We are in the same field as some top stationery sellers so having a good analysis of them has helped us. Since we are a small business with no real place in society selling our products which are the same as what they sell at lower prices, would hopefully boost our ratings. Having good quality items at cheap prices would hopefully make our business run its full course.
For selling our stationery it gave the impression that it was only right to sell the goods in the Atrium. This is an area at the entrance of the college where a lot of students hang out. This should grab their attention to come and buy.
The people chosen to manage certain areas I believe were chosen because they are clearly the right people for that job and they will certainly see this function through to the end.
Based on these findings I imagine that our business will do well and will have a steady and secure financial background.
When producing a business plan there are many ways of going about it. These may prove to be hazardous or very valuable for the business. There is no right or wrong way to make a business plan, the only reason why you would think that there is, is because the bank may reject your request for a loan to get started simply because of the way you presented it. Preparing a business plan is very hard but with a good convincing outline of the status that you are at and where you hope to end up, good things will happen for you. I produced my business plan in a very simple way, which is easy to understand and follow. To me that was the best way to do it, my views were straight to the point and I stated what would be good about it and what may give Stationery on Tap problems. Other ways that I could have created this business plan is by using power point. This is a technique which involves using digitally enhanced picture slides. This would then be projected on to a white projection sheet enabling everybody be able to see and take notice.
The use of more pictures would have illustrated my points better. This would have given people a clearer depiction of what is in this business plan. This would have also made it easier to understand and they would become more interested in the business plan. Since it is very long winded people may become bored and they would be reluctant to read the whole lot. Even though there are graphs in the plan that is expected, a business plan needs to have charts to point up certain areas that may need careful attention.
An oral presentation could have been done. This would have involved taking a lot of time out of the day but it is very effective. Giving out booklets with key points that you are going to talk about would take the pressure off of you. If there are things that people don’t understand they have the opportunity to ask you questions which you will be able to answer. This is an excellent way to get your point across and the intellectuals that you would be talking to would take you more seriously as you had the courage to stand up in front of people that you didn’t know and explain why your business would be a success, or why they should be inclined to lend you whatever amount of money you need to get started. Obviously if you need a very large amount like £20,000 you would need a very persuasive argument as to why you should be allowed to receive the money.
Using an overhead projector could also be effective as this could be used in the same way as the oral presentation. This method offers people the option to ask for assistance with something that they do not know.
Group presentations could be used. This is very similar to the oral presentations but there is a difference. The people’s ideas are the same but they interpret it in their own way. Everyone has to input into the discussions as some people will be better at certain areas than others. If Stationery on Tap were a partnership instead of an ltd then this could be used as the partners would come up with ideas to put their views across clearly and in very few words.
With any approach that is taken we would need to keep in mind that the people who are reading this or listening to you doesn’t want to be there for a long time. Having to read why you are the best suitable client to start up your business over and over again would make them very tired. Yours is not the only business plan that they are going to read so you would need to appreciate how many they have read and are going to read. Try to make it as easy as possible for you and for them. Countless pages of writing would make them dissuade anything that you have written. The approach that I would take would be to use the overhead projector or power point. This would enable anyone to ask questions about what they don’t understand or if they would like to make suggestions about what you could do to improve it.
For Stationery on Tap I created a thorough financial plan with different resources to illustrate how practical our business will be. We used these ways to see if our business will be able to create profit in order to give dividends to our shareholders. Since they are the preliminary founders of the business they should get a satisfactory outcome from it. In order to make sure that the plan will work various things had to be done. I constructed 5 break-even charts to represent where I hope to break even and the expectantly of us making more money than we are spending. With some items we will make money quickly and others may struggle. For example with file paper we need to sell between 3-4 pads in order to be at the break-even point, from this point onwards we will be making money not losing it. However people are very conscious about buying file paper from us therefore we may not meet this target. Pens are financially viable as people need them more than anything else. Costing on 20p each people are more inclined to purchase these. We will need to sell 13 of these to meet our set target. This would be considered an advantage as the targets that we make in these estimations can very much so be met.
With the items that we bought we have paid VAT. The prices that are set for our products have no VAT added on to them. Therefore the customers are not paying the right prices for their goods. This could be classified as a disadvantage.
A disadvantage is that we haven’t kept any accurate records. This means that we don’t really know what is coming into the business and what is going out. Thus giving the indication that anyone can be stealing from the business and we would have no idea about it. In the coming future we would need to make sure that we keep records so we know how stable we are, and what position we are in.
