With my experience of having basic skills of being a full-time employee, I possess the knowledge of how the employees work. Therefore I am able to give a fair amount of work between the employees, and not overload them with too much work.
Full-time and part-time employees
There will be 1 full- time employee and 2 part-time employees.
The full-time and part-time employees will take responsibility of:
- Must be able to serve to the customers and deal with any customer relations.
- General cleaning: sweeping floors and cleaning the equipment.
- Restocking products when they are empty.
- Products in the shop are presentable to the customer.
- Must be able to deal with money, especially cashing up at the end of each week.
- Must know about current promotions in order to deal with customers.
- Must follow health and safety, such as not wearing jewellery.
I would like for the employees to have a good interest in food, and are able to have a polite manner when serving the customers, in order to make the customers not feel too pressured when deciding what flavour ice cream they want. I want to let the employees have a good opportunity in taking part in promotions, and how to attract customers. This will give me ideas and suggestions for the promotional activities to take place.
The main training for the employees is to be able to use the till correctly, and dealing with customer relations.
The pay for the employees will be £5.35 per hour, and the benefits will be staff discounts for the food and personal accident insurance.
Job Description: Frosty Creams Full-Time Employee
Post Title: Employee
Responsible to: Owner
Job Type: Full Time
External Contacts:
Members of the public
Internal Contacts:
The employees and managers in the Frosty Creams
Wages: £5.35 per hour
Job Purpose:
To be able to keep high standards of customer service and dealing with any customer relations that arise. To take responsibility of cleaning and making the shop presentable to the public.
Main duties and responsibilities:
- Ensuring products are at quality standards.
- Have the ability to use the till
- Be up to date with the current latest promotions, in order to deal with the customers.
- Be able to restock products
- Ensure food quality
- Hours of work is 40 hours per week
Person Specification – Frosty Creams
Post Title: Employee
Responsible to: Manager
Job Type: Full Time Essential (E) /Desirable (D)
Good Communication Skills
Highly Motivated
Team Work Skills
Initiative
Good organisation Skills
Ability to maintain accurate records
Stock taking skills
E
E
E
E
E
E
E
Experience working in shops
Delivering food and drink service
Customer Service
E
E
D
NVQ or equivalent in a related area
Food Hygiene Qualification
E
D
I.T Skills
Experience of stock control
Shop cashiering
D
D
D
Questionnaire
Age _________
Gender: [ ] Female [ ] Male
What area do you live in? ___________________
What areas do you shop in?
[ ] Wimbledon [ ] Sutton [ ] Croydon [ ] Kingston
[ ] Other _______________
What price are you willing to pay for good quality ice cream?
[ ] £ 1.50 – 2.00 [ ] £2.00 – 2.50 [ ] £2.50 – 3.00
List your favourite flavours of ice cream _______________________________________________________________________________________________________________________________________________________________________________________________________________
What other ice cream places do you buy from?
[ ] Hazaan-Daz [ ] Ben & Jerry’s [ ] Other _____________
When are you more likely to buy ice cream?
[ ] Morning [ ] Afternoon
Are you willing to buy ice cream if it is gluten-free?
[ ] Yes [ ] No
Are you willing to buy ice cream if it is dairy-free?
[ ] Yes [ ] No
What toppings would you like on your ice cream?
[ ] Sprinkles [ ] Flake [ ] Wafer [ ] Different flavour sauces
[ ] Marshmallows [ ] Chocolate Buttons
[ ] Other _____________________________________________________
Primary Research
Questionnaires
I provided a questionnaire to be filled out by a 20 different aged customers. This was an effective method and allowed the business – Frosty creams to ask specific questions to the customers.
This questionnaire has helped Frosty Creams with important information and how to target the customers of what prices, differentiation of product ( ice cream ), and what is the best method of promotion that they are likely to be aware of for Frosty creams advertisement.
Analysis of Questionnaire
The results show that a majority of the people who answered the questionnaire are likely to shop in Sutton. A small percentage will visit Kingston to shop.
The majority of the people are willing to buy ice cream for £2.50 to £3.00. Frosty Creams needs to make sure that their pricing strategy is around £2.50 to £3.00 to be able to appeal to the target market. From this I can use premium pricing strategy as customers will be willing to pay more for the ice cream for its product quality for nutrition. The level of competition for ice cream in Kingston is low so this pricing strategy can provide beneficial to Frosty Creams.
The above graph shows distinctive ice cream brand names that Frosty Creams will have competition with around Kingston, and neighbouring towns. Frosty Creams must differentiate their product from their competition and be able to promote the unique factors about the product through direct marketing, and other means of promotional media.
Frosty Creams are likely to sell more ice cream during the summer season, and sell the least ice cream during the winter period. This shows that during the summer they can promote more and be able to increase their sales, and will need more stock evidently. During winter they will be unlikely to sell ice cream so less stock needed, and can show that cakes and hot drinks are more suitable for that time of year.
The majority of people are willing to buy ice cream that is gluten-free and dairy-free. This helps to show that Frosty Creams are able to sell ice cream that is gluten-free and dairy-free, and shows they are more unique compared to their competition.
