Is there scope for a new bus service in the area?
The piece of coursework which I have chosen is 'A' - 'is there scope for a new business in the local area?' The business that I have chosen is a bus. It will operate in the winter as a normal service bus but in the summer it will be quite different. It will operate on a route taking it past or very near major tourist attractions, beaches and through the main areas for hotels. I will generate profits by selling tickets for these attractions, perhaps offering a guided tour both in the day and at night, advertising the attractions both inside and outside the bus and offering a simple bus journey in the winter.
I have chosen to do this topic as I was a conductor on the model village bus in the summer of 2000 which operates in a similar manner to the bus I shall set up. Thus, I have contacts with the company which ran the bus: Celebration Travel. My father worked for Wallace Arnold which operated yet another similar bus in the area. He is another contact. I also saw this as a way to interact with members of the public during my fact-finding missions which I thoroughly enjoy.
In order to assess the feasibility of this idea I shall conduct a number of tests and investigations. The first will be into procuring the vehicle. I was thinking of an old London Route Master for approximately ten to twelve thousand pounds. It should accommodate approximately 65 people in addition to the driver and conductor. I plan to scour the internet and specialist magazines such as Coach and Bus Week (CBW), Coach Tours and Bus & Coach Buyer.
The second will be a number of practical tasks in Torquay. This will include questionnaires for the public, the taking of photographs, foot counts and looking for premises for the bus.
The third will be an interview with a representative from Celebration Travel to find out how they ran their service with the Model Village and the costs involved with running such a business. I will also be able to find out what licences I will need to run a bus an well as what insurance.
The bus that I intend to buy will be an old London Routemaster (see photo in appendices) . They are the old, double-decker buses that used to travel around London. They used to be owned by London Transport and are sold off to private groups when they are obsolete or for a multitude of other reasons. They can be bought in the region of £10,000 to £12,000. During the mid 1950s,it was decided to replace London transport's old fleet of Trolleybuses with a standard type of diesel engined bus which would give greater flexibility in operation.
As a result, London transport developed the Routemaster, a bus with a varying capacity (the one I have chosen being 69 (36 upstairs, 28 downstairs and 5 standing)) which could move passengers quickly through the bust London streets. The actual chassis was made of state of the art materials at the time which gave the added benefits of being easier to control and it uses up less fuel. The bus needs a compliment of two crew. There is one driver and one conductor. Should the bus be hired out for an extended period then both crew could be drivers who swap roles as government laws dictate. Passengers board the bus by a platform at the rear. This is the primary point of exit in the event of an accident. There are also easily breakable windows upstairs which can be used. The total fleet of over 2,700 buses was slowly brought into service between 1959 and 1968.
I managed to get the information on the buses form the London Bus Company website. I was sent some information on different types of buses (see appendices) from the company but I had already made up my mind. The London Routemaster would be the ideal bus. It has a large capacity which would prove useful in the summer. There is also the added benefit of how bold and eye catching the bus is. The majority of buses in the area are white, approximately 30 seaters operated by stagecoach. These are single deck and are as common as muck. The bus I shall choose is a massive 69 seater, 8.395m in length, 4.382m high and 2.426m wide. It is also bright red. It does, however, loose some of the nostalgia value of the Model Village's 1964 replica of a 1908 design Leyland LGOC type B bus. But it is still very eye catching. This will lead to me being able to charge higher prices for advertising (externally that is).
They can hold 69 passengers. Assuming a full compliment of passengers, which is very likely in the height of the summer, each giving me up to £5.00 gross profit (sales turnover minus costs of goods sold) would come to around £350. That would be the money they give me minus the costs of the tickets. Say a ticket was bought for one adult to go to Bygones (ticket cost £2.00 and are sold for £3.50) and to the Model Village (cost £2.60 and told for £3.90) gives a gross profit of £2.80. Although I dare say many people are likely to be charged extra for the sight seeing tour and for tickets for other attractions slightly farther afield such as Neptune cruises (a company offering cruises along the coast to Teignmouth and Dartmouth) and to Paignton Zoo (as the name suggests, a zoo) and possibly attractions further inland such as Becky Falls (a waterfall near Chudleigh) or Woodlands (an adventure area / park near Dartmouth).
