Question

As 2020 No-fun-city summer progresses, your friend is thinking of opening up an ice cream shop called ‘Rain, Snow or Shine’. Your friend heard that you completed the Financial Management course, and count on you to advise financial aspect of the ice cream shop adventure. What questions would you ask your friend and what advice would you offer?

Answer 1

As a financial manager, I would ask my friend few pertinent questions relevant to setting up a business.

1.Is the business a proprietory or partnership?

2.How is the capital raised - self/ family and friends/crowdfunding?

3.Have you estimated the fixed costs or the setup costs ?

4.Have you made any projections based on your assumed projections of cost price and selling price?

5.Is the location right for the trageted customers?

As an advise, I would tell him to focus on the business and be committed to it without any excuses. I would also advise him to keep a track of all the expenses and keep the business simple. He should also not try to hire workers just for the sake of it as it is a form of expenses. One canot avoid the fixed costs, but one definitely can keep a tab on variable expenses.At the same time, deliver the product as per cutomer expectations and provide satisfactory services.