- Fast forward a few months…Your friend asks you how your business is doing and you are unsure how exactly to answer. In fact, you are not necessarily sure how your business is going since you are so new to this! This part will help you organize your thoughts and come up with a more formalized process and financial reporting can help you demonstrate your success (or lack thereof!).
For your cart, come up with a way to determine profit and financial position. Expand your Excel spreadsheet from part 1 by adding an additional tab. There is no specific format for this. Data should be reasonable based on your projections from Part 1 and include all expenses. Your grade is not dependent on whether you are making a profit.
Use the momentum from the discussion forums from week’s 6-7 where we collectively brainstormed methods of (a) if the business was profitable and (b) how to measure profitability in a professional format.
Include an analysis that summarizes your findings in a professional manner.
This part of the project should be approximately 2 – 4 pages including the financials.
The submission is due by the conclusion of week 8.
- What would you do if you could significantly cut your costs and turn a larger profit? Would you do this even if it meant getting questionable products (meat/buns/etc) from a vendor? It sounds like an easy answer in the abstract, but it would be interesting to reflect on this type of dilemma when it is your livelihood that is at stake….what if this were your only source of family support? Would that/should that change your perspective?
- Knowing what you know now, how could you have structured your hotdog cart to be a more lucrative business venture? Would you have changed pricing options, location or sales tactics? Would you have done everything the same? Use this chance as a free-form reflection to discuss the pros/cons of opening a small business. Be sure to include the related accounting considerations when pointing out the best practices or lessons learned.
- Brady Dumais owns a small restaurant that operates on a cash-only basis; no credit cards are accepted. Brady has taken a bookkeeping course and a tax preparation course. With the help of his spouse, he is able to perform all the bookkeeping duties and prepare his tax returns.
Brady discovers that federal and state income taxes take away 35 percent of his profits. Because his is a cash business, Brady has started the practice of “skimming” sales. Because these sales will not appear in the business records, they will escape taxation, and Brady will be able to retain 100 percent of these revenue dollars.
Identify the stakeholders in this case.
Comment on the legal and ethical issues involved in skimming.
If you were aware of this activity on your business, how would you address it?