Summary of Questionnaire Results.
The results I have gathered, the majority of the questionnaires were answered by people who live in the area of Sutton.
The results show;
- The area they are likely to shop is Sutton.
- The majority of the people are willing to pay £2.50 to £3.00 for good quality ice cream.
- People are likely to buy ice cream in the summer season in the afternoon compared to the winter season
- The people are willing to buy gluten-free and dairy-free ice cream.
Promotional Media
Introduction
Businesses can use a variety of different types of promotion, and this makes consumers aware of products. Promotional aim persuades them to buy those products.
Advertising
Advertising utilises audiovisual and print media. Audiovisual media means communicating to customers via television and radio, and print media via leaflets and posters. Audiovisual media will be more expensive compared to print media.
Frosty Creams can advertise through leaflets and posters, which will be highly beneficial compared to the audiovisual media, as Frosty Creams will have a small budget in promotion. The leaflets will contain certain facts in order to create awareness of the primary product of ice cream. The leaflet can contain the augmented facts such as its ‘gluten-free’ and ‘dairy-free’. This will gain customers who are healthier conscious.
The posters will be put up and leaflets distributed in the Kingston area. This will cost their normal pay per hour at the Frosty Creams shop. The production of the leaflets will be approximately £219 for 5000 leaflets.
Sales Promotions
Sales promotions provide a financial incentive to purchase a product. This can be provided through coupons, demonstrations, frequent user incentives, loyalty cards, price-off vouchers, and free samples.
Frosty Creams will provide free samples at the beginning of their shop opening, to be able to publicise their shop, and attracting customers to improve sales. The free samples can also be provided at events which Frosty Creams sponsor.
Frosty creams can provide price-off vouchers in magazines and newspapers, which are popular in order to gain vast amounts of the public – when they visit. The price-off vouchers will be offered after a few months of opening, to keep customers in and gaining profit.
Sponsorship and Public Relations
Public relations helps the business to seek good publicity and to improve the business’s standing in the eyes of consumers and other interested groups. The main purpose for sponsorship and public relations is to increase awareness and to create positive image of the business, and its products.
Businesses engage in a variety of PR activities including:
- Making donations to charities
- Sponsoring sporting and cultural activities
- Allowing the public to visit the business
A good example of a business which uses public relations and sponsorships is Red Bull which sponsors extreme sports events, like Red Bull Air Race. This promotes the Red Bull drink and shows that Red Bull have researched their customers in order to gain their awareness.
In relation to Red Bull, Frosty Creams needs to segment their market in order to know what their customers are interested in. A majority of the customers are young people especially after school time and at weekend. Frosty creams differentiated the market by making the ice cream dairy-free and gluten-free, in order to gain the older age range. This means that Frosty Creams knows their segment market, and will be able to gain customer awareness of the good quality ice cream.
Frosty Cream can donate and promote their product to charity of Coeliac UK. This Coeliac disease is an auto-immune disease, which means that the body produces antibodies that attack its own tissues. This attack is triggered by gluten. This shows that Frosty Creams can show awareness of the gluten-free and dairy-free ice cream.
Evaluation
The benefits of using a number of promotions for Frosty Cream is to be able to introduce the product range to customers through a number of promotional media. Identifying the target audience will also help to be able to counteract competitor advertising, this will increase sales of Frosty Creams. Advertising clearly that the ice cream being gluten-free and dairy-free, this will educate the target audience that ice cream can be healthy! The primary product for advertising will also help to support other sales in the shop such as the cakes and drinks.
Price
The factors determining the price of a product can be summarised as the three Cs: cost, competition and customer value.
Cost
The cost of producing the ice cream is important for a new business in the market. The price of the product, ice cream, should cover the cost of producing the ice cream, and selling the product.
Competition
The price of the product might want to be below or at the competitor’s price list, as this will gain more customers as the product is cheaper. If the product is unique and differentiated from other competitors, the business may price the product higher for it to be acceptable.
Customer Value
The price of the product, ice cream, will be determined by the target audience. If customers can gain significant benefits from the product, they will be willing to pay a higher price for the product. If customers gain few benefits, they will only be prepared a low price.
I must also consider a decent market strategy by using a combination of the following:
- Cost plus pricing
- Penetration pricing
- Premium pricing
- Skimming
- Loss leaders
I will be choosing cost plus pricing, and premium pricing, as these are most beneficial to Frosty Creams.
Cost plus pricing
Cost plus pricing is aimed at the cakes and drinks. This will be done when Frosty Creams starts up, in order to be able to survive the market. I will find it much easier to calculate as there I am a managerial of all operations and finance. I have to make decisions for pricing of the cakes and drinks from both research and competitors. I will only need to know the production cost of the cakes and drinks, and how much profit on in order to make a profit for Frosty Creams afterwards. As the cakes and drinks are not the primary product for Frosty Creams, I think it’s sensible to keep the cakes and drinks at a low price to enable customers to keep on buying the products.
