity analysis, investment in a pastry shop in the heart of Dubai would be a good idea because of the low and manageable inflation. Likewise, the interest rates are also low compared to other economies (Gillman, 2013). Briefly, I plan to finance the Patisserie shop through savings in my bank account and donations from friends and family. According to Rogoff (2014), bank loans are not good for a start-up business because it can come with dire consequences, such as high interest rates due to inflationary pressures in an economy.
Payback in Capital Budgeting points to the time required to recuperate the resources exhausted in a speculation, or to achieve the Break-even Point (BEP). For illustration, a $ 5000 speculation made toward the beginning of year 1, which returned $500 toward the end of year 1, and year 2 individually would have a two-year payback period. Payback period is generally written in years. Beginning from the first year of a venture by computing Net Income for every year: Net Income Year 1 = Money Inflow Year 1 – Money Outflow Year 1. At that point the Aggregate Income = Net Income Year 1 + Net Income Year 2 + Net Income Year 3, and so on. This is aggregated year on year until the Combined Income is a positive number. Therefore, the positive year in the series is the payback year (Jonathan, 2010).
However, the Time Value of Money is hardly checked. In a book by Kent and English, (2011) the Payback method instinctively appraises the point an outlay reaches to “sustain itself”. Every single one being equal, a short Payback time span is attractive over long time spans. The Payback method is mostly used in Capital Budgeting due to its handiness regardless of the superficial limit portrayed in this essay.
The term is likewise generally utilized as a component of dissimilar sorts of speculation areas, regularly concerning vitality effectiveness, support, or diverse adjustments. For instance, computer hardware might be depicted with a Payback span of a definite era, expecting some costs (Baumann & McAllister, 2015).
References
Avi R., (2010) Capital Budgeting Techniques, The Payback Period, The Net Present Value, The Internal Rate of Return and their Computer Applications, Managerial Finance, Vol. 13 Issue: 10, pp. 11 – 13
Baumann D, McAllister L (2015) Inflation and String theory, Cambridge University Press
Boardman, C. M., Reinhart, W. J. and Celec, S. E. (2012), The Role of the Payback Period in the Theory And Application of Duration to Capital Budgeting, Journal of Business Finance & Accounting, Vol. 12
Gillman M (2013) Inflation Theory in Economics: Welfare, Velocity, Growth and Business Cycles, Rutledge
Harold B. Jr. and Seymour S. (2012) The Capital Budgeting Decision, Ninth Edition: Economic Analysis of Investment Projects, Rutledge
Jonathan L (2010) A Dictionary of Accounting, OUP, Oxford
Kent B. H and English P. (2011) Capital Budgeting Valuation: Financial Analysis for Today’s Investment Projects, John Wiley & Sons
Laporte E and Le Tallec P. (2012) Numerical Methods in Sensitivity Analysis and Shape Optimization, Springer Science & Business Media
Rogoff (2014) Bankable business plans, Thomson Texere.
The National (April 2016) Dubai’s inflation rate cut by lower rents. Retrieved on 23 July 2016
Thomas P. (2014) Capital in the Twenty-First Century, Harvard University Press
Williams, J. R. (2012) Financial and Managerial Accounting, McGraw-Hill, p. 1117
Zimmerer, T. (2010) Essentials of entrepreneurship and small business management, Pearson Prentice Hall, New Jersey
Discuss the Report for Patisserie Shop in Dubai.
Part 1: Stating the objective
In the near future, I intend to get involved in pastries or bakery. Particularly I would like to open a Patisserie shop in Dubai. I picked this trade since I appreciate preparing and cooking a wide range of nourishment, I mainly appreciate preparing and eating pastries. I might want to prepare wedding cakes for weddings, birthdays, and for any uncommon event. I would likewise appreciate contending in cake appears. At that point, when I am prepared to resign I want to have the capacity to write a book on my experience to help any other person that might need to open up his or her patisserie shop business.
Part 2: Identifying costs/benefits and the method
Identifying Costs
According to Baumann & McAllister (2015), each business is distinctive. From costs to staff necessities, a business’ needs are exclusive, as is the measure of cash invested to get it off the ground. Opening a pastry kitchen may be perceived as easy; in any case, one should take the opportunity to draft a plan appropriately to guarantee a bread shop is effective. The financial plan for each pastry shop is distinctive, contingent upon an assortment of components including size, area, items and the technique. By evaluating salary, estimating costs and arranging for the unforeseen, anybody can plan a strategy that will lead a pastry kitchen/patisserie shop to achievement.
