Bank

Americans developed many types of “national” governments between 1775 to 1789. Each of these variations in centralized governments served different purposes through out this time period. They also represented the ideologies and fears of the people in how they were regarded, empowered, and organized.

One of the first unified fronts that the colonial states presented in a form of centralized governments was the formation of the Second Congress. The Second Congress met on May 10, 1775 in Philadelphia. It had many of the same restrictions that the First Congress had when it met in September 1774. Their purpose was to perform in two contradictory ways. First they had to raise money for an army. All the while negotiating a reconciliation with England.

Some of the delegates included, John Hancock, John and Samuel Adams, John Dickinson, George Washington, Benjamin Franklin, and James Madison. Although these delegates were, for the most part, of the same mind in 1775, times would later change them: influencing all of them in different political directions.

This Congress had virtually no power. They did not have any authority to write or change laws. But they could raise an army, finance the war, gathering a pro-independence coalition, and they could explore diplomatic alliances with foreign countries.

So little power was given to Congress, by the states, because of a deeply embedded fear of a powerful centralized government. Unwilling to repeat the mistake made in Britain, placing so much power in such a small governing body, was something that the states strived to not repeat. And they kept that in mind when they elected to draft the Articles of Confederation.

The Articles of Confederation, drafted by John Dickinson in May 1775, allowed Congress to issue bills, borrow money, to settle all disputes between states, and to administer unsettled western lands. However, many state governments did not like the last two provisions (settle disputes between states and control all western lands). Those issues would cause Congress to debate the Articles for years.

To amend the Articles, all states had to unanimously agree to the changes. Again the second class powers given to the national government was due to the states fear of an all-powerful central government. For it could potentially jeopardize the freedoms of the people it governed. Just like it had when the king of England and Parliament passed various revenue generating taxes on the colonies without representation.

By 1781 economic turmoil began to weaken the newly formed confederation of the states. The cost of the war had plunged the colonies into economic hardship. From 1781 to 1788 is known as the “critical period.” After the revolution the first priority was to pay for the war itself.

Congress had given land certificates to solders that fought in the war against the British, as payment for their service. They had also printed money to pay for the military supplies and pay solders, but the money was never backed by “hard money.” Hard money is gold or silver. In 1775 this printed money had some value, but it was virtually worthless by 1781. Many states had also printed paper money in excess, as well. Further confusing and disrupting the economy and plunging the country into deeper economic debt.

Even though Congress was granted the right to print money, it did not have the right to tax. Without the ability to tax, Congress had no means of collecting revenue to pay for the war. A weakness that was discovered when Robert Morris served as Superintendent of Finance for the Confederation from 1781 to 1784.

Morris originally proposed a five-percent impost tax on all imported goods into the country. But most coastal states already had impost taxes, which they used to pay for their potions of the war debt. Also Congress did not have the authority to impose such taxes on the states populations according to the Articles of Confederation. Nor did they have any means of enforcing compliance of such tax laws. This proposal was soon dropped.

A second plan by Morris called for a nationally supported bank that would hold Congress”s hard money along with other investors and private citizens. In return the bank would give the government short-term loans. This plan also allowed the bank to print “banknotes.” Banknotes were paper money that was backed by hard money in the bank vaults: therefore they would not depreciate in value. The theory behind this was that with paper money backed by hard money it would provide the nation with some economic stability.

Morris” national bank worked with limited success. The bank was relatively small; it printed little money (even thought it actually printed more paper money than what it could back in hard money) for circulation. Therefore, it had limited impact on the economy: providing little stability.

In the fall of 1786 the economic troubles of the Confederation reached a peak. Armed men threatened the courts in Massachusetts over the newly imposed taxes passed by the state. Not only were additional taxes passed, but also the state insisted that they be paid in hard money. Most citizens at the time had little hard money on hand.

This caused many to arm themselves again, in protest against the hardships that the government was imposing on them. Daniel Shays was the leader, who was a farmer, and also had served as a captain in the Continental army during the revolution. Shays, with 2,500 other, marched on the courts of Massachusetts. James Bowdoing, governor of Massachusetts at the time, quickly put the rebellion down. Later this uprising would be called Shays Rebellion.

The significance of Shays Rebellion was that it demonstrated that the nation was still in unrest. Originators of the revolution found themselves on the other side of the table. In their efforts to repay the war debt and maintain a standard of living and success of their businesses, they had placed economic hardships on the people in the form of excessive taxes. Although Congress and the state governments had few options (one being to print money in excess or to heavily tax the people), some thought that there was a better way.

Economic problems come from the simple fact that all thirteen states printed their own money. Some states (with strong economies: Virginia and New York) relied on taxes solely to repay their portions of the war debt quickly. While other states that had poor economies simply printed more money to compensate for monetary fluctuations. One theory was that if a unified economy could be established it would help ease the situation and growing tensions. But to have that you would need a unified national government, one with more powers than the present Congress had to manage it.

At the prompting of James Madison, the Virginia legislature called a meeting of the states. The way this meeting was called bypassed the confederation Congress. The purpose of this meeting was to try and modify the Articles of Confederation, to give Congress power to regulate trade in hopes to improve the economic problems. But only five of the nine states, which agreed to participate, attended. Out of those who did attend, all had the same impression of a pending national crisis. So the meeting was rescheduled for Philadelphia in May 1787 in order to try and get more participants to attend.

During the time it took for a quorum to gather, Madison and the Virginian delegates drafted a fifteen-point plan, which totally restructured the confederation. Once the seriousness was reveled of what was really under discussion, it was unanimously decided to keep all of the proceedings completely confidential. To help keep order, George Washington was elected to preside over the convention.

Virginia was the first to propose vast changes in the federal government. Their plan, presented by Edmund Randolph, called for a three-branch government. With a two chamber legislature, a powerful executive, and judiciary branch. This government operated directly on the people. Congress had the right to veto state legislation, coerce states militarily to obey national laws, and to legislate in areas were states are incompetent. The executive and judiciary branch could veto jointly any legislation presented by Congress. To say the least this plan was heavily debated. But it did not meet any out right opposition.

William Paterson, who was from New Jersey, presented an alternative plan in mid June. This plan became know as the New Jersey Plan and resembled some of the Articles of Confederation. It had a single house Congress in which the states would have one vote. But it would have a shared three-man presidency, of who were elected by Congress. This three-man group took the place of the executive and judiciary branches. This plan gave vast powers to Congress: it was allowed to regulate trade, and to use force on unruly states. However, the plan still rested on the confederation principle of the national government that was to be an assembly of states and not of the people.

