ENT 6116 - Business Plan Development
Dr. Tang Wang
October 27st, 2024
Cost Structure Report
Jiaxin Mu
Annabella Soto Olivella
Rishab Chandra Gowlikar
Rithika Kandimalla
Kalpana Limbu
Fixed Costs
Our fixed costs cover the basic expenses needed to set up and run the photography service.
These costs stay the same no matter how many bookings we get:
1. Rent: $6,000 per year
o This covers a small office space for customers who want in-person help and a
workspace for photographers.
2. Equipment Costs:
o Cameras: $2,000 for two high-quality cameras to take professional photos.
o Laptops: $1,000 for two laptops used for editing and handling bookings.
o Furniture: $1,000 to furnish the office.
o Photo Printer: $500 for printing photos in office.
Total Fixed Cost: $10,500
Variable Costs
Variable costs change based on the number of photo sessions and customer orders:
1. Labor Wages: $5,440
o Estimated for 8 hours per day during busy times, paying photographers
$17/hour.
2. Photo Printing Supplies: $200
o Covers materials like paper and ink for printing photos.
3. Delivery Costs: $10,000 per year
o Covers 1,000 deliveries at $9.99 each for pick-up.
4. Shipping Supplies: $3,000
o For packaging photo albums and frames to ensure safe delivery.
Total Variable Cost: $18,640
Combined Total Cost (Fixed + Variable): $29,140
Cost Drivers
Our main cost drivers, or biggest expenses, are equipment, photographer wages, and
delivery:
Most Expensive Items: Cameras and editing equipment for high-quality results.
Most Costly Activities: Paying photographers and handling delivery.
Cost-Saving Ideas: Partnering with local vendors for discounts on supplies, and
offering pick-up options to lower delivery costs.
Breakeven Point
Our business will break even, or cover its costs, once we reach a certain number of bookings:
Breakeven by Volume: We’ll break even after about 388 bookings at $75 per session.
Breakeven by Time: We expect to reach breakeven in around six months, assuming
bookings grow during peak graduation times.
Startup Costs
We’ll need startup funding equal to our total fixed costs to get our business up and running:
Total Startup Capital Needed: $10,500
Funding Sources: Bootstrapping, contributions from friends or family, and potentially
small grants available to USF students.
Cash Flow Management
Managing cash flow means balancing income from photo sessions and add-ons with our
regular expenses.
Cash Coming In: Money from individual and group photo packages.
Cash Going Out: Regular costs like wages, delivery, and printing supplies. We’ll set
aside an extra 10% each month to cover any unexpected expenses.
Estimated Monthly Cash Burn Rate: $2,428, based on our total fixed and variable costs. Our
plan is to keep cash flow positive by focusing on sales and affordable services.