Thomas (2014) puts it better that various startup costs are connected with opening a pastry shop. For instance, someone has to acquire nearly all of the materials needed to begin a patisserie shop. Additionally he/she needs to guarantee the instruments required in order to be fruitful, for example, blenders, stoves and other fundamental necessities. The overall costs include office related costs, for example, development and rental charges, startup supply in addition to diverse resources essential to begin the bread shop.
Whilst creating a budget to open a pastry kitchen, the key thing to front is to discern the sum of money required to invest in the venture by offering pastries to the market. One key segment of drafting a budget is thinking about items that will have a set of cost, for instance, rolls of bread, treats and biscuits. The valuing system must work while finishing custom orders for individual customers; for instance, outlining and heating in an oven a custom wedding cake. The measure of profits anticipated will give an estimation of the amount of cost a pastry shop can have without losing cash (Baumann & McAllister, 2015).
Identifying Benefits
With wild rivalry from basic sellers and other box retailers such as supermarkets, an effective pastry shop must be set up to meet the requests of its clients with the same accommodation as the other retailers, however, it should be of higher quality. To make and keep up progress in such a challenging industry, a new pastry shop must be arranged well before its grand opening. Working a bread shop can be a troublesome endeavor with startup hardware costs, generation due dates, holding fast to security and upkeep directions and overwhelming nearby rivalry for clients. There are, nevertheless, some key advantages of running a patisserie shop. The main benefit is having control over a retail business in which someone can build up a reliable client base and extend to other places when the time is correct (Thomas, 2014).
One of the geniuses of running a pastry kitchen is having control on the items and their sums (Zimmerer, 2010). Moreover, there is an array of alternatives including a practically perpetual assortment of breads, cakes, cakes, brownies and pies. Concentrating on a specific product offering in order to have practical experience is usually recommended so that that pastry chef can idealize the formula and assembling of it. Additionally a pastry chef can pick ‘things of the month’, for example, pumpkin flavor biscuits and bagels amid October to pull in clients. This depends on the way that individuals need to eat and countless appreciation. Therefore, they will pay for crisp items. Heated things are solace sustenance that can be set up as exceptionally nutritious and wonderful (Zimmerer, 2010).
The pastry shop business offers potential for extraordinary imagination. A pastry chef and his staff can try different things with unique formulas, energizing presentations of items and can express the bread shop’s style with improvements. Representatives who are permitted to express their thoughts are more fulfilled by their work than the individuals who are required to create the same things all the day (Laporte and Le Tallec, 2012).
An advantage of running a pastry shop is that an investor can regularly extend the business as required. Occasionally, there is a chance to move into a bigger region or to add on to present office. Regardless of the fact that an investor does not amplify the physical size of the pastry kitchen, he/she regularly can build the quantity of various items on offer and the sums prepared in a session. Cautious observing of offers and considering the costs of fixings are basic in figuring out whether or when to grow and extend to other towns.
In a book by Harold and Seymour (2012), the Payback time is the period necessary to restore from the outlay of a project. The Payback period of any project or venture is an imperative determinant of whether to try the project, as extended Payback time spans are regularly not appealing for speculative arrangements. Therefore, this is a suitable method for estimating the payback period for a patisserie shop.
Payback time spans are exceptionally uncomplicated to compute. It is an evaluation of risks absolute in an investment project. Given that risks that come about soon after capital injection in the duration of a project or a venture are observed as more dubious, the Payback time span gives a sign of certainty of revenues in a project or venture. For businesses facing liquidity matters, it points a straight arrangement of projects that will return money in a timely manner (Avi, 2010).
Payback method fails to test out the Time Value of Money; this is a real shortcoming because it can prompt erroneous pickings. An array of Payback techniques that tries to expel this shortcoming is known as the reduced or discounted Payback strategy. It does not check the cash flows that are realized following the Payback period (Williams, 2012).
