Report on setting up of a coach company
TO: [insert name]
FROM: [insert your name]
SUBJECT: Report on setting up of a coach company
I have been asked to produce a report for a friend in answer to his proposal to set up a company that organises coach tours to Europe.
To go about this assignment there first needs to be a course of action, a set plan on which to base the assignment around and follow.
Time
Intended Action
Resources Available
Problems/Adjustments made in the light of experience
6th October
Produce and send template e-mail to distribute to coach firms
Computer, internet, business studies text book
Not many small businesses on the internet
3th October
Evaluate and review responses obtained
Returned e-mails, business studies text book
Only 1 e-mail received from 10 distributed. 10% response.
6th October
Gather ideas and look for common factors
Returned e-mails and internet sites
Few received so went to a local bank for help and only general information on the internet
20th October
Use bank leaflets for extra reference
Leaflets on loans, starting businesses and common problems of new businesses
Not much specific detail for coach companies so had to relate to the subject.
29th October
Produce report
E-mail, leaflets, business studies text and exercise books, teachers.
None.
This is a copy of the email that was used to send to the coach companies:
Dear (persons name obtained from web-site)
I am a GCSE student and for my business studies coursework I have been set the task of setting up a theoretical coach company. Therefore I am writing to you to ask for help so as to complete my assignment to the best of my ability. I would like to ask for information about the following criteria.
. Any information about the maintenance of the coaches or what is essential to have on a coach when going abroad.
2. Information on safety aspects of the tours you offer
3. Information about the structure of your company
4. Your main methods of advertising
Any information on any of the points above would be most gratefully received and if it would be easier to send a leaflet or brochure your company has my address is:
32 Sunnyfield Gardens
Hockley
Essex
SS5 4SL
Many thanks,
Neil Christie of Westcliff High School for Boys
The only email received contained the following points.
* It is too complex to outline maintenance of our coaches, as there are too many factors involved.
* Please check our web site for our commitments to safety.
* The information about all our staff is confidential for safety reasons.
* We advertise mainly by using the coaches with logos and by word of mouth and a good reputation.
No other brochures were received.
For this reason and the lack of information obtained from the coach companies it made the task a little more difficult. Each web site was checked thoroughly but the detail was far too vague to gather any real conclusions and as a rule each site was very basic and contained little more than a contact number for booking. Therefore it was necessary to make a journey to a local bank that offered help in the way of advice for finance and problems that new businesses go through after starting up. The information was quite vague and expanded across to all new businesses that would be starting up so was not as precise as one would have liked. Therefore the business studies textbooks and exercise books had to be used more extensively than the reference material gathered.
The starting point for all business is that the first and most important aim is to survive. In the first year the vast majority of businesses run at a loss and it is only through financial support that they can continue and start to break even before thinking about profit maximisation. For Mrs. Lowes the first aim is to build up a strong reputation and base on which to build before thinking about increasing profits and expanding.
The main competitors will be companies offering the same kind of tours. As yet there is no local competition and as this business is first trying to appeal to those people locally that is a good thing. There may be some competition nationally from bigger businesses but as yet we are not in a position to compete with such companies. They should not affect sales as people would most likely prefer to come to a local company rather than use a large scale one that is situated a long distance away.
If Mrs. Lowes were to need ...
This is a preview of the whole essay
The main competitors will be companies offering the same kind of tours. As yet there is no local competition and as this business is first trying to appeal to those people locally that is a good thing. There may be some competition nationally from bigger businesses but as yet we are not in a position to compete with such companies. They should not affect sales as people would most likely prefer to come to a local company rather than use a large scale one that is situated a long distance away.
If Mrs. Lowes were to need a loan she would be best going for a loan that is enough to bring her business to a point where the main infrastructure of the business is paid for and one that offers a low interest rate. If the loan can be secured on the business that would also be better as she would then not lose any personal belongings if the business were to fail badly. However Mrs. Lowes is in the position of having enough money from an inheritance to set up the business and perhaps leave enough money for other causes. Staff will be family members as the business is a new venture for the family to, eventually and hopefully, expand into something larger. A loan may be needed when dealing with specific items such as maintaining coaches and purchasing them from new. In this case the best loan would be a long term one with a low rate of interest so that there is not too much to pay for the business whilst it is still establishing itself.
The business then needs a market to use. Those mainly interested in battles and trips are at either end of the age range. There will be the ex-soldiers, the elderly and those that wish to expand on their cultural knowledge and also those in schools and colleges that are studying the subject and wish to learn more from a first hand experience. There is therefore a market for the cause and it can be used to maximum advantage.
