Opportunities: As mentioned before, my market share has not yet matured and so it will be easier to find or attract customers than it would be in a matured or declining market. More people going to work will also allow me to explore the market and possibly gain more customers. According to the household expenditure survey meals away from home are expected to increase. Demand therefore is expected to rise. My premises will allow for expansion and eventually I hope to make enough sales. Increased output will become possible as demand rises.
Threats: the business is presently dependent upon one large contract. Competitors may enter the market. Possibilities of competition from e-commerce. Competition from the Internet enters the market quickly. This will require continuous environmental scanning. I also fear that Jerry’s have already established a good reputation with the locals and it will be hard to compete and gain the market share. There is possibility of price conflict between my business and my competitors. Jerry’s and Ronky may have new innovative product and service and may have superior access to channels of distribution.
In conclusion to the SWOT analysis above, I can conclude on the fact that there will be a considerable amount of threats and weaknesses, which I must also make sure that the strengths and opportunities are maximized to make the business stronger.
After conducting my market research I have come to a conclusion that there is reasonable demand for the type of business am planning to open, this is because I manage to establish the fact that people are willing to spend there money on fast food from my questionnaire. The market itself is still in the growth stage and has not yet matured. This is useful towards my business because it shows that there is a larger chance for the business to be successful than it would be when entering a matured market. I also found out in my market research that salaries in London is higher than anywhere else in the country, this mean that more people can afford to pay the rates am going to charge. My market research also showed that small and medium sized businesses could also be targeted because some employees may have to limit their hours of work so that they can cook their food. However they may extend their hours of work if they can get a suitable food from a restaurant. My major competitors in the market are Jerry’s and Ronky, which I found when conducting my market research. I will try to look at how they do things and which methods they use and then use the best ones for my restaurant.
Once my business is ready to open, I want the following to be achieved in the early stages between a year or two.
- Establish the business name
- Break even
- Have a small promotion campaign running in selected areas
- Have a stable and strong work force
- Increase the number to customers to highest ever after 1 year
- Increase market share
- Expand the business by opening another branch if there is reasonable demand.
Once the business has established its name it will repeat business form, existing customers and the customers introducing friends. Further more a good reputation may also result in competitor’s customers coming to my restaurant. It is essential for my business to break even otherwise it will result in bankruptcy, the main incentive of the business is to make a profit and this will only be achieved once the business break evens and progresses further. Having small promotion campaign in local areas will result in raising awareness amongst the public and possibly attract new customers. It will help people remember the business in future if they ever need to use it. A strong and stable workforce will mean that customer can build good relationship bond with the workers and not need to readjust regularly. The business will also run more efficiently with a stable work force because staff will be more experienced and have good relationship with each other.
After a year, the business will be well established and the major goal would be to increase the number of customers. This will also result in increasing market share and possibly make more profit. If there is excessive demand then I may also consider expanding the business and opening another branch or alternatively expand the existing one if possible. Hopefully this will result in a larger market share and more profit.
My marketing plan also contains the marketing mix to comprise the ‘four Ps’:
-
Product: - Keemto will produce a standard food and customers can choose their own chose of food from the menu but this will not affect production time or production cost. My main products are rice, eba, pounded yam, amala and beans.
-
Price: - this will be set after considering the price of competitors’ products and the market segment, which is being targeted. Once the decision is made the price will be standard at least for the first year. The decision will be made based on the awareness of my customers’ income. I aim to price my goods accordingly. After examining my Jerry’s carefully, my production will be identified and a margin of 65% will be added in order to cover overheads. I’ll also make a comparison with Jerry’s prices.
-
Promotion: - in order to succeed; I need to carefully promote my goods. I will promote my restaurant by using leaflets and having promotion of free drinks with meals at weekend. There will be some targeted advertising in specialist magazines but to a large extent, they will rely heavily on word of mouth recommendation. This will enable me to get as many as possible customers.
-
Place: - the location of my restaurant is Homerton High Street, which is busy and popular area in east London. The location is a convenient area for my business because the area of full of Nigerians and other Africans. My products will be sold direct to customers. Buyers will collect or pay for delivery by a member of staff.
The four Ps are crucial because it is them that will have a big impact on the customers. Each P will determine to some extent how much money my business takes in.