Part 3: The Analysis
The projected costs and revenues for a pastry shop are shown in the table below.
|
Year |
Cost |
Revenue |
|
Y 1 |
$ 50,000 |
$ 40,000 |
|
Y 2 |
$ 55,000 |
$ 50,000 |
|
Y 3 |
$ 55,000 |
$ 70,000 |
|
Y 4 |
$ 60,000 |
$ 100,000 |
|
Y 5 |
$ 60,000 |
$ 120,000 |
As indicated in the table above, the pastry business starts to take off from the third year of operations. This is due to many favorable microeconomic and macroeconomic factors. The fiscal setting include outside components in an industry as well as the overall economy that may affect a venture. The macroeconomic setting affects an entire economy in addition to the larger component of its projects or ventures. Boardman, Reinhart and Celec, (2012) concur that various monetary components carried out as external requirements on a business; this means that an investor has partial management of external factors.
The inflation rate in the U.A.E has been rising gradually since 2013 and it is expected to stabilize around 1.50 in the coming years. The CPI is also expected to settle at 150. Price increases in the overall economy have been due to escalating housing and utility cost (The National, 2016). Using sensitivity analysis, investment in a pastry shop in the heart of Dubai would be a good idea because of the low and manageable inflation. Likewise, the interest rates are also low compared to other economies (Gillman, 2013). Briefly, I plan to finance the Patisserie shop through savings in my bank account and donations from friends and family. According to Rogoff (2014), bank loans are not good for a start-up business because it can come with dire consequences, such as high interest rates due to inflationary pressures in an economy.
Payback in Capital Budgeting points to the time required to recuperate the resources exhausted in a speculation, or to achieve the Break-even Point (BEP). For illustration, a $ 5000 speculation made toward the beginning of year 1, which returned $500 toward the end of year 1, and year 2 individually would have a two-year payback period. Payback period is generally written in years. Beginning from the first year of a venture by computing Net Income for every year: Net Income Year 1 = Money Inflow Year 1 – Money Outflow Year 1. At that point the Aggregate Income = Net Income Year 1 + Net Income Year 2 + Net Income Year 3, and so on. This is aggregated year on year until the Combined Income is a positive number. Therefore, the positive year in the series is the payback year (Jonathan, 2010).
However, the Time Value of Money is hardly checked. In a book by Kent and English, (2011) the Payback method instinctively appraises the point an outlay reaches to “sustain itself”. Every single one being equal, a short Payback time span is attractive over long time spans. The Payback method is mostly used in Capital Budgeting due to its handiness regardless of the superficial limit portrayed in this essay.
The term is likewise generally utilized as a component of dissimilar sorts of speculation areas, regularly concerning vitality effectiveness, support, or diverse adjustments. For instance, computer hardware might be depicted with a Payback span of a definite era, expecting some costs (Baumann & McAllister, 2015).
References
Avi R., (2010) Capital Budgeting Techniques, The Payback Period, The Net Present Value, The Internal Rate of Return and their Computer Applications, Managerial Finance, Vol. 13 Issue: 10, pp. 11 – 13
Baumann D, McAllister L (2015) Inflation and String theory, Cambridge University Press
Boardman, C. M., Reinhart, W. J. and Celec, S. E. (2012), The Role of the Payback Period in the Theory And Application of Duration to Capital Budgeting, Journal of Business Finance & Accounting, Vol. 12
Gillman M (2013) Inflation Theory in Economics: Welfare, Velocity, Growth and Business Cycles, Rutledge
Harold B. Jr. and Seymour S. (2012) The Capital Budgeting Decision, Ninth Edition: Economic Analysis of Investment Projects, Rutledge
Jonathan L (2010) A Dictionary of Accounting, OUP, Oxford
Kent B. H and English P. (2011) Capital Budgeting Valuation: Financial Analysis for Today’s Investment Projects, John Wiley & Sons
Laporte E and Le Tallec P. (2012) Numerical Methods in Sensitivity Analysis and Shape Optimization, Springer Science & Business Media
Rogoff (2014) Bankable business plans, Thomson Texere.
The National (April 2016) Dubai’s inflation rate cut by lower rents. Retrieved on 23 July 2016
Thomas P. (2014) Capital in the Twenty-First Century, Harvard University Press
Williams, J. R. (2012) Financial and Managerial Accounting, McGraw-Hill, p. 1117
Zimmerer, T. (2010) Essentials of entrepreneurship and small business management, Pearson Prentice Hall, New Jersey
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