Assignment to set up a new retail business in my area. I already know that similar shops already exist and that I will have competition. I hope that my business will be successful and that there will be room in the market for my new shop.
Introduction 1.0
I have been set a business studies assignment to set up a new retail business in my area. I already know that similar shops already exist and that I will have competition. I hope that my business will be successful and that there will be room in the market for my new shop.
My new retail business is going to be a sports equipment shop. It will only stock sports equipment like cricket bats and hockey sticks. It will no have things such as sports apparel and other clothes. The new shop will be located in the middle of a town (Ramsgate) and be open all year round.
I got my sources of knowledge from producing questionnaires. I gave the questionnaires to a cross section of society. I gathered all the questionnaires and compiled the results to produces different tables and graphs. The Internet helped me in finding out where different competitors were and what there prices are. Also it helped me to find what a suitable location would be to set up the new business. My Business Studies GCSE 2nd edition textbook, by Alain Anderton, helped me to find out different information like constraints on the market etc.
I think that one constraint I will occur on my business is that the cost of house prices may go up so buying or renting a shop may be more expensive than at first I had imagined. The only problem i have occurred is that my business will have to be confined to Thanet.
Location
My new business retail will be located in Ramsgate High street.
I have decide to set up my business in Ramsgate because it is a well populated area and often visited from people who travel far and wide.
Business Aims 2.0
One important aim for my business will be to survive. To survive, my business has to at least break even over time. This means that it makes neither a profit nor a loss. If it continually makes a loss, it will most certainly go out of business. (Survival in the short term and profit in the long term.
My business objective will be to achieve the aim which i have set for my business.
Business Management 3.0
I think that my business should be a sole trader business. This means that it is only run by a single person (me) who has unlimited liability. Being a sole owner has many more advantages than disadvantages. The advantages of a sole ownership are: It is easy to set up and also it is easy to run. Tax advantages, a sole trader is taxed in a different way to other types of business. Control, the owner is in sole charge and so can make whatever changes are necessary as the business operates over time. Capital, a business nearly always needs some capital to start trading. Profits, all the profits of the business are kept by the sole trader. They don't have to be split up amongst several or perhaps even millions of other owners or shareholders. This means that there is a link between effort, success and money earned. The harder the sole trader works and the more successful the business the more can be earned. Privacy, only the inland revenue and customers and excise need to know how well a sole trader is doing financially. The business doesn't have to publish any information, which could be seen by the general public or other businesses. Labour relations, the larger a work organisation, the bigger the scope for misunderstanding and problems. Many sole traders work on their own. However sometimes business work in small teams so the relations between the workers and the employer are likely to be good. Flexibility, many sole traders have some choice about when they work. The disadvantages are: Unlimited liability, this is a legal obligation on the owners of a business to settle (pay off) all debts of the business. In law, there is no distinction between the assets and debts of the business and the personal assets and debts of the owner. Lack of continuity, there is no guarantee that the business will survive when the owner wants to stop running it. They might be able to sell it to someone else. They might pass the business along down the family. However the business could simply stop trading and all its assets. Illness, if the owner were to have a long illness, then they might be forced to shut the business. The income and profits would then stop. Long hours, many sole traders work very long hours to keep their business afloat. People may decide to work different days of the week to keep business going e.g. open on Sundays. Difficulty of raising capital, some people have the money already to start up a business. They might have some redundancy money, for instance. Most small businesses, though, find it difficult to get suitable start up capital. They also find it difficult to get money to expand their business. Limited specialisation, one person being many things like a lorry driver, a building labourer, an accountant, a receptionist and a secretary amongst other jobs. A larger business however could afford to buy in specialist workers. A supermarket employs shelf stackers, accountants and lawyers so some sole traders may find that the costs are higher than those of a larger business because they can't gain the advantages of the division of labour. Limited economies of scale. Say the sole trader hires out lorries by the day. A large construction company would own its lorries because this is cheaper if they are kept in use all the time. But the sole trader may only need lorries some of the time. This is an example of economies of scale. In general the larger the business the more scope there is to reduce costs per unit produced. Sole traders are nearly always small businesses. So they often don't have the cost advantages that large businesses enjoy because of large-scale production.
