In hypothetical terms, the firm was bound to go into losses in the first few months of establishment. The objective we had prioritised was to establish the company quickly with minimal losses, which then could be easily recovered over a short time period. We firstly did the essential market research. This would give us a market audit, allowing us to precisely plan both short-term and long-term strategies, ensuring that we don’t have any confusion and see exactly what our goal is. Along with the research, we decided to build a premium website. This was our first step into advertising, organising and brought up a channel of communication between stakeholders and us. Our next step was competition research. This should us what we were up against and how to establish our own USP, accordingly, we set our product specifications and price as well as an introductory promotional discount to attract customers if they enquired. We then did negotiations with distributors to establish channels of distribution. The reason for this is that a company needs revenue, but more importantly, profit to survive, which can only be established with sales. By the third month, we had successfully established a channel of distribution, which was in our budget and produced good profits. We mistakenly forgot about the 30-day credit. We had consumed a majority of our capital, leaving us in money being owed to the bank. We therefore decided to apply for an overdraft to allow us a margin for error. Also as a reassurance as well as necessity, we needed to raise capital, so we borrowed surplus from friends and family. Customers continued not to pay money owed to us, leading in Microvault going in to debts of thousands of pounds. This was not acceptable so we set up credit control to regain money owed to us. We had to take drastic measures to ensure the company’s survival. We were left with no choice but to take out a £10,000 loan from the bank to sustain our losses and maintain a working capital for production as we had contracted new distributors as well. This meant production line quantity increased as well as surplus to maintain production and overheads. Eventually, the debtors paid up and business was stable. Enquires were slowly increasing as well as individual orders. We then decided to hold expansion for a while and focus on saving profits. This was to ensure that once research had been done and we did decide to expand, we would have the capital to sustain it. Meanwhile, we published a trade magazine advert. This was the first real promotion we had done. It helped the company’s reputation and status quite a bit. Enquires increased and sales were at an all time high. Eventually, we completed the formal setup of MicroVault Ltd. This reduced the risk of liquidisation and redundancy as well as improved the company status and reputation. We then created an employment contract and made the individual full-time. Lastly, we relocated to a business park, as the demand was higher than the storage capacity. This saved us hours of labour put in, resulting in more time to focus on other things such as recruitment.
MICROVAULT LTD COMPANY.
Report to: Bank Manager
Date: 4th February 2009-03-04
Report for: Bank Loan
Obtaining a loan for MICROVAUL LTD COMPANY to help finance expansion. Executive Summary
This is an end-of-year trading report of MICROVAULT LTD COMPANY. I am writing this report to show the success of the company so far, and explain its performance. The main point of this report is to obtain a loan from the bank to help finance expansion. Introduction
We are a small limited company called MICROVAULT. MICROVAULT was established in 2009. We specialise in producing Computers. Our company is in a market for 14 months and we are looking forward to make it much more successful with some financial support form the bank. So far our company have a high reputation with its stakeholders and local community, we are looking forward to be...