Throughout the customers visit to the restaurant, there will be waiter/waitress to make sure all customers receive a good service without wasting time. The restaurant will be available for hire of events from customers who have special occasions like wedding, birthday, anniversary and so on. I will try and look at the serving methods used by Jerry’s and Ronky and see which method will be useful to me. The restaurant will open at 11:00 am so that customers planning to have their breakfast and lunch will get the time to do so. The restaurant will close at 12:30 am. The long operating hours will allow more flexibility to customers. There will be tea break and lunch break for staffs to relax, this is because they are going to be working all day long. However tea break and lunch break will allow them to recover and have rest.
Overall I feel that I can charge just below my competitors’ rate because the market researched has proved that my type of market is in the growth period therefore, there is reasonable demand for the service that am going to provide.
Marketing Objectives: The primary objective of keemto will be to attract customers from the very heavily travelled in London. These customers are mostly professionals coming back from work and couples having a date. Some local customers are also expected to patronize the restaurant. The second marketing objective will be to gain repeat customers from those who patronize the restaurant for the first time as well as to gain customers through word of mouth advertising from first time users. Serving a high quality food product in pleasant surroundings and a clean comfortable atmosphere will do this.
Marketing strategy – advertising and promotion: An important consideration in the total marketing effort of the restaurant is to found in the name itself. This name will not only arouse interest and curiosity from customers but it will also lend itself well to major theme of the establishment. The theme will be carried out in every aspect of the restaurant including advertising, promotion and public relations. Since it is anticipated that the great majority of customers who will patronize keemto will be professionals, the company will make wide use of billboard advertising. An important feature of the building purchase and land lease includes the use of four large billboards, two on each side of keemto approximately one and one half miles from the street’s exit going in both north and south directions and two similar signs located approximately 5 miles from the street exits in the same manner. The use of these billboards is for the remaining three years of the current land lease and subject to renegotiation at that time. It is expected that the billboards will carry the same message and theme of the name. Keemto items will be attractively displayed in refrigerated keemto cases. Also each of the dessert specialities will be similarly displayed in a refrigerated bakery display case. Such displays will give a high point of purchase advertising appeal to patrons. Finally all staff including waiters and waitresses will wear T-shirts specially silk-screened with Keemto logo. All sales will be for cash or major credit and debit card. Cards from visa, master card, American express and visa electron. Cheques will not be acceptable.
Market definition:
Customers: the primary market for keemto is that of the professionals going in both north and south directions. These are consumers that have been working for a long hours and probably travelling to a far distances. It is expected that the average number of passengers per vehicle will be two. There will be some seasonality to the business in view of the much heavier traffic that is expected on the street during the summer months.
Customer size: it is anticipated that approximately 100 customers will be served daily and weekend traffic should be 25 to 30 percent higher than activity from Monday to Friday noon. I strongly believes that 85% of my customer base will come from Hackney. An additional 10% will come from other part of London and only 5% of the total volume of business and customers are expected to come from the local population. Initially business from the local community will be some how higher simply because of curiosity.
Market growth: first month sales are forecast at £6,000. Business is expected to grow by approximately by £500 the next month. Initially keemto will serve some 600 customers daily or a monthly total of 16,800. Therefore within six months, the monthly number of customers will be approximately 17,000 or on a daily average basis will be 650.
Competitors: Nigerian restaurant are becoming more in demand than ever before. Many small restaurant have seen a gap in the market and have tried to expand. Keemto will be the third Nigerian restaurant on homerton high street but the competitors Jerry’s and Ronky are a bit far from keemto’s location. So I have decided to add some menu that the competitors do not offer at present. Jerry’s is a very successful restaurant serving over 250 customers a day. Jerry’s menu includes fish & plaintain, rice and pounded yam. Jerry’s open from 5.30pm to 12.30am. The Jerry’s weaknesses are high price, limited choice of food, short opening hours and slow services, which mean I can gain market share by cutting my own price, providing variety of food, opening longer hours and also providing high services. My business is a larger size and I believe I can attract more customers by having the right amount of skilful and dedicated staffs. I aim to cook all food to customers’ satisfaction.
Methods of distribution
Foods will be served in a clean plates direct to customers eating on the premises and in a sealed plastics for customers getting a take away. I aim to purchase a vehicle to deliver food directly to local customers. The cost of the vehicle is expected to be £12,500 with 4 years of 25% straight line depreciation. The restaurant will be split into different areas. For instance a sitting area, waiting area, toilets, kitchen and fire exit. The floor will be covered with wood flooring. The sitting area and the waiting area will have chairs and table, which will accommodate any customers buying and waiting to purchase food.