The cash flow forecast is a guesstimate of how much I think we will generate within the first 6 months of us starting. With the research that was taken we as a company are confident that these figures will be the border line of how much we make. With the optimism that we will not make a lose in any of these months we should do as well as anticipated. The profit and loss account is another estimate of how I hope we will do. These figures are just predictions on what we are going to expect in the future. The balance sheet is an actual demonstration of how we have done so far. The spaces that have nothing in them are like this as we haven’t made any purchases yet, we haven’t sold anything, and we have no gross profit. We had a selling shares party which is reflected from the expenses onwards. When we sold shares we made £209 and from this we took £17 to buy refreshments for those that came. Unfortunately we have debtors as not everyone has paid, £15 of the £209 have to still be paid by some of our shareholders; we were however able to use the remaining money of £177 to purchase stationery. At the bottom of the chart it states our capital is £209, Net profit (loss) is -£17, which will equal to £192, we took no money out of the business for personal expenses so we had no drawings, this gave us net assets of £192. Even though we made a lose in the beginning it’s good that balanced out in the end.
However this financial plan will not work in the outside world as it is very unrealistic. If you look on the balance sheet you will see that there are no fixed assets (eg) machinery or a premises. In reality we would need to have at least a premises. Since we don’t have to pay rent or any additional fees it will make us more likely to make money. The type of balance sheet that this is will only be appropriate within the college, since this is a small venture we don’t really need a large amount of facilities, honestly if this was going to be done for real we would need to create something that will reflect exactly how much money we would need and how much we would have spent. Another disadvantage with the viability of this plan is that we have debtors. It may only be a small amount but we didn’t anticipate this so now we have lost some money. If we had appointed a credit controller we may have been able to avoid this problem. They would’ve seen who needed to pay their debt and chased them up. We did however give receipts to those who bought shares in the business so we have an idea of who still owes money. Despite the fact that people have receipts they weren’t issued another one when they paid the remaining of their debt, therefore they can say that they remembered paying since their friend paid. If we had issued another ticket along with their original then we would know exactly who is telling the truth.
Since these disadvantages were not predictable it has made me more strong-minded to make sure that Stationery on Tap will remain in the financial situation that it is in and that we will resolve the drawback in the business that is our creditors.
To truly see if this business plan is valuable for the shareholders there is a number of things that needs to be done. Finding out whether we have prepared ourselves enough for the worst case scenario or if we are just expecting good things to happen straight from the start. You as the employees or the managers are not the only ones who are expecting something out of this business enterprise. Even thought they don’t work in the business the shareholders have a say in what happens. They are the ones who invested the money to get you started and they have the ability to vote off a director or change something within the businesses articles.
People will be look forward to the end of the business’s life to get their returns (dividends). We will need to see if the business will be profitable enough to get them their original shares and whatever they are going to get on top of it.
The business plan on a whole looks at strengths and weaknesses that may occur within the business. It outlines the primary and secondary research needed to fully identify what our business needs to look for from competitors and what they need to ask their target market. Special tools like the PESTEL analysis should be used to make sure that Stationery on Tap have acknowledged constraints that could affect their business, certain things that they may think is irrelevant others may think that it is the one thing that they don’t do therefore they will not purchase from us.
The amount of money needed to make sure that we are financially constant throughout the first few weeks is very important. This need careful consideration and does require to be looked at with the utmost highest regard as this is imperative.
Our shareholders are entitled to know when they would be able to get their returns. The ROCE (Returns on Capital Employed) equation compares the net profit of Stationery on Tap with the owner’s capital. It basically shows the owner how long it would be before they can get their capital back.
ROCE: 248.50
*100 = 123.94%
200.50
The Net profit percentage compares the net profit to sales. This equation is taken from the profit and loss account and turned into a percent.
Net profit percentage: 248.50
*100 = 56.16%
442.50
The Gross profit percentage is also taken from the profit and loss account. This measures the gross profit compared to sales.
Gross profit percentage: 265.50
*100 = 60%
442.50
There is some debate about whether or not it is advisable to have a large profit. If you are a small company like Stationery on Tap then we don’t have the resources that would cover a larger company (eg) WH Smith. Having a large profit could make your tax quite high meaning that you would noticeably have to pay more.
