Financial Feasibility of Opening A Business

Source: Mintel 2007

Form the above diagram you can see that the alcoholic drink market is one of the largest in the UK to date. From this, even after the above fall in availability of pubs and bars, the drinking scene is still incredibly active throughout the UK. This also shows me that there is an increase in the sale of wines and spirits, showing that the era of a simple pub where predominantly beer is drunk is slowly dwindling, as mentioned before the newer generation have a tendency to drink spirits and other drinks as opposed to beer. This table can be used to determine what drinks I should mainly stock. Since the beer dominates the market, it would be just as catastrophic to ignore it as it would be to embrace the faster growing sectors.


From my research on the Key Note website I found a survey that was conducted that asked for what reason people visited the pubs in their area.

Source:
Data for the chart came from Key Notes 2001

From the information I gathered I generated this pie chart. Here we can see that sports observation is the largest sector. This gives me the incentive and evidence needed to completely decide on the sports theme to my pub, as I can utilise this particular part of the market.
        Furthermore, I noticed that eating a meal and entertainment are significantly large chunks of the pie. This only furthers my enthusiasm that my original idea was correct. A sports themed pub, that provides meals during the day, and entertainment at night, as well as weekend functions.
        

My idea for hiring out my bar for specific sporting functions still needed some research however, and from this I found some very supportive information.
        My local football team, Michelin, frequently share out its premises to other groups to hold meetings. One of which is the Ballymena Arsenal supporters club. I asked the chairman of the club whether his club got together to watch the matched on weekends and on occasion weekday evenings.
        He then told me that they were forced to either not meet up at all, or when they did, they had to share an over-crowded pub with supporters from other teams, which could often lead to trouble as well all know.
        This information provided me with certainty that my idea to be able to hire out my sports bar was a good idea, and that I should specifically target supporters clubs as well as other sporting party’s.

Source: Wikipedia

Above is a diagram emphasising the effect on the foreclosure of properties, homes as well as businesses, it is essentially a summary of the current credit crunch.
        From this we can see, as a progression through the quarters since the start of last year closures of businesses and homes have increased on a massive scale. This is due to many banks refusing to loan businesses money or offering homeowner’s mortgages. This has to be taken in to account when i plan on opening my business. I could well become one of these many statistics as banks are reluctant to lend new businesses money unless there is a guarantee that the money be repaid within a short period of time.
        I need to take in to careful consideration as to whether a bank loan is the ideal way with which to fund my business.

My competition

Listed below are the names and locations of all my largest rivals that I will have to contend with in my chose market:

1. The Blackstone Bar – 11 Hill Street
2. The Cabin – 29 Ballymoney Street
3. The Slemish – 35 William Street
4. The Cosy Corner – 32 William Street
5. Farmers Hotel – 71-75 Mill Street
6. Fountain Bar – Fountain Place
7. Front Page Bar – 9 Ballymoney Street
8. The George – 54 Mill Street
9. The Grouse Inn – 2-12 Springwell Street
10.  The Horse and Jockey – 3-5 Bryan Street
11. The Imperial Bar – 87-89 Wellington Street
12.  Kernoghans Bar – 9 Galgorm Street
13.  The Linenhall Bar – 38-40 Linenhall Street
14.  O’Hanlons Bar – 26 Willaim Street
15.  The Smithfield Arms – 21 Galgorm Road
16.  Spinning Mill – Broughshane Street

The above are listed in numerical order, as this is their corresponding number on the map overleaf.
However, the map does not display the entire Ballymena city centre, so listed below are the Bars that are not located on my map.

The Knockeden Lodge – Crebilly Road

Ladysmith’s Arms – Waring Street

The Moat Bar – Henry Street

The Raglan Bar – Queen Street
Gillies Bar and Grill - Galgorm

Connolly’s Bar – Dunfane, Ballymena

Please turn over to see the map of Ballymena City Centre with all the Bars and Pubs located.

Names in bold are the competitors that I have analysed to be my main.


(When reading the map, please ignore any numbers located in red circles, the numbers I refer to are marked beside a black ‘x’)

Market Mapping

A market map is a tool used to segment the market, then show in diagram form, which specific are each Pub covers, helping me highlight a suitable gap for my business.