The route for the bus, in the summer, will be as follows:
* from the Strand in Torquay Town centre up toward Hollywood bowl;
* Turn right just before the bowling alley and head toward Meadfoot beach;
* Drop off and pick up people on Meadfoot beach, very popular among tourists but sometimes difficult to reach. Some tourists do not even know of its existence and simply head to the polluted, noisy and crowded Torre Abbey Sands;
* Drive up through Wellswood and turn right. In Wellswood, there is also another attraction, Kent's Cavern there which will be serviced;
* Continue on toward the Model Village, turning right along the Babbacombe Downs;
* Stop in the model village to pick up passengers and drop them off. It also services Bygones (a museum with a bit more character) and the old St Marychurch precinct and churches;
* Go down through Plainmoor centre and down to Castle Circus before going up past the Methodist church and down to the sea front to offer a hail & ride service on the Torre Abbey Sands beach;
* Occasionally, we would go up and down Belgrave road and along the other main hotel roads. This would also be a hail and ride service. The hotel run will operate mainly first thing in the morning. This is at a time when many people will have been kicked out of their hotels and just pointed in the direction of the town centre. I am sure that such a bus as ours will be a welcome sight. We will know where to take them and will be able to sell them discount tickets as well;
* We will then return to the strand in the town centre. From there we can pick up more customers.
That will be our route. There are a couple of annotated photographs and postcards in the appendices. There will also be signs dotted around pointing out where the bus will stop mainly although the bus can pull over anywhere to let people on. We may also decide to go off to some of the holiday camps around Paignton once or twice per day to pick up and drop off people.
The actual bus will cost £5,500 from the aforementioned London Bus Company. So, I need to find out from where I can get sufficient finance. I will also need money to advertise my bus, and to keep it going for a some time after I start up. As there is no real clientele base as most people are on holiday, I will not have to worry about building one up as I would with many other types of business. There is also no need to worry about fitting out premises - like with a restaurant or shop - which would mean income would take time to start coming in. Thus, it will start as soon as I start up the business.
The main source of my figures for the bus's costs is my telephone interview with the representative of celebration travel. Kim, the owner of the firm, was my interviewee. She ran the Model Village bus last year after having leased it from the Model Village. She too has a keen interest in buses and was able to give me a guide on how to modify the Model Village costs she gave me so that they would approximately fit those of a Routemaster.
She said that, as a Routemaster design was a lot more recent, maintenance and ...
This is a preview of the whole essay
The main source of my figures for the bus's costs is my telephone interview with the representative of celebration travel. Kim, the owner of the firm, was my interviewee. She ran the Model Village bus last year after having leased it from the Model Village. She too has a keen interest in buses and was able to give me a guide on how to modify the Model Village costs she gave me so that they would approximately fit those of a Routemaster.
She said that, as a Routemaster design was a lot more recent, maintenance and servicing costs would be about 50% of those for the Model Village bus. Wages would obviously be the same as would the cost to cost of the Wallace Arnold premises. Employees liability (to cover malpractice, mistakes etc on the part of the staff) would be the same as would the Road fund licence and operators licence (both available from government offices).
The advertising costs for me would depend on the type of advertising I wanted. The first would be for staff. This would be done through the job centre primarily and maybe the local newspaper, The Herald Express, as both are free. There would be no point advertising regionally or nationally as no one would really be willing to move or commute a long way to drive a bus as one may if it were a solicitor or other similar job.
Actually advertising my service will cost money unfortunately. The main way I intend to advertise is by dropping off leaflets in local hotels as this is where the majority of my customers will be staying. I have looked at local printing shops and the cheapest I have found is the one in Babbacombe - 'Harlequin southwest.' They charge the very competitive rate of 3p per black and white A4 sheet when one orders over 1000 sheets. This increases to 5p for an A3 sheet when one orders more than 1000. Although 6p per A4 sheet when one orders less than 100 is not very competitive (I have found places doing it for 4p) they are by far the best value when it comes to over 1000. I have decided to get 1000 copies in A3 of my poster (see appendices for a copy). There will be 4 copies on A4 paper. Thus, as A4 is 1/2 the size of A3, I will get 8 copies per 5p. So, the 8000 copies will cost £50. I will deliver roughly 80 copies per fortnight to each of the 100 largest hotels in Torquay with possibly a few in bucket and spade shops and tourist information outlets. These will then be kept with other leaflets for tourist attractions. Over the six month season this will cost roughly £650 or £25 per week. There is a full list of how much it costs to photocopy at Harlequin in the appendices.