Since this is our first year we have nothing to compare these figures to. Based on recent studies I would say that these figures show Stationery on Tap is a very valuable asset to our shareholders, they will gain double their money back at least. Stationery on Tap will only be opened for a few months which means that the shareholders will not get as much money as they could get with our competitors. A well known establishment like WH Smith has been opened for years, and will stay opened even after we close down. This is a large company with branches nationwide. If one of our shareholders were to buy shares from WH Smith they will without a doubt gain more dividends with them than they would with us.
If potential shareholders were cautious about whether or not to buy shares from the business I wouldn’t hold it against them. All businesses have a downfall sometime and it is very hard for both the company and the shareholders to regain the amount of money that they’ve invested. Each share costs £1 each so if there are less shareholders and the only investors are within the two AVCE classes then the shares will be worth more. This is all dependant on whether or not at that crucial moment we have a secure flow of sales.
We don’t have a name that to the public means reliable, good quality, excellent reputation. We can only promote so much to the students of St. Charles and if they don’t take any notice then if worthless. Highly respected multinational companies like WH Smith, or Woolworths have the reputation that other companies dream of. They are known for their quality goods and they have worked hard to get where they are today. Stationery on Tap will reach out to the public stressing that their goods are of high quality. We will be selling name brand goods, but, we cannot force students to buy, we can only encourage the fact that the goods are of high quality and at reasonable prices. We would hope that a large proportion of the students at St. Charles will come and obtain supplies from us. Since we are situated in the college it is very easy for students to ask any questions about what they are buying. This will enable customers to know exactly what they are buying, also they can test the goods before they buy them.
We hope to build a steady relationship with our customers. As they are practically on our doorstep we need to make sure that we are catering for their every day needs. We will not pressure any of the students to purchase from us we can only be optimistic on the view that the students will trust us enough to buy once and keep coming back until we close.
However you carry out your research there will be pros and cons to the approach taken. At first with the approach that you take you hope there will only be advantages, that every thing will go smoothly, but, disadvantages have a habit of making itself known at the wrong moments. If the slightest thing is overlooked or not taken seriously then the business on a whole may suffer critically. Primary and Secondary research is the most important data that you would ever find. Primary research is all about finding out how people would think about the setting up of your business. Seeing whether or not people will purchase from you when you first set up. Advantages to the use of questionnaires are that they are useful when trying to find out what the public want. We asked questions like: (a) How often do you purchase stationery? Majority of the students bought pens, pencils, and other equipment whenever necessary. (b) If you could buy your stationery in college at break time, would you? A wide amount of people said they would. However there is a disadvantage to using this method, students may not be entirely truthful about whether they would buy from us and they may not have paid attention to the questions. They may have only filled out the questionnaire not because they wanted to but to get rid of whomever gave the questionnaire to them. (c) What would you consider a good price for the stationery? The advantage to using this question is that the students can set the prices for which we will the items. A disadvantage to this is that students may give ridiculous prices expecting us to use their suggestions to sell the stationery. If we don’t do this they will end up not buying the stationery from us.
Finding out who our competitors are, what they sell, and at what prices would be very beneficial to us. Since we will be situated in the college students may not be able get the equipment they need around their area. Depending on where they live there may not be WH Smith or Woolworths near them, therefore when they come into college they will be able to purchase what they need with no hassle. Using the price system that our competitors use would give us a good indication on how we should price our goods. However, customers may think that if we price our goods at the same price as our competitors, we are no better than them; also we don’t have the reputation of mature companies like WH Smith who are known for selling high quality goods at somewhat reasonable prices.
The SWOT, PESTEL (including financial), Marketing Mix, Product lifecycle, Boston matrix, and Ansoff matrix are used to find out certain things about your business. The SWOT deals with the strengths, weaknesses, opportunities, and threats of your business. An advantage to this is that we will really begin to realise what is good about our idea and what may create problems. It’s very nice that our customers are on our doorstep, but, will they walk up the steps to come and buy from us? If the good points out weigh the bad then we hope the business will be successful. Advantages to the 4ps are: 1. It analyses the product, price, promotional strategies, and place of selling. 2. It enables us to know exactly what we are going to do, in terms of the price of certain items, what types of promotions we are going to use, also where we are going to sell the goods. Disadvantages are: 1. If done wrongly this could become disastrous. 2. We as a business may get over our heads and not analyse something properly. 3. We have an obligation to put our customers first some people may forget this and just start thinking about the money we could make, this will then lose us money. If the Marketing mix isn’t done right and we believe that it is then we can lose a lot of money. If we start our business on the basis of what we have said in the 4ps then we could probably fail. The Product lifecycle sets the stages for where our business goes and ends up. An advantage to this is that we can see clearly where our business is at certain times. (eg) picking a name for the business would be in the development stage, the first time we go out there to sell will be the introduction stage. Another advantage is that with the product lifecycle we are able to see when our products are declining. We will notice a change in the way it is selling and we will hopefully be able to come up with an extension strategy to extend our time. A disadvantage of the use of the lifecycle would be the way it determines the expectancy of a product, and not the business. If we look at it like: were a small business that is only situated in the college. We don’t have the reputation like WH Smith or Rymans, thus giving the consumers the opportunity to go elsewhere, and us not being able to do anything about it.
