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This report has been written because the owner (Robyn Lee) of the Ultimate Supper Club has realized that the operation of the business is reluctantly growing up. Thus she has asked for a recommendation if it would be profitable to purchase all what they usually spent for 'rental costs' on table and kitchen linen or just keep them 'renting'. 'Buying' or keep on 'renting' is the focal message of the report. In other words, the report is preparing a change to happen in business operation based on its analysis, finding, conclusion and recommendations.
In any case, Robyn Lee probably felt this all day and night. As a result, her frustration wanted to find out why the business grew up so slow, what actually happened and in what way to solve the problem - if there was only one. The business owner must have suffered this condition for about one and a half years, accordingly. However, the request has handed down to me on 18 December 2010.
Gathering vital information is a key factor for this report. With that information, we feed them into a table so we easily analyse what it actually happens over periods of time. To this end, an analysis of the given table below is very much the central requirement that needs to be done so we can obtain a different result. The procedure is expecting a difference from the usual look of previous reports.
After gathering information from four restaurant supplies, it said that 'the average weekly quantity of linen could be purchased for only $2500.00, if all items were purchased on a single contract, and linen has a useful life of two years', accordingly (See Appendix A). From the table below, Table 1, in the column of 'Total in 2 yrs', let's look at the very first row - 'White Table Cloths'. How could we compare that amount ($5200.00) to the amount ($2500.00) of buying it. The difference ($2700.00) is far beyond the limit. That is just one item and if we move down to the total row, the difference is unbelievable!
The major finding of this report was that 'running' this kind of business via a 'rental strategy', based on this given information, must put a hard stop there right now! It is evident that the financial lost is incomparable, which is far from an operation of a good modern business in this century. Purchasing the whole item on a single contract for only $2500.00 is amazing. It meets the demands of cutting costs required by the business owner. In addition, a laundry service would be $6500.00 ($125 x 52) per annum. This would come up to $130,000.00 in two years, which looks far better than continuing to rent the table and kitchen linen in the next two years.
In connection with the current storage, it shows that there is a little problem. We can't guarantee that our need for storage would depend upon our weekly laundry delivery. Sometime we have to give up something so we can get the other second best option. In this case, we definitely need to expand and enlarge our storage. This is to say that we need a plan to happen in the next few years. With the purchasing of the kitchen table and linen, we definitely save a lot of money in the next two years. That would give us a deposit for restructuring (or renovating) our house in order to enlarge our storage.
The main conclusion that can be drawn from this report is that the 'rental costs' is far too expensive and will never be part of the business anymore. Obviously, the Ultimate Supper Club can quickly generate more money (surplus) if they own the tools (and all related equipment/assets as required) for their business. With that positive outcome in terms of finance, the solution for the lack of storage can be easily obtained although it had to go through so many obstacles. Business people must also learn to focus on business requirements more than personal demands, so it reaches the required business destination. This destination is normally a positive one and of course a positive difference would always be the outcome. Without a procedure that breaks down the given piece of information and reconstruct it again hoping to find a new result, this report would not have any satisfactory conclusions.
The owner's negative realisation about the operation of the business was correct. She realised it and did the right thing asking for a recommendation about her doubt.
In the light of these conclusions, I recommend that there will be a 'change' in the operation of the business. Ultimate Supper Club must buy the whole item in that single contract. That includes all the other things that relate to the usual 'rental costs'. It is the best option ever happened to Ultimate Supper Club, as it's far cheaper than the usual existing 'renting' way. That would definitely stop the business from throwing away huge amount of money that they should hold.
In addition, a personal demand must be well handled so the business could save money to enlarge the building for the storage, for example, as expected in this case.