There will also be room to advertise on my bus. I first contacted First bus company to see how much they would charge. I explained the situation I was in (GCSE coursework and all that) and asked for some pricing plans. The response they gave me was not exceedingly helpful. It went along the lines of 'Too busy, go away.' I shall henceforth not be using First buses.
I then contacted Stagecoach group plc and Brighton & Hove Bus Company for ideas on how much they charge for people to advertise. This time, however, I bent the truth somewhat. I sent e-mails to both of these people explaining I was the advertising manager in a small solicitors firm. They both sent me a letter in response. Both letters can be found in the appendices.
From these I have decided how much to charge people / companies to advertise on the bus. The main internal advertisers will be tourist attractions in the summer and other things like solicitors in the winter. This is because one is more likely to go to a water park (e.g. Quaywest) than to a solicitor when on holiday. The external advertisers will be pretty much anything. I do not, however, wish to look like a massive billboard. Thus, I will not permit advertising which makes the bus look too tacky.
There are a variety of places where people can advertise. Firstly, inside there are the 26 inches X 8 inches posters. These will be great value and will have a captive audience. In the summer it can be for tourist attractions while in the winter there is likely to be more an audience of the young, shop and office workers and the retired. There will be 32 in total: 8 on each side of the bus on each floor. One interior panel will cost £20 per month which is slightly less than what is charged by the Brighton company. That should generate £3840 over a 6 month season.
Next will be a 48 X 20 inch poster on the upper back of the bus which will be charged at 150 per month. This is slightly higher than what Brighton charges but this bus will attract more people's glances than other buses. That is £900 per 6 month period.
There will be another Poster on the lower back of the bus of the same dimensions and pricing as the upper bus poster. This will be good for companies which wish to advertise to car drivers, particularly car driving tourists who may be able to go to advertised attraction inland like Crealy or Woodlands. Again, £900 for the season.
That leaves the sides on which to advertise. There will be a high and a low poster on each side of the bus. The high will be 25 feet by 25 inches and the low will be 14 feet by 20 inches. They will be good to advertise to shoppers. Alas, we must advertise out own bus and tell people what it is so the higher posters on the sides and the back and one on the front will tell people about the excellent service we shall provide. One side poster (lower) will cost £300 per month.
So the total possible external advertising revenue will be £4500. That added to the £3840 for the inside gives a possible total of £8340 for the 6 month season.
That leaves just one more space on which to advertise: my leaflets which I have already described. I do not think that I would be able to charge enough to make a profit and pay for the cost. Thus, I will charge companies only the cost of advertising to me. The advertisements will be on the space on the back of the leaflets. Sadly, it costs to print on both sides. My advertising bill will come to £650 over the season. To print on both sides will cost 20% less for the 2nd side. So the total for printing on a 2nd side will be £520 or 1170 in total. To cover this cost in total I will charge 1.125p per 1/4 A4 advertisement.
With the advertising all wrapped up, I can move onto from where I can get enough money to set up the company. As I have said, the bus will cost £5500 to buy. I shall need approximately £1000 in case I need to do anything to the bus. I will want enough money to cover costs for one month to leave me with some breathing room from when I start up. So before I can work out how much I will need, I need to find out the costs involved. I got some figures from Celebration Travel and the London Bus Company on how much such an operation would cost to run. A detailed description of all costs, per month, is given below:
Conductor wages1: £1191.66
Driver wages2: £1950
Fuel: £650
Maintenance & servicing: £587
Public liability and insurance: £152
Employees liability: £44
Bank charges: see later
Wallace Arnold premises: £110 per vehicle
Road fund licence: £35
Operator's licence: £15
Advertising: cancelled out by charges (see above);
Road tax: £17
The conductor is an essential part, mandatory due to insurance when carrying passengers, unfortunately.