The Boston matrix deals with products that may be, a star, cash cow, problem child, or a dog. We sell different objects, and these can be placed in those categories. An advantage to using this is that we will have an idea of what products will sell well and what will bring us down. Pens, Pencils, and Plastic wallets are some of the products that are a star and would most definitely be beneficial to our company. Ring binders and Maths sets are a dog. Not many people would buy these unless they really needed something to put their work in or they did Maths. These products may have an effect on the stability of the business in the coming future. A disadvantage to using the Boston matrix is that we may not realise whether some of our products are not doing very well. This could end up in lose of money which we may not be able to retrieve and failure of the whole business.
The Ansoff matrix places our business in certain markets, these are: Penetration, Product expansion, Market expansion, and Diversification. These may be existing or new markets, and existing or new products. The advantages for these are that they can interact with each other. (eg) For a business like ours we would be in an existing market with an existing product (market penetration). Others could be an existing market with a new product (product expansion). This is a good way to analyse exactly where we would be, this will then give us an indication of how much competition we may face. I honestly don’t think there are any disadvantages to using this field.
The PESTEL analysis is one that all businesses need to analyse fully. There are legal requirements that any business providing a service to the public need to follow. Whether they are going to be environmentally friendly, or are they are going to use technology to do the production work. Whether or not we need shareholders or certain goods to help us along our way. All these ways need to be looked at; this will enable us to know certain fragments of the external influences which may affect our business. This would be considered an advantage as it helps us understand what type of effect the outside world would have on our small business.
When starting up a business there are certain things you would need. Whether it’s a table to put stock on or if it’s stock itself, these things will be needed before we start up the business for real. An advantage to the amount of equipment needed is that there isn’t very much. We will require a table to place stock on, a trolley to bring the stock to the required place and a cash tin to hold the money. A disadvantage to the amount needed is that we as a company may not be reaching our fullest potential since we don’t have the proper equipment.
The financial requirements of our business will come from the shareholders. They will be the initial founders of the business. The advantages to this are that with the help of our two classes we may be able to come up with enough money to get the business up and running. A disadvantage is that we may not be able to convince people that Stationery on Tap is a good investment. The amount of people needed to sell the goods at certain times may develop a problem. Since we are all paired off with others to do the job some may find it difficult to do it alone if their partner doesn’t come in. An advantage to this is that there will always be someone from the two classes at break time in the college therefore it is quite easy to find someone else to help you. The time structure is a bit of a problem. Since theoretically we only have a matter of 20 minutes to sell goods it seems like there is no point. However if you are free period 3 then you can sell then also. With these requirements there is one big advantage. If people don’t pull their weight then they will be fined £2. If they refuse to pay then they will be disqualified from the business and their shares will be distributed to the other shareholders.
An alternative marketing strategy
There are many ways that I could’ve taken when constructing my Business plan. Using these ways could have made my actual business work differently. When looking at the Place the standard place for selling products is in the atrium at break time. Normally there are pretty good sales, but in addition to this we could go to tutor rooms at tutor period, this would be done just in case people can’t make it to the atrium at break time, also we can sell products in the common room. If two sets of people were to sell products at the same time then we would cover more territory, this may generate more sales. As a business providing a service to the public we need to make sure that we get our goods to the customers on time, first time, every time. For this to be done successfully our business needs as effective logistics system to place to the product at the point where it is required by the customer.
