S2.

2014
Name: Kumar, Raynil
ID: S11088642
Name: Tita, Teibaibure
ID: S11075567
Name: Vakaloloma , Litia
ID: S11096586
Name: Versoni, Grace
ID: s11100093
S2. 2014
FM202 Group Assignment:
Sweet Cravings Scoop Shop
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Student plagiarism cover sheet
Statement of originality
Course: FM202
Names: ID Number:
Kumar, Raynil s11088642

Tita, Teibaibure s11075567
.
Vakaloloma, Litia s11096586
.
Versoni, Grace s11100093
.

We have read and understood the University of the South Pacifics, School of Management and
Public Administration policy on academic misconduct and plagiarism. We are aware of the
following: The view taken by the Head of the School of Management and Public Administration
is that failure to acknowledge or inadequate acknowledging the work of another will result in a
student receiving an official written warning and a mark of 0 for that piece of work. If the
plagiarism case is regarded by the Head of School of Management and Public Administration as
substantial (for example a significant failure to acknowledge a source) it will be forwarded to
the Student Development Committee of Senate (the Discipline Committee). The School of
Management and Public Administration has introduced a database of those students who have
been reported to the Head of School for plagiarism and the penalty that was imposed and that
repeat offenders (regardless as to the extent of the plagiarism) will be automatically referred to
the Discipline Committee. All members contributed equally to the completion of this
assignment.
We confirm that the work contained in the attached item of assessment is entirely our own
work except where we have specifically acknowledged anothers work and the source of that
others work.
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Part I. Executive Summary
Sweet cravings scoop (ice-cream) shop is business partnership and will be owned and run
by Teibaibure Tita, Litia Vakaloloma, Raynil Kumar, and Grace Versoni. The scoop shop will be
located at a rented space in the busy USP cafeteria, Suva, Fiji. With a combination of debt and
owners investments of about $8,100.00 in initial equity, the business hopes to successfully
establish in the given high-traffic location.
The business is anticipating to bring a wide variety of ice-cream, chilled drinks and
selected pastries to the USP cafeteria where it is currently not sold. Market offerings will
include a vast variety of flavors together with options for dairy and non-dairy ice-creams in
different sizes. With a selective marketing strategy, the Sweet Cravings intends to create a loyal
customer base through reasonable prices and additional healthy options mainly for students,
lecturers, and gym attendees who are our target market.
A forecast of business sales predicts a figure of $116,160.00 in the first year and rises by
$17,022.20 in the second year (Refer to Appendix, Table 1B). Sales forecasted are easily
achievable upon start-up according to the market research that have been performed.
According to predicted sales and expenses, net income is anticipated to rise to over $150,000 in
five years (Refer to Appendix, Table 2A). In addition to this, scenario analysis of the business
illustrates a positive net income can be achieved if sales volume do no drop more than 14% of
the forecasted figure (Refer to Appendix, Table 2B). Overall, Sweet Cravings scoop shop is a
feasible and profitable project to invest in, as given discount rate, terminal value and forecasted
cash-flows for 5yrs the business has a positive net present value (Refer to Appendix, Table 2)
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Part II. Lessons Learnt
With the intention of getting additional advice and knowledge for starting our scoop or ice-
cream shop, we have conducted an interview with a business owner manager operating the
similar line of business to get a few ideas on how to manage our new business efficiently and
effectively.
The owner manager, Lady Mavis Ah Koy, who is in her early seventys, operates an ice-cream
shop called Sa Ula Ice-cream located at the Flea-market in Suva. The business is named after
her mother, referring to somewhat delightful, wonderful and attractive (Ahkoy, 2014). Although
she is wealthy, she enjoys the satisfaction of running a small ice-cream business to all various age
group who enjoy their ice-cream. She chose this line of business as it is easy to prepare and to
serve to customers. Sa Ula Ice-cream sells nine-teen (19) different flavors, in which the business
owner buys in bulk from her both suppliers, Tuckers and Tip-top (2014).
Above all, the lessons learnt from our interviewee to operate a small ice-cream business
effectively, by;
Minimizing costs in the least possible ways, by always being hands-on to watch
everything being done in a fairly way. For example, she mentioned about how for every
carton of ice-cream, there are certain amounts of ice-cream scope that needs to be made
in order to get certain profit out of it. If the money does not add up to the number of ice-
cream scopes, then the employee serving the ice-cream will have to pay from his/her
own pocket.
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Maintaining a healthy relationship with your supplier is important by paying them on
time in which may get you to receive discounts on certain items.
Maintaining consumer loyalty is another significant factor, in terms of how you
communicate and interact with them when they come in to buy, through advertisement
as well so that to attract them into the wide variety of different ice-cream flavors that is
available.
Not be too greedy when setting prices of for ice-cream. The selling price of an ice-cream
is sold at a reasonable price to target the average people. Again here the business owner
manager mentions that she can serve over 100-200 customers, in which may depend on
the weather or when people get paid.
In summary of lessons learnt, business is not always and only about money profits but above all
else the pleasure and satisfaction that comes from doing what you love consequently satisfying
the needs of people of all walks of life. For in efficiently and effectively operating a business in
which one has a passion for will result in happier customers, who in turn will become loyal
customer, and ultimately will mean more sales. As stated in a quote by General Electric CEO, Jack
Welch, Do what you do so well that they will want to see it again and bring their friends.
(Memoriable Quotes, 2014)." Lastly, for business to grow, it must diversify to selling other
products or invests into other shops.