Premium Pricing
Premium pricing is aimed at the ice cream. The ice cream is of high quality ingredients with gluten-free and dairy-free. Customers will be willing to pay more for the ice cream for its product quality for nutrition. The level of competition for ice cream in Kingston is low so this pricing strategy can provide beneficial to Frosty Creams.
Evaluation
Cost plus pricing tends to ignore the competitors pricing, which argues whether the pricing is correct or not. Premium pricing may not get the full profit because the product may be too high or too low from the customers.
Product
Core Product
The core product is the ice cream being able to give the customers the ability of nutrition with a pleasant flavour which the customers like. The ice cream will be in different flavours to meet the customers taste in food. Ice cream will have the basic job of being able to meet the customers hunger need of dessert.
Tangible Product
Tangible product is the ice cream will be gluten-free and dairy-free, because customers are health conscious. The gluten-free and dairy-free differentiates the ice cream from ‘normal’ ice cream ordered in super markets. The ice cream sales will also provide toppings such as, wafer and flakes, this also differentiates the product.
The other sales of cakes and drinks will also provide nutrition for the customers, as a tangible product as it’s not the primary product.
Augmented Product
The augmented product is the customer service giving the opportunity to the staff in providing the service towards the customers. This is provided by the training which I have given them.
Market Size and Research For Ice Cream
The ice cream market is worth £1.25 billion, an increase of 8% from 2002. However, the market peaked in 2006, after an extremely long hot summer, at £1.33 billion. Following this peak, 2007 was a less successful year, with overall value down just under 7%, a direct effect of an unfavorable summer.
This has highlighted the correlation between ice cream sales and weather, and has ensured that the primary challenge for the ice cream market is to grow occasions outside the summer months and move away from being just a refreshing cool-down or a standby desert.
The consumer is increasingly conscious about what they eat, both in terms of evolved health, ie natural and functional foods, and in terms of ethics and provenance. Innovations from the ice cream industry have raised its game in order to meet these challenges with products like Frusì and Fruit Crunch as well as more extensions of the Green & Black’s brand and more ethical products from Ben & Jerry’s.
Place
A physical location shop will be located in Kingston. The rent per year for this shop is approx. £15,000 p.a.
Kingston is area for people to visit of all ages. There are a wide variety of shops already situated in Kingston; this will create a lot of customers coming to the area. A wide variety of ages will come to the shop:
- 13 to 18 year olds - School children will go to Frosty Creams in the afternoon after school, if they are close by for a treat.
- 18 to 25 year olds - Groups of friends will likely to go to Frosty Creams on weekends, or afternoons.
- 25 to 35 year olds – People are more health conscious and will look for dairy-free and gluten-free such as provided by Frosty Creams with ice cream.
Family groups will also go in to the shop, in order for an outing in the area.
Frosty Creams is a tertiary sector as it is providing services as providing ice cream and other products to the general population.
Customer Segmentation
Introduction:
Frosty Creams can segment markets in a number of ways, such as age, gender, socioeconomic, and lifestyle. The customer segmentation divides the customers into groups with similar characteristics.
From both primary and secondary research for ice cream, the results have helped to segment the market in a number of ways.
Age:
The main age group I will be targeting is from 13 – 35 years old:
- 13 to 18 year olds - School children will go to Frosty Creams in the afternoon after school, if they are close by for a treat.
- 18 to 25 year olds - Groups of friends will likely to go to Frosty Creams on weekends, or afternoons.
- 25 to 35 year olds – People are more health conscious and will look for dairy-free and gluten-free such as provided by Frosty Creams with ice cream.
Family groups will also go in to the shop, in order for an outing in the area.
Gender:
Both females and males are likely to buy ice cream from Frosty Creams. Females are more likely to buy the ice cream for the quality of the ice cream compared to the men.
Lifestyle:
Customers, who buy from Frosty Creams, are health conscious, as the products are gluten-free and dairy-free. They are probably will go on days outs, and willing to exercise more.
Socioeconomic
ABC1C2 are Frosty Creams target socio-economic groups. These groups will have enough income to buy my products. A and B are will be willing to pay more for good quality ice cream.
Evaluation
The benefits of customer segmentation are meeting the customers needs, as their needs differ from person to person. Frosty Creams will get more profits from knowing their customer segmentation.
SWOT Analysis for Frosty Creams
Introduction
SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.
Strengths
Good quality customer service is provided by Frosty Creams. This is to retain the customers so they come back in the shop. The good quality customer service will be given training in how to deal with customer relations by the owner.
There will a wide flavour range of ice creams, in order to meet the customers’ tastes. There will be common flavours such as strawberry, vanilla and chocolate, and there will be uncommon flavours such as caramel and mint. The wide flavour range will give competition hard to differentiate their own ice cream, and provides different tastes from supermarket.
There is good quality ice cream as customers are starting to become more health conscious, and this is why Frosty Cream is starting to do the products as gluten-free and dairy-free. This also makes Frosty Creams more unique compared to other shops revolving around ice cream.
The vibrant location of Frosty Creams in Kingston provides vast majority of the public, and Frosty Creams will gain a lot of profit from being in a vibrant location. This will also make it more accessible to customers coming to the area as its well known for the shopping centre.