Promotion
In addition to what we already do, we could do more of it. As the college has a website that is very popular we could use this to promote any functions that the business is developing. For use only on the college premises we could put our company on the default page, therefore when the students log on to the internet they would automatically see it. Students will notice that this is not the normal website and they will hopefully take us seriously and come looking for us. Obviously we couldn’t use television advertising but we could use power point during the assembly’s and have our Managing Directors (Nike Akinde, Brian O’Halloran) tell them what we are about. Using more posters in all classrooms and on all notice boards. If we take advantage of these elements then this should give us recognition around the college. Using handouts, flyers and leaflets to pass out to our public, letting them know that we are here to provide for their everyday needs. Whatever we try to do we need to make sure that it’s not expensive so it doesn’t have an effect on price or costs. Stationery on Tap could do discounts (eg) buy 2 disks at 75p each and get a disk holder for 50p (usual price £1). In the interest of recognition Stationery on Tap could sponsor up coming events, (eg) the college Talent Show). This could give the company a boost as people will know that our business offers sponsorship to any occasion that arises in the college. This may also create more sales.
Price
We are currently using “Cost Plus Pricing” which involves adding on a percentage on to the price that we paid to order the goods. (eg) if we bought a disk for £0.50 and added 50% on to it then the customers would have to pay £0.75. This is actually the price for one of our products. The type of pricing strategy that our business could use is could easily be based on how much our customers are willing to pay. If there is a high demand for a product then we could use a strategy called “Skimming Pricing”. This is initially used to take advantage of the customer’s desire for the product. As we have competition we could use “Competitive Pricing”. This is a situation where the business sets a price roughly in line with its competitors. Whatever type of pricing that Stationery on Tap chose to do we can’t do it on the bases of what our competitors do. We need to make sure that we a re taking into consideration the effect that our prices will have on our customers. Even though our customers haven’t signed a contract saying that they cannot go anywhere else for their stationery, they are free to go to any retail shop for their goods. In order for them to come to us we need to make sure that we offer them the best possible prices.
Products
Certain things appeal to certain people, therefore we as a business need to find out what these things are and study it. Granted that we are a stationery business and this is our main priority, we can still involve ourselves in times of the year that may be special to those around us. 14th of February is Valentine’s Day, and December 25th is Xmas, we could sell single roses or cards on these occasions making more money for us to spend on re-orders. On April 1st the college Talent Show takes place we could sell the tickets and use that money as prize money for the best performance. A lot of market research would need to take place to make sure that customers would want us to do this. In relation to our actual business we could produce the products with our name on it or at least our company logo. Items like pencils would have our name on it, and large rubbers could have the logo. This would give recognition and would make our business correspond with competitors (eg) WH Smith.
Alternative Production Strategy
Within the production management of the company there are many ways that things can progress. These ways can be beneficial to the company, but if it’s done wrong then it can become costly. Alternative strategies that Stationery on Tap can use could be to change the size of some of the products. Since we sell the standard size ring binders we could sell the lever arch folders, which is twice the size. This would give those who have a lot of work to carry the opportunity to buy the ring binders from us. With all suggestions we would need to research that this is what the customers want. Even though we don’t actually produce anything we are only providing a service we could still come up with ideas that could have a positive effect on the business. Having a theme day/week could be useful as students may like to mix and match their equipment. If we were to order certain colours which offset others then the public may buy it. The people of St. Charles aren’t very interested in really extravagant, bright, vibrant colours (eg) orange, or yellow), therefore if we knew what colours they liked then we could order it in and this may even save us money.
Even though this is for production this suggestion could also be used for promotion. If Stationery on Tap were to make products and put our name on it, then it will make people more aware of our company and they could find use of the items that they buy.
Alternative Financial Strategy
In the beginning we sold shares to those of the two AVCE classes and to others around the college. At the moment we are considered to be a limited company, this means that we only sell our shares to friends and family. If we change this and become a plc then we could sell our shares all the time. (eg) on the stock exchange. If we were to sell shares on a regular basis (eg) every few months, then we would have a financial stability that would help with expanding the business. To predict before hand how the business could develop in the future we could use a break-even chart which will show us just at what point we will be making more money than we’re spending. This is a good way to have a clearer depiction of what may happen in the future. Also this could be used to give us an outlook on what prices we should sell our products. Hopefully by this we would have an idea on whether or not we would make a lot of money or even a standard amount. The break-even charts would show us (a) where we would break-even and (b) how many products it would take to sell for our total costs to equal our total revenue.
Another financial strategy would be to lend money from the bank. In the real world this would be considered unrealistic but we would only be lending a small amount. However even though this is a small sum of money (eg) £100, the bank would want to see financial records for the business. Now if Stationery on Tap were not able to show these records then we would not get any money. With a good business plan which will reflect how well the business would do the banks will see no reason to not lend us the money.