School: JFS

Link Teacher: Mr. J. Zinger

Business Adviser: Paul Kasler

Brent Area Board

Interim Accounts
Cash 4 U Company Report
Executive Summary

Cash 4 U

Cash 4 U is a service aimed at people who have unwanted items in their homes or offices which they
would like to sell but either don’t have the time or don’t have the expertise necessary to do so.

Our mission statement is as follows: “Cash 4 U is an internet-based company backed by the Young
Enterprise scheme based in the Harrow area. We sell new or second-hand items on behalf of
customers using either eBay or directly at our stall, to achieve the best price with minimum hassle
for the seller.”

Key Figures

Initial business plans showed that at an average sale value of £50, at average gross profit of 15%, we
needed to sell 12 items per week to break even. Our aim for profitability meant we needed even
more than this. Our initial target was break-even (£600 per week), with plans to grow this quickly.
Sales-to-date are £2,183, with gross profit of £554.83. Operating costs-to-date are £367.09, resulting
in net profit of £90.64.

Key Activities

We quickly discovered that developing a business around a service rather than a product had many
challenges. We needed to ensure that we had processes for accepting and managing the anticipated
deluge of goods, making sure that every item was properly accounted for, sold, paid for, packaged
and sent to the buyer, and monies paid to the seller. This was mostly carried out using a paper-based
system. We later developed a sophisticated on-line warehouse management system to allow all staff
to input detail of the status of any item, and to track all sales. Our customers can also track the status
of sales on our website allowing for greater interactivity and customer involvement.

The biggest issue was attracting items to be sold. This meant getting our unique message across to
our target market which was predominantly the school, consisting of 2,000 students and their 4,000
parents. Initially we targeted directors to speak to their friends and families to spread the word. This
was quite successful, and got things started. After this we began to market on a larger scale using
flyers, letters and presentations in school assemblies. This method of marketing has been successful,
but has not yet achieved the volume needed for profitability.

Moving Forward

After numerous adaptations and improvements to the business model we created, we believe that this
business could now be scaled up and replicated in numerous different schools. With the correct
infrastructure in place, this service can be very profitable, but every market is different and therefore
different techniques are needed to make it work. Based on this, there are still growth opportunities
for the company in the form of adapting further to the market and refining our marketing techniques
in order to improve our profits.

To date, the company is still constantly expanding and evolving meaning that sales figures are
improving as our organisation, communication, marketing and financial awareness are always on the
rise. We have certainly found that the way to run a business is to “learn by doing”, and we will
continue to do so.
Contents

1. Introduction
2. Start-up
3. Review
4. Cash 4 U and its Future
5. Company Structure
6. Finances

1) Introduction

As a service, Cash 4 U has not been as easy to control as other businesses. We do not have a product
to sell, so marketing and sales have had to be very adaptive and spontaneous as we were unaware of
what we had to sell; therefore the company has had to be constantly structured and reviewed in order
to improve its efficiency, its reputation and its ability to expand.

Cash 4 U bases its service around eBay which is a well known internet auction site used to buy and
sell to people around world. Our key feature is that we will take an unwanted item from a customer,
take photos of it and research a well thought out description, then list it on eBay making it available
to buyers worldwide. This means that for the minimum hassle to the seller, we will sell their item for
the highest price we can find on the market and then give the money received to them. The ability to
take an unwanted item and then give the seller money for it is and always will be our main appeal.

2) Start-up

Setting up Cash 4 U

As with most companies, the seemingly simple process of thinking up an idea and bringing in initial
share capital was found to be a problem. This was one of our first learning points which are that a
company cannot simply be started; it has to be thought out and planned first.
Cash 4 U came out as the best of a list of ideas which were generated from a brainstorming session
between all the directors. Everyone in the group has had experience with eBay and so we decided
that a business based on our experience this successful internet auction site would be very profitable.
We realised that we had a huge captive market at our fingertips consisting of 2,000 students and their
4,000 parents, family and friends. It also seemed very beneficial that this type of service would have
very low start-up costs which meant that our initial capital investment could be kept to a minimum.

Setting up a bank account

The beginning of Cash 4 U was troubled with financial problems. 4 weeks after applying for a bank
account with HSBC, it still had not been created. After 5 weeks our bank account was initiated. Due
to the nature of our service, it was essential that we had a bank account before we started taking in
items to sell as to give money back to our customers, we have to go through a process of
withdrawing the money from paypal to our bank account.

Board meetings

Meanwhile we were quickly learning that our board meeting were not working as efficiently as they
could be. We were simply shouting out our problems and expecting everyone else to be able to
answer them. As weeks went by, we began to improve our communication and team members
started to solve their problems before the meeting. This meant that our meetings were just used to
summarise the week’s business from each department’s perspective.
In a short period of time we realised that in order to succeed that the managing director with
agreements would have to delegate tasks to suitable members of the team.

Market Research

One of the first tasks which our marketing director carried out was an initial market research to see
how well the market would respond to our service. A questionnaire was conducted with random
students during their lunch times for 3 days in order to collect a reasonable amount of data. A
questionnaire was also handed out to people at the Winter trade fair in St. Georges to see how
feasible it was to market to other people outside school. The data collected was used to plan our
initial marketing strategy which has since been adapted numerous times as we learnt more about our
customer base.