Weaknesses
There is a lack of experience of management for Frosty Creams, as I haven’t owned a business before. There I have little knowledge of how to run a business. This can make Frosty Creams vulnerable to other competitors, as they have more knowledge of how to run a business. This can be overcome by going on a managerial course in advancing my knowledge of current skills.
I have lack of knowledge for the ice cream market. This is because I don’t know whether customers are looking for quality ice cream. This is why I need know, what part of the market for ice creams is able to gain profit from the customers. Frosty Creams to know what ice cream is able to be more marketable than others.
Opportunities
There is good opportunities in increasing number of shops this would help Frosty Creams in order to create awareness of their primary quality product of ice cream. This will mainly be in SW London, the increase of shops in order to be able to keep on top of the managerial position.
Frosty Creams can expand to different areas of the UK in the future when I have more experience as a manager, and have the right skills in order to keep on top of the other shops that are owned. This will create more awareness of the products in different areas of the UK.
Frosty Creams has the chance to give people a healthy lifestyle. This is done by putting fresh ingredients into the ice cream, and also by having gluten-free and dairy-free ice cream.
Threats
Other shops which sell the same differentiated food, as this competition may provide better food and different better price range. Depending where their located they might earn more profit to Frosty Creams. Frosty creams must provide the best quality ice cream in the Kingston area and the best pricing strategy in order to compete against competition.
Secondary Research - Competitor Analysis
Pret A Manger
Pret A Manger opened in London in 1986. The company was founded by college friends, Sinclair and Julian, they two of them created food they craved most, using natural, preservative-free ingredients. There are about 150 Pret shops at the moment mostly in the UK. They turn over roughly 150 millions pounds a year and they would like to make 9% profit a year.
Pret A Manger shop nearest to Frosty creams, Unit 5, Eden Walk, Kingston upon Thames, Surrey, London, KT1 1BP. Opening Times: Monday 8:00 - 18:00 Tuesday 8:00 - 18:00 Wednesday 8:00 - 18:00 Thursday 8:00 - 18:00 Friday 8:00 - 18:00 Saturday 9:00 - 19:00 Sunday 9:00 - 18:00.
Pret offers food such as, sandwiches, baguettes, wraps, sushi, salads, soups, cakes, desserts, drinks, crisps and bakery. They are all without chemicals, additives, and preservatives. There ingredients are delivered fresh every day, and the food is made fresh in the kitchen’s shop throughout the day. This shows that Pret A Manger have a wide variety of products and offer customers healthy food, because of the fresh ingredients.
Pret spends hours over new recipes. They launch up to 20 new ideas each month. This shows that the team are reviewing new ideas for the customers so they don’t get bored of their current food. Particularly when the food market is changing all the time and customers are expecting different.
Pret offers deliveries of buffets, and the food is also fresh with no chemicals, additives and preservatives.
Promotion, Pret offers to dozens of charities helping the homeless by offering unsold sandwiches at the end of the day. In 2006, they gave away almost quarter of a million pounds worth of food and cash.
Pret A Manger price list (appendix 1)
The average hourly rate for Pret’s Team Members was £6.78 per hour. Starting rate for Team Members is £6.55 per hour. They are offered to receive their mystery weekly shopper bonus each week. Benefits include 28 days’ holiday per year; sick pay; maternity; and paternity. Pret has their own training academy in Victoria, which shows they have great training and development service. Pret has won awards for it’s training and HR. The Guardian voted Pret amongst the top employers in the UK in 2007.
Starbucks
In 1971 the first starbucks opened in Seattle. Over the 30 years Starbucks has more than 6,000 locations in over 30 countries. In 1988 entered the European market of 65 Seattle Coffee Company stores in the UK.
The nearest Starbucks to Frosty Creams is in 149 Clarence Street, Kingston
Surrey, ENG KT1 1QT.
Starbucks has wide variety of coffee and espresso beverages, such as Espresso, Café Americano, Café Latte and Cappuccino. There are also a number of cold drinks – Iced Vanilla Latte, and Frappuccino’s. There are number of foods which Starbucks offer, cakes, cookies, sandwiches, fruit salad, and panini.
Starbucks have commitment to origins, helping to promote a sustainable model for the worldwide production and trade of high-quality coffee.
Starbucks Price List (Appendix 2)
Sales Forecast
Ice Cream Sales
This table shows the sales for ice cream across six months.
Price for ice cream - £2.50
Over the beginning of the year between January and March, customers are less likely to buy ice creams for why ice cream sales unit is low compared to May and June, which have a higher sales unit. This is because it’s cold at the beginning of the year and gradually gets warmer. This is due to seasonal variation. There will be some sales at the beginning of the year as the shop is in a vibrant location.
The supply and product needed for ice cream is more demanding between April and June, this requires more stock in order to meet customers needs.
Cakes Sales
This table shows the sales for cakes across six months
Price for slice of cake - £1.50
Cakes are more likely to sell at the beginning of the year compared to ice cream. Cakes are less likely to sell more between April and June as ice cream is more demanding to cakes. This shows gradual sales dropping from January to June.
