Start Up Budgeting for a Brick Manufacturing Company

This paper focuses on the startup budget and the design of the value chain for the brick manufacturing business. Just like any other manufacturing business, having a credible plan for brick manufacturing company is essential. This is because issues concerning the final product occupy a lot of space in any business operation. They entail outputs and inputs, retail and wholesale, finished products or parts (Roueiheb, 2015). Therefore, financing a medium to large brick manufacturing business demands plentiful resources and detailed planning. The type of manufacturing intended in this case is the stabilized soil brick technology, which will enable the company produce high quality bricks and, in return, fetch higher income. The company prefers stabilized soil bricks technology because it supports an environmentally sound and cost effective masonry system. The company intends to serve interests of construction industry in regards to both public buildings and private homes.

Value chain for the brick manufacturing company will have a comprehensive outlook with respect to demand and supply (Presutti & Mawhinney, 2013). Its main aim will be to reduce the cost of the finished products and make them accessible to a large number of consumers. As such the company requires taking into consideration its own costs as well as the potential rivals so that it can sustain its survival in the business. In designing the value chain for the company, a number of factors should be taken into consideration. For instance, in regard to input provision, the company will consider Siliceous Clay as the most essential raw material. Therefore, consideration to establish the plant close to the source of raw materials shall take priority. In regard to production method, the company intends to follow both semi-industrial and industrial production methods for clay bricks. Marketing and selling remains an essential aspect of the value chain for the company where issues such as advertisement, pricing, services, and distribution, market research and survey system will be addressed. Management of resources will, also, comprise an essential part of the value chain for the company. This part will entail activities like recruitment, training programs, and personnel wages and salaries. This industry, however, lacks codified recruitment and training system.

The type of budget, which the brick manufacturing company intends to implement, is the operating budget. This budget will give an indication of the services and products that the company expects to utilize within the budget period. This implies that it will include descriptions of all the activities that the firm engages in for the purpose of generating income. These activities will include collection of raw materials, production process, sales as well as inventories of the final products. In this case, the operating budget will contain two main sections: the revenue budget and the expense budget. The revenue budget will indicate the company’s projected proceeds for the expected year. On the other hand, the expense budget will give an indication of the company’s expected expenses for the expected year. The budgeting review steps necessary to ensure that the company attains its financial forecast include (Roueiheb, 2015): checking the industry standards; making a spreadsheet; looking to cut costs; factoring in some slack; conducting periodic review of the business; and continuously shopping around for suppliers/services.

The four benchmarks that the company intends to utilize include: competitive benchmarking, internal benchmarking, process benchmarking, and generic benchmarking (Brook-Hat, 2013). Competitive benchmarking will be performed against competitors in brick manufacturing industry. This will help the company establish the factors that influence its competitors to perform better. Internal benchmarking will become essential when the manufacturing company grows into multiple units such us multiple factory locations, and sales offices. This will benefit the company by identifying new innovative practices and opportunities for improvement. Process benchmarking will be concerned with the production method and technology. In regard to production method, the company intends to follow both semi-industrial and industrial production methods for clay bricks. In the case, the company will ensure that the right people are actively involved in process improvement to ensure that the final product surpasses the quality of competitors. Generic benchmarking will be concerned with the technological aspects, deployment and implementation of technology. The company prefers stabilized soil bricks technology because it supports an environmentally sound and cost effective masonry system. This will highlight new opportunities that can make the business competitive.

The type of cost system that will be implemented in the brick manufacturing company is the process costing system (Brook-Hat, 2013). This cost system is appropriate in the brick making industry where there is production of identical products and in large quantities. In this case, there will be no need for tracing costs to particular items because of their similar identity. On the main challenges is that process costing can result into cost errors that can cause huge negative impacts on the production system. This challenge; however, can be overcome by eliminating redundant processes in order to increase cost savings.

In conclusion, financing a medium to large brick manufacturing business demands plentiful resources and detailed planning. Value chain for the brick manufacturing company will have a comprehensive outlook with respect to demand and supply. The type of budget, which the brick manufacturing company intends to implement, is the operating budget. The four benchmarks that the company intends to utilize include: competitive benchmarking, internal benchmarking, process benchmarking, and generic benchmarking. The type of cost system that will be implemented in the brick manufacturing company is the process costing system

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