From this market map I can clearly see that there is a substantial gap in the market for a young, slightly more expensive upmarket bar in Ballymena.

        Since my bar will have a more expensive twist to it, I will have to attract customers with more money to spend. For example YUPPIES.

My Main Competitors

In this section I will outline the basic qualities that my competitors possess which I will need to challenge with my new business idea. From this I can gather large amounts of information about what the public in Ballymena want when they look for a night out or for recreational premises with which to enjoy themselves.

The Blackstone Bar

In my opinion the main reason the Blackstone attracts so many customers is due to the excellent restaurant service it provides, rather than its function as a bar. However, its location could be better. It is currently situated on Hill Street which, even though it is just off one of the main shopping streets, it is still quite a dingy, dirty side street. The Blackstone itself is well kept and appealing, but its surroundings aren’t quite the same.

The Slemish Bar

The Slemish is an old Irish themed bar in a small street linking the main shopping street of Ballymena to one of the main entrances in to the shopping precinct. Due to its excellent placement it generally attracts quite steady, but not outstanding business throughout the week and on weekends. Its USP is based on its Irish theme and often has functions located in it to cater for everyone; it is one of the more popular bars in Ballymena.

The Grouse Inn

The Grouse is the best placed of all my competitors. Its location is absolutely ideal as it is right on the main shopping street and also offers lunch and dinner services which means that it has constant customer attention. In my opinion the Grouse is my main competitor as it offers everything a bar/restaurant can and has a high reputation within the town. However it does not have a particular USP, something that I could exploit.

Gillies Bar and Grill

Gillies is also up there as one of my most challenging competitors as it offers excellent food and its bar area is incredibly well set out, with a large open plan area for socializing. It is very different from the rest of the competition as it is an excellent establishment for a night out. However it is located in Galgorm, which is at least 5 minutes drive from Ballymena town centre. This is its key downfall in maximising its sales in my opinion.

The reason I have highlighted the above is due to the fact that they all, as well as I, target the same general market. We all aim to utilise sales from the 18-35 age category as that’s where the most money is available. Even though my target market is a slight bit more niche, targeting sports fans, it would be incredibly stupid to ignore this market where all these other places have succeeded.

Having competition for my business will have a major impact on its success. Since each of my competitors will claim a percentage of the potential market, no matter how small, it means there are fewer customers available for my business, thus lowering its chance of success.

---

Where shall I locate?

One of the key aspects to making this business successful is its location. I need to locate in an area with high levels of passing trade, so as to generate enough money to take the majority of the market share from my opposition.

        So, to begin with I looked online for empty premises in the Ballymena town centre. The search wasn’t as straightforward as I thought it would be, but eventually I was able to draw up a shortlist of potential places to site my business:

• An ex estate agents, McCann property sales. Located very near the town hall, it is in the centre of Ballymena, but its position is a little bit awkward for people to stop, there isn’t an easily accessible car park, and it is situated right on a crossroads, which can be hard to access. Another drawback is it may well be too small to actually facilitate a restaurant.

• An ex church centre, Kenbaan used to be used for church functions and now is completely un-used and up for sale. It definitely has the right size; however it isn’t appropriately designed for an open plan restaurant, and will have to have some refurbishment work undertaken.

• An ex Tesco metro. This is easily the best situated of the three premises. Located in one of the main shopping streets, easily large enough to hold a restaurant and bar area and has a large car park in behind.

So, after generating this shortlist, I think it was quite obvious which premises would be ideal for my business.

        

The ex-Tesco metro, as I already briefly outlined, is easily large enough, with around 20,000 square feet of space to refurbish. Furthermore being located on Church Street, there is a very large amount of passing trade and traffic, even though there are 2 nearby café’s, having an established restaurant should easily attract customers due to the larger menu choice and options of a meal rather than a quick lunch.

        

Furthermore, the car park behind the building is absolutely crucial to its success, as it is easily accessible and has room for around 80 cars. Even though my restaurant won’t be able to facilitate 80 cars worth of customers, having too much space is much better than too little. However, it could be a double edged sword, as potential customers have to drive by the front of the building before they realise what it is, then the route to the car park can be complicated if people don’t know where they are going.

