Extra Expenses 12,000 Promotion/Bonuses 8,000
£134,712
Net Profit
£154,902
Evaluation of my Business Plan
SWOT Analysis
Strengths
- The business proposal is practical and will make a good profit if it was to be produced. This is good as it shows that my research was effective and I was able to find a gap in the market that my business could fill in Muswell Hill.
- The business with being focused on certain aims (good customer service, wide variety of products, experienced staff etc) was easy to develop around these points and special detail was given to ensure that they beat any other competition in surrounding area’s.
- The business is unique in the fact that is it based around the needs of our target audience, we will also have a qualified sports trainer to guide our customers to the right sports products and equipment, we see this as a unique selling point.
- With it being sports products I am selling, I am able to have a large mark up price, as sports equipment can be bought cheaply in large batches from the wholesaler.
- There is a low amount of competition locally.
- Good range of products.
- Products will range in price to meet all of our target audience.
- The sports and leisure industry is on the increase, the locals of Muswell Hill are into their leisure since there are 4 gyms all within walking distance, however there is no sport shop, so I feel I would be filling a gap in the market as I would stock items of clothing and equipment for the gym.
- Sports brands have developed a common, recognisable `language of style' among young people around the world.
- Some items of sportswear seem to have become permanent fixtures in the typical consumer wardrobe.
- Sport generally appeals to a health-conscious public, and the media keep awareness of sports and sports brands very high through broadcasting, advertising and sponsorship.
- Sportswear manufacturers have established a globalised structure that lets them take advantage of favourable trends in growth markets around the world.
- Following sports, such as football, has become a global preoccupation.
- Many individual sports are popular worldwide, allowing manufacturing companies to operate on a global level and develop exports.
- Demand from affluent consumers for keeping fit and healthy is strong and continues to grow, giving an underlying solidity to sports goods manufacturing.
Weaknesses
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Because we are a new unknown store, we will have to start off with a weak brand name and a unfamiliar reputation among our customers, this may mean our projected income is not 100% accurate as sales might not start off high to begin with, it could take some time to increase our brand recognition and reputation with our target group, to try to counteract this we will invest some money into a promotional campaign before our opening.
- Although I am able to put a high mark up price, I feel I could still purchase the product for cheaper if I ordered it in bigger bulk, however I don’t want to over estimate the value of the business and order to much stock which would result in making large losses, furthermore with sports products there are always new products coming out on a monthly to yearly basis, such as new football kits and trainers, so I don’t want to have excess stock, it has to be balanced.
- A lack of experience may effect the progression of the business and wrong decisions are likely to be made during the first year, however it is an industry where you learn quick, it is just important to learn from your mistakes, to over this in depth research has been carried out, I customers.
- Although there is no direct competition, the sport shops in local area’s are often highly funded chain stores, with a large reputation.
- For the large, prominent fashion brands, their very fashionable status is itself a weakness, leaving them vulnerable to basic fashion changes.
- For the technical, performance brands, extreme fragmentation across sports, and the products needed within each sport, make it difficult to achieve either economies of scale or industrial synergies.
- Retailing has become too obsessed with fashion, reducing stock ranges and the quality of service in many sports stores.
- Globalisation means that UK companies are vulnerable to new entrants from foreign markets. also have a good knowledge of the sports industry and the needs of my
Opportunities
- The sport and leisure industry is on an increase with more and more people looking after their health, and the area of Muswell Hill is no different, there is also no current competition with the closest sport store over a mile away.
- For the mean time I plan to order stock manually, however depending on how busy the company is there are certain items of technology which I could use to do it automatically, which would save time.
- There are several local schools and gyms, I would try to create a partnership with them in order to provide them with their PE kit and sporting agreement, this would generate a regular amount of high income, and would be brilliant to boost our reputation and awareness to our target audience.
- After a few months ill be able to assess our sales, to see if I need to order larger quantities of stock, if I find out we do, that will result in us being able to purchase the stock in mass quantities for a cheaper price.
- Having got to know their customers well, both manufacturers and retailers have the option of adapting to any new trends and `looks', even if it means diversifying from conventional sports production.
- Fashion is a powerful factor for those sports coming into fashion, providing opportunities for fast-moving companies.
- The high street's obsession with sporty fashion is creating opportunities for specialists to distribute performance products through other channels, such as the Internet.
- The current phase of consolidation means that there are opportunities for stronger firms to acquire factory capacity or retail properties at a relatively low cost.
Threats
- There are no sport shops in Muswell Hill or even within walking distance, however those in surrounding area’s tend to well known retail stores such as JJB, Footlocker and Sports World, these stores have a wide variety of products as well as having a large reputation. Locals of Muswell Hill will often travel to the stores by a car or public transport, but our aim is for our store to fill the hole in the market, meaning they shop with us rather than the retail stores.
- Another issue will be our first year, frequently the hardest year for new businesses. With little experience it will be hard to establish a name for ourselves. However with a effective advertising campaign, which appeals to our target audience, I believe that we should be able to establish the business and attract the crowds of Muswell Hill, it will be important to create a good name for ourselves, as well as making sure all our customers are pleased with our service, therefore they’re more likely to recommend us to their friends and colleagues.
- In winter people may be less likely to go out in the cold weather and exercise, this could potentially lead to a drop in sales, however our stock will vary to the weather, so in the winter we will stock products suitable for the climate.
- The availability of low-cost sourcing in the Far East, and potentially in other regions, is a constant threat to manufacturers in the UK.
- The globalisation aspect (also a strength) means that the industry is vulnerable to new entrants from foreign markets.
- For performance specialists, sports are increasingly prone to come and go out of fashion rapidly in the media-driven climate.
- Non-sports related designer brands are increasing their advertising and high-street presence.