A compromise later broke the heavy debates over the two plans. By mid July it was agreed that the new form of government should be a three-branch government with supreme power over the states and bicameral legislature (with a Lower House of Representatives appointed by population and the Senate who represented each state). In the Senate the two senators could vote independently of each other. This was the first emergence of the present day federal government; a government based on the representation of the people.

The next hurtle was to define who the people were. In southern states they had large majorities of people who could not vote, but would give power to them through the new form of Congress. But these people were slaves: the debate was, are they citizens or are they property. To the southern states they were citizens, with the idea that they would allow more power for them in the Congress. However, smaller northern states with little or no slaves viewed them as property. Who had no right to representation in Congress. This debate created what is known as the “three-fifths clause.” Which stated that only three-fifths of the non-voting population could be counted when deciding the number of representatives in Congress.

With most of the problems out of the way, the next step was to have the thirteen states ratify the new form of government. Only nine states needed to ratify, and pass, the proposal in order to make it law, however, it was going to be an up hill battle. For the states would not give up their powers so easily.

The proponents of the new government called themselves Federalist; opponents to the new government took the name of Anti-Federalist. By May 1788, eight of the states ratified the proposal. To help gain more support, the federalists James Madison and John Jay wrote a series of essays called “The Federalists Papers.” The essays started in October 1787, and totaled eighty-five altogether. They were published in New York newspapers in hopes to win the states vote for the new government. New York was critical to the success of the proposal, after Virginia, New York was the next most influential state. If New York could be persuaded to pass the new form of government it would assure solidity and legitimacy to the new government.

Even though Virginia and New York”s ratification was not necessary to the passing of the new government, the federalists wanted to have a unanimous vote. Having these two states would help in pulling the remaining two states in (North Carolina and Rhode Island) into a unanimous agreement among the thirteen states. These two states did finally ratify the new government, but not until May of 1790, and at that, they barely ratified the new government by only a two-vote margin.

Prior to the revolution the ideology that prevailed was that government should be local, and directly represent the people. If a government was to be too large and to far from the people it served, it had the potential to become a dictatorship in its management of country affairs. But because of the economic strain of the war, the thirteen different economies and monetary systems were not adequate. Nor could they stabilize the economics of the confederacy.

A few politicians of the time (like James Madison and Alexander Hamilton) had a vision of a more powerful centralized government that would be able to bring the states in line with national policy and help to stabilize the local economies. While showing the world a unified front among the states. Several debates would develop over the idea of a more powerful government over such things as the definition of representation by population, the western territories, and the power of the states vs. the power of the federal government and Congress.

Compromises, persuasive arguments, and essays would have to be made by everyone. But finally, in May of 1790, the thirteen states would agree on a larger, more powerful federal government. Which had authority over the states in matters of taxation, trade, and fundamental laws that transverse state lines.

This business plan is prepared to obtain financing in the amount of $10,000 to complete the service development, set up operations base, and implement an aggressive sales and marketing program.

The Hair Salon is a proposed new business. Principal has developed the skills and knowledge to manage and provide hair salon services for Fort Frances, and the surrounding area. The total market potential for the first year is $1,746,675. The business will be profitable in the first year of operation and conservatively expects to achieve sales of $53,392 with a net income of $12,352 by the end of the first year.

The market for this new business will be Tribal First Nation where the business will be located, Rainy River and Nicickousemenecaning First Nations, Fort Frances, Alberton and La Vallee Townships, Emo and the surrounding area. The market research has revealed a lack of hair salon services located within Tribal First Nation.

The Hair Salon is proposing that Indian Affair and Northern Development (INAC)’s Opportunity Fund program provide a grant contribution of 40 percent of the capital and working capital costs. Principal will contribute 40 percent cash equity which is consistent with INAC’s program mandate. The remaining 20 percent will be in the form of commercial financing from the Royal Bank of Canada.

The business will be self-sustaining after the first year of operation. The business can be fully operational eight weeks after financing has been arranged.

BUSINESS HISTORY AND ORGANIZATION

The principal is Principal, a longtime resident of the Tribal First Nation. Principal is a status Ojibway from the Tribal First Nation, near Fort Frances, Ontario. He is proposing to establish an hair salon business. The
form of business ownership is a sole proprietorship, with Principal as the proprietor.

The business will be located on Tribal First Nation, and is scheduled to open on January 1, 2009. The principal will manage the operation, and receive the necessary business support to ensure sound fiscal business management. In relation to the development of aboriginal business, the principal has never received government assistance to start a business operation in the past.

THE PROJECT

The Hair Salon is being developed to provide a full range of hair salon services within the Tribal First Nation and the Town of Fort Frances, Ontario. The business plan is prepared in order to raise the financing necessary to develop the service, conduct business activities, and create an awareness of a service in a competitive target market.

The direct competition within the target market area specializes in hair care and styling. The most important aspect of this venture will be the ability to generate a steady clientele to offer an array of hair care services. The venture will have an established clientele because Principal’s wife Candace has been hairstyling in the area for the past 10 years, and has developed a clientele who come specifically to her for their hair care needs. The business will be able to offer competitive lower prices compared to the market competition because of the low overhead costs associated with the project.

The new business involves establishing a hair salon facility where people can meet their personal hair care needs. The facility will be located in the centre of the community with easy access for all customers. The facility will also be developed to create a stress free and pampered environment.

Principal will coordinate and provide these services.

SERVICES

The business will provide Hair Salon services on behalf of the clients and focus on the following services:

• Hair Styling / Cutting
• Washing / Drying
• Perms
• Facial Waxing
• Hair Colouring
• Hair Styling / No Cutting (Updo)

Customers will also be provided with a convenient waiting area as an added convenience to the services.

LOCATION

The business will operate out of Principal’s residence on Tribal First Nation. The residence is located in the heart of the community which will enable easy and convenient access for all customers who wish to utilize the business’s services. Renovations have been completed which make the building capable of housing business operations. The building will have one large
room available entirely for business services.

Tribal First Nation has a population of 533, according to 1996 Census, and is located five minutes east of Fort Frances, Ontario. Fort Frances is the center of the Fort Frances – Rainy River District which encompasses two towns, many townships, and 10 First Nations.