Above is a picture of the front of the premises that is available for sale or rent. As we can see from the picture little money will have to be spent on removing any old signs or having to take any signs e.t.c that the Tesco’s may have left and the refurbishment can start straight away.

        In conclusion this premise ticks all the boxes that I laid out before hand, it is an ideal location and since it is situated with a lot of passing trade it can maximise the potential market.

Secondary Research Summary

Advantages

• Secondary research is easily accessible. Mantel, Cobra and KeyNote can be accessed from the Central library and an abundance of information can only help to develop the business.
• The access to the information is relatively cheap, most is even free. It will be minimum cost as the information is readily available on the internet and in newspapers such as the Financial Times.
• Secondary research is really the only way to examine large scale trends as costs and time would be vast if I was to do the research myself.

Disadvantages

• Biased results and inaccuracies cannot be checked. We have to 100% trust that the information has been collected fairly and is completely accurate.

Conclusion

To conclude this secondary research was incredibly useful. Now that I know more about the UK drinks market, I feel I will be more adept at setting up and running my own Hireable Sports Themed Bar.

        My ideas for operating a food service appears to be justified as it can help generate a steady income throughout the day before the real money is made at night time. Furthermore my idea to operate as a hireable opportunity seems to be well endorsed by people I have spoken to as it can offer groups a chance to watch sporting events without the overcrowded crammed and often volatile pub environment found elsewhere.

Questionnaire

1) I am opening a Sports Bar and Restaurant in Ballymena Town Centre.
Would you:

A) Definitely Try It

B) Very likely to try it

C) Probably try it

D) Maybe Try It

E) Definitely not try it

(If A, B, C or D is checked, and then proceed to question 2, if not then go to question 3)

2) How often are you likely to visit this establishment?

1. Every Day

2. 3-5 Times a week

3. 1-2 times a week

4. Never

3. How many times a week would you visit your local public house or nightclub?

A) I don’t go at all

B) 1-2 times a week

C) 2-3 times a week

5. More

4. What type of Alcoholic Drink Do You Prefer?

1. I Don’t Drink Alcohol

2. Beer

3. Wine

4. Spirits

5. Alcopops

F)  Other; please specify

_____________________

5. How Much Money Are You Likely To Spend In One Visit?

1. Less than £10

2. £10-15

3. £16-20

4. £21-25

5. More than £25

6. How many times per week do you visit a restaurant facility in the Ballymena Area?

A) Less

B) 1-2 times a week

C) 2-3 times a week

6. More

7. Do you think that there is any need for another licensed alcoholic premise in Ballymena?

 Yes                                No

8. How close do you live to Ballymena Town?

1. I live in the town

2. 1-3 miles outside

3. 4-6 miles

4. 7 Miles or more

9. How far would you be willing to travel to watch a sporting event?

1. 1-5 miles

2. 6-10 miles

3. 11-15 miles

4. More than 15

10. What would you consider your ‘favourite’ sport? (To watch or play)

1. Football

2. Rugby

3. Gaelic Football

4. Hurling

5. Athletics

6. Other; Please specify

____________________

11. Do you prefer to socialize when watching sport? Or do you prefer to watch by yourself?

Socialize                                        Alone

     

12. Which of my competitors do you prefer?

1. The Blackstone Bar

2. The Slemish Bar

3. The Grouse Inn

4. Gillies Bar and Grill

  13. Lastly, which age bracket do you fall under?

1. Under 18

2. 18- 35

3. 36-50

4. 51+

That is the end of my questionnaire; I thank you for your time.

Analysis of Questionnaire

This questionnaire analysis is completely based on the 100 questionnaires I handed out to a range of people within the Ballymena area, in order to gather information from people who may be part of my potential market.

1. I am opening a Sports Bar and Restaurant in Ballymena Town Centre.
   Would you try it?

This is the very basic point of my questionnaire; its aim is to help me determine I whether enough interest will be generated in my business.
        If the majority of people in Ballymena were willing to at least try my business idea, judging by this I feel that I could easily generate enough sales revenue to run my planned business.
        A unique selling point (USP) is any aspect of a firm which differentiates itself from the competition. I feel that my business USP, the sporting theme, should be sufficient enough to generate repeat custom once a customer has visited. This is one of the many advantages of having a USP, since repeat custom is essential, another may be to manipulate a USP in order to first gain interest and original custom from customers, which then allows the business to ensure repeat custom in other ways, such as excellent service.

