Study into the Feasibility of a Motor Factory Start-Up - Free Essay Example

Introduction: The aim of this project is to study into the feasibility of a motor factors start-up. This is particularly challenging in this current economic down turn. My plan is to open a shop in my local town selling different types of car parts and accessories; I believe there is a good opening for a business like mine to be successful. As I worked as mechanic in the area for many years, I have noticed a lot of downtime in local garages due to not having parts on time, also the nearest motor factors is about 50 kilometre away, So my business would reduce downtime and fuel cost for customers. I plan to look in the finance available to me, and also look in to what grant are available from the government for people that are planning to start their own business. Im also going to research the market, and wholesalers that supplys the motor factor industry I will also look into the legal issues involved in starting up a business in Ireland. Objectives: The areas I wish to pursue are : Legal issues for starting up. Researching the market and wholesalers. Finance, government funding. Marketing plan and sales. Project schedule Literature review: Motor Factors: According to wiktionary, (2010). The definition of a motor factors, its a supplier of car parts and accessories; they supply Car parts and Tools to the motor trade and to the general public. They can deliver top Quality spurious car parts and service kits at a fraction of genuine parts cost. Item imageItem image Cartridge type oil filters fuel filters Air Filters Business plan: A business plan is very important when setting up a business; it is required when looking for government grants, bank loans and also for Investors Capital. It will give you and them a clear picture of your business, and will show that you have thought it through.it also gives your business direction, and let you know what is facing you in the future of the business. Joshua Feinberg states four Benefits of producing a business plan are Motivation, Planning, Analysis and Strategy. Motivation: can help you concentrate with your business plan idea i and giving you a better direction. This will assist you in seeing the direction of your original idea. Planning: can help you show where you are at the moment and where and where you are planning to end up. It gives you assurance where you are going. Analysis: helps you to consider other options that you would normally regard as important. It also helps you interact with different areas of the business. It helps you compare with other generation, how that ties into your services, delivery, and accumulation margins, after tax forecasting. Strategy: helps you compare the type of interaction between your business and other local businesss in the area. By practicing this you will have achieved the main sources of information about your competitors; which will be very important for your future. A business plan give you a direction and puts you plan on paper, when things are in front of you it is easier to see your strengths and weakness much quicker, you then will be able to correct any problems that you have encounter have time to correct these areas and corrected them before you enter the business. Enterprise Ireland (2010) has stated may Question that is asked in a business plan. Details of yourself and anyone else involved in running the business? Your business idea Details of yourself? Where and how you will sell; how much you will sell? Your premises? The equipment you will need? The suppliers you will use? Details of the staff you will employ? How much money you will need? How do you hope to raise the money you need? An expected profit/loss calculation for the first year? Details of business advisors if you have one? Start-up Business Grants: A start-up business grant is finance that is available from the government which helps you get started in your business. According to my local enterprise board, (2010) people setting up their own business are entitled Priming Grants, they must fulfil the following areas ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ have to be Located in the county enterprise board area. ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ A business which on growth that may not suit Enterprise Ireland ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ A business employing up to 10 staff ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ A Manufacturing or internationally traded services business ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ A Domestically traded Service business with the potential to trade internationally. ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ A domestically traded services being established by a female returning to the workforce or unemployed persons where the potential for deadweight and displacement does not exist. County Enterprise Board s tates suitable clients may be entitled to a Priming Grant in the first eighteen months of starting a new business. The maximum Priming Grant that will be paid will be 50 % of the cost of the investment or up to ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬150,000 whatever comes first. Grants over ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬80,000 and up to ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬150,000 will have to be projects with to qualify to Enterprise Ireland and potential to export internationally . A Grant will be 50% of the total investment, the maximum grant available is ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬80,000 . It is Subject to a 50% limit, a maximum grant of ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬15,000 for a full time job created shall apply to an employment support grant. Back to Work Enterprise Allowance: According to Citizens Information.ie (2010) you can apply of the Back to Work Enterprise Allowance if you are: Setting up as self-employed in a business that has been approved by your local enterprise board, and getting a Jobseekers Allowance for 12 months or Unemployed for 2 years and getting Jobseekers Benefit. Getting One-Parent Family Payment, Disability Allowance, Blind Pension, Farm Assist, Incapacity Supplement, Pre-Retirement Allowance, Invalidity Pension, Carers Allowance, Widows/Widowers (Non Contributory) Pension, Deserted Wifes Benefit/Allowance or Prisoners Wifes Allowance for at least 12 months Getting Illness Benefit for 3 or more years Getting Farm Assist for 12 months, providing that the self-employment is now in relation to the holding and not the continuation of an existing operation. A qualified adult of a person eligible to claim the BTWEA. This involves the person who is eligible for the BTWEA