Media Advertising
Businesses like orange advertise through the media. This includes:
- Television, radio and cinema.
- Magazines
- National and local newspaper
- Trade newspapers and journals- these are specialist publications aimed at businesses or workers in a particular industry
- Posters and transport- such as billboards on the side of the road and advertisements on buses or vans
- Directories- including Yellow Pages, although orange does not use this medium.
I am going to use Orange mobile phone company as an example in this section.
Orange wants to reach a large number of consumers and it has a large advertising budget. It can afford to advertise on television - an expensive medium. But it also uses magazines, newspapers and billboards. Its advertising slogan, "The future's bright, the future's Orange", is designed to encourage consumers to want to use a mobile phone, a technology still of the future for most people. But it also implies that Orange, rather than any of the rival networks like Cellnet or ...
This is a preview of the whole essay
I am going to use Orange mobile phone company as an example in this section.
Orange wants to reach a large number of consumers and it has a large advertising budget. It can afford to advertise on television - an expensive medium. But it also uses magazines, newspapers and billboards. Its advertising slogan, "The future's bright, the future's Orange", is designed to encourage consumers to want to use a mobile phone, a technology still of the future for most people. But it also implies that Orange, rather than any of the rival networks like Cellnet or Vodafone, is the network of the future.
If Orange wanted to recruit an accountant, however, it would be very wasteful to use television. The style of the advertisement would also be different from one selling a phone. It could use a jobs section in a quality newspaper like the Financial Tomes or The Sunday Times. Alternatively, it could advertise in a more specialist trade journal like Accountancy Age, a small business wouldn't be able to afford television or a national newspaper. It would want to focus its advertising, using media which was affordable and which reached its target customers.
Businesses in Thanet are very different to those in Canterbury. Canterbury is a city whereas Thanet is a district. Canterbury attracts thousands of tourists each year to its old medieval city and Cathedral. Thanet also has its fair share of tourists but no where near as much as Canterbury. Canterbury is overall a more expensive area with its average house price of £128,912 where Thanet's average house price is £92,812.
My new retail shop is going to be only sports equipment not designer clothes etc. E.g. Slazenger cricket bats and Wilson tennis rackets NOT Adidas tracksuit bottoms or Nike winter coats. There is no other shops in the area which specify in just sporting equipment. There are a few shops in the high street like First Sport and Warreners who have very limited sporting equipment but specify more in designer clothes e.g. Adidas tracksuit bottoms. I feel that I will have no competition in the area as there is nothing like my business retail anywhere else. My business retail will have sporting equipment for both men and women and also for children.
As my business will be located in Ramsgate I will have to think about the different pricing policies. This is because Ramsgate (in Thanet) is a generally poorer place than Canterbury so I will have to think about lower prices for my products.
Although Sports Mania is in Canterbury it still has low prices on its products. Sports Mania's aim is to sell more products for a cheaper price than selling and average amount of products for a more expensive price. This is the method that I plan to use.
E.g.
My Shop (My Method) A Different shop (Different Method)
No. of products sold. Price of product. No. of products sold. Price of product
6 £5 3 £10
5 £6 2 £15
8 £6 6 £8
Total £108 £108
Both methods will end up with the same amount of profit but I believe my method is more appealing to the people in the area in which my shop will be.
Although Ramsgate, (Thanet) is not an overly populated place I think that in time there will be more retail businesses like mine being built thus causing more business and trade to come to Thanet.
Research Objectives and Methodology 4.0
All the research in my project has come form a questionnaire which I handed out to the general public to fill out (Sample questionnaire included). I have been in many internet web sites searching for the relevant information for my business. Such web sites are search engines like www.google.co.uk or actual web sites like www.yell.com or www.miles-barr.co.uk, www.estateangels.co.uk, www.parklandestates.co.uk, www.mandmsports.com, www.blitzsport.com, www.fogdog.com.