Graph Key:

1. Definitely Try it
2. Very Likely To Try It
3. Probably Try It
4. Maybe Try It
5. Definitely Not Try It

As we can see from the graph, the majority percentage of answers that came back from my questionnaire’s favoured toward the option of definitely trying my business, which only leads me to further believe that the idea of my business could well be successful.

2. How often are you likely to visit this establishment?

This question aims to gather information on how often or not people will visit my bar, obviously linked to their answer in the previous question.
        By targeting the 18-35 year old age group, and analysing their results (age being asked in a later question) I can see how much of this potential group are located within Ballymena, since this is where my business is located. It also lets me decipher whether I will theoretically generate enough income from this group, since they are the largest alcoholic consumption group, hence they should be my main target.
        I was however disappointed with the results yielded from the question. As the graph above shows, the higher amount of people are only really willing to visit this type of establishment once, at most twice a week. I did anticipate this however, which is why i added the daily restaurant function to make sure my business generates money throughout this week as well. The results I gathered have lead to two major decisions I have now made with regards to my staffing levels and stock needing to be held.
        Firstly, my staffing levels will need to be adjusted to accommodate for the custom my business will theoretically generate. Having less bar staff during the weekdays, and employing more during the weekend, especially Friday and Saturday nights.
        Secondly, my stock levels will have to be sorted, so that there are larger amount of alcohol available for the weekend nights, possibly meaning i should receive an order later in the week to accommodate for my busy nights.

3. How many times a week would you visit your local public house or nightclub?

The aspect for this question was not to determine whether people would visit my business, but more to analyse the regularity of the customers that my competitors attract.
        Since these businesses have been running and successful for many years in some cases, I gathered even before I produced this questionnaire, that there must be a substantial amount of regular customers in order to maintain this success year after year.
        The findings of this question were exactly what I expected. Many of the people within my target group often visit their local premises 2-3 times a week or even more. As is detailed in the below graph;

        The graph below shows that the majority of people that took part in my questionnaire, visited their local premises regularly, predominantly more than 2-3 times a week.

        With regard to my business, these results have quite an impact. It shows the large amount of repeat custom that my competitors retain every week. If we take this information alongside the results from the previous question, it doesn’t provide me with confidence. The majority of people said that they visit their local premises more frequently that they were prepared to potentially visit my new establishment. From this I gather that i will have to look to other methods of attracting repeat custom, instead of relying solely on my businesses USP; for example providing excelling service that my competitors cannot, or a higher quality of food or a wider range of alcoholic beverages.

4. Which type of alcoholic beverage do you prefer?

This question was mainly designed to help me measure my businesses stock control with regards to demand for the different types of beverages available.

This question yielded a result that pointed toward the majority of people in Ballymena preferring beer drinks as opposed to wines, spirits or alcopops.
        

The above result will have a large impact on my stock control. Obviously, i will have to align my overall stock levels to cater for the beer section of my stock, if i weren’t to have a majority of beer stocked, then providing my customers what they want may become difficult. However, to completely neglect the other alcoholic beverage types would be catastrophic, so a large quantity of stock overall will be required a potential large cost to my business.
        Furthermore, it leads me to another decision with regards to promotion and offers available on my drinks. Since beer will already sell itself, by advertising and promoting drinks with a lesser percentage, especially Alcopops, can lead to maximising my profits overall and making the most of the potential money being spent by my customers. Also, it can make my business more appealing if customers believe they are getting more value for money, this may give myself an advantage overall my competitors.

5. How Much Money Are You Likely To Spend In One Visit?

This is essential in judging my prices within my business. It also lets me know what kind of prices my competitors charge if this is the amount their customers are spending on one night out. I could aim toward an under pricing strategy to make myself seem like the cheaper option in order to take customer attention away from my competitors.