MARKET ANALYSIS AND SALES FORECAST

TARGET MARKET

The target market area includes the Fort Frances, Emo, Alberton and La Vallee Townships, and Tribal, Nicickousemenecaning, and Rainy River First Nations, and other small communities in the surrounding area (classified as Rainy River, Unorganized in the Canadian Census). The total population of the target market is 14,820 according to the Selected Characteristics for Census Divisions and Census Subdivisions, 1996 Census. There are 5,545 households in the target market area, according to the 1996 Census.

TOTAL MARKET POTENTIAL

Information on the Total Market Potential was determined by the health and personal care expenditures per household, according to Statistics Canada’s 1996 Family Expenditure in Canada. According to the 1996 Family Expenditure in Canada guide, each household spends $315 annually on personal hair care services which includes hair washing, cutting and styling services, other hair grooming, and other personal grooming services.

The Total Market Potential is as follows:

• Total – 5,545
• Households – 315
• Health and Personal Care Expenditures Value in $ – 1,746,675

MARKET SHARE

Community members will continue to use other available facilities such as local competitors and retail outlets for their hair care products and services. Therefore, it is conservatively estimated that the business will be able to achieve three percent of the estimated total market potential.

• Total Market Share Value in $ – 52,400

VALUE OF SALES

Based on the Total Market Potential and the Estimated Market Share, the value of sales is estimated to be $52,400. A conservative growth of five percent on revenues is targeted based on the growth rate of the target market population, awareness of the business increases, the potential for increased business services, and inflation. The third year is estimated to be four percent.

SOURCES OF MARKET INFORMATION

The market information was obtained from the Statistics Canada’s Family Expenditure in Canada 1996 market guide, and Selected Characteristics for Census Divisions and Census Subdivisions, 1996 Census, and Canada Business Service Centre’s Small Business Profiles for Hair Salons.

CUSTOMERS

The strength of the business will lie in its ability to meet the needs of its customers within the target area. The target customers are interested in the following:

• a business that provides the highest quality hair salon services available in a convenient location, and comfortable, safe environment;
• affordable costs and services which fit their specific needs;
• reliable hair salon equipment and a professionally-trained service staff;
• a business which works for the best interests of the clients;

The hair salon business owner is looking to provide a number of assurances. He wants:

• the business to operate from 9 a.m to 5 p.m. Tuesday through Saturday;
• to provide the highest level of professional service;
• reliable hair salon equipment;
• customers to be treated with respect and courtesy;
• to conduct business in a professional manner, dress, and spirit;
• and accessible facilities and services;

Customers are going to generally come from Tribal, Fort Frances, and the surrounding area. The demographics of the target customers are as follows:

• women and girls primarily between the ages of 13-64;
• and men and boys between the ages of 14-54 who are concerned about grooming and hair care.

COMPETITION

In the immediate community there are a number of retail service competitors and retail space. Some of the factors which make this venture appealing compared to the direct competitors are explained below:

• The principal’s wife has extensive training in all aspects of the offered services developed through 10 years of hair styling service.
• Services will be competitively priced compared to competitors due to the low overhead cost associated with the project.
• Business will be run with the highest level of professionalism.
• Staff has an already established clientele from years of hair styling services conducted in Fort Frances.
• Staff will be friendly and courteous to its customers to create goodwill and build up a strong clientele.
• Long term potential to create more jobs in the community as the business thrives.
• The business will incorporate various marketing strategies which will get the message of its services to the community and its target market.
• The principal has the necessary managerial training to meet the operational and management requirements.

The key success factors are to develop a business exactly as described and being able to deliver the products and services. The business’s ability to deliver the services to the customer will improve the competitive position.
The word of mouth advertising of satisfied customers will be invaluable.

Local competition will come from various sources. One thing to note is many hair stylists often work from business to business at different times which affects the business’s ability to generate a steady clientele. This analysis is as follows:

• Competitor 1— located on the main street in Fort Frances and offers a wide array of hair salon services.
• Competitor 2— centrally located in Fort Frances has very limited space to deliver hair styling services.
• Competitor 3— located in Emo, the business has large service space and established clientele in west end of the target market.
• Competitor 4— Small independently-owned home business has small clientele.
• Competitor 5— Located in downtown Fort Frances, offers wide-array of hair and personal services. High taxes and overhead costs mean higher prices for services.
• Competitor 6— New business offers array of esthetic services.
• Competitor 7— Located in downtown business district, offers wide array of hair care services for men and women. High taxes and overhead costs mean higher prices for services.
• Competitor 8— Established business located in business district in Fort Frances. High taxes and overhead costs mean high prices for services.
• Competitor 9— Relatively new business offers array of hair care services.
• Competitor 10— Sells wide array of personal grooming supplies.
• Competitor 11 — Sells shampoo, and hair care and grooming products.

MARKET TRENDS

Principal is aware of trends which are emerging within the industry and the current practices.

• There is a significant increase in the growth of Aboriginal business. Aboriginal people are becoming more aware of the management support opportunities available to them.
• Aboriginal people are looking to get quick and easily accessible products and services generally viewed as essential for any community.
• The fashion industry has created a perception about personal care that has assisted in establishing a significant market.
• The provision of a wide range of services in one location is essential to the meeting the busy schedules of customers.

MARKETING STRATEGY

In an effort to make the business as successful as possible, an aggressive marketing strategy will be implemented immediately upon the beginning of operations. The business will incorporate numerous marketing strategies such as word-of-mouth, print advertising, and competitive pricing. The location of the business will be situated where there is convenient access for customers who wish to utilize the business’s services and products. A business sign will be located above the business’s entrance and be clearly visible from the street which will enhance the awareness of the business in the area. The marketing effort will focus on developing an immediate message and awareness to potential customers. The principal will initiate and implement the marketing strategy of the business.

PRICING STRATEGY

The pricing strategy will be based on the hair salon standards within the industry. These rates will enable the company to service debt costs, indirect expenses, and generate profits. A breakdown of the pricing, is as follows:

• Hair Styling / Cutting$15
• Washing / Drying / Hair Styling / Cutting$20
• Perms$45
• Facial Waxing$7
• Hair Colouring$32
• Hair Styling / No Cutting (Updo)$20-25

PROMOTIONAL STRATEGY

The promotional strategy will consist of word-of-mouth of satisfied customers, and print advertising. Promotion will incorporate various forms of print advertising geared towards getting the business’s message of its services and operations out to its potential target market. The business will commit $1,500 annually to its advertising and marketing efforts. The following briefly describes each method:

• The business will place an advertisement in the yellow pages of the area telephone directory. This will enable the business to reach a large number of potential clients in the target market area, as new telephone directories are issued every year to each household with a telephone.
• The business will periodically place an advertisement — which details the business’s services and hours of operations — printed in the local area newspaper. This will provide the business with another outlet to reach its projected clientele via mass media.
• The business will print up flyers to be inserted in the Tribal First Nation newsletter which is distributed to the entire community. There is no cost for this promotion.
• The business will incorporate the word-of-mouth of satisfied customers to reach other potential clients in the target market area.
• The business will notify previous clientele of staff.