I decided that it would not be profitable to run the bus as a normal passenger service. This is because a nearly 70 seater is simply too much for a small town like Torquay. A smaller 30 seater Stagecoach is much better. I went down to Torquay town centre in the middle of March this year and observed the number of people on Stagecoach buses, mainly the number 32 as that follows a similar route to our bus in some areas. I cam to the conclusion, from the number of passengers, that I would lose money just running a 70 seater where average numbers of passengers are around 15.
So the monthly costs will be £4751.66. This of course is not a definite figure. It will depend on damage to the vehicle as well as how many miles we go, passengers, night time bookings and any maintenance the driver may need to do before and after the bus starts running each day. I will increase it by about 20% to £6000 per month, just to be sure. That, added to the cost of the bus will be £11500.
So, now I need to find a source for this sum. I thought first of grants and the Princes' Trust seemed like one of the best options. It gives grants of up to £4000 to an under 30 year old to start up a new business. That is a grant where I do not have to pay it back nor pay interest. I have repeatedly sent for a brochure / information pack but they have yet to send me one.
I also looked for other grants from the government which may be available to the tune of £2000 in my circumstances. That, too, is interest free and I do not have to pay it back. The national lottery is likely to be too much of a long shot. They award mainly to charities and things that would benefit a lot of people. My bus does not qualify under either of those categories. So that leaves about £5500 to find.
I looked around a number of banks and building societies and I think that the best one to use would have to be National Westminster bank. National Westminster bank offer charge free accounts for small businesses for 18 months provided some requirements are met. The way to get the charge free account from the National Westminster bank is:
a) One must already hold a National Westminster bank personal account or
b) One must change their personal account to National Westminster bank and
c) No more than £1 million is paid from the account each year.
As I already have an account and our bus is unlikely to take in £1 million in a year, I qualify for a charge free account.
Other benefits of a small business account with National Westminster bank include:
* Free consultation with a National Westminster bank small business advisor;
* Company cheque books;
* Company credit cards (useful for paying for petrol etc)
* Availability of online banking;
* Availability of telephone banking (National Westminster bank direct business banking);
* Over 1600 branches across the UK
* Discounts on insurance;
* Free COBRA (Complete Business Reference Advisor) which will help me keep in time with new legislation and key events / dates
* Free overdrafts (to a set amount);
* Excellent business rate loans;
* Free e-mail addresses supplied by National Westminster bank;
* Discounted internet ready Gateway PCs with discounted internet charges through the National Westminster bank ISP (internet service provider);
* Free business planning software.
As you can see, they offer a really comprehensive package to get the fledgling business of the ground and flying with the best of them. A really 5 star package.
So, as I have said, I need to find another £5500. This will come in the form of a loan form National Westminster bank. Unfortunately, they do not offer the splendid Loan Protector which guards against death, unemployment or sickness with business loans. Added to this is the fact that one must also pay a couple of % more on business loans than on personal ones.
So, £5500 loans incur an interest charge of 14.9% per year on a business. I think that one year is probably too short a period of time to find that money and two years would be the best term. Thus, the repayments would be at £275 per month or £1650 over the season. Alas, we must also pay over the winter so I will pay into a savings account like a mini cash ISA or something for 6 months than pay the other amounts in the winter. So the charges would be £550 per month for 6 months with 50% going into an ISA and 50% going to National Westminster bank. So the loan increases costs of about £6000 to around £6500 per month.
We need also to look at the costs of keeping the vehicle over the winter. This too would be done at Wallace Arnold. So, over the 6 month period I would need to spend £25 per week on keeping the bus at Wallace Arnold and I would put an extra £25 a week into the ISA to cover costs over the Winter.
I will also need to keep Road Tax and other things up to date in order to attend parties, weddings, etc (more details later)
The revised cost list should look something like this:
(PER MONTH OVER THE 6 MONTHS)
Conductor wages: £1191.66
Driver wages: £1950
Fuel: £650
Maintenance & servicing: £587
Public liability and insurance: £304
Employees liability: £88
Bank charges: NONE
Wallace Arnold premises: £220 per vehicle
Road fund licence: £70
Operator's licence: £30
Advertising: cancelled out by charges;
Road tax: £34;
Loan: £550.
TOTAL: £5674.66.
This figure is still under the £6000 I originally budgeted for.
