Operational Requirements

Discuss about the Grant Application or Business Case.

In the current scenario, the food industry is growing with rapid speed and having significant contribution in the GDP and tourism activities of the nations. The planning of business about food restaurant in hospital will require skilled human resources who can help in the development of menu, planning of operations, preparation and delivery of the food. The infrastructure and implementation of technical tools for taking the order and offering the information to the customer. The prior planning of business and development of the roadmap of the business would be beneficial for the management. The opening of the restaurant to provide food in the hospital in Sidney, Australia would be the major task that will require financial resources to establish the restaurant. For starting the business in Australia the option of the opening of food restaurant in hospital would be more feasible (Fuller, 2016). The supply of the services would be manageable as there are many vendors are available for offering the raw material to prepare the food in hospital according to menu and requirements of customers. The consideration of issues of economy, human resources and implementation of technical resources would be the major concern of the management to meet the objectives.

• To meet the needs of local and international customers.
• To offer high-quality food and services.
• To gain profit from the organization.

The small business unit requires funds for managing the following operations in the business which are playing vital role in the planning and implantation of business project,

Working capital: For starting the business sufficient amount of working capital is required which is the major reason for funding. The working capital helps to maintain the health of the business that can be gain from the external sources like banking institute and investors. A loan can help the management to cover the short-term fund requirements of business to grow to meet the needs of customers and supplier for food restaurants in hospital (Junior.et al. 2016). This kind of approach in funding of working capital will help the organization to gain the advantage of new opportunities by investing in the development of new products and services for customers.

Asset purchase: In the business of food restaurant in hospital, the funds are required for purchasing of assets to prepare and deliver the food to the customers. The major assets of the restaurant are furniture, determination of quality interior and ambience as well human resources. In the current scenario, customer demands entertainment too with food so implementation of equipment’s like music system, big projector screen as well development of facilities would be requires funding. The setup of kitchen and machinery for preparing and offering the food demand funds (Wray.et al. 2015).

Location and Market Potential

Cash flow: the process of owning a business can be a roller coaster especially in a hard time of slow demand and the weak economy. To survive in these conditions the management will require funds to maintain the cost of the basic operations and pay to the human resources. For that reason, owner of the restaurant will need funds to keep the ship afloat.

Inventory: For the food product and services business in hospital, inventory of the raw material plays the critical role in the management of timely services (Malherbe, 2015). The prior forecasting and availability of raw material are essential to meet the needs and demand of the customer. This would be a major reason for funding in the business.

For opening the restaurant in hospital the location Sydney is selected as there football of international and local people is high that are looking for quality food and services to spend some quality time with the friends and family members. The growth of food industry is 8% which indicates that business of food restaurant would have potential to grow with the effectiveness.

According to analysis, the demand for quality food and services is high in the selected region of Australia. The business process of food is beneficial for management as a demand of verity food is increasing as people are investing on quality food and services that are encouraging the food business. By considering information, the financial required are high for the establishment of a restaurant as a development of infrastructure and recruitment of skilled human resource will be important (Begenau, 2016). The major food business is also having significant contribution in the GDP and attraction of tourist to the particular location. 

The budget has been prepared for the first financial year which consists of all related activities regarding the operation of the restaurant in hospital in Sydney. This facilitates corporation in integrating all related resources because right forecasting is done for the material needed in the manufacturing of several products and services. On the other hand, forecasting from the zero-based cash budget assists management of new restaurant to access cost-effective sources and ensure the successful operation of the business for longer time span. The budget of the business has been prepared in accordance with the outcome presented in the cash flow statement. For this purpose, each year is considered as the financial year and accordingly amount of revenue and expenses has been divided for each year. It is assumed that amount of expenses will remain same in all months of the single financial year. This helps management keep a record of the expenses in a more effective manner.

Preparation of the Budget

Table 1: Zero-based cash budget

The above-mentioned budget shows that in every year the company will increase its revenue because of its unique identity in the marketplace and meeting the expectations of customers. However, loan or long-term debt will be paid on time every month so as to reduce the financial burden. It aids to achieve the long as well as short-term objectives of the business as management would be able to arrange other resources accordingly. The constant increase or rise in the profitability of restaurant in hospital in Sydney shows that it can effectively recover the cost of production and increase the overall rate of return. This aids to cater the requirement of the business and shed light on its expansion for a long term.

The budget for the second financial year has been prepared as follows where the outcome generated from first financial year considered (Malherbe, 2015). This enables management of restaurant in hospital in Sydney to estimate the requirement of the financial resources and accordingly access suitable sources. However, the below-mentioned budget reflects that company is not required to acquire the financial resources from any other party. The most significant or crucial aspect is that firm has control over its expenses so that accordingly revenue is increased. This, in turn, the company is ensuring consistent growth and development in the marketplace. However, unfavourable condition might face when the business

Table 2: Cash budget

The aforementioned budget is prepared on a quarterly basis in which in the first quarter business get surplus worth 348992 because the cash balance of the previous year is added in the revenue. In this manner, it becomes easy for the new restaurant in Sydney to ensure smooth operation without acquiring the loan. Furthermore, revenue or rate of return for the business is increasing in all the quarter. It proves to be effective in expanding the business in the future time span and meeting the requirement of the business in the right manner.  Moreover, yearly expenses are divided per month so that it becomes easy for a corporation to have right control over the expenses and accordingly overall performance of the business can be managed in an effectual manner.

