Simventure letter
Order Description
Activity 2 (Individual)
Students should individually prepare an end-of-year (or end of period, if more than 12 months) report for a company, suitable for submitting to a bank manager in support of a loan application (to convince him that the business is viable and credit-worthy).
The report will explain the success of the company so far, and make reasonable estimates of its performance in the next 6 months with a view to obtaining a loan from the bank to help finance expansion. It should be addressed to the Bank Manager. Marks will be given for authentic trading success, for credible predictions, and for business-like presentation.
Trading report guide length 1000 words.
Simventure Diary Record
Month 1
• Decided on Comupter-Mart as our company name.
• Paid for both market and competition research, following the advice of the advisor.
• Hired a bookkeeper to create financial reports.
• We also changed our supplier to “Sourceline” as their components cost less.
Month 2
• Selected “Engineering Companies” as our target market.
• Chose selling points: Good Quality, Features and Style.
• Set-up a basic website, and hired a web designer.
• Redesigned product to better fit clients’ needs.
• Changed pricing to £530 per unit.
Month 3
• Trained self in sales.
• Joined local networking business group.
• Started direct marketing campaign.
• Trained self in marketing.
Month 4
• Completed redesign of product and implemented the new design as our main product.
• Performed customer research.
Month 5
• Put advertisement in local paper.
• Trained self in marketing.
Month 6
• Performed more customer research.
• Started personal selling campaign and bought a customer database.
Month 7
• Did not make any changes this month, as we were satisfied with the orders we received last month.
Month 8
• Set up limited company, wrote up sales contract and employment contract.
• Unfortunately, due to the amount of orders we were trying to process, it was not possible to get done, everything we had planned to do this month. Because of this, the contracts would not be completed until a later month.
Month 9
• We did not make any changes this month, as we could not spare any time to do anything, as we were already too busy with the amount of orders, and the contracts that needed completing.
Month 10
• For the same reasons as month 9, we did not make any changed this month.
• At the end of this month, the contracts were completed.
Month 11
• Started recruitment for a part-time employee.
Month 12
• The previous round of recruitment was unsuccessful, as 0 acceptable candidates were found, so another round, with more interviews, was carried out this month.
Month 13
• Employed a part-time member of staff, being paid £9500 salary, to help with the influx of orders.
Month 14
• Increased the price of the product to £600, which is still lower than our main competitor’s price, in the same market. We also gave customers a 5% discount for the first month.
• Applied for £5000 bank loan, to be paid back over one year.
Month 15
• Changed supplier to “Pro Supply” as their prices are lower than our current supplier.
Month 16
• Changed our target market to “Professional Services” as it is larger than “Engineering Companies”
• Changed the price of our product again to £650, to increase profits, which is still a lower price than our nearest competitor in that market, while our product is still superior in each field.
We decided to finish our SimVenture journey at this point, as we believed that our business had begun to flourish, and was stable. Given the opportunity to trade more, the figures suggest that the business would have continued to grow in a steady manner. Our end of month reports and screenshots are included in the appendix.
Appendix:
January 2015 Month End Reports
This month you purchased 56 components at a cost of £392 and you produced 1 product. At the end of the month you held 0 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £458. Variable costs were £392 and fixed costs were £694, giving total costs of £1,086 and a net profit of -£611.
You had 3 sales enquiries, leading to orders for 3 units to a value of £1,374, which will be satisfied next month.
In terms of your bank account, you received £17 and paid out £650. The resulting change in your bank balance (or cashflow as it is known) was -£633, leaving you with a closing balance of £9,363. You can see more detail in the cashflow report.
February 2015
This month you purchased 168 components at a cost of £1,176 and you produced 3 products. At the end of the month you held 0 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £1,374. Variable costs were £1,176 and fixed costs were £302, giving total costs of £1,478 and a net profit of -£90.
You had no sales enquiries this month, which meant that you also received no orders.
In terms of your bank account, you received £1,389 and paid out £682. The resulting change in your bank balance (or cashflow as it is known) was £707, leaving you with a closing balance of £10,057. You can see more detail in the cashflow report.
March 2015
This month you purchased no components. You didn’t produce any products. At the end of the month you held 0 products and 0 components in stock.
You had no orders last month and so didn’t sell any products, meaning your income was zero. Variable costs were £0 and fixed costs were £778, giving total costs of £778 and a net profit of -£763.
You had no sales enquiries this month, which meant that you also received no orders.
In terms of your bank account, you received £473 and paid out £1,938. The resulting change in your bank balance (or cashflow as it is known) was -£1,464, leaving you with a closing balance of £8,576. You can see more detail in the cashflow report.
April 2015
This month you purchased no components. You didn’t produce any products. At the end of the month you held 0 products and 0 components in stock.
You had no orders last month and so didn’t sell any products, meaning your income was zero. Variable costs were £0 and fixed costs were £112, giving total costs of £112 and a net profit of -£99.
You had 1 sales enquiry, leading to orders for 1 unit to a value of £530, which will be satisfied next month.
In terms of your bank account, you received £14 and paid out £105. The resulting change in your bank balance (or cashflow as it is known) was -£91, leaving you with a closing balance of £8,478. You can see more detail in the cashflow report.
May 2015
This month you purchased 67 components at a cost of £469 and you produced 1 product. At the end of the month you held 0 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £530. Variable costs were £469 and fixed costs were £816, giving total costs of £1,285 and a net profit of -£741.
You had no sales enquiries this month, which meant that you also received no orders.
In terms of your bank account, you received £544 and paid out £805. The resulting change in your bank balance (or cashflow as it is known) was -£261, leaving you with a closing balance of £8,206. You can see more detail in the cashflow report.
