Debt Management - 2016

Problem

A client’s tempo delivery business did not earn revenues as expected. He was not able to service the loan taken for the purchase of the tempo. Credit cards were used-up to the limit and dues were paid in instalments, which he missed many a times. This affected the CIBIL score. No bank would lend him any kind of personal loan to pay off the vehicle loan. The salary from the regular job was not enough. Being the only earning member of the family there was no other source of income and this made things worse. The family members were unaware of the situation. As often happens he started taking loans from friends to pay off the vehicle loan and credit card loans. When the friends demanded their money be paid, he sought other friends and acquaintances to pay off these loans. Worried and anxious on one such quest he landed at our doorstep; hoping we would lend him some money.

Solution

The client was advised to sell off the vehicle, though at a depreciated value and foreclose loan amount. His cash flows were scrutinised and all discretionary spends were stopped till such a time that the loans from friends were also paid off & expenses were equal to his income. Continuing with the austerity measures for a couple of more months resulted in surplus cash at end of each month. The cash surplus generated in these months and in the following months was further invested prudently in a systematic manner to earn better returns and have enough liquidity for emergencies. Thus, providing him with apt financial planning and consultation for a secure present. Alongside, credit card debts and loan repayments are an important aspect of financial planning for businesses and individuals. We recommend planning the expenses and repayments right from the initial stages. For more information kindly contact us.

A holiday resort business plan - 2011

Problem

With a limited budget of Rs. 10L a client wanted to build a camping resort on the banks of a river. The resort would have tents for customers to stay, essential amenities like food and water. Bullock cart rides and some rural activities like weaving, pottery, & tattoo were thrown in for added rustic/rural feel. The land parcel belonged to the client. Though the concept was good there were no skills or knowledge about financial management required for the business. There was no feasibility done for the project.

Solution

In order to optimize the limited capital resources:

• Cash flow analysis of capital expenditure towards essentials only was considered. Essentials like:
  • Cost of civil work required in making toilets, plinths for tents, kitchens etc.
  • Use of bamboo for walls as partitions in kitchens.
  • Basic landscaping at the entrance and reception area with the help of locals.
  • Electrification of the premises.
  • Water supply from Municipal Corporation & plumbing.
• Analysis of buys v/s rent to reduce the upfront expenses for items like:
  • Tents
  • Kitchen equipment
  • Bullock cart
• Uses of local recourses in order to save the cost of transport e.g.:
  • Locals from the nearby villages were employed to do small basic jobs.
  • Fruits and vegetables.
• Out sourcing transportation activities of customers to the resort.
• Breakeven analysis:
  • Costing of tent rents and future projections of income from the same and activities at the resort.
  • Time taken to breakeven.
• Future profits and scope for expansion.

Since the client’s family was from the real estate sector (builder) he would do the marketing and publicity along with his other ongoing projects. Apart from brochures no extra cost was considered for marketing in the initial stages.