There are two main alternatives for Mrs. Lowes within the legal structure of the business. She could operate as either a sole trader or a partnership. She wishes to be a partnership with her brother so that they can both make decisions as the money from their inheritance belongs to both of them. A partnership is quite like a sole proprietorship in that it is easy to set up and no solicitors or accountants are needed to help run the business. The disadvantages are that one member may not work as hard and would prefer to do something else. As this is a family venture both would want to work hard to make it work and by being close relatives it would be easy for them to talk over any suggestions for the business. As being a partnership is what is wanted from them this has to be the option taken. To argue against being a limited company the main factor is that it wants to remain a family business and run on a good reputation and not worry about documentation that has to be done and try to produce as much profit as possible. They would also like to keep the business with them having the power to make decisions and not have a structure where there are managers and directors that would cost money to pay and may not fit in with their way of running things. This table shows the advantages and disadvantages for being a sole trader, partnership and private limited company (ltd).
Sole Trader
Partnership
LTD
Any documentation needed?
Only registration of the company
Deed of partnership
Memorandum of Association, Articles Association.
Initial capital invested?
Usually little, loan needed
More from partners, can have sleeping partners.
£2 to start up. Money needed from shareholders.
Liability
Unlimited
Unlimited
Limited
Tax considerations?
Reduced National insurance etc
Reduced in some areas
None
Many staff needed?
Very little
Usually specialised staff
Owners, managers, a main structure to the company
Control over company?
00%
Shared with partners, perhaps disagreements.
Usually run by owners and shareholders.
Main problems
Long hours, limited specialisation, lack of continuity
Disagreements between partners
Lack of control over issues, no open market for transfer of shares.
By recruiting good staff that are friendly and have valid qualifications for going on European tours Mrs. Lowes hopes that her reputation would never come under any doubt. She also wishes to try and keep employers happy and content for working in what they believe in and not for money or for the sake of work. She also wishes to have the final say and keep the business running as she and her partner wish it to be run.
For the location of the business it is thought that their house can be used for a main office. This way there is no need to buy other properties, as the main aim of their office is to handle booking forms, advertising and giving help to customers. They can distribute leaflets to people with information about the tours and if needed could use an agent to distribute their leaflets. The main problem of location is to decide on where to keep the coaches that they wish to buy. They have to be kept under some sort of cover is they want to use their own coaches. If they choose to use other coaches from a different company then they will have to rely on that company for being organised and efficient enough as to not let them down. If they decide to buy a building as an office and operate as an agent using the coach companies for their tours then they will have to look into buying a property that will be in a suitable location. Also if any problems arise they will have to take the blame and not the coach companies, as it is their tour. It would be better to buy the coaches and keep them in a warehouse on an industrial estate. Perhaps then an office can be built within the premises so that all things can be handled from the same place. That would improve efficiency and relieve any worries about the reliability of the coaches. Also it would then be possible to advertise on the coaches, as they would be theirs and not belong to another company. The best option would be to buy a suitable amount of coaches, keep them stored in a warehouse and use a section of that warehouse for an office so the company is based closer to a town and has all aspects for the company built around the office.
To buy the coaches each one has to be of a certain specification. There are safety aspects needed and also as the journeys will be quite long they have to be luxury coaches. Therefore the coaches have to fulfil criteria. As do the guides that have to be used. To ensure a friendly, informative tour they have to be quite knowledgeable in the field they are dealing with. When interviewing staff and buying coaches the following points have to be considered. The drivers also have to be fully qualified.
Guides
* Friendly, polite and have no past problems with employers
* Have enough knowledge about history and the areas they will cover
* Speak English as well as other languages to be able to organise the tour should there be any problems abroad
Drivers
* Fully qualified HGV license
* Be familiar with driving in Europe
Coaches
* Fully air conditioned
* Seatbelts for every sitting passenger
* Fully insured
* Toilets
* Perhaps a drinks machine
This information, although quite obvious, has to be used because tours in all categories have to be able to provide the basics because one without the other means the tour will be remembered for the wrong reason. For example, a great guide and driver with a coach that has no air conditioning will suffer because people will be more concerned about being hot and bothered than listening to the guide or realising the quality of the driver.
The reason above gives yet another example as to why the coaches should be bought. If the coach company has not got a coach available to the correct standard they may try and send one without certain features but if the company has advertised these features already they will be liable to blame and the coach company would have caused problems for the company.