June 2015
This month you purchased no components. You didn’t produce any products. At the end of the month you held 0 products and 0 components in stock.
You had no orders last month and so didn’t sell any products, meaning your income was zero. Variable costs were £0 and fixed costs were £152, giving total costs of £152 and a net profit of -£139.
You had 3 sales enquiries, leading to orders for 3 units to a value of £1,590, which will be satisfied next month.
In terms of your bank account, you received £13 and paid out £609. The resulting change in your bank balance (or cashflow as it is known) was -£597, leaving you with a closing balance of £7,597. You can see more detail in the cashflow report.
July 2015
This month you purchased 201 components at a cost of £1,407 and you produced 3 products. At the end of the month you held 0 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £1,590. Variable costs were £1,407 and fixed costs were £150, giving total costs of £1,557 and a net profit of £45.
You had 3 sales enquiries, leading to orders for 16 units to a value of £8,480, which will be satisfied next month.
In terms of your bank account, you received £13 and paid out £140. The resulting change in your bank balance (or cashflow as it is known) was -£128, leaving you with a closing balance of £7,460. You can see more detail in the cashflow report.
August 2015
This month you purchased 1072 components at a cost of £3,283 and you produced 15 products. At the end of the month you held 8 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £3,710. Variable costs were £3,283 and fixed costs were £102, giving total costs of £3,386 and a net profit of £337.
You had 5 sales enquiries, leading to orders for 15 units to a value of £7,950, which will be satisfied next month.
In terms of your bank account, you received £3,192 and paid out £1,497. The resulting change in your bank balance (or cashflow as it is known) was £1,695, leaving you with a closing balance of £9,142. You can see more detail in the cashflow report.
September 2015
This month you purchased 1005 components at a cost of £7,035 and you produced 16 products. At the end of the month you held 9 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £7,950. Variable costs were £7,035 and fixed costs were £102, giving total costs of £7,138 and a net profit of £822.
You had 6 sales enquiries, leading to orders for 20 units to a value of £10,600, which will be satisfied next month.
In terms of your bank account, you received £4,779 and paid out £7,594. The resulting change in your bank balance (or cashflow as it is known) was -£2,815, leaving you with a closing balance of £6,315. You can see more detail in the cashflow report.
October 2015
This month you purchased 737 components at a cost of £9,380 and you produced 11 products. At the end of the month you held 0 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £10,600. Variable costs were £9,380 and fixed costs were £1,149, giving total costs of £10,529 and a net profit of £75.
You had 5 sales enquiries, leading to orders for 16 units to a value of £8,480, which will be satisfied next month.
In terms of your bank account, you received £7,954 and paid out £8,159. The resulting change in your bank balance (or cashflow as it is known) was -£205, leaving you with a closing balance of £6,085. You can see more detail in the cashflow report.
November 2015
This month you purchased 1072 components at a cost of £7,504 and you produced 16 products. At the end of the month you held 0 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £8,480. Variable costs were £7,504 and fixed costs were £372, giving total costs of £7,876 and a net profit of £610.
You had 5 sales enquiries, leading to orders for 15 units to a value of £7,950, which will be satisfied next month.
In terms of your bank account, you received £6,366 and paid out £5,514. The resulting change in your bank balance (or cashflow as it is known) was £853, leaving you with a closing balance of £6,920. You can see more detail in the cashflow report.
December 2015
January 2016
This month you purchased 938 components at a cost of £6,566 and you produced 14 products. At the end of the month you held 0 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £7,420. Variable costs were £6,566 and fixed costs were £1,028, giving total costs of £7,594 and a net profit of -£174.
You had 5 sales enquiries, leading to orders for 22 units to a value of £11,660, which will be satisfied next month.
In terms of your bank account, you received £9,010 and paid out £8,003. The resulting change in your bank balance (or cashflow as it is known) was £1,007, leaving you with a closing balance of £5,328. You can see more detail in the cashflow report.
February 2016
This month you purchased 1474 components at a cost of £10,318 and you produced 22 products. At the end of the month you held 0 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £11,660. Variable costs were £10,318 and fixed costs were £1,062, giving total costs of £11,380 and a net profit of £285.
You had 4 sales enquiries, leading to orders for 14 units to a value of £7,980, which will be satisfied next month.
In terms of your bank account, you received £12,425 and paid out £7,554. The resulting change in your bank balance (or cashflow as it is known) was £4,871, leaving you with a closing balance of £10,125. You can see more detail in the cashflow report.
March 2016
This month you purchased 941 components at a cost of £6,683 and you produced 14 products. At the end of the month you held 0 products and 3 components in stock.
Orders in the previous month generated sales in this month to a total value of £7,980. Variable costs were £6,683 and fixed costs were £1,046, giving total costs of £7,729 and a net profit of £252.
You had 2 sales enquiries, leading to orders for 2 units to a value of £1,200, which will be satisfied next month.
In terms of your bank account, you received £10,071 and paid out £11,741. The resulting change in your bank balance (or cashflow as it is known) was -£1,670, leaving you with a closing balance of £8,432. You can see more detail in the cashflow report.
April 2016
This month you purchased 131 components at a cost of £1,004 and you produced 2 products. At the end of the month you held 0 products and 0 components in stock.
Orders in the previous month generated sales in this month to a total value of £1,200. Variable costs were £1,004 and fixed costs were £1,056, giving total costs of £2,060 and a net profit of -£844.
You had 3 sales enquiries, leading to orders for 13 units to a value of £8,450, which will be satisfied next month.
In terms of your bank account, you received £5,655 and paid out £1,437. The resulting change in your bank balance (or cashflow as it is known) was £4,218, leaving you with a closing balance of £12,629. You can see more detail in the cashflow report.
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