OPERATION PLAN

The business has the capacity to operate approximately 250 days per year. The business will operate Tuesday through Saturday on a regular eight hour business day, opening at 9 a.m. and closing at 5 p.m. The business will extend hours of operations during different seasons where business activity is greater. The principal will ensure the business is operating at the designated hours. This will enable customers to become familiar with the operations schedule. The staff will start each day off by preparing the business facility and equipment for daily operations, and ensuring the facility is clean and presentable. The business will open precisely at 9 a.m. each day. The staff will review the appointment book to review the schedule, and begin planning the day’s activities. If there are any inventory supplies required, the staff will place calls to suppliers at this time.

The business will operate on the basis of offering the best hair salon services available by utilizing high-performance, low-maintenance equipment, high quality salon products, and highly-skilled salon professionals. Customers can schedule appointments over the telephone, or walk-in. Any questions or suggestions customers have will be treated with all seriousness by the staff. The most important aspect of the business is the ability to deliver the services in the most professional manner possible. Staff will be courteous, helpful, and respectful at all times.

Customers will enter the business through the main entrance. The staff will hang up the customer’s outer garments, if requested, as they come in. The staff will lead the client to the waiting area until all preparations are made to serve the customer. The staff will try to make the client feel as comfortable as possible. The staff will then perform the service which the customer requested. If, at any time during the client’s visit, the customer requests an additional service, the business will accommodate the customers, schedule permitting.

The staff will closely monitor the level of business activity over the course of the business day to determine which time customers most often frequent the facility in an effort to evaluate the hours of operation to better suit the needs of the customers. As closing time nears, the staff will evaluate inventory stock and, if necessary, prepare a list of supplies to order at the beginning of the next day’s business.

The principal will monitor inventory, complete bookkeeping and banking requirements, and maintain the business’s financial statements. Each evening, the principal will empty the cash box’s cash and receipts, clean up, shut off the lights, and lock the facility for the next day’s business operations.

SERVICE STAFF

The principal will make up the service staff. The responsibility of the service staff is to ensure customers get quality assistance when they utilize the business’s services. The main area of function is to handle customers needs. The other functions include managing office supply and product inventory, ensuring equipment is in excellent working condition, and the overall day-to-day duties of running the business.

The service staff will also be responsible for establishing a rapport to increase the chances of repeat business, and word-of-mouth advertising. Other functions will be to monitor the additional needs of customers and getting important feedback. The service staff must be good at communicating
and meeting the customers needs and express the best service the business has to offer.

SUPPLY AND PURCHASING

The majority of the supplies and products will be hair salon inventory supplies, cleaning products, and office supplies. The principal will obtain a vendor’s permit to purchase supplies at retailer’s price. The business will commit 5 percent of monthly sales to its inventory requirements. The products and supplies required will be purchased from available distributors for the area. The items being purchased will be purchased from a local wholesaler or ordered via telephone. The anticipation is that the business will be able to plan its inventory supply requirements a month in advance. The principal could purchase products not considered taxable. The suppliers will require proper documentation prior to the sales of tax-free products. The business will pay for all items by cheque.

MANAGEMENT

MANAGER

The business will be managed by the principal. A management control system will be implemented for the operation. The responsibilities of the manager will be the maintenance of the company debt load and monitoring the financial activity of the company. The manager will implement any decisions he makes regarding the direction of the business and act on decisions. The manager will ensure the smooth day-to-day operations of the company. In addition, the manager will have signing authority. The manager will monitor expenditures within the budgeted cash flow statements. The manager will also be responsible for authorizing drawings when financial targets have been exceeded. The manager will also be responsible for planning the implementation of measures which would increase the profitability of the business. The manager will be responsible for the day-to-day bookkeeping duties of the business and maintaining a record of all accounts receivable and payable. In addition, the manager will produce a monthly report on the
status of the business.

The principal of the enterprise will perform the management functions of the business. The principal is prepared to make a full-time commitment to the business when financing is arranged and in place. The principal will be responsible for the all aspects of the business. The principal will be responsible for marketing, identifying customers’ needs, monitoring the equipment, and ensuring the smooth operations of the business.

MANAGEMENT SUPPORT

The principal will provide the bookkeeping functions for the business. He will receive the necessary assistance so he can focus on the specific reporting and legal requirements of the company. The business’s legal functions will be provided by a local lawyer who specializes in corporate law, if necessary but not budgeted. The local charter bank will provide the banking services for the company. A local insurance company will provide the insurance and assist the business with its insurance needs.

BUSINESS SUPPORT

The accounting and financial control functions will be handled by the principal. With the aid of the business support program, the principal can gain independence within the first year of operation. A local accounting firm will assist the business with the establishment of a bookkeeping system using Simply Accounting Version 5, provide year end statements, and address tax strategies for the business. The cost of the business support program will be $2,000 and identified as Professional Fees in the financial statements.

SERVICE DEVELOPMENT

The business plan has been developed to organize the concept and basic design of the services. The business plan demonstrates the feasibility and basic operations of the service. The following is a list of additional work that is required before the service can be provided.

1. Business Registration
2. Purchase Insurance
3. Organize and equip an office space within the principal’s home including renovations.
4. Installation of telephone line and utilities.
5. Purchase and install salon equipment, inventory and office supplies.
6. Ensure all aspects of business development are completed.
7. Initiate marketing strategy.

FINANCIAL REQUIREMENTS

Refer to the Pro Forma Income Statements and Cash Flow projections. The business plan for the hair salon venture is to be jointly funded by the principal, Indian Affairs and Northern Development’s opportunity fund, and a commercial institution.

Additional financing in the amount of $10,000 is required to complete the service development, establish a marketing program, gain the necessary management experience, and commence operations. The notes to the financial statements explain the financial statements more clearly.

PROJECT COSTS

The following is a summary of the projected financial requirements:

BEAUTY EQUIPMENT

The Beauty Equipment will cost $6,000 which includes applicable taxes. The business will purchase the Beauty Equipment from various sources. A breakdown of the Beauty Equipment is listed in the Appendix.