Task 3
Production and resource requirement
My product will be to sell fresh Nigerian food, drinks and desserts. I have decided to have many products on my menu because different food aim at mass market and every age in the market will purchase one product or the other, so if I don’t sell one product I’ll still make money from the other. The flow of money and sales is expected to change at different reasons. Keemto will be located in a building immediately adjacent to the exit of homerton high street. This facility was formerly a restaurant. It has current seating of 60 and can be expanded to accommodate 90 people at a very moderate cost. Since it is a former restaurant, it contains very important restaurant equipment and fixtures, which would be available for purchase together with the building. The asking price on the building is £135,000. The total annual labour budget is expected to be £53,750, which is calculated on the basis of employing the following:
3 cook each at the rate of £175 per week
2 part time sales assistant each at the rate of £100 per week
I clerical at the rate of £150 per week
2 cleaners each at the rate of 100 per week
The following are the resources and financial requirements for my business
Quantity to be produced: one of the most important decisions I have to make is to identify the most appropriate scale of production to provide foods or services for my customers. I can gain many operational benefits from producing foods on a large scale. I can measure the scale or size of my production by the number of units produced over a period of time. If the scale of my production increases, average unit costs over most production ranges are likely to fall because I’ll benefit from economies of scale. The sales of my product will depend on time of the day because most people will go to work between 9am and 5pm, which means I’ll get most customers after 5pm. Sales in the evening are expected to be £700 more than morning and evening. Below are the amounts of food and drinks expected to be produced in a day?
Quality required: I have decided to choose a wholesaler where I’ll be able to get extra fresh ingredients as soon as possible. The qualities of my product have to be at the highest level at all time in order for me to create special food for my customers. I’ll make sure warning to my staff to dress neatly by wearing a hair net and gloves at all time. I will also carry out a regular hygiene inspection in the kitchen, bathroom and toilet for health and safety of the premises. All food will be produce to the preference of the customers and there will be no significant difference in raw materials produced to individual orders.
Equipment required: this will help me to plan the number of staff and pieces of equipment I need to keep pace with the pre-booked orders and instant sales I have estimated. Check the length of time it takes each piece of equipment to product a batch of products and use this figure to assess the number of machines needed and the total time required to produce the stock required. This will help me to work out the delivery dates for pre-booked items. The building in which the equipment is housed is also a consideration because of noise levels and safety issues. The design of the production unit will be carefully organised to avoid too much wasteful movement between functions. For me to acquire equipment, a number of critical decisions will have to be made. I’ll have to decide whether to acquire the equipment now or buy them or lease them. Other factors that will affect my choice of decision will be the supplier I chose. This will be determined by quality, payment terms, technical back up and after sales service. The equipment I’ll need includes a wide range of items including telephones, vehicles, cooker, microwave, dishwasher, cutlery, tables, chairs, pots, fryers, fridge, freezer, cups and plates.
Labour requirement: the two principal positions needed to operate Keemto are the manager and the cook. I’ll be the one to take these responsibilities and employ some staffs, which are as follows with their wages.
Stage of production: I’ll need to make decisions about how to divide up the stages in the production cycle. A small easy to produce food will require only a few stages whereas a highly complex item will need many more stages. It will also depend upon the number of functions one machine can complete. This will help me to set up a well-controlled operation, cook a steady flow of finished foods, reduce wastage and maintain specified quality standards to meet my customer requirements. I’ll purchase my foods and drinks from wholesaler in order to have it at a cheaper price. I’ll cook the foods every morning in order to serve my customers with fresh foods.
Food preparation process
As a Nigerian restaurant, most of my ingredients and final menu items will be supplied by wholesalers some of which will be directly from Nigerian and some in the UK. I have no concern for the freshness of my foods because arrangements will be made to keep a one-week minimum inventory on hand at all times, this will be done with the use of freezer. I have made agreements with some Nigerian food suppliers and wholesalers to provide me with their specialty food requirements. Each of these wholesalers has assured me that they will deliver orders within 48 hours and if necessary deliver within 24 hours subject to an added delivery charge. Some purchase will be made on a periodic basis from Nako Cash and Carry to assure the company of a second source of supply. All other food products will be purchased from Nigeria and the ingredients can be purchased from local wholesalers. These include dairy products, fruits, vegetables, seasonings, canned goods, etc. I will store meat in the freezer and freshly cook every day upon demand. Vegetables, soups, rice, beans, porridge, eba, amala, pepper soup and pounded yam will be prepared daily. Most desserts will be kept in the freezer until the day of use.