The supply and produce needed for ice cream is more demanding between January and March, this requires more stock in order to meet customers needs.
Drinks Sales
This table shows drinks sales across six months.
Price for hot/cold drinks - £1.50
The drinks sales forecast shows only on average a 100 difference between the January and June months. The drinks sold at Frosty Creams are both Hot and Cold. Hot Drinks are more demanding between January and March. Cold Drinks are more demanding between April and June.
Overall Sales
This table shows overall sales across six months, which include the ice cream, cakes and drinks sales.
The staff needed between April and June is more compared between January and February as there are more sales and to which customers are more demanding for the products such as ice cream and drinks. The staff needed between January and March is less than the end of the six months as there are less sales for the products.
Operations Plan
In this section I will discuss the physical resources, human resources, legal requirements and production budget to help to achieve my aims and objectives.
Physical Resources
The physical resources will include the type of premises, equipment, the stock required and their cost.
Frosty Creams will have to consider how they will acquire the types of physical resources:
- Lease
- Rent
- Hire Purchase
- Trade Credit
Lease
A lease can be used to finance the purchase of many fixed assets, including equipment. It is a contract in which the asset is rented by a business, for the duration lease period, when it is then given back to the lesser.
Rent
There is a fixed amount for Frosty Creams to be able to purchase and normally can carry on renting if the contract runs out.
Hire Purchase
When Frosty Creams hire purchase, the pay monthly contract will be a long period and eventually Frosty Creams will own the equipment.
Trade Credit
Frosty Creams needs to negotiate to the supplier to be able to extend the 30 day
Premises
The most common physical resource and probably the most expensive is likely to be the premises. This could be a shop, warehouse, office or factory, singly or in any combination. Frosty Creams will be looking for a shop. The key decision for Frosty creams is whether to buy or rent the shop.
The rent per year for this shop is approx. 15,000pa.
Reference 1 for shop
Frosty creams will incur additional premises whether the building is bought or rented, costs such as insurance, electricity etc.
Equipment
Frosty Cream needs to decide whether to buy, lease or hire purchase the equipment.
Office is needed for Frosty creams in order to run the business, however small. These costs will need to be identified and estimated. The buying costs will need to be identified for:
- Computer – Hire Purchase
- Printer - Buy
- Stationary - Buy
- Cash Till - Buy
Shop equipment is needed for Frosty Creams in order to run the business. These costs will need to be identified and estimated. This equipment will be:
- Freezer for ice cream – Hire purchase
- Cold & hot Drink vending machine – Lease
- Furniture – Buy
- Ice Cream scoops - Buy
Ice cream scoop up freezer
Hire Purchase - Pay monthly for 12 months £66
Desktop PC http://www.currys.co.uk/
Printer, Scanner, Copier http://www.currys.co.uk/
£69.99
Cash Register Till
£172.00
Till Rolls
£33.70
Coffee Table
£220.00
Chairs
£100
Ice cream scoops
Trigger Scoop
Price: £6.99
Cold Drinks Vending Machines
Lease: £80 per month
Hot drinks Vending Machines
Lease: £80 per month
Stock
Frosty Creams involves manufacturing, buying or selling a product such as ice cream, then stock is a very important resource. Frosty Creams needs to have a good stock control procedures to ensure it is using its resources efficiently. The stock will have a significant impact on your cash flow. The stock needed will be:
- Toppings
- Ice Cream
- Cups/box things for ice cream
Toppings £30 per month
Ice Cream Production: £3 per litre
40 scoops per litre
12 tubs minimum as there are 12 different flavours
Cups/Box things: £60
Fixed reorder stock level
Frosty creams needs to decide the lowest stock level to meet the likely demands of the customer. Frosty creams should know when to reorder before stock level is reached. The maximum stock level also needs to be set so Frosty Creams knows how much to reorder.
Frosty creams needs to know the lead time so how long it takes for the new stock to be delivered, so the stock levels can be met to the demands of the customer. The complications of not knowing the lead time is there won’t enough stock or there will be too much stock. Whilst the stock is being held it is not generating revenue for Frosty Creams.
Just in time
Frosty creams will have the option to be able to keep their stocks as low as possible, which means new stocks are only ordered when they are needed for demands. Frosty creams needs close co-operation between the business and the suppliers in order for this to happen.
Human resources
Owner – Me
I am the owner of the shop; I run and have full responsibility of the business.
I am responsible for the running of the business:
- In charge of the staff
- Products of the shop
- Finance of the business
- Publicity and promotions of the shop and products.
- To keep up with the laws. E.g. Health and Safety.
I need to have an interest in food as that is what I am selling, and need to have the knowledge in order to create new flavours of ice cream for new products in the future. This will help with the variety of offering ice cream flavours already to customers.
My experience of having basic skills of being a full-time employee, this gives me the knowledge of how the employees work. Therefore I am able to give a share amount of work between the employees, and not overload them with too much work
Full-time and part-time employees
There will be 1 full- time employee and 2 part-time employees.