STARTUP COSTS AND WORKING CAPITAL

The following is a list of the Startup and Working Capital Requirements

• Bridge Financing Interest
• Insurance Costs
• Utilities
• Business License
• Telephone Line
• Office Supplies
• Advertising and Promotion
• Legal Fees
• Operating Expenses
• Accounts receivable

The estimated costs for these items is $4,000.

SOURCES OF FINANCING

In this project, there are several types of financing to meet the capital and operating requirements of this business. The business is proposing the following mix of Equity, Commercial Financing, and Department of Indian Affairs and Northern Development grant contribution. The breakdown is as follows:

EQUITY

The principal is making an equity contribution of $4,000 towards the project development. The funds will come from personal resources and will be available upon project approval by the he money will be placed into a separate business bank account.

COMMERCIAL FINANCING

The commercial loan will come from the Royal Bank of Canada. The principal has her account with the bank and is in a strong financial position with the bank. The amount of the loan is $2,000. The rate of interest is at 10 percent over a 24-month term. Payments of $191 will be made on a monthly basis.

DEPARTMENT OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT’S OPPORTUNITY FUND

Tribal First Nation will make a request of $4,000 from the Department of Indian Affairs’ Opportunity Fund program which will match the First Nations equity contribution on behalf of the principal. The objective of the program is to provide equity gap funding to eligible recipients in order that they can attract joint venture partners or secure conventional debt financing to take advantage of a business opportunity. The contribution is non-repayable. Eligible recipients are First Nations, Inuit and Innu Community Economic Development Organizations that:

1. have submitted an acceptable business plan;
2. can substantiate an opportunity to establish a viable business and
   demonstrate the need for an equity contribution to complete the financing package;
3. have the organizational development capacity with a proven record in business development;
4. and have a record of regular and acceptable reporting.

Eligible projects are business projects that will establish or expand a viable business which will create sustainable jobs, enhance community wealth and reduce social dependency.

The total of the Opportunity Fund contribution can not exceed the recipient’s equity contribution, nor can the total of all federal department’s economic development contributions exceed 40 percent of the total project costs. Where the total federal contribution is between 25 and 40 percent, the project assessment should demonstrate why the contribution is being recommended.

Neither contributions from the federal government (excluding cash equity) and / or other non-cash assets without a readily marketable cash value shall be considered as the recipient’s equity when calculating the eligible matching contribution portion.

The program will be reviewed at a national and regional level on a regular basis to ensure that the program management guidelines are being applied, and to monitor attainment of performance objectives and results.

A business plan which provides a detailed outline of the history, management, operations, marketing, and financial aspects of the business must be submitted. It should demonstrate why the applicant requires a federal economic development contribution and how this contribution will make it a viable, ongoing business venture which would not likely go ahead in the absence of federal support. The business plan will be the basis for preparing the project approval documents.

PROJECTED FINANCIAL STATEMENTS

Set out below are the following schedules for Year One and Three Years of business operation:

• Income Statement
• Income Statement Support Schedule
• Long Term Debt Analysis
• Equity Position Analysis
• Fixed Asset Detailed Analysis
• Cash Flow Statement
• Balance Sheet
• Source and Application of Funds

NOTES TO FINANCIAL STATEMENTS

• The starting time frame is January; therefore the business development must be completed by this time.
• The expenses required to implement the business are going to be charged to the project.
• The startup and working capital value is to cover the startup costs necessary to commence operations.
• An increase of two percent annually is assumed on all business expenses.
• The commercial loan is estimated at 10 percent compounded monthly over 24 months.
• Depreciation is estimated at 20 percent per annum for all long term assets. However, in the first year of operations, 50 percent of the depreciation rate is assumed.
• There is no rate for income tax because the principal is an aboriginal person who will operate the business on-reserve.

VENTURE SUMMARY

The average rate of return on the Owner’s equity investment of $4,000 is 140 percent.

The venture fairs well in comparison to other investments. The bond rate of return is three percent. The Guaranteed Investment Certificate is approximately 2.75 percent. A bank account yield is approximately 0.25 percent. The rate of return on investment could easily exceed the performance of Growth Mutual Funds.

The business will have a favorable cash flow. This will enable the business to service debt, cover operating expenses, and re-invest funds into the business. The third year could see a substantial increase in the cash flow because of the debt retirement. The business would be in a solid position for growth. The business has the potential for success.

Our goal is to provide our ervices In a comprehensive and cost-competitive manner advantageous to our customers. Management Structure and Background The affordable accounting is a sole proprietorship owned by Ms. Thary Cheam. Ms. Cheam graduated from Marian Court College in 2001 with an Associate in Science degree In Accounting. She has worked for MMA Financials as an accounting auditor from 2002 to 2006. She’s currently employed at State Street Bank and Trust Company as an Officer in Global Operations.

During her career at State Street Bank 1 OF6 volunteered to assist low income family filing Income Tax Return. As an experienced ndividual she will manage all aspects of business and service development to ensure effective customer responsiveness. Support services will be provided by a qualified part- time Accountant and an Administrative Assistant. Additional staff will be added as client work load factors mandate. Organization Chart Marketing Plan It is a requirement that all US employees must file their annual Income Tax Return.

The Affordable Accounting is a home-based Income Tax Preparation Service that utilizes trusted tax preparation software to file Income Tax Return for customers. Ms. Cheam intends on using a number of marketing strategies that will allow the Affordable Accounting to easily target individuals within the target market. These strategies includes referral bonus and student discount. The Affordable Accounting will also use an internet based strategy, such as FaceBook and Craiglist.

This is a very important as many people seeking local services, such as tax preparers, now the Internet to conduct preliminary searches. The Affordable Accounting will be driven by referrals, so for the first few weeks, the business will need to be more aggressive in getting new clients, who will then pass the word on and the business can begin to xperience organic growth. Target Market Lynn Resident Revere Resident Saugus Resident Salem Resident The Affordable Accounting will position as a full-service accounting service that takes the time to get to know the client’s situation.

Consumer clients primarily need annual tax filing services; however, in keeping with the position, the Affordable Accounting will also offer tax planning, personal budgeting, credit counseling, and checkbook reconciliation services. A special effort will be made to attract north shore residents who need someone to make deposits and bills while theyre away on vacation. Competitive Environment A few firms exist in Lynn to assist individuals with their annual income tax return.

