Benefits of Sole Proprietorship for PQS Bicycles

Part A- Business Structure

As per the case, a new company named PQS Bicycles is initiated by an individual in a nearby 15km radius of Frankston. The proposed firm converts regular bicycles (New and old) into e-bikes. It would be managed through the sole proprietorship business structure because it is owned by a single owner. The rationale behind the selection of sole proprietorship organizational structure is that this structure would facilitate complete control and ownership of business operations (Brinca and et al., 2016). Moreover, the proprietor does not want to consider lengthy processes of taxation and financial reporting in a regular manner. It ensures quick decision making because the owner maintains complete control over the capital and cash flow. However, there are some issues identified in the sole proprietorship business structure that could be faced by the owner in the present case. First of all, the owner has to bear all risk on investments. It also contains a risk of long term sustainability because fluctuations in the market trends could increase the chances of bankruptcy and business closure (Penman and et al., 2018). This structure covers unlimited liabilities on the owner so the proprietor could find several issues in raising funds for business expansion through bank loans and other resources.

Part B- Business Plan

Title of Business

PQS Bicycles

Executive Summary

The proposed firm of PQS Bicycles would be established as a single owner firm in the location of a 15km radius of Frankston. It would facilitate a variety of services related to the conversion of regular bicycles (New and old) into e-bikes and other maintenance work. In addition to that increased demand for an e-bike would facilitate a long term stable growth. It would provide new business opportunities to the company.

Background

PQS Bicycles is aimed to establish an outlet of e-bike near to Monash University Peninsula campus. The company is focused on supporting the green initiative of government agencies to reduce transportation-based emissions (Scott, 2019).

Vision

To assess sustainable growth with consideration of different green initiatives and consideration of technologies

Mission

The mission of the company is to facilitate a low cost and efficient e-bike conversion services that would increase the number of users of e-bikes. This mission would help the company to meet the local transportation needs of students and other individuals and reduction on greenhouse gas emissions linked with local transportation.

Marketing Plan

Marketing Mix

Product: Company offers a range of e-bike kits and installation services to convert their traditional cycle into an e-bike.

Price: Organisation follows a competitive pricing approach to maintain business profitability and market competitiveness (Dowling and Maalsen, 2020).

Promotion: Both traditional and digital marketing tools would be considered to promote different e-bike kits and other related services.

Operations and Production

For the proposed business, key requirements are listed below:

Financial Projections

Cash Flow

Part C- Variance Analysis

Cash Flow

As per the above of the table of cash flow projections, the company has maintained favourable net cash flow because the value of actual net cash flow is higher than budgeted net cash flow. However, the company has not achieved the management’s expectation in terms of cash receipts because there is unfavourable variance is identified of $-700 within cash receipt in which the actual cash receipt is lower than the predicted cash receipt. It shows that the business entity has to pay significant attention to cash inflow (Ionescu, 2017). On the other hand, the company has maintained positive outcomes in terms of business expenditure because the actual expenditures are lower than budgeted expenditure.

Income Statement

In the context of variance analysis of the income statement of the company, it has found that the business entity has not achieved a projected income of $10000 and recorded an unfavourable variance of $-3005. In a similar way, the actual expenditure is higher than the budgeted expenditure that shows an unfavourable variance of $623 to incorporate expenditures. Moreover, the business entity has faced a loss of $-2178 in actual data that has resulted in unfavourable variance in overall business profitability and earnings (Marzlin Marzuki, N. A. R., and Ismail, 2019).

Reference

Brinca, P. and et.al. (2016). Accounting for business cycles. In Handbook of Macroeconomics (Vol. 2, pp. 1013-1063). Elsevier.

Dowling, R., and Maalsen, S. (2020). Familial mobilities beyond the private car: electric bikes and car sharing in Sydney, Australia. Applied Mobilities, 5(1), 53-67.

Fishman, E. (2017). Changing lanes: The emergence of e-bikes. ReNew: Technology for a Sustainable Future, (139), 42-45.

Ionescu, L. (2017). Productivity accounting and business financial performance: a review of current evidence. Economics, Management, and Financial Markets, 12(2), 67-73.

Penman, S. H. and et.al. (2018). A framework for identifying accounting characteristics for asset pricing models, with an evaluation of book‐to‐price. European Financial Management, 24(4), 488-520.

Marzlin Marzuki, N. A. R., and Ismail, J. (2019). Benefits and limitations of variance analysis in management accounting. ACCOUNTING BULLETIN, 15.