Our Company's Core Business Strategy & Financials
Sales Organization
Our company, operating in the tertiary sector, is dedicated to providing services directly to the customer. Therefore, we utilize a direct distribution channel: Manufacturer to Final Consumer.
Pricing Policy
Our company aims to achieve the following objectives:
- Achieving permanent market presence.
- Generating short-term market returns.
- Promoting and positioning our products and services, defending against or acting proactively against competition.
The price of our products and services is set by referencing three key methods. We consider:
- The costs (Cost & Selling Price Range).
- The maximum price that can be set on the market.
- An analysis of the company's advantages and disadvantages against the competition.
Legal Form
Our legal structure is a Limited Liability Company (S.L. or Ltd.). The share capital is divided into indivisible and irreversible shares. The minimum number of members is 1, with no maximum limit. The share capital, consisting of members' contributions, must not be less than €3,005.06. In our case, members contribute €1,001.70 each, making the initial disbursement relatively low, which is advantageous.
Formalities Required for Company Setup
- Application for Company Name Certificate.
- Opening a bank account.
- Drafting and Signing of Memorandum and Articles of Association (Statutes).
- Transfer Tax Payment.
- Registration in the Commercial Register.
- Application for CIF (Tax Identification Code), Census Registration, and Tax Statement of Economic Activities.
- Registration in the Self-Employed Regime and/or General Social Security Regime for Partners and Employees.
- Request for Official Company Books (e.g., Minute Book, Share Register).
Type of Business Organization
We employ a line-functional organizational model, blending vertical and horizontal design structures. The central structure retains a linear model with vertical design, complemented by advisory and support (staff) units. The advantages of this model include:
- Clear understanding of individual tasks.
- Defined reporting lines for workers.
- Easier control by superiors.
- Increased flexibility and good coordination.
Our company utilizes a vertical organizational chart, where units with higher levels of authority are positioned at the top. A General Meeting, formed by the company's promoters, will exist, and each of us will perform a specific function within it.
Financing
An ICO Investment Loan (2011) is intended to enhance the implementation of new business initiatives. Key details are:
- Amount: €70,000
- Payable in: 12 years
- Nominal Rate: 6%
- Monthly Fees (first year): €683.10
Financial Analysis Tools
Cash Budget
A tool used to track a company's expenses and income over a specific period.
Balance Sheet
The balance sheet accounts for a business's economic and financial situation.
Net Present Value (NPV)
A procedure for calculating the present value of future cash flows resulting from an investment. An NPV > 0 indicates profitability.
Internal Rate of Return (IRR)
Used to decide on the acceptance or rejection of a proposed investment. If the IRR is greater than the market's required rate of return, the project is acceptable; if it is lower, it should be rejected.
Financial Ratios
Used to determine the magnitude and direction of changes in a company over a period of time. These include:
- Rates of Return
- Management/Activity Ratios
- Credit, Debt, or Leverage Ratios
- Liquidity Ratios
Conclusion
Our company would not be viable if we were to secure a short-term loan, as our working capital is negative. This is because short-term liabilities exceed current assets, meaning a significant portion of our non-current assets is financed short-term. This implies a risk of potential bankruptcy or insolvency, which can only be prevented with higher incomes. To mitigate this risk of infeasibility, we should seek longer-term financing, potentially with grace periods, to manage the substantial investment in machinery.