Timing: quantity to be produced, equipment required, quality required and stages of production are all part of timing of my whole production process. The starting point is obviously the time schedule chart drawn up at the beginning of my operation and my resource planning control system. This will clearly show the number of goods needed at specified time periods within the year, the capacity of equipment, the number of staff I’ll need to maintain production levels, the pre-booked orders to be met, and the estimated sales I am attempting to meet and the expectations and requirement of my customers. The schedules I have already detailed can be used in conjunction with any monitoring techniques I have set up to provide feedback on how well my operation is meeting my targets. I can make changes at any stage in the procedure to avoid either under production or over production of foods.
Task 4
Financial plan.
Sources of finance: there are different ways in which I can raise the finance necessary to purchase assets and fund working capital. The method I’ll choose depends upon the amount of money I required, the risk that my business represents to potential lenders and the time period over which the loan is required. The time period over which the loan is required can be used as a means of classifying methods of finance into three categories, which are:
- Short term finance is between 1 to 2 years required for working capital
- Medium term finance is between 3 to 10 years required for purchase of fixed assets e.g. machinery
- Long-term finance is between 11 to 25 years required for purchase of land and premises.
I’ll need access to short term finance to meet my requirements for working capital. Short-term finance is usually repayable within a year period. There are two principal methods of short-term finance, which are overdraft and trade credit.
Methods of finance I’ll use are:
- Capital of £92,000
- Mortgage of £54,000
- Loans of £15,000
- Overdraft of £30,000
Total sources of finance equal £191,000
Budgets including start up and working capital: budgets will help me to look into and plan for the future. The aim of budgeting is to provide a system of control that enables organisation to work towards its objectives. The preparation of a budget depends critically upon its purpose. There are two kinds of purposes for budgets these are:
- Provide a map of an organisation and all the parts of the organisation that go into the map.
- Form the basis for financial management and control.
In order for my business to operate effectively and plan for the future, I need to pay for the use of resources e.g. start up capital for my business would have to include the following: fixed assets, capital expenditure, working capital, revenue expenditure. Below is a copy of my budget.
Break-even forecasts: is the point at which sales levels are high enough not to make a loss and not high enough to make a profit. Break-even concept is a development from the principles of marginal costing. Marginal costing is a technique that uses costs to forecast profits from the production and sales levels expected in future periods. Break-even can either be calculated by formula or by graph. To calculate break-even by formula, I need to find out the level of sales needed to break even. In order to do this, the information I will need for the first calculation is the fixed costs and gross profit margin percentage. The gross profit can be divided by the sales and multiplied by 100 if I do not have the gross profit margin percentage. Break-even formula is:
Fixed costs
X 100 = Break-even level of sales
Gross profit margin
If my gross profit margin is 40% and my fixed cost is £5,000, the calculation will be:
£5,000 X 100 = £12,500
40
This means I’ll need £12,500 of sales to break even. In order for me to find out the number of units to sell to break-even, I have to work out the number of units I plan to sell over the first year of trading. I can use the following formula to work out the number of items I will need to sell to break-even:
Fixed costs
Selling price per unit minus variable cost per unit
Cash flow forecasts: in order for me to plan ahead, I must have a realistic understanding of what is happening within my business. I must know when money is expected to come in, what the money is needed for and if it would be possible to use some of it for expansion and development.
Projected profit & loss account: is a financial statement that summarises the revenue and expenses of a business for an accounting period and shows the overall profit or loss. Profit and loss forecast is restricted to regular income items such as sales revenues and running expenses.
Start-up balance sheet: balance sheet is a financial statement that shows assets, liabilities and capital of my business at a particular date. Balance sheet shows the state of my business at one moment in time and things that could be different tomorrow. A balance sheet lists assets which are amounts owned by my business such as premises, vehicles, stock, cash and bank. Liabilities which are amounts owed by my business such as bank overdraft and loans. Capital which is the amount finance I put into the business and profits built up over the year.