The full-time and part-time employees will take responsibility of:
- Must be able to serve to the customers and deal with any customer relations
- General cleaning - sweeping floors and cleaning the equipment
- Restocking of products when they are empty
- Products in the shop are presentable to the customer
- Must be able to deal with the money, cashing up at the end of each week
- Must know about current promotions in order to deal with customers
- Must follow health and safety – such as not wearing jewellery
I would like for the employees to have a good interest in food, and are able to have a polite manner when serving the customers, in order to make the customers not feel too pressured when deciding what flavour ice cream they want. I want to let the employees have a good opportunity in taking part in promotions, and how to attract customers. This will give me ideas and suggestions for the promotional activities to take place.
The main training for the employees is to be able to use the till correctly, and dealing with customer relations.
The pay for the employees will be £5.35 per hour, and the benefits will be staff discounts for the food and personal accident insurance.
Training and Development
The training for Frosty creams will be at the beginning of the job they start for 2 days. This will be on-the-job training for the employees with the till training, customer relations, stock take and general cleaning of the premises. This training will be paid for as an induction. This will help to develop their skills in a number of areas:
- Good Communication Skills
- Team Work Skills
- Initiative
- Good organisation Skills
Communication is a key skill when serving customers throughout the day, this will also help deal with problems that the customers have throughout the day. The employee will need to have some initiative on the problems and whether to decide if the customers should get a discount. They will be able to develop their team skills in order to communicate ideas to both manager of the business and other employees. The employees will need to develop their organisational skills when restocking the ice cream and stock taking, for the money.
The employees applying for the job will need to take on a course of food hygiene. Frosty Creams will pay for the course, and would need the employee to do this course after their induction at Frosty Creams.
Food Hygiene Course Details
The course is available at Kingston College, which is located at ;
Kingston College,
Kingston Hall Road,
Kingston upon Thames,
Surrey. KT1 2AQ
Award in Food Safety in Catering
The Award in Food Safety in Catering is a Level 2 qualification covering the basic principles of food hygiene. It is valuable as a free-standing qualification or as an addition for people following other training programmes. The qualification covers the core criteria for Level 1 Food Hygiene qualifications as recommended by The Royal Society for the Promotion of Health, The Chartered Institute of Environmental Health, The Royal Institute of Public Health and the Meat Training Council.
Recruitment
Frosty Creams will be advertising in local newspapers at the beginning of opening a shop. This will cost £165 for 1 week. Frosty Creams will also employ members through advertising in the shop window, especially when Frosty Creams have already employed a few members.
When the interviews take place, the shop will close so the interview can take place within the surroundings of the job. This will cost a couple of hours of work for Frosty Creams.
Production Budget
January: 3,020.78 – 1,453.6 = 1567.18
February: 2,437.80 -1,867.4 = 570.4
March: 2,512.7 – 2,501.1 = 11.6
April: 2,550.15 – 3588.1 = -1037.95
May: 2,512.7 – 5416.4 = -2903.7
June: 2,662.5 – 6189.9 = -3527.4
Total: 2,000
Loan for: 3000
Total Repayable : £3370
Repayment per month : £93
Interest Payable : £369
Start-up Budget: 3,000
Cash Flow Forecast
Introduction:
A cash flow forecast will be planned in order for Frosty Creams to have a realistic understanding of when cash is expected to come in and out. This forecast will also show what the money is needed for and to see if the profit can be used for expansion and development.
Analysis:
From the cash flow forecast I can see my closing bank balance at the end of the six months is positive, but this is only because of the affect of the bank loan. I need to consider factors that might affect the cash flow forecast:
Amount of Sales: Whether it increases or decreases it will affect the costs that I pay out to buy stock, and the closing balance
Equipment: If ice cream freezer breaks down, I may need to pay out on a new one which will have an impact on cash flow forecast with the closing balance.
Rent: If the rent increased the cash flow forecast will have a lower closing bank balance.
Wages: If I have to pay for temporary staff when the full time staff are off ill or on holiday, this will also have an impact on the closing bank balance.
Stock: If more stock is needed or the price of stock is increased, the closing off the balance will be lower.
Break Even Analysis
Introduction:
Break-even analysis is a technique widely used by production management and management accountants. It is based on categorising production costs between those which are "variable" (costs that change when the production output changes) and those that are "fixed" (costs not directly related to the volume of production).
I worked out the break-even point by using the formula:
Breakeven point = total fixed costs
Selling price – variable cost per unit
= 1632
2.50 – 0.50
In order for Frosty Creams to break-even, Frosty Creams has to sell 816 units per month
It is important to know the break even point because;
- It helps to show how much Frosty Creams units have to be sold over a certain amount of time for total costs to equal sales revenue.
- Frosty Creams needs to know when a profit is gained and alternatively to show when a loss might be suffered
- It could be used as an aim and objective.
- Break even can help review the possible action to move towards a more stable break even position
- Frosty Creams can use a 'what if' analyses of changing the variable and fixed costs to see what impact the change is on the break even point.