The company name and logo have been designed to give a subtle but professional look to the company. As it is mainly a war tour company, Battle-Ax gives a kind of impression that there is some conflict and is good enough to appeal to youths as well as not be dramatic to put off the elderly. It is quite catchy and has enough of an effect to be remembered so can be passed about through word of mouth.
If the company is a success, and there is no reason why it should not be because there is very little local competition and the ideas are good ones, then the areas that are being visited and also the museums will benefit from the extra tourism. Perhaps hotels would offer cheaper rates if the company made an agreement to use their services for each tour. This would further benefit the company and if the hotels being used were more favourable it would help to enhance the reputation of the company.
However if there was a problem with the economy and a recession occurred the company would suffer. These tours, although worthwhile, are not a necessity and so people would not want to go on them. However it may be of a benefit in some cases because instead of expensive foreign holidays people may choose to go on tours instead. This may be of a benefit, as people going abroad would like to stay abroad where it would be cheaper to stay. Perhaps lengthening the tours would have an increase in the amount of people that were interested as opposed to going away on expensive holidays.
To summarise these are the main points for the business to consider:
* A partnership would give better opportunity and suits them best, as it is to be a family business. It will mean more income and the family have complete control over the business.
* The coaches should be bought for the tours. This will mean no relying on coach companies which may be unreliable for providing the correct coach or providing it on time.
* The location of the business would be better in an industrial estate where the coaches can be kept, along with the office so that the company base is altogether and not spread far apart.
* Advertising should be done with leaflets and brochures to be given to travel agents to offer to customers interested in coach tours. This is the cheapest option and will be available to those who want a specific tour. There should also be notices given to local schools and elderly residential areas through councils that will give notice of the tours and the benefits of them for the two sets of groups.
* Income will at first be primarily for the location of the business and then for hiring staff. The remainder of the money could then be banked and used to pay off the loans that will be taken out for the coaches to be bought.
* Staff being hired should have strict qualifications and be put through a tough interview to equip the business with able staff that will not let the company down.
* Links should be made with places abroad offering accommodation so that it may be able to get this at a cheaper rate with group and loyalty discounts.
* Everything possible should be done to keep the customers happy and reassured to build a good local reputation with customers and then perhaps the press to gather better advertising.
* The tours themselves should be to famous places for maximum interest. Battlefields at Ypres and the Somme and also war museums in France would be excellent candidates.
* There should be an incentive to want to make people go on another one of the tours. A discount for travelling on numerous tours would be a good idea.
Price information
Rough guides for prices can be given for locating the business and purchasing the raw materials of the business and boundaries for running costs can be stated.
Rental of a large building in an industrial estate per month- £20, 000
Purchasing costs for a new luxury coach- £200, 000
Operating costs for the business (gas, electricity, water, petrol, salaries for drivers and guides, maintenance of coaches, accommodation abroad)- £20, 000 monthly
Predicted income per fortnightly tour (averaged out for the early stages)- £4, 000
To cover operating costs and rental of the building the inheritance sum was a total of £876, 000. This could be banked and the interest could be used to pay off the loan for buying the coaches. It could also be used to maintain regular payments to hotels abroad.
The leaflet
The leaflet in itself is well laid out and contains the vital information needed to promote the tour. It gives information about the tour, the main aspects of the tour and stresses important features of the company in stating that the guides and drivers are fully qualified and the coaches up to a luxury standard. The cost of the tour is presented and booking for the tour is easy to do through the booking form that is aimed primarily at family bookings. Group bookings would be easier done by telephone to make it more convenient. It has a professional layout, quite eye catching and would have a chance of being recognised. The company name and logo is advertised well without being plastered all over the leaflet and taking up space. The double sided A4 leaflet layout was preferred to the traditional book-style leaflet because the front page is well presented, colourful and informative and a lot of information can be given in paragraphs rather than leaving it up to numerous bullet point style sentences over the leaflet. This is less informative and when dealing with a tour company as much information as possible has to be given to the customer as to make sure they know exactly what they are getting for their money.
The leaflet should be distributed in specialist places-museums in the country or perhaps specialised organisations such as the Regimental Associations. They should also be distributed to tour operators dealing in European tours and made available for the local councils to give to schools, old peoples' homes and elderly peoples' estates. When compared with other methods of advertising it is the best because it gives the choice of location. Television advertisements, posters, billboards etc are far too expensive and/or do not appeal to the age range and categories that would be interested in such a tour. The leaflet has to be available to those that are interested in such things. Therefore it has to be able to be mass produced and distributed easily. A leaflet is the ideal choice to satisfy these criteria.
Neil Christie 11N Business Studies Report