transferring his or her entitlements to their spouse or partner. (In other words, the spouse or partner becomes self-employed and the original claimant becomes the qualified adult on the BTWEA). If the original claimant is entitled to credits, he or she can continue to claim them. A person released from prison that satisfies the eligibility criteria for the scheme Periods of time spent in Fà S Training, Community Employment, and the Community Services Programme. Finance: Bizstart up.ie (2010) states when looking for finance to start a business, your finance provider like AIB will have to consider for five key points, these are Character ,Capacity, Capital, Collateral and Conditions, they call this the five C , and this is what helps them to decide on what to do. Character: Good character is Honesty, integrity and reliability is the qualities that mean you will make every effort to repay your debt. In relation to your business, you must be able to prove that you are an effective manager with a good reputation. Its is very important to be honest and upfront about your credit history and any business problems you may have had in the past. Capacity: You will need to show how your business will created the cash flow that will repay the credit that you are looking for. Your financial plan must show how repayments will be generated. If the business does not develop as planned you need to explain your capacity to repay the credit facility if the business does not develop as planned. You will have to show other sources of income for a backup plan. Capital: Business capital is split between the equity (this is your own money you have put into the business) and the debt (money borrowed from banks). Equity capital acts as a cushion to absorb first losses, while debt capital must be repaid to the bank however the business goes. If you are taking a big risk The bank is also taking one, so if you are seeking to borrow money for a new business AIB will, like most lenders, need to see that you have made a reasonable financial investment. Collateral: Collateral is the security given to a lender for protection in case the business cannot repay the loan. It can be any one of a range of business and personal assets, including buildings, vehicles, machinery, land title and business debtors. If the business cannot generate enough cash to repay the credit facility, the lender may have to take the collateral. This is always the last resort for the banks to do. It is advisable to seek legal advice before providing collateral against credit facilities. Conditions: Conditions and trends in your sector and the economy are big factors in determining the success of your business. Opportunities or threats to your business can arise from , technology, competition, regulation and economic or social changes. You may not be able to control all these factors, but you must be aware of them and be prepared to respond to change. When you look for bank finance, you need to be able t o give your research of the market and how your business will cope with potential downturns in the market. Marketing plan: Wikipedia, (2010) says that Marketing is the way of performing market research, selling products and services to customers and promoting them by advertising to further increase sales. This creates sales techniques, business communication, and business developments. It is a process that which companies build strong customer relationships and creates value for money for their customers and for themselves. Marketing is used to identify the customer and to keep the customer happy, and to hold on to the customer. Marketing is everything you can do to put your product in the hands of the customers. Marketing is also about finding the right people that are interested in your product. According to allbusiness.com, (2010) its important to extend yourself and your business to meet your customers needs. This means stepping up customer service and communicating with customers regularly by email and mailing post to them. Stick closely to how your services are helpful and cost-effective. Y ou need to maintain your relationship with existing customers who will be there when the economy takes up. You can support a project in your community. This will market yourself effectively and show your concern by getting involved in community, this will get local people interested in your business and they will support in return. During a slow economy you must provide customers with attractive package, not only do you want the customers to buy what they need, you must give them a reason to buy it from you. Choosing a Business or Legal Entity: Carlow county enterprise board,(2010). states the first decisions that should be made is to decide on the legal body through which you intend to carry the business on, they are four options you can chose from, Sole trader, Partnership/Limited Partnership, Limited Company A Sole trader is a person carrying on a business in their own name. The debts and liabilities belong to the sole trader to the extent their business and private assets. https://t1.gstatic.com/images?q=tbn:ANd9GcSL29zMb272aF4l1rOdvnaiL12zRTEbRTZvNQEPrAYhcbVNVlvkaQhttps://t1.gstatic.com/images?q=tbn:ANd9GcSL29zMb272aF4l1rOdvnaiL12zRTEbRTZvNQEPrAYhcbVNVlvkaQhttps://t1.gstatic.com/images?q=tbn:ANd9GcSL29zMb272aF4l1rOdvnaiL12zRTEbRTZvNQEPrAYhcbVNVlvkaQPartnership/Limited Partnership This is where two or more people are working together on a business with the intention of making a profit. It is strongly advisable that a written partnership agreement is put in place which specifies the rights and responsibilities of all partners Limited Company This is where a group of people with limited liability is formed for the purpose of the business to be carried on in the name of the group. A private company with limited liability is the most appropriate to most small businesses, In order to register as a private limited company; you must register with the company office. Register for VAT: Irish Revenue,(2010). states a trader is generally required to register for VAT for making supplies of goods and/or services, subject to his or her turnover exceeding certain amount. The most common amount isÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬75,000 for the supply of goods, and ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬37,500 for the supply of services. Some traders are generally not required to register for VAT, although they can choose to do so. These include traders whose turnover does not exceed the amount above, and also farmers. https://t2.gstatic.com/images?q=tbn:ANd9GcSLXAiz_AsAbH_G7_10JI9mHzYShjZxVrYn0bx6XuveF9Hk7apihttps://t2.gstatic.com/images?q=tbn:ANd9GcSLXAiz_AsAbH_G7_10JI9mHzYShjZxVrYn0bx6XuveF9Hk7api