Profit and Loss Account
A profit and loss account is the method by which a business determines its level of profit. As profit is important to so many different stakeholder groups, it is vital that it is calculated accurately.
Balance Sheet
A balance sheet is a formal document that states in detail the assets, liabilities and capital structure of a business.
Evaluation
In this section I will discuss the different ratio analyses, and discuss what if analyses of Frosty Cream of the best and worst case scenarios that could happen relating to the break-even graphs, cash flow forecasts and, profit and loss sheets. I will discuss the risk assessment when starting up a business such as Frosty Creams. I will discuss the SWOT and PEST analysis in relation to Frosty Creams.
Ratio Analysis
Profitability
Profitability ratios tell us whether Frosty Creams is making profits and whether they are at an acceptable rate.
Gross Profit Margin
= gross profit x100
turnover (sales)
13,257.50 x100
21,016.50
= 63%
This tells us how much gross profit per £1 of turnover our business is earning. In order to increase the gross profit margin, I would need to buy make and buy the products for less or increase selling prices. If Frosty Creams raw materials and wages go up, the gross profit margin will go down unless Frosty Creams increases it’s selling prices at the same time.
Net Profit Margin
= netprofit x100
turnover( sales)
875.50 x100
21,016.50
= 4%
The net profit margin ratio tells us the amount of net profit per £1 of turnover Frosty Creams has earned. That is, after taking account of the cost of sales, the administration costs, the selling and distributions costs and all other costs, the net profit is the profit that is left, out of which Frosty Creams will pay interest, tax, dividends and so on.
Return on Capital Employed
= net profit x100
capital employed
= 875.50 x100
£ 7,617
= 11%
This tells us what returns management has made on the resources made available to them before making any distribution of those returns.
Solvency
Solvency ratios indicate how capable Frosty Creams is of meeting its short-term obligations.
Current Ratio
= current assets
current liabilities
= £4,731
£1,210
= 3.9
This shows whether Frosty Creams can pay debts due within one year from assets that Frosty Creams expects to turn into cash within the same year. A ratio less than one is often a cause for concern, particularly if Frosty Creams sees it persists for any length of time.
Acid Test Ratio
= current assets - stock
current liabilities
= £4,731 - £800
£1,210
= 3.2
Unfortunately not all assets can be turned into cash quickly or easily. Some notably raw materials has to turn into the final product, then sold and collect cash from debtors. A ratio of less than one would be critical to Frosty Creams.
What If Analysis
This is to check out best case and worst case scenarios. I can use the following:
- Cash Flow Forecasts
- Break-Even Analysis
- Profit and Loss Account
Cash Flow Forecasts
Scenario 1: The sales from April to June are halved because of colder weather.
The impact of cold weather shows that Frosty Creams will be losing profit if the sales are halved between April and June.
Scenario 2: If the rent for Frosty Creams was to increase to £1,500
The impact of £250 extra rent still allows for Frosty Creams to make profit in June.
Scenario 3: Frosty Creams need to employ another employee. Wages are doubled.
This shows that recruiting another employee to help with the Frosty Creams business will not help with making profit for the business.
Evaluation
If any of these scenarios happen, Frosty Creams will hardly be making any profit, and possibly suggest a high bank loan to start out with for example £5000, to help with contingencies and problems.
Break-Even Analysis
I can use a 'what if' analyses of changing the variable and fixed costs to see what impact the change is on the break even point.
Scenario 1: If the selling price increases by £3 for the ice cream.
In order for Frosty Creams to break-even, Frosty Creams has to sell 653 units per month.
Scenario 2: If the rent for Frosty Creams was to increase to £1,500
In order for Frosty Creams to break-even, Frosty Creams has to sell 941 units per month
Scenario 3: If the variable cost per unit is increased by £0.20p.
In order for Frosty Creams to break-even, Frosty Creams has to sell 907 units per month.
Profit and Loss Account
I can do a what if analyses by changing the sales purchases and costs to see how it will impact Frosty Creams in a worst or best scenario case.
Scenario 1: If there was an increase of sales by £5,000
The profit and loss sheet shows if there is an increase of sales by £5,000, The Net Profit is £5,875.50.
Scenario 2: If direct labour was increased by £1,000
The profit and loss sheet shows if the direct labour was increased by £1,000, The Net profit is decreased to -£124.50.
Scenario 3: If the rent increased by £1,500.
The profit and loss sheet shows if the rent increased by £1,500, the net profit is decreased to -£624.50.
Risk Assessment
Frosty Creams needs to plan out their risk assessment when starting up a business.
SWOT and PEST analysis
SWOT Analysis
SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.
Strengths
Good quality customer service is provided by Frosty Creams. This is to retain the customers so they come back in the shop. The good quality customer service will be given training in how to deal with customer relations by the owner.
There will a wide flavour range of ice creams, in order to meet the customers’ tastes. There will be common flavours such as strawberry, vanilla and chocolate, and there will be uncommon flavours such as caramel and mint. The wide flavour range will give competition hard to differentiate their own ice cream, and provides different tastes from supermarket.