For an implementation of new project or plan, there is need of contingency planning that helps to deal with the unexpected situations as well maintaining the financial health of the organization. For planning of financial needs for surviving in the crisis conditions would be involve following steps:

Zero-based Cash Budget for the First Two Financial Years

Specific actions: The top amendment of an organization need to plan the specific actions for fund management for future by considering the multiple scenarios using the contingency planning. This kind of planning would involve opinion of stakeholder as well actions that have been taken by the competitor organizations in these situations (Iacoviello, 2015). For example, the organization will deposit some amount for the security of the business which can be used in this kind of situations to run the business without interruption.

Adjustment in working capital: The contingency planning of business will involve the adjustment in the allocation and utilization of working capital to meet the financial needs of a particular situation. As the situation of business gets improved the management can increase the bonus accruals (Sadgrove, 2016). The preferable actions need to be taken to mitigate the situation of crisis. The prior adjustment by forecasting financial situations will be beneficial for an organization to meet the objectives.

Assessment of revenue and resources allocation: the planning will be the focus on revenue and cost of the operations to make changes in the financial activities to have sufficient funds for maintaining the operational activities. The top management will assess revenue from the business as well make the distribution of resources accordingly which will help to receive certain benefits in the moment of crisis (Finch, 2016). For example, the management could influence the prices of products and services to maintain the financial investment.

The break-even point indicates that point from where the ratio of profitability can be derived. It assists corporation or management to under the situation of neither profit nor loss. The restaurant for hospital in Sydney would accordingly make huge profitability which aids to recover initial cost and meet the expectations of all related stakeholders. The below-mentioned calculation reflects the break-even point. At this juncture, operating expenses incurred from the first financial year is 320000 and long-term debt is 20000. On the other hand, sales revenue generated from the first financial year is 650000. Owing to this, 52.30% is considered as the break-even point.

Operating Expenses + Long-term debt/sales

(320000+20000)/650000=52.30%

The break-even analysis has been conducted from the outcome of the cash flow of restaurant for hospital in Sydney. It is based on certain assumptions which are explained below the table. The below-mentioned table reflects sales turnover is keep on increasing which facilitate to cater the requirement of all related operational activities. However, additional expenses such as VAT and interest-free borrowing are generated by the business. In this manner, first financial year derived sales turnover worth 650000 whereas in the second year it was 780000 and the third year contain sales turnover worth 936000. This amount of sales turnover is considered as the final outcome or cash received for the respective financial years. Furthermore, cash expenses are incurred in hiring the raw material, labour that facilitates produce the final outcome for meeting the expectations of customers.  However, no any kind of long-term assets would be purchased in the first financial year but later it would. 

Apart from this, a corporation will not pay the dividend because no such money has been borrowed. Owing to this, financing aspect of the business is secured whereby it becomes easy to meet the expectations of all related parties and increase the rate of return for the corporation. Moreover, management of the business incur expenses in acquiring the assets and paying the long-term debt so as to meet the short and long-term obligations on the right time. The aspect of meeting the short-term obligation on the time is helpful to maintain the successful operation of the business. This proves to be effective in deriving the valid outcome and supporting all related stakeholders of the business. On the other hand, it might be possible that cost of production increases with the variation in the cash expenses. For this purpose, tight control will be imposed by the management of the business in order to increase the rate of return.

Table 3: Cash flow statement

• The sales revenue of the business will be increased by 20% in each financial year
• The expenses incurred in the production phase will be increased through 10%
• Uniqueness in the products and services reduces the need for marketing
• There will be the high or large number of customers.
• The firm will outperform in the marketplace as it would offer varied range of products and services
• The suppliers are easily approachable and they provide timely material of the production of safe and quality products.
• The new service of product which is being offered by new restaurant would be different from other competitors and perfectly meet the expectations of customers. Owing to this, sales turnover will be increased continuously.
• The cost of production or indirect cost might increase due to a poor economic condition. At this juncture, management might be in the need for acquiring sources. Therefore, the new restaurant in Sydney considers both positive and negative outcome and accordingly contingency plan has also been provided.

Conclusion

The aforementioned report concludes that management of new restaurant can easily manage its profitability and expenses by having control over different business activities. It can also be said that At this juncture, the price of products might be increased so as to recover the cost and increase the rate of return from the business. Also, training can be provided to personnel so they focus on the quality of products and services whereby sales can be increased automatically.

References

Begenau, J., 2016. Capital requirements, risk choice, and liquidity provision in a business cycle model.

Finch, B., 2016. How to write a business plan. Kogan Page Publishers.

Fuller, G.W., 2016. New food product development: from concept to marketplace. CRC Press.

Iacoviello, M., 2015. Financial business cycles. Review of Economic Dynamics, 18(1), pp.140-163.

Junior, E.L.C. and Morand, C., 2016. Interest of mate (Ilex paraguariensis A. St.-Hil.) as a new natural functional food to preserve human cardiovascular health–A review. Journal of Functional Foods, 21, pp.440-454.

Malherbe, F., 2015. Optimal capital requirements over the business and financial cycles.

Sadgrove, K., 2016. The complete guide to business risk management. Routledge.

Wray, H.E., Grant, S., Kofman, E. and Peel, C., 2015. Family friendly? The impact on children of the family migration rules: a review of the financial requirements.