Financial monitoring
In order to monitor my finance I will employ a junior clerk who will be monitoring my accounts at the end of each year to see whether I have done my accounts properly and if there are any mistakes been made then he can rectify them. I will check my cash flow regularly and also my budgets in order to locate any financial crisis in future and be prepared for it. My budget will serve as a means of setting targets, controlling costs and making decision. The financial forecasts will be monitored on a monthly basis and any significant variances will be investigated. Where it is found that costs are incorrectly forecast then the budget will be recalculated otherwise corrective action will be taken.
The assets, which are there for security, will be fixture and fittings and equipment that will be security for my business, which is quite good if any problem comes, then I can use these assets.
Task 5
Evaluating my business plan.
Return on capital employed (ROCE): after my business planning, one way for me to evaluate the success of the plan is to look at the return on capital employed in my business. The figure for capital employed will usually be taken at the start of the year because it is the capital that generated the profit in the following year. The best way for me to think about the percentage return on capital is to compare it with other investments; for example if I invest £100 in a building society and earn £10 in interest in that year, my return on capital will be 10%. Return on capital employed formula is:
ROCE = Profit before interest and tax
X 100
Capital employed
If my Capital employed is £92,000 and my profit before interest and tax is £6,400 the calculation will be:
£6,400 X 100 = 6.96%
£92,000
Which means my ROCE will be 6.96%
Profit margins: my forecast profit figures in the business plan can be used in other ways to evaluate the future success of my business. There are two basic types of profit margin, which are: gross profit margin and net profit margin. Gross profit margin relates the gross profit earned by a business over a trading period to the sales revenue generated over the same period of time. Gross profit earned by my business is the sales revenue less the cost of sales in the same trading period. The formula used to calculate gross profit margin is:
Gross profit margin = gross profit X100
Sales revenue
This means if my gross profit is £46,900 and my sales revenue is £66,800 the calculation will be:
£46,900 X100
= 70.21%
£66,800
Net profit margin = net profit X100
Sales revenue
This means if my net profit is £6,400 and my sales revenue is £66,800 the calculation will be:
£6,400 X100
= 9.58%
£66,800
Ability to reward or repay investors: a simple way of assessing the viability of my business plan is to know whether my business will be able to offer return to its investors i.e. the bank where I loaned money for the business. Being a sole trader one measure of success is whether I will earn sufficient income to make the business worthwhile. My investors will expect the payment of interest on their loan as well as some repayment of the principal. If my business is projecting a significant loss, my investors may be concerned that they will not be repaid. It is also likely that my investors will scrutinise the business’s cash flow forecasts carefully therefore it is important for my business to earn sufficient revenue to repay investors and also important that earnings arrive in time to satisfy the demands of investors because investors will want to be assured that the business has made arrangements to pay interest instalments on loans even at times when cash may be in short supply.
Being a new business it’ll be crucial for me to be ahead of competition because I plan to invest in my staff by training and arranging appraisal every 3 months in order to monitor their performance in the business. I believe I staffs are my key to the success of my business and if they are happy, they will have good customer services with the customers. Because my business plan’s net profit is healthy enough for a new business I’ve decided to advertise my business on Africa television to enable me to get more customers from around the country and I’ll also create a website where people can place their orders for home delivery, take away or eat in. Doing these will enable my business to get more profit in the future. I’ve also decided to take a short-term loan in the future by starting my repayments one month after taking the loan. This will able me to finish the repayment on time with lower interest rates.
I realised that the strengths my business have is that my plan it is achievable and realistic and I took enough research before producing the plan and with my net profit I therefore believe that my plan is a successful one. But the weaknesses is that I could have planned to outline all my strengths and weaknesses of each decision made and also involve my potential customer by asking them the price that will be most suitable and why before making any decision.
Justification of the approach taken to the construction of my plan
My project will be successful because it is based on market research as I did primary research that is I got the questionnaires filled from my potential customers, which showed that there is demand for my business. I did some secondary research and with the help of financial times I was able to learn about the economy as well about my competitors. I was also able to get information from Office for National Statistics, which was quite helpful as it gave me information about employment in Hackney. I also used the Internet to do my research as it’s valuable research tool and it was able to get me useful information about the market and its competitors. I also used books and was able to get ideas on topics such as designing a plan, legal implications and recruitment. I went to banks and got their business plan by which I was able to get ideas for my business plan. I also prepared myself for smooth running of the business and made arrangements for alternatives in case of problems such as short of staff, lack of finances, marketing etc.