We will still use the £6000 figure for ease of calculations and to leave a safety buffer. I will need to find £36000 over the 6 month period in order to cover all costs. First, I will deduct the possible £8340 (over 6 months) I can make in advertising which leaves £27660. Already a major reduction.
The amount of money I need to find per week come to £1064 or £152 per day. From my discussions with Celebration Travel I found that average takings for the Model Village bus in 2000 came to £350 per day. Roughly 1/2 went to the Model Village for costs of the tickets which leaves £175 takings per day gross profit. This is already higher than the £152 needed.
The figure of £350 is just an average. The amount starts quite small in May / June before working its way up to a large sum. I often remember counting up at the end of the day and it coming to over £1000! That was just on a Sunday, however, it could get a lot busier on Monday and Tuesday.
Alas, there were very bad days. One day when it was raining cats and dogs we only had about 10 passengers and takings of less than £50. That did not even cover the Driver and 1/2 of the conductor's wages.
But before celebrate and assume that this is going to be a very profitable venture, we must look at some of the results from my questionnaires.
The questions which I asked 50 people in Torquay over the Easter holiday over two days are as follows:
* Would you be interested in using a tourist bus to go around Torquay selling discount tickets?
* What sort of places would you like a tourist bus to visit?
* Would you be interested in trips inland / to Dartmoor [may be impractical due to length, width, height and weight of bus (11.6 tonnes), 18cm ground clearance and a 58ft turning circle]
* For what attraction would you like to see discount tickets?
* Are you here on holiday?
* Would you be willing to use the bus simply for flat rate bussing?
* If holiday, in what sort of accommodation are you staying?
* If hotel, what area is the hotel in?
* If hotel, do you look at leaflets in your hotel's lobby / tourist information area?
* (if on holiday) Did you bring a car with you?
* (If yes) Would you be willing to travel on a novelty bus anyway? Perhaps for the children or something to remember.
* (If on holiday) Did you bring any children with you?
* How much would you be willing to pay for a day out at two or three local attractions (per person)?
The questionnaires gave some interesting results:
For the question 'What places would you like a tourist bus to visit?', I have already pretty much worked out what places people chose:
KEY
MV / By (Model Village / Bygones)
TC (Town centre)
Bel R (Belgrave Road area (hundreds of hotels in this area)
Quay (Quay West
Camp (Camp)
This really confirms what I first thought. Many people wish to visit the Model Village / Bygones, go shopping in the town centre, visit their hotels in the Belgrave Road area and go to the beaches. These are the main 6 options. Some people wanted to go to Dartmouth, Dartmoor, Exeter etc. Completely impractical and not sufficiently profitable. Thus, the route stands at what it was to start off with.
The next question 'Would you be interested in using a tourist bus to go around Torquay selling discount tickets?' provided a very high yes:
As you can see, it would be a very popular service with 88% saying yes. The majority of 'no' are probably car owners.
'Would you be interested in trips inland / to Dartmoor' was the next question. It proves to be an almost complete reversal of the previous result:
Clearly, people do not want to go waltzing all over Dartmoor. It would not be a serious option given the type of bus with which we are dealing. It is designed for the hustle and bustle of London, not the ragged central Devon moors. People would rather visit the seaside which is probably why many people came. A lot, if I remember correctly, cam from the north of England. There were many from Liverpool and Manchester who could probably just go to the Pennines or somewhere like that.
'For what attraction would you like to see discount tickets?' This provided a response which was pretty obvious: 'All of them' The response from everybody was 'As many as possible.' Thus, I shall contact the Model Village, Bygones, Cruise companies, Kent's Cavern and all manner of different attractions and get as many tickets (preferably discounted) as possible.
'Are you here on holiday?' was the next question.
The results (yes 48%, no 52%) are likely to change as we get to the height of the summer months. Torquay becomes infested with people on holiday. I predict it may change to as high as 65% or even higher for yes in August. Clearly, there will not be any shortage of customers.
I will, unfortunately have some competition. This will be in the form of Stagecoach buses. This will not be significant as well, why pay for fare and entry when you can just pay for entry? The Model Village bus only sells tickets to the Model Village, none of which are discounted and the Land train is just a slow sight seeing train. No real competition anywhere. I may have captured a market which ha yet to be tapped to the full extent possible I this area.