I chose to use the internet for much or my research because it is fast and easy to use. I have been searching different estate agents in order to find the perfect situation for my business. I have been on many sporting equipment web sites in order to find the prices of various sporting goods.
The GCSE Business Studies second edition by Alain Anderton has helped me much in my research for my project. I have used nearly all the pages in the text book in one way or another to help me with my research. I have been using the text book because it has everything that I need to know about the business side of my new retail shop.
5.0 Results
Here is a list of all the different sporting shops in Ramsgate:
Bad Boy Sports Ltd
22, York St Thanet
Ramsgate Kent
CT11 9DS
Tel: 01843 852662
PNS Sport & Leisure
28, King St
Ramsgate Kent
CT11 8NT
Tel: 01843 850888
First Sport
8, High St
Ramsgate Kent
CT11 9AB
Tel: 01843 584448
Warreners Sport & Leisure
36, King St
Ramsgate Kent
CT11 8NT
Tel: 01843 593128
Sportique
72, High St
Ramsgate Kent
CT11 9RS
Tel: 01843 570707
I have chose not to rent my new retail shop but to buy the shop, that way if the shop ever goes out of business I can sell it for a more profitable sum. The shop I wish to buy is number 10 High Street Ramsgate. It will cost £95,000 to buy the shop and an additional £200,000 to stock the shop to insure the goods and to pay a years wages, electricity and heating.
Here are a few prices of different equipment that I will stock in the shop.
Universal 18 speed cycle
£99.99
Browning rescue wood £29.99
Body Sculpture DUMBELLS
£6.99
Body Sculpture ELLIPTICAL STRIDER
£139.99
Browning BADMINTON RACKET
£14.99
BCE CUE & CASE SET
£24.99
6.0 Analysis of Results
From the questionnaire that I have produced I can tell that men are a lot more interested in a sporting shop than women. From the questionnaire it is clear to see that I asked a younger group of people.
The questionnaire has helped me to see what types of sport people are interested in and how much they usually spend on products, how often they visit shops and what the best way of advertising would be.
Although my research suggests that the best method for advertising would be leaflets I have chosen to advertise on the radio. I have chosen to advertise on the radio, as a wider range of people will most probably be listening. I have mainly chose to advertise on the radio and not by leaflets because I am able to get half and hour free advertising time a day on Invicta FM. I am able to get the advertising time, as my Father is the chief executive of Invicta. Also my research shows that people want the shop open on Bank Holidays and Sundays, but extra research shows that less people go shopping on Bank Holidays and Sundays so it would be waste of time and more importantly money to open on these special days.
My business will provide a job increase to the area and also a boom to the area and to other businesses. I will provide a financial increase across the board. Unfortunately like every business I will be effecting the environment. My business will not be a factory in which noise and smoke will be released but there will be packaging from products, which may have an effect on the environment. I will try to minimise the pollution by recycling all the packaging that I receive. As my business is just a sports equipment shop it should influence clubs and teams to buy from the shop, which in turn may influence more people to join the clubs. This will make the area overall a more healthier area and also things such as crime may be reduced. I think my business may have a small affect on other businesses because
7.0 Business Plan
JC's Equipment Store
0 High Street Ramsgate
Kent
CT12 8PJ
England
01843 843193
In this section I must state a concept theory to address a problem of my business.
Product
Developing and designing a product that satisfies customers' needs and wants and producing the right amount and to the right quality specifications.
Price
Getting the price right so that the product is affordable to customers, but also allows the business to make a profit.
Promotion
Making sure that the customer knows about the product through promotion. Advertising on TV and radio is always a good way of promoting a product.
Place
Ensuring that the product is on sale in places convenient for the customer to buy it. It is important that a business is situated on a high street as they are likely to sell more goods than if the shop was in a back ally.
