About business plans
Steve Browning has always had a good eye for business. While he was still at school,
he opened his first business - a swap service for computer games on which he made a
good commission.
Steve had always liked making designer furniture - partly because his parents had a
shop which sold furniture.
After he finished the Trade and Crafts High school he worked at a factory but he
never really liked it. He decided to work for himself making designer furniture at
home. He planned to sell his furniture through his parents' shop by advertising in local
newspapers. His parents were very keen on the idea. They told Steve he needed not
pay them anything for the first 3 years to see if he could make the business work. He
decided to find out what prices he could charge for his hand-made tables and stools.
First he wrote down his estimated personal expenses for the year. Then he wrote
down what his estimated business expenses would be.
He used a couple of formulas to work out the cost price based on the cost of each
item plus profit.
Steve estimated that his total sales for the first year would be 150 stools and tables.
He divided his total business expenses by the number of pieces of furniture to find the
cost of each item.
Steve was not pleased with the results, as the price was too high for the market. He
would have liked to have charged well under 15 Ls and 70 Ls, that he would have an
edge on his many competitors.
He knew that if he wanted to have a lower selling price he would have to reduce
either his profit margin or his business and personal expenses.
Three years passed and Steve Brown had set up his own business, making designer
furniture. It was a hard struggle at first, but for the last year, he had so many orders
that he couldn't cope with them.
He obtained an Ls 8,000 bank loan to buy some modern machines. Although the
machines helped him to produce more furniture, the number of orders continued to
rise. He still could not keep up with them.
He decided to take on a partner who would be able to share the work and invest some
money in the business to pay off part of his bank loan. He put the advertisement in the
newspaper.
Working Partner
required for designer
furniture business.
Experience and capital
needed.
Send full details
Box 6222
When Nick was looking for job he saw Steve's advertisement in the paper. Nick Reed
wrote Steve about his job experience telling that he had been working in a factory for
10 years, that there had been 30 employees in his company and his employer Mr.
Mitchel had been a bad boss to work for.
A few days later Nick received the following note from Steve:
I would like to have you come to my office at 32 Park Street on Friday, May 6 at 4:00
p. m. so that I can take a look at you. I am pleased with the way you express yourself
so I'm looking forward to meeting you.
Cordially,
Swenson
P.S.
I enclose an application form to fill in.
He was later invited to go for an interview with Steve. He had to wait a few days for
the decision to be made as there were several applicants for the job.
When he heard that he had got the job he went to Mr. Brown's main office to sign a
contract giving the conditions of employment (number of hours, salary).
When they discussed the terms of partnership they ran into problems. Nick was
willing to invest Ls 3000, but he wanted 50 % of the profit. Steve agreed.