Prepared by: Aaron Moffatt Nicole Batty
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- Navigate this page:
- 4.10 Business Structure
- 4.11 Considerations
- 5.0 The Human Resources Plan
- 5.2 Job Descriptions
- Table 5.3 – Hunter Tasks 5.3 Recruitment Plans
- 5.4 Training Programs
- 5.5 Strategy
- 5.6 Labour Break-down
4.9 Working Capital Plan4.9.1 Inventories Due to the nature of Revival’s restoration centre, very little inventory will be kept on hand. The service offered will be unique to each and every customer specification. The needs of each customer will be assessed and the necessary parts will be ordered when needed. Revival plans to keep a small amount ($10,000) of generic inventory on hand that will be necessary for most jobs; items such as nuts and bolts. This generic inventory will be fairly small items that will be easy and cheap to store. Revival will also have very little need to hold finished goods in inventory since projects will be picked up almost immediately upon completion. Average days for generic unfinished inventory: 30 4.9.2 Accounts receivable Although Revival offers a relatively high cost service it may not be beneficial to offer financing or credit to customers. The target market and consumer profiles suggest customers will be able to afford Revival’s services without financial assistance. This approach will save the business from many potential problems associated with giving people credit, such as invoicing, collection policies and people refusing or being unable to pay. This is feasible because the customer will receive monthly bills which must be paid before they can take the finished project. Average days for our accounts payable: 0 4.9.3 Operating line of credit Since Revival is keeping a very low inventory, a line of credit will be used to purchase the majority of the supplies and parts required for each job. A $100,000 line of credit that is secured against the building at a rate of prime plus .7 will be more than adequate. 4.9.4 Accounts Payable Revival’s suppliers offer credit terms of 2/10 net 30 so it is beneficial to take the 2% discount within the 10 days offered based on the following: Cost of not taking discount = (2%/98%) x (365 days / 20 days) = 36.5% This means the cost of financing a part through the supplier would be an additional 36.5% whereas the line of credit can finance the part for a mere 3.5%. Average days for our accounts payable: 10 4.9.5 Cash conversion cycle (CCC): CCC = Average days inventory + Average collection period – Average Days Payables CCC = 30 + 0 – 10 CCC = 20 4.10 Business StructureRevival will be a private corporation due to the following advantages: Limited liability Access to Capital Continuity of business Income tax deferment These advantages outweigh the minor inconveniences of paying an annual fee or disclosing financial information. Revival will state a fiscal year end of December 31st for the sake of convenience. The primary shareholders will also form the board of directors and hold various officer positions. This is to take advantage of their various skills and knowledge. After the issuance of 1,000 shares primary ownership will belong to the President/Director with the remaining shares divided among the other five directors. All of these will be Class A preferred shares so each shareholder receives voting rights along with security against bankruptcy and a claim on assets.
Table 4.4 – Shareholder List 4.11 ConsiderationsOther aspects of business operations have been considered to ensure that Revival encounters no unforeseen issues. 4.11.1 Capacity Limits Due to the limited amount of car bays and staff members Revival will only be able to accommodate three automobiles at a time. The number of vehicles per year is limited only to the amount that can be annually put through these three bays. The circumstantial nature of each vehicle makes predicting the annual number of vehicles difficult. 4.11.2 Cost of Sales As previously mentioned the circumstantial nature of this business makes estimations difficult. Revival will maximize the return on service with a 100% margin on labour. The gross profit margin for parts however will be on the low average of industry at 30% in order to attract customers. Schedule 3 in Appendix A explains how these margins will be achieved. 4.11.3 Quality Control The services provided by Revival will need a limited system of quality control. To ensure that the mechanical staff correctly perform the necessary procedures the vehicle will be evaluated before being given to the customer. These evaluations include: Performance Measurements such as dynamometers Standardized 100-point inspection Comparison to Costumer Specifications To further ensure a level of quality, Revival will offer a limited-warranty for 12 months with the single stipulation that it does not apply to any performance parts. This is an industry norm due to the nature of these parts. 5.0 The Human Resources Plan5.1 Organizational StructureThe initial organizational structure for Revival will be relatively flat. As Figure 5.1 indicates below the Board of Directors and Officers there are only two levels of employees. The managerial position will initially be held by one individual but in the expansion plan the managerial responsibilities will be divided between two positions. Figure 5.2 shows that the reasoning for this is an increased staff and a more functional organizational structure split into the sales and restoration departments. There will also be an increase in the restoration crew and an additional hunter to accommodate the increase in business. 
Figure 5.1 – 2011 Organizational Chart 
Figure 5.2 – 2016 Organizational Chart 5.2 Job DescriptionsAll Employees will work 8:00 – 5:00 daily and receive 1 hour unpaid lunch break as well as thirty minutes of paid breaks throughout the day. Described below are the responsibilities and duties of each organizational level. Restoration Supervisor
Table 5.1 – Supervisor Tasks Shop Team
Table 5.2 – Mechanic Tasks Hunter
Table 5.3 – Hunter Tasks
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