The 4P's will not affect by business in any way as I hope to stock a huge range of products for anyone and everyone. As I have said before the price of my goods will be low in order for me to sell more. I am going to advertise on one of the most quality forms of advertising, which is the Radio. My business will be located in the middle of the high street so there will be no problems with where the shop is.
Break Even Account
Key Terms-
Break-even:- Where revenues equal costs.
Break-even Chart:- A graph which shows total costs and total revenues and the break-even point where total revenue equals total cost.
Budget:- A forecast of income and expenditure over a period of time, like a week or a year.
Margin of Safety:- The quantity sold above the break-even point where the business makes a profit.
Budgeting
A budget is a forecast of what might happen. Claire Peakman's budget is £100. She gets £50 from her parents and £50 from her job. She plans on spending her money on clothes, food and going out. She hopes to save £10 each month. In a budget you have to work out what you will spend your money on and how much you have to spend.
Uncertainty
In this section I have used Claire Peakman and Peakman Lighting as an example. I got the information from the GCSE Business Studies textbook.
Table 24.1 Claire Peakman's Monthly Budget.
Income (£)
Spending (£)
Allowance
50
Clothes
45
Job
50
Food
0
Going out
35
Saving
0
00
00
Table 24.4 Break-even analysis for Peakman Lighting.
£ Per year
Sales
Total revenue
Total Fixed
Total variable
Total cost
Profit/Loss
(average price,
cost
cost
(fixed cost
(total
£15, x quantity
(£10 x quantity
plus variable
revenue
sold)
sold)
cost)
minus total cost)
2,000
30,000
20,000
20,000
40,000
0,000
*
3,000
45,000
20,000
30,000
50,000
5,000
*
4,000
60,000
20,000
40,000
60,000
0
5,000
75,000
20,000
50,000
70,000
5,000
6,000
90,000
20,000
60,000
80,000
0,000
Losses are shown with a star *
Below, I have calculated a break even chart for JC's Equipment Store.
I got the information from the Internet and changed a few figures so that it would suit my business.
Balance sheets.
In this section I will be using a company called Beauford. They are a PLC company who make ceramic goods.
To operate as a business Beauford has to have assets. These are what the business owns, such as buildings, offices, machinery, stocks and cash. Without assets, a business could not produce anything. To buy these assets, a business will need to raise funds from different sources. For example Beauford might have borrowed money, or it might owe money to other businesses for materials that it has received but not yet paid for. Money owed to others is called the liabilities of a business.
The balance sheet is a record of the assets and liabilities of a business at a particular point in time. It must balance. The assets of the business what the business owns must equal its liabilities, what it owes. Included in what it owes are the monies owed to the owners of the business, such as profit.
By law a limited company has to produce a balance sheet for its shareholders. This shows its assets and liabilities on the last day of its accounting year. For Beauford this is 31 December each year. Companies can, though, choose any date on which to end their financial year. A company could, for instance, choose a financial year which runs from 1 February to the 31 January.
Fixed Assets.
The balance sheet starts with a record of the fixed assets of the business. These assets include land as well as buildings such as factories, offices and fixed plant. Fixed assets also include all the machinery and equipment owned by the business, such as machine tools, computers, furniture, cars and trucks. Not all assets are tangible. One example of an intangible asset is investments. These are investments in other companies.
Current Assets.
Current assets are the assets of the business which can easily be turned into cash or are cash, i.e. they are liquid assets of the business.
Stocks
Stocks are the raw materials and goods waiting to be processed and finished goods awaiting sale. Beauford, for instance, would carry stocks of clay and paints to make ceramic products. It would also carry stocks of finished goods such a logs waiting for delivery to the customer. Stocks at Beauford at the 31 December 1996 were valued at nearly £3.4million.
Debtors
Debtors are the people and businesses who owe the company money. In the business, it is usual to deliver goods to other businesses and give them a minimum of 30 days to pay. For most businesses including Beauford nearly all debtors are other businesses. Beauford was owed about £6.2million by its debtors on the 31 December 1996.
Cash
The most liquid asset is cash itself. Beauford had £71000 in cash held in the bank accounts at the 31 of December 1996.
