Set Assignment Information
Scenario
You are working as an assistant in a small business advisory service. Amir, who wants to start his own
photography business, has asked for advice on two possible options for the future. Amir has provided
you with some information about his business, the market and the two different options that he is
considering.
The business
Amir has just graduated from university with a vocational degree in photography. He wants to set up his
own business specializing in photography services.
The aims and objectives of the new micro business are:
• to establish a brand
• to maximize sales
Market trends
Despite over 75% of the world’s population owning smart phones in 2021, and many of these phones
having a digital camera, there is still work for professional photographers. These provide photographic
services to include studio photo shoots of families, newborn babies and pets. Photographers also work
outside the studio, travelling, for example, to schools to take portrait pictures, and to weddings, special
occasions, and events. Many sports organizations also like to have a professional photographer present
at matches, events, and competitions to capture the action.
The global market for photographic services grew from USD 41.71 billion in 2022 to USD43.54 billion in
2023 with a growth rate of 4.4%. Forecasts for2027 estimate the sector’s value at USD 49.54 billion with
a growth of 3.3%.
Weddings is the largest sub-sector of photographic services but has seasonal fluctuations in bookings.
Certain periods of the year are busier, followed by quieter periods where fewer weddings take place.
During 2022, the average number of weddings photographed by each full-time professional
photographer was 30, each costing the client approximately $2 000. More than a quarter of clients
requested that a second photographer attend. Although taking photos only averages 10 hours each
wedding, another 14 hours is spent editing photos and two hours designing the album.
Photography services is a competitive market. As well as competing with other photography businesses
for bookings, the internet is also full of advice on how to take your own photos without a professional
photographer. Renting professional equipment for occasions such as weddings or using photographs
taken by guests is recommended as a cheaper way to capture great memories of special occasions.
To combat this and gain the maximum number of bookings, photographers spend on average in excess of
$1 800 a year on online advertising, printed brochures, photography exhibitions and wedding fairs. Many
spend about an hour on social media every day with 75% having a blog.
Option 1 – Buy an existing photography studio in the city
Amir has seen a photography studio for sale in the city. It is an established photography business with an
existing customer base. The purchase price includes all photography and store equipment. The studio
has a large exterior display window and inside it is set up for a variety of photo shoots. Amir could open
the business immediately.
The premises is located in a busy shopping centre in a pedestrianized area which is a very popular
shopping destination for local residents. It is surrounded by a variety of retailers.
Amir and his parents will invest in the property, but his parents will not work at the studio.
Amir plans to run this business with the help of one member of staff.
Start-up costs:
- Purchase of fully equipped photography studio: $161,500
- New signs: $2,850
- Initial marketing: $1,900
Yearly costs:
- Wages for receptionist/store assistant: $13,300
- Other expenses to licensing and insurance: $34,580
- Cost of goods sold: 28.5% of sales revenue
Other Financial information:
- Predicted sales volume of one hour photo shoots: 23 photo shoots
- Average selling price of one hour photo shoot: $66.5
- Variable costs each photo shoot: $9.5
- Weekly fixed costs: $950
Amount available for investment:
- Amir: $47,500
- Amir’s parents: $71,250
Option 2 – Build a small photography studio at home
Alternatively, Amir could pay to have a small photography studio built in the garden of his home. Before
the business could start to trade, Amir would also have to purchase the photographic equipment he
needs, including cameras, studio lighting and backdrops. This is estimated to take two months.
Amir has $47500 to invest and will need to find an additional source of finance for the balance of the
start-up costs. Amir plans to own and run this business alone.
Start-up costs:
- Building and set up of a photography studio: $31350
- Photography equipment: $14250
- Initial marketing: $1900
Running costs:
- Expenses to include licensing and insurance: $12825
- Cost of goods sold: 28.5% of sales revenue
Other financial information:
- Predicted monthly sales volumes: 8 photo shoots
- Average selling price of one hour photo shoot: $47.5
- Variable costs each photo shoot: $9.5
- Weekly fixed costs: $380
Set Assignment
ACTIVITY 1 – An electronic business report and presentation with speaker notes
Using the information provided, produce a formal report for Amir that recommends which business
option to choose. This report must have a logical structure and use appropriate business terminology
throughout. Your report must be supported by a set of presentation slides with speaker notes. This
presentation must be concise, accurate and well laid out.
The report
Your detailed report must examine the two options Amir is considering for the business. It must be set
within the context of the aims and objectives of the business and refer to the scenario throughout.
Your report must include a rationale that shows:
•the different factors in the internal and external business environments that influence each option, and
the relative importance of these factors
•possible risks for each option and reasonable alternative approaches that could be taken
• the implications of human, physical and financial resources on the operation of each option
• the influence of legislation and regulation on each option
• the use of financial forecasts and ratio analysis to predict the performance of each option and the
relative importance of this data
• a supported conclusion that recommends which option Amir should choose.
The presentation
Your slides and speaker notes should present your business analysis and recommendation to Amir, giving
clear, supported reasons for choosing one business option rather than the other.
This activity covers learning aims A, B, C and D.
A.P1, A.P2, A.M1, A.D1B.P3, B.P4, B.M2, B.D2
C.P5, C.P6, C.M3, CD.D3D.P7, D.P8, D.M4