From the graph, we can clearly see that the majority of people voted for the higher amounts spent during a night out. This undermines my idea of a lower pricing idea, since people are willing to spend large amounts of money on a night out. So either I aim to attract the higher spenders with a more upmarket socializing option, or attract people who want to spend large amounts of money, but want more drinks for the money they spend.

6. How many times a week do you visit a restaurant facility in Ballymena?

Moving on from the beverage aspect of my business, I decided it was time to find out information to judge the potential size of the market for my restaurant facility. This will determine the potential success of my day to day restaurant facility, the aspect of my business that will generate the majority of the money throughout the week. If the restaurant cannot generate enough revenue to maintain my business, then a bar may not be a suitable business idea.

The results did somewhat surprise me, as i didn’t expect there to be a lot of repeat custom within a restaurant throughout the week. I thought its business to be one of a more passing trade, but i was proven wrong as the majority of customers opted to eat out in restaurants within Ballymena multiple times per week.

7. Do you think that there is any need for another licensed alcoholic premise in Ballymena?

This is a much simpler question to analyse through its results, as there are only two options. If the majority of people opt for there to be another alcoholic premise, if they fall in to my target age range (18 – 35 year olds) then it can show me just how many people will be willing to give my business the benefit of the doubt when it comes to trying something new.
        On the other hand, if the majority vote for their not to be a new premise, then heavy advertising and an attractive concept may need to be employed in order to attract these customers who aren’t open to the idea of something new.

Pleasingly we can gather from this graph that people are more open to the concept of a new, differently styled alcoholic premise in Ballymena. This is reassuring, mostly because the majority of people who voted ‘Yes’ did in fact fall in to my target age group, meaning that people may even be attracted to my business’s idea, before it has even become a reality.

8. How close do you live to Ballymena Town?

If the majority of people that my questionnaire interviewed do in fact live outside Ballymena, then it could drastically affect my potential revenue as well as repeat custom. People who live outside are much less willing to frequent either an alcoholic or restaurant facility as the idea of travel may be a deterrent.
        This could lead to a business decision on my part to heavily advertise my business’s ease of access. Ideally my business, as discussed before, is in Ballymena’s town centre in an easily accessed area with a large available car park. By advertising this fact, it could lead people to make that extra effort to travel if they know that their extra needs are being catered for, like car parking.

Thankfully, the overwhelmingly largest proportion of the people asked did live close enough to Ballymena to not have to worry quite so much about the parking or ease of access aspect that I mentioned before.

9. How far would you be willing to travel to watch a sporting event?

Since my business is aimed toward the more sporting area of the market, having a sporting theme, I have already stated how i plan to provide provisions for viewing all manner of sporting events. This question was aimed to gather information on how dedicated people are to travelling to watch sporting events, live or otherwise. This leads me to the idea that I could aim part of my advertisement toward the people who are willing to travel to Ballymena for the restaurant/bar facility (as detailed in the previous question), that they won’t have to travel as far as planned if they come to my establishment. Being closer and providing all they need may be perfect in attracting those people who are unsure about travelling times to my business.

As we can see, people are very much more than willing to travel the distance to watch their favourite sporting events. Many people explained to me, after I further probed the question, that the idea of making that effort to support their team/country, makes the distance they have to cover worth it if they think it makes a difference. Further questioning revealed that if the right atmosphere were created, people were more than willing to travel if they thought this would help them enjoy their sport in comfort.

10. What would you consider your ‘favourite’ sport? (To watch or play)

My idea behind this question was to gather information on which particular sports I should mainly aim the design and advertising of my business toward. By providing for the more popular sports I can ensure that people who want to see their sport in a relaxed and themed environment I can maximise the revenue gained.

I had anticipated that football would dominate, as within the UK Mintel noted that football was the most popular sport. This leads me to believe that I very much should cater for multiple sports, but still have the majority of my provisions geared toward the football environment.

11. Do you prefer to socialize when watching sport? Or do you prefer to watch by yourself?

Immediately we can see that this question is linked to my business core idea and selling point, the idea of socializing while watching and enjoying sport. If people are unwilling to socialize with friends, or even strangers, in order to enjoy themselves then my business may fail to attract the customers needed.