A Balance sheet for my Business.
£
Fixed Assets
Tangible Assets 9,000
Investments 500
9,500
Current Assets
Stocks 75,000
Debtors 0
Cash at Bank 10,000
85,000
Current Liabilities
Creditors: amounts
Falling due within one year (20,000)
Net Current Assets 65,000
Total Assets Less Current
Liabilities 74,500
Long Term Liabilities
Creditors: amounts falling due
After more than one year. 0
Net Assets 74,500
Capital and Reserves
Retained profit and reserves. 2,000
Summary
Balance sheet- The part of a business' accounts where the assets and liabilities of the business are recorded.
Current Assets- Liquid assets of the business.
Fixed assets- What is owed by a business which it uses over a long period of time, such as buildings or machinery. Fixed assets include tangible and intangible assets.
The Profit And Loss Account
Profit and Loss account -
A Record of the revenues and costs of a business over a period such as six months or a year.
Appropriation account -
The part of the profit and loss account which shows what has happened to net profit.
Change in Stock -
Closing stock minus the opening stock.
Cost of Sales -
Costs of production such as raw materials costs, direct wage costs and changes in stock.
Depreciation -
The fall in value of fixed equipment and buildings over time as they wear out.
Gross Profit -
Sales turnover minus cost of sales.
Net Profit -
The profit made after all costs and revenues have been taken into account. It is gross profit plus non-sales revenue minus operating costs.
Trading account -
Part of the profit and loss account which shows sales turnover, costs of sales and changes in stocks.
Table 25.1 Profit and loss account for Coats Viyella, 1996*
£Million
Sales Turnover
2455.1
* Brackets around a number mean that it is a minus figure.
Costs of sales
-1739.7
** Profit on ordinary activities before taxation.
Gross Profit
715.4
Operating Costs
-603.8
Other
-17.2
Net profit **
94.4
Taxation
-34.1
Dividends
-72.9
Retained Profit
-12.6
Depreciation
There are different of calculating depreciation. One way called the reducing balance method, is simply to take off a percentage of the value of the value of any asset, like a machine.
Another method is called the straight line method. Say a machine was bought for £110,000 and would be sold for an estimated £10,000 in 5 years time. The business would therefore use up £1000,000 worth of the machine over 5 years. On this method, it would depreciate the car at a fixed £20,000 each year for 5 years.
Table 25.10 Profit and loss account J Simmons Joinery for
year ending 31 June.
994
995
996
997
£0
£0
£0
£0
Sales turnover
96
93
96
316
Less Cost of sales
00
19
06
75
Gross Profit
96
74
90
31
Less Operating expenses
Directors' wages
8
8
8
34
Equipment and
8
4
8
9
vehicle hire
Motor expenses
8
5
8
3
Other
42
37
35
47
Net Profit
0
1
1
8
Corporation tax.
0
0
0
3
Dividends
2
3
3
5
Retained profit
8
9
9
0
Business Plan
Business Plan - A plan for the development of a business giving forecasts of items such as sales, costs and cash flow.
Name- JC's Equipment Store
Address - 10 High Street Ramsgate
Kent
CT12 8PJ
England
Limited Company/Partnership/Sole Trader - Sole Trader
What Does Your Business Do? - Sells sporting equipment like hockey sticks and baseball bats. To the general public through a retail store.
Date You Started Trading - Spring 2003
(date you will start if you have a new business)
Aims - To sell sporting goods to a cross section of society at a low price but still make profit.
Staff- 2 members of staff working round a typical 40 hour week.
For my business I will have more than one main dealer. I will have supplies from companies like Slazenger, Adidas, Gray Nichols, Browning and many others.
As I will be buying my stock in bulk it should in theory be cheaper, so I will not have to put my prices right up like some sporting shops do. My prices will be low and hopefully customer interest high.
My business is situated well and targets all types of customers also my advertising is good.
Through research on the internet I have found out that the average cost of rent in my area is £750 a month, but this does not affect me as I am buying the shop and not renting it.
