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Planning for Your Seafood Business Quentin S.W. Fong Fishery Industrial Technology Center University of Alaska Fairbanks KodiakThe Profit TriangleDefinition and Concepts: ProfitEvery business has essentially three tasks:Who Am I?What business do I want to be in?Functions of ManagementWhy Business Planning?Functions of Management: PlanningFunctions of Management: ImplementationFunctions of Management: ControlPurpose and Uses of Financial RecordsPurpose and Uses of Economic and Financial Records (Cont’d)Our Focus: Business PlanSlide Number 15Income Statement: Jewelry Business in TanzaniaPlanning for Your Seafood BusinessQuentin S.W. FongFishery Industrial Technology CenterUniversity of Alaska FairbanksKodiakThe Profit TriangleProfitBenefitCreationCompetitiveAdvantageInternalOperationsDefinition and Concepts: Profit• Profit: the monetary value that remains after all costs have been subtracted from gross income or revenue.Profit = Gross Income – Total CostwhereGross Income = Price X QuantityTotal Cost = Total Fix Cost + Total Variable Cost• Fix Cost: money that you have to pay out even you are not producing anything• Variable Cost: money that you will have to pay out only if you produce.Every business has essentially three tasks:• Production• Marketing• FinancingWho Am I?• What are my strength and weaknesses?• What do I like to do?• What do I dislike and avoid as much as possible?What business do I want to be in?• Do I want to be in the business of harvesting or growing?• Do I want to be in the business of selling fish?• Do I want to be in both?Functions of ManagementPlanningImplementationControlNewInformationWhy Business Planning?• To see if we can produce the product(s) to achieve our objectives base on what we’ve got.• If not, what do we need.• What kind of returns will we get and what kind of costs do we have to incur.• How much risk and uncertainty are we willing to take.• Institutional requirements e.g. banks.Functions of Management: Planning• Most important task – it means choosing a course of action, policy, or procedure.• To formulate a plan, the manager/owner must:1. Establish goals.2. Must identify the quantity and quality of resources available to meet the goals (e.g. land, water, machinery, livestock, capital, labor).3. Resources must be allocated among competing uses – the manager must identify all possible alternatives, analyze them, and select those that will come closest to meeting the goals of the business.• All the above steps require the manager to make both long-run and short-run decisions.Functions of Management: Implementation• Implementation includes acquiring resources and materials necessary to put the plan into effect, plus overseeing the entire process.• Coordination, staffing, purchasing, and supervising are steps that fit under the function.• The control function includes monitoring results, recording information, comparing results, and taking action when problem arise.• This ensures that the plan is followed and produce desired results.• Or provides an early warning so adjustments can be made.• Outcomes and related data become sources of new and improved information to adjust current or improve future plans. Functions of Management: ControlPurpose and Uses of Financial Records• Measure Profit and Assess Financial Condition – more important reasons.• Provide Data for Business Analysis – e.g. How can we make the business more profitable or financially more stable?• Assist in Obtaining Loans – Lenders need financial information and records in order to make lending decisions. Good record keeping can improve the probability of obtaining a loan.• Measure the Profitability of Individual Enterprises – A farm or business may be producing different commodities or services. For example, a fisherman may be catching salmon and cod at the same time. Although the business may show profit overall, it may well happen that salmon may be producing 100% of the profit, with cod loosing money. With a record system that shows the profit/loss of each enterprise (salmon and cod), the unprofitable or least profitable one(s) can be eliminated.Purpose and Uses of Economic and Financial Records(Cont’d)• Assist in Analysis of New Investments – should I be investing in IFQs, new gear, new refrigeration unit, new dive tank etc. etc.?• Prepare Income Tax ReturnsOur Focus:Business Plan• Outline or scheme for the organization and use of the resources available to us to achieve our objectives.• These resources includes capital(financial and physical), labor.• Operating a business without a plan means making decisions at random.Business Plan Components• Business Concept• Management Capabilities• Corporate Structure• Operational/Production Considerations• Competitive Analysis• Marketing Plan• Financial Projections:– Sales Forecasts– Cost Assessment • Capitalization RequirementsIncome Statement: Jewelry Business in TanzaniaItem Cost per Year (TZS)Tools 750,479Labor 4,158,960Marketing 213,280Raw Material 319,920Utilities 399,900Transportation 199,950Loan Repayment 287,928Total 6,330,417Loan Use 799,800Net Cost for Year One 5,530,617Gross Income (TZS17,995.5x350) 6,298,425Net Income


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UAF FSN 261 - Planning for Your Seafood Business

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