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References
Ahkoy, M., 2014. Running an Ice-cream Shop [Interview] (12 9 2014).
Anon., 2014. Memoriable Quotes. [Online]
Available at: http://www.quantisoft.com/Articles/Quotes.htm
Fiji Revenue and Customs Authority, 2011. Resident Tax Rates. [Online]
Available at: http://www.frca.org.fj/residents-tax-rates-2001-2012/
[Accessed 1 10 2014].
Peter McInnes, 2012. Peter McInnes. [Online]
Available at: http://www.petermcinnes.com.au/au/component/magebridge/vitamix-5200-brushed-
stainless
[Accessed 10 10 2014].
USP Commercial Operations Accountant, R., 2014. Price of Rent at Cafeteria [Interview] (1 9 2014).



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Appendix
Table 1A: START-UP Capital and Costs






Start-up Capital
Debt Financing 1,670.00 $
Equity Financing 8,082.40 $
Total Startup Capital 9,752.40 $
Start-up Costs
Supplies (Office and operating) (200.00) $
Advertising (375.00) $
Accounting and Legal (400.00) $
Openning Inventory (6,184.40) $
Outside Services (100.00) $
Miscellaneous (400.00) $
Capital Purchases (1,993.00) $
Other Startup Costs (100.00) $
Total Start-up Costs (9,752.40) $
STARTUP CAPITAL & COSTS 2015
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Table 1B: Projected Monthly Cash-flows (Year 1)




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Uses of Cash

4. Capital Purchases (Equipment). Basic equipment cost is estimated to be $1,993.00. This
expense includes:
a. A 5200 brushed stainless steel vitamix blender for $ $1,673 (Peter McInnes, 2012)
b. Commercial Water Urn for $70

5. Rent. Rent Payments are $1000/month (2x2 sq.meters @ $250 per meter) (USP
Commercial Operations Accountant, 2014)


6. Advertising. Business-launch efforts upon start-up will include $375 worth of brochures
at .50cnts ea (Ahkoy, 2014).
7.
8. Telephone and Utilities. FEA electricity) $200 per month, Water $30 per month, TFL
(landline) Vodafone & Digicel (mobile) bills estimated at $30 ea. per month (Ahkoy, 2014).


9. Business License Fee. The business license fee based on type of business operation.

10. Insurance Premiums. $520 per month (Sun Insurance Business Asset multi-risk cover-
package. These premiums will cover any accidental loss)

11. Supplies Expense. This item includes all utensils needed within the shop. This will only be
bought once a year.
12. Revenue Tax. The amounts are calculated according to percentages laid out by Fiji
Revenue and Customs Authority and will vary each year according to business income (Fiji
Revenue and Customs Authority, 2011)

.
Chargeable Income ($)
Tax Payable ($)
Social Responsibility Tax
0-16000
Nil
16,001 22,000
7% of excess over $16,000
22,001 50,000
420 + 18% of excess over $22,000
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50,001 270,000
5,460 + 20% of excess over $50,000

13. Payroll. Wages total $15,620. No payroll taxes applicable as wages are below taxable
income amount. This amount includes the managers, cashiers, and kitchen hands
annual salary

14. Loan Payments (Principal and Interest). All of the $1,670 loan allocation will be used
during the first year of operations. Assuming this amount was available at the beginning
of the business fiscal year, interest at 6% totals $54.77. In addition, according to the loan
agreements, principal payment of $143.73 was also required. 11 monthly payments will
be made in first year, with the remainder paid in first month of second year. The total
payments for this category will be $1,779.54 (interest and principal).


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Scenario Analysis:
Table 2A: Base-Case



Table 2B: Optimistic Case


Justification: In an optimistic scenario whereby inflation kicks in, products prices would be higher
hence 14% increase in sales consequently increasing net cash-flow.



Sales 116,160.00 $
less Variable Cost 68,384.00 $
Gross Profit 47,776.00 $
less Fixed Cost 32,603.45 $
EBIT 15,172.55 $
less Interest Expense 74.84 $
Earnings Before Tax 15,097.71 $
less Income Tax
Net Income 15,097.71 $
Add Depreciation 264.45 $
Net Cash Flows 15,362.16 $
2. Expected
Sales (increase by 14%) 132,422.40 $
less Variable Cost 68,384.00 $
Gross Profit 64,038.40 $
less Fixed Cost 32,603.45 $
EBIT 31,434.95 $
less Interest Expense 74.84 $
Earnings Before Tax 31,360.11 $
less Income Tax 9,780.11 $
Net Income 21,580.00 $
Add Depreciation 263.45 $
Net Cash Flows 21,843.45 $
2A Optimistic
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Table 2C: Pessimistic Case



Justification: In a pessimistic scenario whereby variable costs increase and sales decrease by 14%
due to a slack period, the net cash-flows will be negative.
Sales (decrease by 14%) 99,897.60 $
less Variable Cost (increase by 7%) 73,170.00 $
Gross Profit 26,727.60 $
less Fixed Cost 32,603.45 $
EBIT (5,875.85) $
less Interest Expense 74.84 $
Earnings Before Tax (5,950.69) $
less Income Tax
Net Income (5,950.69) $
Add Depreciation 263.45 $
Net Cash Flows (5,687.24) $
2B Pessimistic