The above illustration clearly shows that the social aspect my business aims to provide is correct. By providing a social setting to view sport, people will be more intrigued by the concept of viewing their favourite sports amongst friends in a pleasant atmosphere.

12. Which of my competitors do you prefer?

This question is aimed toward judging what rough percentage each of my competitors claim within my target market. It also further backs up the point made in my secondary research that these are my main competitors I have highlighted. By identifying my main competitors before my business has opened, it allows me to judge whether my location allows me to be close enough to competitors that many regulars don’t see my business as being too far away to be an inconvenience.

From this I have been able to back up my statement that these are my main competitors. Proven that i have identified correctly, since only 4% of people voted otherwise, it means i can focus attention and advertising strategies in to attracting these select businesses repeat customers away from their regular establishment and in to mine.

  13. Lastly, which age bracket do you fall under?

By asking this question, I can back up whether the people that I asked amongst with my questionnaire fall within my target age group, 18-35 year old alcoholic consumption community. If the people interviewed didn’t fall in to this bracket, then their answers and statistics gained can’t be taken in to account when gearing toward my market.

Thankfully, we can see the vast amount of people asked were in fact in the age category, while still providing a wide enough dynamic to take in to account the opinions of potential customers from other age groups.

Sales Forecasting

Within in this part of my financial analysis section I will use a few calculations to find out roughly what numbers of potential customers i can expect to attract to my business within the Ballymena town.

The first question on my aforementioned questionnaire, ‘I am opening A Sports Bar in Ballymena, would you try it?’ will be the basis of my calculations for my potential customers. However, certainty in people’s answers is the only way i can guarantee their custom; I will only use data taken from the ‘Definitely Try It’ or ‘Very Likely to Try It.’

From further research I have also obtained the population of my target area, the Borough of Ballymena. Wikipedia states that the desired population is 51,500, as well as the Ballymena Borough Council website which states the figure to be in and around 75,000, however this figure is for the entire borough, and it is just the town i am aiming for. Since I have two differing figures, i will take a figure from between both; my final population figure will be 51,500.

However 51,500 is the total population of the borough as mentioned before. My businesses target market is not the entire population, but the 18-35 year old category. Further research within the Ballymena Borough Council website lead me to a diagram that broke down the population of Ballymena in to its specified age categories, infant – 18, 18-30, 30-50, 50+. From this i was able to digest the information that 16,480 (32%) of the population fall within the 18-30 category, my target market.

Average Customer Calculation

Calculation 1

From deep analysis of my questionnaire, as is shown in the previous section, i was able to find out that 36% of people that answered the questionnaire chose the ‘Definitely Try It’ Option. While 27% were ‘Very Likely to Try It’.

 The first step in this calculation is to use the two previous figures, and apply them to the 90/30 rule.

Definitely Try It – 36% x 0.9 = 32.4%
Very Likely To Try It – 27% x 0.3 = 8.1%

32.4% + 8.1% = 40.5%

The second step is to take the population of my target as I mentioned before, 16,480, and find 40.5% of the total

16,480/100 = 164.8 x 40.5 = 6,674

Expected Customers – 6,674

Calculation 2

The idea of this step is to calculate how many customers on average my business should aim to attract in a year.

To do this I will take a different question, ‘How Often Would You Visit My Bar?’ as it details how often people will visit my bar and gives me a basis with which to predict my potential annual customers.

There were four different answers, only three of which I can use as potential visits, as the fourth was a ‘Never’ option. They are;

Every Day – 5%
3-5 Times per Week – 37%
1-2 Times per Week – 51%

From here, we take the percentages and multiply them with the number of expected customers, 6,674, to over all find the number of customers per year;

6,674 x 0.05 x 365 = 121,800
6,674 x 0.37 x 52 = 128,408
6,674 x 0.51 x 52 = 176,994

Overall Annual Customers:        427,202

This gives us the figure for expected customers in a year, a simple calculation follows to give me the expected customers per month if we use this as a benchmark;

427,202 ÷ 12 = 35,600

Overall Monthly Customers:        35,600

We then divide this total by 4, to then find the further figure per week;

35,600 ÷ 4 = 8,900

Overall Weekly Customers:        8,900

Total Revenue

By calculating my total revenue, i can forecast my potential financial income for my first year. The statistics used are taken from my previous section on calculating average customers.