Firm range from private individuals, Just preparing taxes to national chains, to accounting firms serving individuals and businesses, to CPA firms. A listing of the business offering accounting/tax preparation services in Lynn is as follow: Liberty Tax Service, Lynn, Ma H&R Block, Lynn, Ma Jackson Hewitt Tax Service, Lynn, Ma Almonte Income Tax, Lynn, Ma Price Strategy Personal/household tax preparation and filing prices are a function of the forms and schedules involved. A base charge is ($25) plus extra for each schedule ($10). Student tax preparation is charge at a flat rate of $25.

Personal consultant or other non-tax filing services will be priced out at the $20 hourly rate. Promotion A direct mail package consisting of letter of introduction and reply card will be sent to all Lynn, Revere, Saugus, and Salem resident. The letter introduces Affordable Accounting and provides information on services and what set it apart from other accounting services, and includes a referral bonus. As a means of building business by word-of mouth, present customers should be encouraged and rewarded for eferring future customers.

Article Analysis from the Financial Times: Obama Administration and the Toxic Asset Plan

In the banking sector rescue plan presented on March 3rd of this year, Secretary of Treasury, Tim Geithner was forced to present the grim truth about the banking situation and the administration’s plan toward a slow recovery. This paper presents an extraction of criticisms and acclamations for the Obama administration’s recovery plan (OARP) based on articles published in the Financial Times.

At this point in the crisis the bottom line is there is no market confidence. Prior to the recent bailouts of automobile manufacturing companies, this nation had existed in a wealth bubble (Rappeport, 2009). The availability of credit, mortgage and loans made it easy for large investors and individuals to be complacent about the goings on in the banking industry. The crisis struck in surprise to many, and the onslaught of information regarding the practices that conveyed false security simply made the investing public distrustful of these institutions. What banking institutions need now is investment, yet investors are simply not willing to take the risk. The OARP creates a system where the government is able to intervene without taking control. By encouraging private investors through subsidized investment incentive, the government limits the risk to the private investor and increases the possible end profit.

The advantage of this recovery plan is that the government presents a solution to the problem without having to nationalize banking institutions. By providing an incentive to private investors, the government is able to open a window for banks to rid their portfolio of toxic assets while gaining new investments. The idea here is to keep the money flowing between investors and the banking institutions despite the gap between the rates banks are willing to let go of their toxic assets and the market value that private investors are willing to pay (Bond, 2009; Mackenzie, 2009; Guerrera, 2009 March 25). Tett (2009) explains that the need here is to encourage investment and to end the investment freeze. The faster banks are able to resolve their problems of toxic assets, the faster they can recuperate from bad debt cycle (Bond, 2009). The strength of the OARP is that it creates a risk-free and possibly profitable investment option for private investors who are willing to invest.

On the other hand, the OARP is not a solid rescue plan. There are many risks stemming from the government taking this action. An immediate negative effect would be the inflation resulting from the large amounts of money that the government would have to feed into market as part of the subsidy deal (Bond, 2009; Van Duyn, A. and Bullock, N., 2009). There is also speculation regarding the assumption that private investors would be willing to invest at all. With the recent poor performance of the debt system, toxic assets may have very little or no market value at all, as such investors may not be willing to purchase these assets (“Double or quits,” 2009, p.5; MacIntosh, 2009). Moreover the recovery plan does little to address the banking practices that led to its pitfall in the first place. The bidding war that may result from private investors competing for an asset may result to other innate disadvantages for the tax payer: (1) private investors may be more confident to overpay for assets because of the availability of the subsidy and non-recourse financing (Young, 2009;  Bullock and Van Duyn, 2009), (2) Banks may overprice their toxic assets in an effort to regain losses resulting from bad debt because of the availability of government funds (Guerrera, 2009 April 3) and (3) in case such investments result in a loss then the government would have to bear the weight of all the loss.

The OARP is a recovery plan developed in an effort to present a quick solution to a financial crisis that threatens the economic sustainability of the entire country. While there are many unanswered questions regarding the practical applications of this plan and the large risk involved, it is a plan that could have positive results.

Reference List

1. Bond, T. (2009, March 24). Markets have lost sight of the reason for state bank rescues. Financial Times, p. 22.
2. Bullock, N. and Van Duyn, A. (2009, April 3). US plan raises the pressure on junk bonds. Financial Times, p. 20.
3. Double or quits in Washington [Editorial]. (2009, March 24). Financial Times, p. 10.
4. Guerrera, F. (2009, March 25). Bank faces big write-downs in toxic asset plan. Financial Times, p. 1.
5. Guerrera, F. (2009, April 3). Bailed-out bank groups consider buying toxic assets from rivals. Financial Times, p. 1.
6. MacIntosh, J. (2009, March 25). Treasury resale may prove best option in crisis. Financial Times, p. 3.
7. Mackenzie, M. (2009, March 28). New bail-out, new divergence of opinion on state of play. Financial Times, p. 19.
8. Rappeport, A. (2009, March 13). Record falls in net worth of US citizens. Financial Times, p. 7.
9. Tett, G. (2009, March 18). Hope evaporates as confusion descends. Financial Times, p. 4.
10. Van Duyn, A. and Bullok, N. (2009, March 20). The tough task of reviving the securitized debt markets. Financial Times (UK).
11. Young, P. (2009, April 2). Why Geithner’s plan is the taxpayer’s curse. Financial Times, p. 11.

Today’s Country Differences in Accounting Standards There are five main influences on a country’s accounting system. Having a different system of accounting is like having a different culture for countries. There are many different things that dictate how an accounting differs. The relationship between business and providers of capital, political and economic ties with other countries, inflation accounting, level of development, and the national culture are the five influences on accounting systems. Relationship between business and providers of capital

Firms can gain capital from numerous sources; selling stock and shares is one way or borrowing from a bank is another. How each country’s firms gain capital has to do with what type of accounting system the country has. The United States is full of people wanting to invest in a company or buy stock in a company. Not only do we have television stations dedicated to the stock market, but as a business student we hear about it constantly. The U. S. tries to use their accounting system to inform individual investors about the firms they want to invest in.

There are other countries that use banks more to gain capital. In these cases the accounting system is geared towards the government and the banks that provide the majority of the capital. Political and economic ties with other countries Politics and a country’s economic system can have a big effect on an accounting system. These two factors seem to bring accounting system together rather than apart. NAFTA and EU have both brought the countries involved together. They have put into practice norms throughout each accounting system to make them more uniform.