Business Process

We decided that for a business and especially a service to run effectively, we would need to create a
process which detailed the movement of items in the business. Also needed was a contract which we
could use to ensure that all our terms and conditions were laid before the customer in order to
prevent any surprises when the transaction was finished. Our initial business process was formed
from what we thought would work most effectively, of course later we found that by running the
process, there were many changes that could be made to improve it. We learnt that a business on
paper is not the same as a business in practice and that it is almost impossible to incorporate all the
possible things that can go wrong, its true to say we learnt from our mistakes and acted swiftly when
problems arose, improving the business.

Trade stall

From Monday 23rd January we set up our stall outside the lunch hall and began advertising to the
school. Within the first two weeks we collected 32 items to sell. Unfortunately this led us to our first
problem which was insufficient secure storage. Initially, we asked the school to provide us with a
secure lockup, however this was not possible and so we were forced to use our own lockers. We
tried to solve this by negotiating with the school to find a larger storage area, however the only room
available was the head of sixth form’s office which was not normally locked. The other problem
with having a lack of storage was that items were left in different locations and lack of
communication meant that it was hard to keep track of them. One learning point that came out of this
was that nothing can be left up to third parties (in this case the school) when in a business.

Winter trade fair

The first outside event was the winter trade fair at St. Georges in Harrow. This was our first real
interaction with customers and taught us a lot about the best way to approach and market to possible
clientele. The event was also useful for us to get a feel for the competition in terms of the products
they were selling and the effectiveness of their marketing. This event acted as a push for the team
who came back to school with a more focused and determined attitude as the team understood the
customer’s needs and a greater perception of how to interact with customers.

Shareholders

Early on, we decided that although shareholders would play a limited role in company decisions
whilst realising the importance of keeping them well informed of the day to day running. Therefore
we decided that a section of our website would be dedicated to reporting to shareholders. This
incorporated a clever system in which special codes were given to each shareholder with their
certificate which they could use to log on to the system and see any company news, download
minutes from board meetings and see the latest company finances. Our shareholders consisted of
family and friends including each director of Cash 4 U. There are 21 shareholders providing £400 of
share capital.

eBay

One of the initial things we had to do after agreeing on our idea was to set up all the eBay related
accounts which would be necessary. This included signing up for an eBay account and a PayPal
account which could be used to transfer money to the buyers of the items we were selling. We also
realised that an additional director would be needed who could manage the eBay process and one
was quickly hired by the managing director.

Website

As Cash 4 U started, a professional looking website was quickly designed by the ICT director which
would be used to advertise our business to the market outside of school, advertise the items being
sold on eBay, and more interestingly allowing customers to become members of cash4u which
enables them to check their items or register items they want to sell with us. Upon leaving their
name and number they would get a call from our sales director.

www.c4sh.co.uk – The Cash 4 U home page The page used by customers to sell items online

The website was an integral part of the Cash 4 U business, and over time it was developed to include
a site for the staff which allowed our communication and organisation to improve significantly.

Marketing

Another problem we encountered and therefore one of our best learning points was advertising.
During the first two weeks we were able to start bringing in lots of items just by setting up our stall
and telling interested passers by what we were doing. However, over time, the number of people
coming to sell things with us started to dry up. We quickly realised that the problem was that we
were severely under-marketing. Therefore the marketing director set about planning a marketing
campaign which would increase our sales to our target of £600 per week.

Below are some of the steps that were taken:

 Flyer production and distribution
 Created and printed letters to go home to parents who may also be interested
 Improved the general design and importance of the stall
 Gave assemblies to year groups.
 Encourage word of mouth, by interacting with the students.
Commission rates

Our initial commission rates were judged upon our competitors. We decided that as a young
enterprise team we would be able to beat the prices of our nearest competitors who were a company
called eSellit in Mill Hill. The idea was that we could compare our prices to competitors in order to
justify them to prospective customers. The commission we take from items depends on the final sale
value on eBay. The table below shows this:

Final sale price (£) Commission Rate (%)

10 - 49 30
50 - 99 25
100 - 299 20
300 - 499 15
500 + 10

Finding the Correct Market?

After encountering problems with the school as a market due to the disinterest of pupils, and the low
value items being brought in, we decided that we may have to look at a different market. After
analysis of our profit was conducted by the finance director, we found that larger items which were
selling for more than £50 (e.g. couches, fridges and exercise machines) were bringing in a lot more
of our profit than the smaller items (e.g. games, CDs, clothing) which sold for less.
Many of the items which were given to us ended up un-sold which caused extra administrative
problems for us as they had to be returned to the seller with no compensation for our effort.

One of the less successful items was a bundle of three used computer games. With listing fees from
eBay costing £2.50 each time we listed items such as this, we realised that they were not selling
because they weren’t in good condition and with the uprising of other formats of games, these items
weren’t even worth taking to sell.
The item ended up failing to sell after three listings and cost the seller (not the company) £7.50.
Obviously, we realised this was not the way forward and so we began a period of review and reform.