There is good quality ice cream as customers are starting to become more health conscious, and this is why Frosty Cream is starting to do the products as gluten-free and dairy-free. This also makes Frosty Creams more unique compared to other shops revolving around ice cream.
The vibrant location of Frosty Creams in Kingston provides vast majority of the public, and Frosty Creams will gain a lot of profit from being in a vibrant location. This will also make it more accessible to customers coming to the area as its well known for the shopping centre.
Weaknesses
There is a lack of experience of management for Frosty Creams, as I haven’t owned a business before. There I have little knowledge of how to run a business. This can make Frosty Creams vulnerable to other competitors, as they have more knowledge of how to run a business. This can be overcome by going on a managerial course in advancing my knowledge of current skills.
I have lack of knowledge for the ice cream market. This is because I don’t know whether customers are looking for quality ice cream. This is why I need know, what part of the market for ice creams is able to gain profit from the customers. Frosty Creams to know what ice cream is able to be more marketable than others.
Opportunities
There is good opportunities in increasing number of shops this would help Frosty Creams in order to create awareness of their primary quality product of ice cream. This will mainly be in SW London, the increase of shops in order to be able to keep on top of the managerial position.
Frosty Creams can expand to different areas of the UK in the future when I have more experience as a manager, and have the right skills in order to keep on top of the other shops that are owned. This will create more awareness of the products in different areas of the UK.
Frosty Creams has the chance to give people a healthy lifestyle. This is done by putting fresh ingredients into the ice cream, and also by having gluten-free and dairy-free ice cream.
Threats
Other shops which sell the same differentiated food, as this competition may provide better food and different better price range. Depending where their located they might earn more profit to Frosty Creams. Frosty creams must provide the best quality ice cream in the Kingston area and the best pricing strategy in order to compete against competition.
Pest Analysis
The PEST analysis stands for:
- Political
- Economic
- Social
- Technological
The PEST analysis is carried out by many businesses to find out what external factors can affect the business.
When thinking about the Pest analysis we must think about the factors of the following:
Political
At present Frosty Creams is paying the national minimum wage to the staff. If Frosty Creams was to expand to a different country, the national minimum wage would change according to the country the business is expanding to. If the national minimum wage was increased, Frosty Creams would be paying more cash outflow, and reducing the chances to get extra profit. If the national minimum wage was decreased, Frosty Creams will be able to have more funds to spend and make a profit for the business.
A change in the government may affect the capital of Frosty Creams, as it may decrease if the government introduces new policies and taxes, which would mean that they would have to pay more direct tax. If the government was to raise tax on Frosty Creams selling goods, this would affect Frosty Creams as they would have to may more tax, as a result leaving them with less capital.
Economical
Unemployment levels at a high level generally means that people within the UK would have less money to spend, this could affect Frosty Creams as customers may stop buying the products of Frosty Creams.
The level of inflation could have an impact on Frosty Creams, because if prices were too high this could affect the consumer buyer trends causing it to slow down, leaving the company with less profit. If the level of inflation rises it could cause demand to fall, therefore leaving the business with less capital, which could have a huge impact on Frosty Creams.
Health and safety need to ensure it is of high standards. If Frosty Creams was to expand into less developed countries it may mean that they need to improve their health and safety aspects. Frosty Creams would need to consider the training costs within the recruitment process.
Legislations that Frosty Creams needs to keep on top of when recruiting employees are;
Health and Safety at Work 1974 - Frosty Creams must have a general duty to provide for health, safety and welfare of those employee s that Frosty Creams employ. Information needs to be displayed to employees about any work related hazards and the precautions needed to contain them. This will minimise potential hazards to the minimum for each employee if there is an induction when the employee is recruited. Short term effects of not doing this can cause time and money. The long term effects of not doing this could be the loss of reputation if an employee has seriously harmed himself or herself.
Race Relations Act 1970 – Frosty Creams needs to protect individuals against discrimination in terms of race, colour, nationality or ethnic origin. This could help for recruitment, or just for possible promotion opportunities.
Equal Pay Act 1970 – Women performing a similar job to men should be treated equally. This includes pay, work conditions and also opportunity for promotion and recognition. Frosty Cream must be aware of this.
Social
If the target market is experiencing a rise in demand of healthy ice cream, then this would mean that Frosty Creams would need to employ more staff to help meet the consumers demands, therefore having to spend more money.
Technological
If the tills are operated more electronically, Frosty Creams might need to spend more time training employees how to use the machine and how not to make mistakes. If anything goes wrong Frosty Creams may lose sales and profits if the machine till breaks down and needs to be replaced.
http://www.upmystreet.com/
http://www.findaproperty.com/searchresults.aspx?edid=04&salerent=1&areaid=0002
Applied Business Studies A2 Collins Book
Mintel Report - http://www.just-food.com/store/product.aspx?ID=57693
http://www.findaproperty.com/searchresults.aspx?edid=04&salerent=1&areaid=0002
http://www.yourlocalguardian.co.uk/ads247/recruitment/
Applied Business A2 Collins Book
Applied Business A2 Collins Book