Alternative approaches that were considered.
In order to make my business a success, I used all the sources I could use but as much as I do, I still need more to do so that my business is a success. Hence I could have done more research in depth and found out
more about my services and done the alternative changes. In case a staff is not there then I will be prepared to have a alternative staff to take over the restaurant so that smooth running of the business can be maintained. If on the basis of the cash flow forecast there is short of finance in future then I can use my overdraft facility with my bank so that every day running of business is not affected. All the rules keep changing for restaurants hence the research, which I did, was done before starting my business, but the rules keep changing so now there may be some things, which I have not included in my business.
Realistic and detailed judgement about the financial viability of my financial plan.
Although my business has not yet started to trade, I can look at my cash flow forecast, balance sheet, trading, profit and loss account, breakeven and financial ratios. Looking at all this, it will be worth me going ahead with my business plan so that I can start up my restaurant. This is because my market research in marketing plan helped me to develop a cash flow forecast. Although there are one or two periods when my business may have negative cash flow but I can still overcome this problem with my overdraft which I have available from the bank. To add that I have included all the expenses and staff wages, my personal drawings or wages will depend on the amount of trade that takes place. This is because in busy periods I will draw out more from the business and draw less when it’s not so busy. In December I have considered giving my
employees a Christmas bonus. Hence the wage bill for every month will be £2000. Overall I believe that my
business does have a successful cash flow forecast, however, I must remember that it’s only a forecast and there may be situations that I may have not considered which I will discuss later on.
When looking at my balance sheet initially I have a positive figure for my net current assets and also my net assets and my capital employed match with each other. However, the main reason being that my
particular type of business does hold much stock. Hence I will own as much assets as any other business would. The two major things my business owns is fixture and fittings as well as the equipment. There
will also be a large amount of food and equipment as my current assets. Nevertheless I have an overdraft limit with the bank, which I would use when I require a small financial boost. The overall figure for
total assets is positive so once again this proves to me that it’s worth going ahead with my financial plan.
The profit and loss account provided me with a positive figure once the expenses were taken away from the total income. From then on I had a net profit and I was left with net profit of £6400 so once again it seems that the business can be a success and its worth going ahead with the plan.
My break-even analysis showed me that I need to look after an average of 100 customers so that I can cover my expenses and break even. As mentioned before the figure directly interrelates with my market research findings. This is because my market research gives me a reasonable demand for the service I am going to provide. If I have an increase in customers then I will consider employing more employees. Alternatively if the business is going through a rough patch then I will reduce the hours for each employee.
Returns on Capital Employed Ratio will definitely encourage investors to invest within the business. This is because my figure of 6.96% shows there is an extremely high return.
Net Profit Margin proves that a 9.58% margin is available for my chosen type of business. It’s a reasonable net profit margin because the calculations include the deduction of all the overheads such as rates and rents, wages as well as other expenses. Alternatively if the net profit margin was in the region of 0-1.5%. Then I may reconsider my decision of opening my business.
Gross Profit Margin shows that the business has a 70.21% margin. However, rent and other overheads bring the margin down. Nevertheless, there is still a reasonable amount left over, which has encouraged me to go ahead with my plan.
With any business before and after its starts to trade there are surprises and obstacles, which it may face. Sometimes they are beneficial to the business while at other times they are harmful to the business. I will be looking at obstacles, which will either halt the opening of the business and those, which will affect the business once it has started to trade in a negative way.
Sources of Finance: as mentioned in financial and production plan I will be looking to obtain a loan of £15000 from the bank. If the bank rejects my application, then I will consider getting a sleeping partner so that I can apply again for lower amount. I could also find a partner and then half the investment. This is because currently I have personal savings of £92000 and could use £52000 of this to open my business with my partner. When discussing the plan with my father, he agreed to help whenever he could so the last report to raise finance would before him. This is because he has good credit rating with the bank and can obtain a loan for my business.
Not Enough Customers: my market research showed me that there is a reasonable demand for my particular type of service, because it is still in the growth stage in the product life cycle. However, I am not guaranteed a certain amount of customers because there is several factors that can effect people using my service. Furthermore only research showed me that there was demand. I will only find out for sure the level of demand once I start to trade. The solution for low turnout is pumping more into promotion and making people hear about my service as well as the value for money they will receive if they buy into my service. I will not be lowering prices instantly because if I lower them instantly then it will be very hard in the future to rise prices back up.