'If a local and without car (24% locals had no car) Would you be willing to use the bus simply for flat rate bussing?'
The answer to this was yes. The flat rate service would be 75p anywhere on the route, anytime. It will also be issued for tourists who wish simply to go to beaches etc. and do not wish to buy any tickets.
The question of accommodation was next.
KEY
H - Hotel (e.g. Fawlty Towers
CP - Camp (e.g. Pontins)
CN - Caravan (e.g. Dawlish Caravan Park)
F - Friends (e.g. Windsor road)
O - Other (e.g. on a bench, Cary Park)
As you can clearly see, the majority of people on holiday are staying in hotels. Thus, it is clear that the best place to deposit my leaflets will be hotels as I had originally thought. I think I may also deposit a few in some cap sites.
The next question was where the hotels in which these people are staying are actually situated.
KEY
BR - Belgrave road
BB - Babbacombe
MF - Meadfoot
O - Other
This question was designed to give me an idea of where I should do my early morning run-arounds. These would pick people up and take them across the town. As you can see from this, 72% are already on my route. Thus, altering it is not really necessary. I now know where to deposit my leaflets for maximum effect.
I now need to know whether or nor people will actually look at my leaflets. Thus, my next question is (if in hotel) 'Do you look at the leaflets in tourist information areas / lobbies in your hotel and / or go to the advertised places? If they exist that is. If they do not, would you look at them if they did?'
This question should give an idea of whether or not my leaflets will actually be seen by anybody. This will not really matter as the costs involved will be covered by advertising. I thought that the 'Yes' answer would be high as many people on holiday would not know where they were going and would look to leaflets et cetera for advice / guidance.
As you can see a large majority of people in hotels look at the leaflets on display. Thus, a leaflet based advertising strategy would be very useful and have a wide audience. In fact according to my calculations, looking at several of the results so far, nearly 30% of all people on the strand at the height of the summer season may well have seen my leaflets. A very good advertising strategy indeed.
How much would you be willing to pay for a day out visiting two or three local attractions? (maximum that is) was my next question. This would help m work out how much the people on my bus would be willing to pay per person to visit a couple of attractions e.g. Kent's Cavern and Bygones. The numbers ranged from £2.00 to £30. The average seems to be £10.78.
This helps me know how much I can get away with charging people. I can now work out how much revenue I would get.
Next are the foot counts.
I performed the first one by standing on the pavement in front of the Royal Bank of Scotland, the Stand, Torquay and I counted the number of people who walked past between me and the pavement. I repeated this at Meadfoot and Torre Abbey Sands. I predict the numbers to be a lot higher, particularly on the last two, during August.
I now know that, as 88% of people would be willing to use the bus, I could have a total number of possible customers numbering over 3000 per hour. This, of course, is ridiculous. There are many flaws in my results and I shall discuss these in the evaluation.
Above, I have presented all of the information gathered from my questionnaires which I deem to be useful.
I now have to decide how I will run in the Winter. As I have already explained, a 69 seater will not be used in the middle of December at full capacity. Nowhere near it. So the only way is through private hire. From my sources in CBW (Coach and Bus Weekly) I have decided how much to charge people to hire the bus. I have added on £100 per day as there is the conductor to think about. There is a flat rate amount of driving time and number of miles. It will cost extra per mile if someone exceeds the prearranged amount.
O/night - over night is the incidental costs incurred by both crew when accommodation is provided.
O/night no ac - over night where no accommodation is included. This may increase should the cost of accommodation be high in that area (e.g. London)
No accommodation is provided in the last two columns for the short three type of hire as the driver is unlikely to be doing just 50 miles a day on period hire.
Going on my interview with Celebration travel and other sources, I predict roughly 3 X 300 mile hires, ad the same number of each other (three per month). That should give £7011 in revenue.
£1290 will be spent on staff
Insurance, taxes etc, will be paid for out of Summer money
£2587.5 will be spent on petrol.
All costs incurred during the trips (food, lodgings) will be met by the hirer.
That will leave roughly £313.35 in gross profit. This will probably meet all other costs like tax which have already been budgeted for in the summer's requirements. Already the amount of money we need to find has shrunk to £24626.5.
So, will it work in the summer?