Understaffing

Due to the ongoing expansion of the business as each week we learnt more and more about how to
improve efficiency and customer relations, we realised that placing the burden of running the entire
company on the hands of the seven directors was becoming more difficult. This problem also led to
low morale among the company as most of the directors started to groan under the strain of so much
work.

Item Analysis

One of the more successful and expensive items to pass through the company for selling was a
running machine. Due to its immaculate condition and through a good solid listing, we were able to
sell it for significantly higher than our original estimates (Estimate £100-200, it eventually sold for
£515.00!.
The item sold for a high price providing us with £61.05 commissions taking.

This did provide us with a helpful analysis of what our company should be aiming to do. We realised
that with the larger items, even if it took more time to photograph and had some smaller hurdles with
transportation issues, these items were gaining the majority of our commission and the smaller
valued items were being overshadowed.
3) Review

After 3 months of running Cash 4 U, we realised a restructuring of the company was needed.

Communication

The first item on the agenda of change was to re-define the roles of all the directors in order to bring
more clarity to the position and to ensure that communication between each member of the team was
more fluent.
One problem was that without clear role definitions we learnt that various members would ‘pass the
buck’. We needed to establish roles for each member and stick to their given role.
This proved successful as directors began to communicate with their fellow directors resulting in a
more reliable business. It really taught us that communication is the key to a businesses success.

Labour

Two new marketing directors and one new sales director were brought in to take some of the
workload and improve morale among employees. This decision was met with immediate gratitude
and increases in productivity which taught us that one of the biggest factors in determining the
success of a company is the productivity of the labour.

Organisation

Due to problems with storage and paperwork, we found that many items either weren’t stored in the
correct place or weren’t recorded properly. This meant that there were certain items which were re-
listed even though they had already been sold, and items which weren’t dispatched for weeks since
their location was unknown.
The solution to this problem was an online database system
created by the ICT director. This system was used by each
director to track the item through the business. At first we
found that it was hard to get everyone to use the system
which taught us that it takes quite a lot of time to introduce
staff to new methods of working.

(Above) The Cash 4 U Warehouse management

system used to record all movements of items
moving through the business.

(Left) The contact form used to record details of

potential customers by the sales director.
Commission Rates

An issue raised by the sales director was that our current commission rates were too high and many
potential customers who expressed an interest were ultimately being put off by the amount of money
we were taking. On this information, we decided that it was in our best interests to lower
commission rates at the expense of our profits in order to try and boost sales figures. We therefore
reduced our rates to 30% for items selling under £30 and 15% for anything above. We believed the
new rates were more fair and also deterred people from bringing in lower value items which were
not bringing in much income.
4) Cash 4 U and its Future
We believe that after overcoming so many obstacles, we are currently on the gradual path to success.
The benefit of running such an interesting company in terms of its problems and ability to adapt to
different circumstances is that it requires effort and determination to make it succeed.
All the directors on the Cash 4 U team have benefited from learning from our mistakes and actually
being able to see for the first time the numerous amounts of problems which come about from
running a business.

Our long term goal now is to prove that the business model we have created for running this type of
service is the most efficient. Eventually our aim will be to package all that we have learnt and scale
it up by franchising into different schools with completely fresh markets.

We can liken our experience to climbing a mountain. We started off by finding our foothold and
getting onto the mountain by coming up with an idea and taking it off the ground. We then found it
easy to climb the first part as we were still fresh to the business front and still eager to make it work.
Eventually, we started to tire as sales figures dropped, taking the team’s morale with it. Then by
reaching the middle of the mountain, we decided to completely revolutionise the way we approached
the business and the climb began to pick up pace again. Now, as we are reaching the summit and we
can see the end in sight, the business is running strong and is on its way to success.
5) Company Structure

Our company structure has been modified several times in order to account for the various problems which the company experienced. The company
structure now looks like this

Managing Director
Joel Reuben

Gregory Kay
Charlotte Leigh Bradley Lever Lee Abrahams Natalie Cohen
Logistics Director
Marketing Director ICT Director Sales Director Finance Director

Ana Rosenthal Adam Caplan Anthony Goldman

Rachel Marshall
Marketing Listing Specialist Sales
Marketing Director
Director Director Director

Adam Kosky
Year Managers: Descriptions
Philip Braham
Richard Hyams
Joe Burns
David Winters
6) Finances
Profit and Loss

Debit (£) Credit (£)

eBay sales 2,183.00
Total paid to customers 1628.17
Gross profit 554.83

eBay costs 283.57

Extra costs 83.52
Total expenses 367.09

VAT 97.10
Net profit 90.64
YE Corporate Tax 9.06

Balance Sheet

£
Current Assets:
Cash at Bank £187.74
Cash in Hand £0.00
TOTAL £187.74
Less:

Current Liabilities: £
Bank Overdraft £0.00
YE Corporation Tax £9.06
YE VAT Due £97.10
TOTAL £106.16
BALANCE (C) 81.58

Represented by:
Issued Share Capital:
800 shares at 50p £400.00
Profit & Loss Account £0.00
Shareholders' Funds £400.00

Signed ____________________