For this section, since it is based on financial intake, i will have to use analysis gathered from my question ‘How Much Money Are You Likely to Spend in One Visit?’ to give me an idea of how much i will intake in a year.

There are 5 differing answers available;

Less Than £10 – 8%
£10-15 – 27%
£16-20 – 30%
£21-25 – 18%
£26+ - 17%

The calculations go as such:

8% of people said they would spend Less Than £10
8% of 35,600 = 2,848
2,848 people spend on average £5
2,848 x £5 = £14,240

27% of people said that they would spend £10-15
27% of 35,600 = 9,612

9,612 spend on average £12
9,612 x £12 = £115,344

30% of people said that they would spend £16-20
30% of 35,600 = 10,680
10,680 spend on average £18
10,680 x £18 = £192,240

18% of people said that they would spend £21-25
18% of 35,600 = 6,408
6,408 spend on average £22
6,480 x £22 = £140,976

17% of people said that they would spend £25+
17% of 35,600 = 6,052
6,052 spend on average £26
6,052 x £26 = £177,352

So from this analysis of monetary intake, I have been able to calculate:

Total Revenue = £797,504

Start Up Costs

As with any new business, there are multiple start-up costs that are involved in its creation. It is essential for a newly formed business to balance the expenditure of these costs with income. There are a few options available to a new business to finance these potential cash flow problems:

• Bank Loan
• Overdraft
• Outside Investors

In my opinion, a bank loan is the ideal option for opening my business as; even though interest rates can increase and end in a far larger amount being paid back what was originally lent, there is potential to take a large financial investment with secure financial history. Options like outside investors provide potential minefields, because if the investors were to withdraw further funding for the business, then it is most likely that the business will suffer as well. It is for this reason that the main financial backing I have chosen is to opt for a bank loan.

Listed below are my original start up costs, these do not include fixed assets that are involved with running the business on a day to day basis.

Costs

• Rent original payment - £40,000
• Beer engine, bar and cellar equipment - £5,465
• Dishwasher x2 - £1700
• Drink Cooler x2 - £2866.5
• Ice Maker x2 - £1786
• Food Supplies per Week - £1200
• Original Bar and Restaurant Fitting and Refurbishment - £50,000
• Security – £1100
• Original Stock - £5888
• Food Supplier Contract - £900

Total Costs - £110,905

From this I am able to establish that a bank loan of at least £250,000 will need to be taken in order to cover the above costs, as well as backup cash in case of emergency or advertising issues.

Fixed Costs

The fixed costs are the costs involved with the day to day running of the business. They are always something that has to be taken in to consideration as they are the only regular source of cash outflow, and if balanced correctly with cash inflows, it can lead to a successful business.

The fixed costs involved in my business are listed below:

• Property Rent - £10,000
• Fixtures and Fittings (Heating, lighting e.t.c) – £1600
• Equipment Maintenance - £300
• Taxation - £1000.96
• Security - £200

As you can see from the above statistics, there aren’t anywhere near as many fixed costs as there are start up ones. However in the long term, they will most likely add up to more if the business is successful, as they are guaranteed costs at the end of each month

Variable Costs

Variable costs are almost like fixed costs, but the amount they pay out each month varies. They are based on undeterminable factors that can’t really be predicted. There aren’t that many variable costs, but they can be substantial, and are expenditures nonetheless;

• Wages (see other page to find out how these were calculated) - £5,704.4
• Advertising/promotion - £2000
• Stock - £5888

These costs are important to consider as they help me produce financial information documents, such as a cash flow forecast, trading profit and loss account or a balance sheet. These methods are explained later on in this section.