I have searched the Internet and found a site called checkmyfile.com. My average spend on gas works out to be £100 a month and £150 on electricity but checkmyfile.com can save me £10 on gas a month and £30 on electricity. So I have decided to go with this company when choosing my gas and electricity.
I have chosen to employ young staff as I can pay them less and also I will be able to train them in the way in which I want them to work. I will be paying them the minimum wage of £3.60 and hour (18 - 21Yrs Old). They will have a set amount of hours a week of 30 but they may have to do more hours if I call them in maybe if I think it is going to be busy.
Minimum Wage
(1) A person who qualifies for the national minimum wage shall be remunerated by his employer in respect of his work in any pay reference period at a rate which is not less than the national minimum wage.
(2) A person qualifies for the national minimum wage if he is an individual who-
(a) is a worker;
(b) is working, or ordinarily works, in the United Kingdom under his contract; and
(c) has ceased to be of compulsory school age.
(3) The national minimum wage shall be such single hourly rate as the Secretary of State may from time to time prescribe.
(4) For the purposes of this Act a "pay reference period" is such period as the Secretary of State may prescribe for the purpose.
Conclusion
This business studies coursework, which I was set over 2 months ago, has taken much time and effort to complete. I am nearing the end of the coursework and I am now going to conclude it.
The questionnaires, which I produced, were very helpful as the results helped me deciding different options to take. For example when is came to the part where I had to decide were to put my new shop/business I would not have known where to put it without the help of my results. Also my advertising results showed that I should advertise by leaflets. This would have been my main choice of advertising if I hadn't been offered space on the radio. The pricing of my products was down to research from the Internet and different sporting web-sites without these I would not know average prices of different products. Some of the results from my questionnaire were not all that helpful. One of the questions on the questionnaire asked the person to fill in how much they would pay for different products. The information they put in was very far fetched as the results varied from £10 for a pair of football boots to £300! Obviously some people may not know how much roughly a pair of football boots are worth.
This piece of coursework was to set up a new business retail shop
in my area. For this I had to go through numerous stages. I had to write an introduction, I had to make business aims, business management, I had to do research objectives and methodology, record the results, analyse the results, and write up a business plan.
I think that my new business will attract more people to the area which may help employment in the area, obviously there will be slightly more pollution with a new shop but I will help this as I have said before by recycling different materials and packaging etc.
Evaluation
A main outcome of my business that I think will be a good outcome is the situation of my business. I think it is the best place in which my business could be as it is in the middle of the high street. If I had have opened up a shop at the top of the high street I do not think that it would do as well if I had placed it in the middle. You can see this by looking at Ramsgate high street. Many of the shops at the top of the high street are closed down due to lack of business.
A down point to my project would be the financial side of things. Most of the financial parts like loans from the bank etc. I estimated. I think I could improve on this by actually going to a bank and asking for a real quote. This way it would have made my business studies project more accurate. I also could have improved my actually getting some pictures of the new shop and maybe designing some advertising slogans etc. I could have got the different floor plans of the shop. I also feel I could have investigated the electricity and heating to a bit more depth. I feel that my estimates on the heating and electricity bills may be to extreme or not extreme enough, this maybe because I do not know much about gas and electricity. Although I think my research on the internet was quite good.
Different facts and opinion in my project are, the questionnaire. The questionnaire would be opinion because the people who fill in the forms, would fill them in to what they think is the best or the worst. The cost of rent or in my case actually buying is fact. This is because there is only one set price and there are not many different prices like there would be if it were a questionnaire.
To improve my project a bit more I could have done some research about what Ramsgate was like 30 years ago and maybe what different shops were there before mine was. This would give some back ground information about the area and my shop.
If I had to do the project again I would probably change the way I did the profit and loss accounts and balance sheets etc. All the data that was put into these graphs and tables was estimated. I feel that I could have either may a more accurate estimate or even investigate further and get the actual results.
John Chapman
0 Thomas'
Business Studies Coursework
