Initial Capital Investment
Initial Capital Investment
Before investing any amount of capital into a business, organisation or idea, It is crucial that research is conducted into the market and the market share of the business. From this, an estimation can be gained if it is a wise idea and what the possible return maybe.
The initial capital investment must be sufficient to cover all costs of the setting up, opening and running of the business until the business is making enough income from sales and services to aide or cover all costs of running of the business.
The first main expenditure the business will occur is Capital expenditure; this includes purchase of land and buildings to be used for the business over several years, and purchases of fixtures and fittings, computers, software and equipment that will be beneficial to the business over periods in excess of one year.
It is important that Mr Myne, appreciates that the points of this type of expenditure is to generate extra profit for the business. If the expenditure does not contribute to generate to business profitability it should not be made. Sometime it is not easy to see the connection; how form example buying specific software or equipment can contribute to the profitability factor, so all factors should be addressed before discarding a purchase or change. Capital Cost Analysis:
Initial investment = £ 250 000
Break down:
Building Cost ((Rent)office operating premises): £ 120 per week excluding bills
£ 120 * 52 = £6240 per year
Bills including (gas, electricity, telephone): £ 2000 per year
Fixtures and fittings (desk tables chairs lights etc): £ 3000
Computer, Hardware and Software inc licences : £ 10000
Advertising (News paper, Web Site, PC Magazines, Flyers) : £ 2000
Wages (9 members of staff): 1 x Database Designer Manager: (£ 22,000 pa) 3 x Head database designer: (3x £ 19,000 pa) 4 x Assistant designers: (4x £16,000 pa) 1 x Receptionist: (£12,000 pa) each
Before investing any amount of capital into a business, organisation or idea, It is crucial that research is conducted into the market and the market share of the business. From this, an estimation can be gained if it is a wise idea and what the possible return maybe.
The initial capital investment must be sufficient to cover all costs of the setting up, opening and running of the business until the business is making enough income from sales and services to aide or cover all costs of running of the business.
The first main expenditure the business will occur is Capital expenditure; this includes purchase of land and buildings to be used for the business over several years, and purchases of fixtures and fittings, computers, software and equipment that will be beneficial to the business over periods in excess of one year.
It is important that Mr Myne, appreciates that the points of this type of expenditure is to generate extra profit for the business. If the expenditure does not contribute to generate to business profitability it should not be made. Sometime it is not easy to see the connection; how form example buying specific software or equipment can contribute to the profitability factor, so all factors should be addressed before discarding a purchase or change. Capital Cost Analysis:
Initial investment = £ 250 000
Break down:
Building Cost ((Rent)office operating premises): £ 120 per week excluding bills
£ 120 * 52 = £6240 per year
Bills including (gas, electricity, telephone): £ 2000 per year
Fixtures and fittings (desk tables chairs lights etc): £ 3000
Computer, Hardware and Software inc licences : £ 10000
Advertising (News paper, Web Site, PC Magazines, Flyers) : £ 2000
Wages (9 members of staff): 1 x Database Designer Manager: (£ 22,000 pa) 3 x Head database designer: (3x £ 19,000 pa) 4 x Assistant designers: (4x £16,000 pa) 1 x Receptionist: (£12,000 pa) each