- Retailers face the possible threat of more vertical integration by manufacturers (e.g. Nike Town).
- In the event of a severe recession, there is a danger of a retail price war breaking out on sportswear, with too many stores competing for the same customers.
- PEST Factors
Political
CONSUMER PROTECTION ACT 1987
- Prohibits the supply of goods not in accordance with the general safety requirement or are unsafe.
- Provides for the safety and protection of consumers by enabling Regulations or orders to be made controlling consumer goods.
- Provides for approved safety standards to enable compliance with general safety requirements.
- Provides powers for seizing and forfeiture, and the powers to suspend the sale of suspected unsafe goods.
- Provisions as to the requirement for persons to publish notices warning of unsafe goods previously supplied.
- Provides for liability for damage caused by defective products.
- Prohibits misleading price indications.
OLYMPIC SYMBOL ETC (PROTECTION) ACT 1995
- Prevents unauthorised use of the Olympic Games symbols and similar labels.
Other issues
- Sale of fake products must be highlighted
- Prohibited from purchasing clothing from certain countries who encourage child labour or have a bad record with the human rights.
Economic
Economic stability is very important to any business as it allows you to maintain a regular pattern of trade. My store would be affected if there was a decrease or increase in inflation rates. If inflation rates grew by a lot it would mean that my costs would not only go up, but also that customers wouldn’t have as much disposable income to spend on leisure products.
The statistics show that people have a lot more money now than they did 50 year ago and that the price of leisure items has significantly reduced. These economic factors have caused more people to become interested in sports and leisure as it is a lot more affordable now than it once was.
Social
Since 1971 the amount spent on leisure has been spiralling upwards at a steady rate, so that by 2004 the figure spent on average per year had increased 6 times over. This is because people now have a far greater amount of disposable income, because wages are rising at a higher rate than costs. Sport plays a big part of many peoples social life, whether be it watching it on TV or actually playing it, therefore teams merchandise has been increasingly popular.
Furthermore residents of Muswell Hill have a high income, there’s has also been a high influx of gyms, which shows that sport and leisure plays a part for residents of Muswell Hill, there are also several parks locally which are usually packed full over the weekend, with regular football and cricket matches, creating a partnership with these teams and local schools to provide them with their kits and equipment could also provide profitable.
Leisure now has the 2nd highest weekly expenditure per household in the UK, just behind transport, with an average of £59 spent per week on it. London also has the 2nd highest average household expenditure just after the South East, both this shows, that location wise, there is a high amount of disposable income, and that Leisure and sport is a industry with a large demand, which is rapidly growing, especially with the recent spate of news and media reports regarding heart illnesses and the dangers of not having enough exercise.
Technological
Advances in technology could be hugely important to the company. Tills can be linked to the accounting software which will show all details of the sales and keep the books up to date. This can then also tell me when stock is running low of a specific product, so I can order more. Latest security software can also help in keeping the store secure from criminals.
Technological factors such as TV and radio means that I can easily advertise the business to lots of people. This form of promotion can be most effective and will help to attract people to my new business. It gives me a very simple method to get people to hear about my business.
Advances of technology will also make communication to my suppliers easier, with methods such as e-mail used globally. Having a website will also help promote and advertise the business, it also gives the public another way of purchasing from us.
Risk Assessment
There are risks associated with all business proposals. It is sensible therefore to identity risks, to assess the chance of them happening. I can then identify action to manage the risk, this is called risk assessment.
Although risk assessments are often associated with health and safety, they can be carried out on any aspect of the business plan, risk assessment could investigate the risks attached to marketing and finance plans.
For instance risks surrounding the sport shop would include, not having enough staff to serve our customers at a quick enough rate, because during the week we will only have 2 members of staff, with this increasing to three during the peak times at the weekends.
Another risk would be our sales being lower than predicted, as mentioned before, because we are a new business our sales may not start high from the beginning, it could take time to build up our reputation and attract a high amount of customers to our store on a regular basis.
Ordering the wrong amount of stock could also affect the amount of profit we make, if we order to much our costs will be to high and its likely we will have to make reductions to sell all the excess stock, furthermore if we order to little stock, we will be missing out of a lot of income, there would be no point in having a store with half the selves empty, its therefore vital that we plan carefully how much stock we will need to get the right balance, we should have a good idea of exactly how much we need after a few months of running the business, that way we have accurate historical data to use.
Another potential risk for us would be to order the wrong products, it would be no good if we order products and then no one purchases them, it’s important that the research we carry out is effective and finds out exactly what our target group wants us to sell, therefore we are able to maximise our sales.
Current Issues
PRICE FIXING ALLEGATIONS
Sports multiples are more exposed to the fashionable sports wear market than to the equipment sector, but their role in selling equipment is also influenced by general issues in retailing.
In 2003, the Office of Fair Trading (OFT) issued fines against companies that were alleged to have engaged in the price fixing of football replica kit. The fines varied in size but peaked at £6.6m payable by Umbro, a manufacturer, and £8.4m payable by JJB Sports, the largest sports retailer. The fined companies lodged appeals against the OFT's decision with the Competition Appeal Tribunal, but the matter was unresolved in late November 2003.
THE HEATWAVE OF SUMMER 2003
Spring and summer 2003 brought exceptionally good weather conditions to most of the UK, including some heatwave weeks. These conditions encourage people to take part in outdoor pursuits and activities such as golf, stimulating the demand for new equipment. For example, the leading outdoor retailer, Blacks Leisure Group, reported strong sales at its Millets stores during 2003, particularly for surfing and board wear.
Sales of Sports Clothing/Footwear and Equipment.
This tables shows me that sports clothing is still the most profitable medium in the sports industry, however Footwear and Equipment are still expected to increase year by year so its important we sell products for everyone’s needs.