Inflation Accounting Inflation is a big factor when deciding how to approach an accounting system. Inflation accounting is all about the historic cost principle. It says that currency is not losing its value due to inflation. “If inflation is high, the historic cost principle underestimates a firm’s assets, so the depreciation charges based on these underestimates can be inadequate for replacing assets when they wear out or become obsolete (Hill, 2011, p. 635). ” Level of Development Developed countries seem to have everything easier.

They are able to acquire more capital and business. They have more highly educated and skilled workers. The more developed countries seem to have it all and the less developed countries with the smaller businesses have taken notice. Smaller, less developed countries tend to copy or attempt to copy the larger, more developed countries in their accounting systems. This can cause problems because the less developed countries do not have all of the resources necessary to have an accounting system fit for a well-developed country. National Culture

A country’s culture comes into play in accounting systems when thinking about uncertainty avoidance. A country’s uncertainty avoidance is either high or low. High uncertainty avoidance means a country is less likely to take risk and rules and regulations. Low uncertainty avoidance means the country is willing to take risk. The country’s with a low uncertainty risk need to make sure that their finances are in top shape so they are more likely to have accountants audit their firms (Hill, 2011). Works Cited Hill, C. W. (2011). International Business. New York: McGraw-Hill Irwin.

A little more than a hundred years earlier, United States was an isolated country and the attitude kept developing during that period. The Senate did not want to ratify the Versailles Peace Treaty that ended the First World War and went to an extent that the country did not even join the League of Nations. Free migration into the country that existed earlier was stopped, business tariffs for imports were increased, and migration from Asia was practically stopped.

Yet, the country had some special capabilities and one of that were the regularities in the modes of production in the country. The production in America made simpler and rougher goods, used much less of skilled labor since machines and organizations succeeded in taking over a lot of their responsibilities. (Delong 1997) Thus some methods of American business had been developed even before the start of the twentieth century and this may have given the country the lead.

It is difficult to ascribe to any particular reason the changes that took place in the American economy during the period before the Second World War America was not one of the leaders of the Western World then as can be seen from the fact that both the World Wars were started by European countries and fought for quite some time by those countries, and America only entered the conflict when it was felt that the tradition of democracy was about to be lost. Yet, there were presidents like Hoover who felt that decline of economy was hurting the American labor.

This view had also been taken in 1917 when the government had decided to nationalize the single largest of American industries at that time – the railroads. (Vedder 1997) To a certain extent, the matters of politics and industrial changes were related and the biggest amount of relationship is found in the case of election of one of the most charismatic of American presidents, Frederick D Roosevelt. One of the reasons for his victory at the elections in 1936 is said to be the support given to him by the American Labor.

This encouraged the labor union in the hands of CIO to seek more power and even challenge the authority of one of the country’s most powerful companies, General Motors. During this period, the company was one of the most profitable and probably the largest organization in the country. This was recognized by the magazines of the time also. The company had 110 manufacturing plants situated all across the country, employed over 250,000 people and was owned by more than 500,000 shareholders.

Yet, the attitude of the labor unions irritated the management and made them hostile to both the unions and the New Deal. At the same time, there was the Second World War in progress. (Lichtenstein 2003) Thus to an extent, the development of industry was being hindered through political ideas, but it is difficult to say who won. After the passing away of Roosevelt, the attitudes changed and the unions ended up loosing most of their power.

That was also probably due to the conflict of the American system with the Russians who had come up as the most powerful country in the continent of Europe. The growth of the industries of the country was of industrial products and the chief among them was the automobiles followed closely by radios, consumer appliances and development of suburbs. The situation can be understood when we understand that the country had enough vehicles on the road to say that it had more than one vehicle for every five in the population.

This is an achievement which many countries cannot state even today. The reason for the development of the country was mass production and that also made it the richest society existing in the world. (Delong 1997) Though all the inventions were not made in the country, but it made sure that large numbers were produced here as it had both the capacity to produce and the purchasers for the goods. It would be wrong to say that there was importance only of production for the War, but production had started earlier.

The thought behind this development was the thinking of the major leaders of American business like Henry Ford, Thomas A. Edison, Edward Filenes, and George Swope of General Electric among others. The depression due to the stock market crash in 1929 was hurting people of the country and the president was viewed as a successful business person and he was trying to persuade business to provide help to the people of the country through more employment. (Vedder 1997) Thus it is difficult to say that production for war had any major impact on development of business prior to the start of the War.

At the same time, after the production capacities were built up for the war, then one of the major questions was the utilization for utilization of this capacity after the War. This problem had also been seen in 1929 when part of the reasons for the crash was a drop of requirement of goods and services apart from the rather insane growth of the stock market. This was solved through the Marshall Plan and other methods. It helped America to keep on producing against loans to be repaid by much poorer countries, some of whom were never able to repay.

The changes in domestic economy over the century have not been remarkable and practices of American consumers have not changed much. There are a lot of realistic impulses within the American consumer which is tied up with the idealism that is sought to be promoted. It contains emotions for freedom and self-fulfillment as the country started with that dream, but, at the same time, many Americans found it difficult to pay for those dreams from their savings and yet required the items as they were felt to be the basis for their identity.

This was not accepted in many of the religions that the country started with, but even before the start of the twentieth century it was estimated that the domestic citizens of the country had an eleven trillion dollar of loans in private debt. (Horowitz 2003) This was spread among different people like the urban working class having loans with pawnbrokers, agencies providing small loans and retailers selling goods on installments. Even for building houses, loans were taken from building and loan associations which had to be paid over a period of five years.

In spite of the fact that this facility of loans provided a lot of help to individuals in purchases, yet many traditional social workers, economists, clergy, bankers, retailers and newspapers did not like them. (Horowitz 2003) The tradition continues and people still keep taking loans through credit cards and many other methods. Houses are pledged repeatedly so that increase in prices can be taken advantage of. The tradition continues. Post WWI Business (New Industries): This is very difficult to say as many industries are now produced in small parts.

On the other hand, in America the individuals decided to concentrate on their private life. The efforts were to separate their lives from others through building up of walls, more prestigious houses with lawns and have a large number of machines – washing machines for clothes, refrigerators to store food and a number of stoves which could be used only for individual dishes. (Delong 1997) Thus one would say that efforts were more on showing off individuality than on development as a social group.

It is clear that after the Second World War, the International position of the American economy was viewed differently by the powerful bureaucrats and politicians within the country. There was the history of two major wars, stated by other countries, which were not resolved without the interference of America, though the entire course of wars was fought on other continents. This helped America as her countryside and people were not directly ravaged. The situation was seen clearly in Germany which had lost a lot of its able-bodied men as did France.

