You have a friend who is thinking of starting up a hairdressing business from home. He can charge £25 for each customer visit, and it takes about half an hour to style a customer’s hair. He thinks that he can work for five hours a day, five days per week, fifty weeks a year. He has worked out that his consumable costs will be about £5 per customer, but he will have to lay out £9,000 on capital equipment, which he thinks will have a working life of about three years. He wants to make at least £200 a week and believes he should also be able to set aside another £100 as a contribution to repairing damages to carpets and fittings. He is very enthusiastic about his plan because he has a friend who has a similar business. She says that 70% of her takings are pure profit. Calculate your friend’s weekly break-even volume for three cases: Meeting costs, Making his required cash surplus, and Making his surplus plus a contribution to repairs. Determine what changes (if any) he would need to make to match his friend’s profitability rate.
Opening an establishment described in terms of the economic challenge may seem profitable. By doing the calculations, one can conclude that the annual net profit of this business is about 16000 £, and the weekly revenue exceeds 500 £. According to the terms of this task, the earning opportunity is...