Running hourly, as I believe I shall, I can pick up about 69 customers at a time. Of course some will get off and some will get on. So I will say that I can sell tickets costing £10 in total to 30 people per hour. I know from experience that in the height of the summer last year there were up to 70 people waiting at the Model Village sign on the strand. The sum 30 is just an average over the 6 months. We will get more than that during the height of the summer and less than that as the summer starts and trails off.
We will run from April to September 6 days a week, from 10am to 4pm with. If we get 30 people paying £10 and 40 paying 75p per hour for that time then the total revenue will come to £51,480. (I will be able to buy tickets for 1/2 of their selling price. Thus gross profit is £25740). That, minus the costs of £24626 that we have yet to find comes to £1114.
The ownership will be that of a sole trader. I will have the benefit of the final say in the running of the business. I do not believe that there is even the slightest chance of the business failing in the near future. I will also get the grants first before applying for the loan. Then, if the business fails, the loan will be secured against the bus. The loan may, actually, be unnecessary as there is enough money to buy the bus. But, as I said, I would like to have a month's emergency funds and money for doing up the bus in case of unforeseen circumstances. For example, the bus could break down for a couple of weeks. If there was no money to pay for fixing it (applying for a loan then would mean even more time off the road), then I would have to get a loan to cover fixing costs as well as those of the bills coming in (business and personal).
I have also worked out the costs for tax, operators' licences, insurances etc, which have been calculated over the year or 6 months. I will have to pay for them in advance, however. This will be as a lump sum or a deposit in many cases. One more point to make is for advertising. We would make £8840 in advertising over 6 months. Over the other 6 months, however, I will not advertise at all. The bus will just be plain red. It would be too much hassle and I doubt that many people would be willing to advertise for just a few outings.
So, in conclusion I will have to say that the business would be very successful for a business in its 1st year. I predict that profits for the 1st year will come to £1114. This would make us just breaking even. In the 2nd year we may have to expand to stay alive / solvent. This may come in the form of a 2nd bus in the 2nd year. This may well be similar to Stagecoach buses which could be used throughout the year as a simple service buses. Or, I could buy a 2nd hand coach and branch off into holidays around the country. I would definitely pay off the National Westminster bank loan as soon as possible although I may incur charges / penalties but these would not be as great as if I had chosen to continue with the loan until the end of the term.
I must say that this project proved to be both interesting and informative. Well, I suppose I must say that about all of business studies really. I found out a lot about financing businesses, how the tourism trade operates, how unhelpful some bus companies can be as well as ho helpful others can be (especially when they think that they'll make a few bucks out of it). I was also surprised at the colossal amount of support offered to small businesses by National Westminster bank.
There are holes in my project, however.
* I really should have asked more people the questions. The small sum of 50 is simply insufficient;
* I should have asked more detailed questions in the questionnaires;
* I should also have asked more people about grants;
* I should have done more research into sources of other finance;
* I should also have investigated the possibility of setting up a 2nd bus at the same time;
* Or, I could do a second project (n) into how our firm X could expand. This could be set in a 2nd or 3rd year of my company.
Bibliography / Sources of information
* The London Bus Company
* National Westminster bank
* Celebration Travel
* Brighton and Hove bus company
* Wallace Arnold
* Coach and Bus Weekly
* Coach buyer
* Auto weekly
* 50 tourists / local residents
* The Princes Trust
* The Government small business grants bureau
* Lloyds TSB
* Stagecoach group plc
* Harlequin southwest
* Babbacombe Model Village
* Bygones
* Kent's Cavern
* Post Office
* Partington & Print
* Print associates
* Prontaprint
* Quickprint
* Small business specialists
* Toptown printers
Appendices
. London Bus Company brochure
2. Letter from Brighton & Hove bus company
3. National Westminster bank information
4. Pricelists from Harlequin Copying
5. Possible design for leaflets to be distributed to hotels
6. Letter from Stagecoach group plc 19/01/01
7. Information leaflet from Brighton & Hove bus company
8. Picture of London Routemaster bus with postcard of Leyland LGOC type B bus (as used by the model village)
9. Postcard of Torquay sea front.
£4 per hour usually but will go up to £4.10 in accordance with new minimum wage in October 2001.
2 Will stay at exactly 20% more than conductor's
William Payling 10R
Business Studies coursework
