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UNIVERSITY OF TECHNOLOGY, SYDNEY -School of Accounting
22567 Planning and Control for Small Business Enterprises
Autumn Semester 2015
Case Study Assignment
OUTLINE OF CASE STUDY:
As a small business owner in the optometry industry, our guest speaker spoke of her and her business partners experiences. Their services and sale items include the following:-

Eye examinations
Eye care programmes
Referrals to specialists
Prescribed lenses (glass and plastic lenses for improving patient sight)
Glass frames
Behavioural optometry (review children sight and determine a specialisedprogramme, if required)
Sunglasses
Eye care products (e.g. eye drops)


She shared her real life business experiences during her visit and this case study will be based on her type of business however, financial data will not be actual and has only been created for the purposes of this assessment.
Assume that you are a practicing accountant and your clients, Gabby Field and Pat Ling often seek your advice throughout various stages of their business life cycle. Gabby and Pat are both qualified Optometrists.
This case study will cover the following areas of small business enterprises.

Considerations in Setting Up a New SBE
Financial Preparation
Planning for Growth
Planning for Retirement

SECTION 1: CONSIDERATIONS IN SETTING UP A NEW BUSINESS REPORT EXTRACT (10 marks)
Gabby and Pat want to open an optometry business in an established shopping complex. Currently, there are 150 shops, 1 main shopping retailer and 3 main grocery store. There is one other optometrist that exists in the shopping centre.
Your clients have all the necessary qualifications to operate and run an optometry business under the approval of the Optometry Board of Australia.
Required: Your clients have asked for a meeting to obtain your advice about what they need to consider before setting up a new optometry business.
Based on the prior information that they have provided to you through conversation, you have decided to prepare a 2 page summary report that will be given to them at your meeting. (Max 2 A4 pages, double sided)


Your brief report will list and explain the following considerations specific to that type of business.

a) Description of the business
b) Business structure consideration e.g. partnership, company
c) Targeted customer/s
d) A SWOT analysis, including any competitive advantage, location
e) A marketing analysis Discuss methods of possible advertising & promotion, frequency of marketing.
f) Costing process Discuss how to obtain the sale price of different services and items
g) Appropriate E-Business considerations Discuss receiving money from patients, making payments, method of paying wages
h) Insurances Mandatory and optional
i) Legal requirements Lease considerations
j) Labour obligations. You will provide a link to the Fair Work Website.
k) Record keeping and compliance, dates and responsibilities for lodging BAS
l) List some possible environmental considerations
m) Develop a set of key performance indicators for this business after the purchase

SECTION 2: FINANCIAL PREPARATION & ANALYSIS BUDGETING (18 marks)
Starting a business is not easy and financial preparation and analysis is necessary.
Gabby has read that a large proportion of new small business enterprises in Australia fail in the first few months of operations. Lack of planning, little knowledge of business costs and the associated lack of cash flows are the most cited reasons of failure.
Gabby and Pat have approached you for further assistance. They want to learn about the process of operational planning by understanding the true costs of their business, in particular, labour costs, fixed and variable costs.
Note: Gabby and Pat decided to setup a company structure for their new business.

a) Labour Budgets

Gabby and Pats employment plan is as follows:-

Pat and Gabby will work 5 days.
Pat will work Wednesdays to Saturdays.
Gabby will work Mondays to Wednesdays, Saturdays.
They will both be rostered to work alternatively on Sundays.
Pat and Gabby will paid by Salary.
There will be a part time dispenser.
There will be 1 full time receptionist/front desk employee from Monday to Friday.
There will be 2 part time receptionist/front desk employees working on weekends, one day each.
An emergency plan will be in place for when any staff member must take leave.
An employment contract will be written to ensure that all staff understand their duties and wage agreement.



This staffing roster will be reviewed within 3 months to determine any necessary changes.
The receptionists/front desk employees will have on the job training as they will have little experienced.
Required: You will prepare a monthly labour budget for 12 months from 5th January 2015 to the end June 2017. Note that the employees age may affect the pay rate.
(Additional labour cost information will be available on UTS online Worksheet Labour Costs)

b) Revenue and Cost Budgets

Required: For the period from January 2015 to December 2015, you are required to:-

Prepare monthly and annual budgeted Profit and Loss statement
Calculate the gross margin on fees revenue (sales revenue) required to achieve a net profit equal to 7% of gross revenue.

iii. Prepare a monthly cash flow budget. This will assist your clients in keeping a record of the frequency of business costs.

Calculate the minimum revenue to break even (exclusive of ii)

(Budgeting Information will be available on UTS online Worksheet Budgets)

c) Report explanation

Required: Provide one page report to your clients explaining how you determined the budgeted figures and how the business is expected to perform (max 750 words)
SECTION 3: FINANCIAL PREPARATION & ANALYSIS FORECASTING (12 MARKS)
Gabby and Pats optometry business has been operating successfully for the last 2 years. It is now January 2017.
They wish to expand their business by acquiring the vacant shop next door for more space and employing a graduate optometrist on a part time basis.

a) Required: You are to prepare a forecast of revenue based on the last 2 years actual figures.


(Information will be available on UTS online Actual Financial Data 2015 and 2016 Worksheet)

b) Required: State what other factors should be included in a forecast analysis? What specific factors would be relevant to Gabby and Pats business? (max 300 words)



SECTION 4: FINANCIAL PREPARATION & ANALYSIS FINANCE OPTIONS (12 MARKS)
Gabby and Pat have made an appointment to see you. Their successful business over the last 2 years has made them consider expanding the business. They plan to include the following:-
employ another optometrist to work 4 days.
reduce their working days.
request the next door premises so as to renovate and combine both shops.
The costs to expand are as follows:-

$35,000 one off cost: Based on 3 quotes from fit-out companies for renovating the next door office so as to make one optometrist business.
$3000 per month: This is the additional rental increase payable per month.
$75,000 per year: Permanent part time optometrist employee on a salary. This will be $82,125 inclusive of superannuation.

These plans require funding.
Required: Discuss the financial options available for Gabby and Pat in obtaining finance for each of the three costs. You may need to consider bank loans, available grants, venture capital, angel investors or other opportunities.
You will need to mention the advantages and disadvantages for each option available for your clients.
SECTION 5: SUCCESSION PLANNING (8 MARKS)
Although Gabby and Pat have enjoyed operating their own business, they are both considering their future. Neither are sure what options are available for them.
Required: Provide a letter stating their options for a succession plan (max 900 words).

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