This had led to those countries allowing a large number of immigrants to come in and some problems for this are being seen in France today. Even during the balance of the twentieth century when Soviet Union collapsed, the sufferings were more directly seen in Russia and other countries. The entire planning of America also reflected this attitude and new organizations like CIA were developed to deal with educationists and others. (Arndt 2005) This shows clearly a feeling that mistakes in the area of political and social thoughts were felt to be possible to resolve through plans.

Thus when America got into some wars like those in Vietnam, Korea and Iraq; the people and the culture of the country could not adjust to the losses for a long time. The realization of the fact that the war was lost took some time to sink in. At the same time, it should also be understood that for all these wars, there have been allegations that business was interested in starting some of them. As the country has changed, the policies have also changed and one of the biggest trends is now to have very large corporations.

It even exists in the field of health care where there have been mergers of Hospital Corporation of America which had the highest turnover with American Hospital Supply which was the biggest supplier of goods to the hospital industry. When this took place in 1985, this was the largest merger in America by organizations outside the oil industry. (Time1985) The point to consider here is that forming of companies leads to increase in profits so that additional benefits can be paid to shareholders, but at the same time, this leads to increase in costs for the patients.

Does it serve the average citizen of the country? Some other difficulties are developed by the systems within the country like requirement of governmental licenses, privileges, subsidy, law and other such advantages. On top of that, there are laws which hinder free trade like the anti-trust cases. (Wright 2002) Yet, the greed among the businessmen does not seem to stop and one of the famous cases was with regard to stock speculator, Ivan Boesky who had stated that “greed is healthy” in 1985. (James 2002) Are the many changes in the attitudes of businessmen in this regard correct?

The 1920’s was the period in which we had many new inventions and discoveries. The business environment flourished. Credit was the new thing and people started purchasing on credit basis rather than saving their earnings. The recession that the country experienced after the war was over and now people were on a spending spree. Companies started making large amounts of profits. Patents were being purchased for every little thing and everybody considered them an inventor.

This period was marked with many new things; we will discuss four of these new policies or changes: discount grocery stores were setup by Henry Ford, installment plans were introduced, and this was the new way of purchasing. The was a huge increase in the number of millionaires and the salaries of executives increased as well as receiving huge amounts of Christmas Bonuses.

Discount Stores

These were initially introduced for the Henry Ford’s company employees but employees generally lend their employee cards to their friends and family. The stores were them opened to the general public of Detroit and people all around the country wished that they lived there. The other merchants protested and it was decided that the store would be closed to the public. Henry Ford basically opened the store so that people could not profit from his employees. He was paying a high wage according to those times, $5. When the merchants would find out that the wages have been increased they would increase the prices of their goods.

These discount stores were able to this because they would purchase 10 to 40 per cent under the prevailing retail prices. The layout of the store were designed in such a way that it did not waste space, there were no frills and flounces and no servility. This type of layout is what we see now in any department store. (1920-30.com)

Installment Plans

Today we purchase almost everything on installments. It has become such a big part of our lives that we do not even think about it twice. Even our houses are bought by us on installments which we know as mortgage.

Before these plans were introduced only the wealthy could afford to buy consumer items such as cars, refrigerators, washing machines, radios and pianos. Once this plan was introduced people of all walks of life could afford to purchase these items. It was initially started by one manufacturer who decided to let the shopper make periodical payments for a limited time period. The other manufacturers to stay competitive had to do the same otherwise they would have lost their customers.

It was estimated that 75 per cent of all automobiles, 85 or 90 per cent of all furniture, 80 per cent of all phonographs, 75 per cent of washing-machines, 65 per cent of vacuum cleaners, 25 per cent of all jewelry, and the greater part of all pianos, sewing-machines, radios, and electric refrigerators, were sold by partial payment. Even clothes were being sold on this installment plan; the amount summed up to $ 1.4 million.

The British saw that these plans had worked really well in America; they decided to introduce their own version of the installment plan which they called, ‘buying on tick.’

Installment plans have helped reduce the class structure of shopping as people with moderate incomes could now enjoy the luxuries of life. These plans are known as the backbone for the prosperity of the economy. As production increased, unemployment decreased and almost diminished.

Number of Millionaires

Today the word millionaire may not mean much to us but at that time being a millionaire was a big deal. The value of money was much higher than it is now. Not many people were millionaires. In 1926 there were two hundred and seven Americans who earned more than a million dollars a year. The growth was more than 150 per cent in two years. In 1921 only twenty one people earned a million dollars a year, in 1924 only seventy five people earned a million dollars a year, while the number went to two hundred and seven in just two years.

In 1927 there were 15000 millionaires, estimation and at least one billionaire. When people started making so much money they wanted to live in the most posh area, they started moving in to apartments on Park Avenue which they decorated and furnished with antiques and expensive paintings. The price of land increased and houses became more expensive, it eventually resulted in a never ending upward spiral. The rent of one room in the exclusive section of this Avenue is $ 1500 per year and this is an average. The Avenue spent $280,000,000 a year. This place was the heaven of America. (1920-30.com)

Salaries of Executives

Since the 1920’s were a time period in which there was plenty of money and finance, the salaries of executives working in banks increased by large amounts. This increased the gap between the rich and the poor, the have and the have-nots. Banks made a lot of money because there were many corporations who required loans to buy each other out or to merge together.

General Motors came up with a plan to make their top executives special partners. This meant that they would be able to purchase common stock in the company at lower prices. Being a shareholder meant that they would get a share of the profits. The idea was that they would take personal interest in their job and try to do the best so that the company over all can do well as they had a vested interest.

In 1926 there was a sharp increase in bank stock prices. Many organizations had bonus policies and would give these bonuses to their employees at different times of the year. In 1926, the Christmas bonus distribution was considered the most generous distribution ever made. (1920-30.com)

Read which best describes what people could buy on credit in the 1920s?

Conclusion

There was much improvement in the life style of the people but this was the period in which the rich became richer and the poor became poorer. Those people who did not live in cities experienced droughts and because of this many people migrated to the cities. In 1926, the Department of Agriculture calculated the figure to be around one million people. All these improvements and inventions have a downside which is visible now. At that time we were only reaping the benefits.

Bibliography 

1. Boom and Bust in the U.S. and World Economies, 2005, http://1920-30.com/business/