Marketing Campaign Fails: If the marketing campaign fails then I will look at the existing methods used and see how effective they were. It may just be that I haven’t targeted the right type of people at the right place. Alternatively I may have to adapt to new methods such as door-to-door sales.
Employee Leaving: If an employee decides to leave then I will have to recruit another one. This could be very easy, because I may get a good response by advertising in the local paper. Alternatively I may not receive a good response hence I will have to reconsider the advertisement methods. I could go to a local job agency or to one, which specialises in catering jobs.
Dissatisfied Customer: There will be times when a customer may not be happy about the service, which I am providing. Therefore I will train each staff to handle this situation by taking the customer into a quite place and listen to what his/her complain is. I will look at the complain and try to do my best to avoid it happening in the future. Furthermore when the business starts to trade three months in. I may consider giving a questionnaire to the customers to find out what they think of my business.
New Local Competitor: At the moment there are two major local competitors and someone else may decide to open another Nigerian restaurant near my premises. I will then have to look at holding to on my existing customers and maximise the level of service. I can launch another marketing campaign while the new business is setting up and lower my prices for short period so that more people hear about my business.
Market Forces: I will not have any control or influences on market forces. Therefore I will have to adapt to market forces. For instance if Nigerian restaurant is going through a rough patch, then the businesses main objective will be to survive and break even.
Viable marketing, production and financial alternatives in my assessment of my business plan, based on my understanding of the financial information generated by my evaluation.
I have described above the various techniques that I have adopted regarding my marketing, production and finance apart from those mentioned above.
Marketing: for my marketing research, I could have get more questionnaires filled which would have given me details in depths about my competitors and also whether there is demand for my business.
Production: for my production, which is basically goods and services, which I offer to my customers, now I offer more than two services which includes; serving waiting customers for take away, serving waiting customers for eat in and serving waiting customers for delivery. But other alternatives can be that I could have offered them free delivery which could have been an added value for my customers another service can be that I could have offered snacks to waiting customers while their food is prepared.
Financial: for my financial part, the alternative can be now that I have taken loan from the bank, I could have loan either from a family, friend or a relative instead. This would have reduced the pressure of paying back the loan with interest on fixed intervals. If any problem occurred in my business then it would affect my whole business that is, it will affect the marketing plan, production plan and also financial plan for which then I would be looking for alternatives to solve the problem and bring back things to normal again.
The disadvantages of constructing this business plan are the following:
This was the first time that I had constructed a business plan; therefore, I was inexperienced and created common mistakes. My project is just a plan and there will be no real cash involved so this might have decreased the intensity at which the plan was put together in. Although my primary research showed me that there was a demand for my particular type of business, I could not expand to great lengths, the main reason being; time constraints and not having money to employ people to carry out my market research. Therefore I had to go out and carry it out myself. It was difficult to find a reasonable site at first, but when I visited a few estate agents it became clearer to me and eventually found a suitable site at .
I used several sources of information and some were useful than others. For instance some Internet sources had the exact data (local labour market information: www.isc.gov.uk) while other sites had irrelevant information.
One major positive aspect of my business is that there is very little money tied up in stock. In
my financial plan I said I would need a £15000 loan to get started. This is because some businesses needed large amounts of start up cash to start trading.
If I were to reconstruct my plan then I would go about it in a similar fashion, but make a few changes. For instance I would research my market much more intensively which will allow me to produce a much more detailed plan. What is more is that I may discover new things about my business, which may encourage or even discourage me from going ahead with my plan. I would also concentrate much more on promotion. And draw a budget for the promotion activities. This is because in my plan I did not look at promotion in too much detail. Therefore next time I would concentrate more on the layout of posters/flyers/leaflets/questionnaires. Finally I would consider researching a lot more about my area where I am going to trade. This is because I have looked at East London in detail but have not researched Hackney in great detail.
Overall I believe that my business plan is good enough to obtain loan from a bank. This is because my market research showed me that there is a gap in the market and a good chance of my business succeeding. As mentioned before I do not need a large amount of capital so once again this should make my business proposition to the bank even stronger. The fact that I have not a built up credit rating with the bank may affect my chances of getting a loan. Nevertheless, I can emphasise the fact that my businesses unique and demand levels are high. Finally I believe that I can go on to succeed with my business and possibly expand in the future. Alternatively if my market is declining then I may diversify into another market.