Wages

With an establishment as large as my proposed idea, keeping staff motivated and happy by balancing my wages budget is essential is essential as motivated staff is the cornerstone of a successful business. Below are my proposed wages for the 5 main areas of employment:

All the below wages are on an hourly rate, apart from my assistant manager(s).
Bartender - £6.50
Chef - £6
Head Chef - £8
Waiter - £5.20
Part-Time Glass Collector (Weekends) - £4.50
Restaurant supervisors - £8
Bar Area Supervisors - £8
Assistant Manager - £1.5k per month, salaried

Next, i have detailed my weekly shift assignment that i plan to use in order to calculate my wages per week; this will obviously differ on a weekend;

Totals:                                          £59.40                                  £77.10

By adding these values together, then multiplying by five (as I am using this also for Sunday), i will get my overall wage budget per week for the five days where this wages table has been used. By multiplying this second total by four it will give me the total per month.

£59.40 + £77.10 = £136.50 x 5 = £682.5 x 4 = £2,730

Total per month for this wages table - £2,730

With regards to running my weekend shifts i devised a second table;

Totals:                           £552.10                        £297                   £489.60                      

The calculations I ran on the previous table are exactly the same as the previous table, except it is only used for Friday and Saturday nights, so therefore only multiplied by 2.

£297 + £489.60 + £552.10 = £1338.7 x 2 = £2,667.4

Total wages for this wage table - £2,667.4

If we add the wages together we can get my fixed wage per month.

£2,730 + £2,667.4 = £5,407.4

Total Wages per Month - £5,407.4

Balance Sheet

Fixed Assets

Property/Rent -                                                         £10,000

Fixtures and Fittings -                                                 £1,600

Equipment Maintenance -                                         £300

Taxation –                                                                £1000.96

Security -                                                                 £200

Wages -                                                                 £25,901.6

                                                                        
                                                                        £39,002.56

Current Assets

Stock -                                                                 £5,888

Cash -                                                                £139,095

                                                                        £144,983

Creditors –                                                                £50,000

Net Current Assets –                       £144,983 – £50,000 =         £94983

Assets Employed -                                                         £133,984

                                                                        
                                                                        £228,967

Long Term Loan -                                                         £133,984

Current Assets -                                                         £133,984

Trading Profit and Loss Account

Sales Revenue -                         £4,171,608

Cost of Sales -                         £26,097.6

GROSS PROFIT -                         £4,145,510.4

Less Expenses

Rent and Rates -                         £333

Stock -                                 £5,888

Taxation -                                 £1000.96

Fixtures and Fittings -                 £1,600

Equipment Maintenance -         £300

Security -                                 £200

Wages -                                 £25,901.6

                                        £35,223.6

OPERATING PROFIT -                 £797,504

NET PROFIT BEFORE TAX -         £797,504

NET PROFIT AFTER TAX -                 £657,541

DIVIDENDS -                                 £0

RETAINED PROFITS -                 £657,541

SWOT Analysis

For this fourth part of my coursework i have decided to write a SWOT analysis of my business. A SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieving that objective.

Strengths

• USP of sports theme.
• Large passing trade.
• Car Park availability
• Business is located in a popular street.
• Specific age group means large attraction to younger audience.

Weaknesses

• Potentially too large premises.
• Large business aims means larger start up costs.
• A lack of marketing and business experience on my part.
• Hiring of experienced, trained staff.

Opportunities

• Chance to capitalise the market for younger people in Ballymena, as there aren’t any current places
• Chance to create a new reputation for my business, from scratch.

Threats

• Quite a large amount of competition in the Ballymena area.
• Older age groups are unwilling to try a new business, they are happy with the ones already in place.

Strengths

My strengths are listed in order to highlight the positive aspects of my business plan, to see what is good about the business i have theoretically created;

My first is the USP of my business. A USP is a marketing concept that states that any product making unique propositions to the customer enhances the attractiveness of the business.
        

The USP within my business is its sports theme. I feel this sets it apart from other pubs and drinking establishments in the Ballymena as it is aimed toward a more sporting area of the market, while offering them something different that competitors cannot match. By setting my business apart from the competition it gives myself a higher chance of generating maximum profit from new customers, whilst offering competitors customers something different so as to attract them to my own pub.

         

        Secondly, I have situated my business in the Ballymena town centre. Since Ballymena is a large shopping attraction for many people in the surrounding borough, there is a large amount of passing trade. My business being situated on one of the main shopping streets, it is easily accessed surrounded by many shops, this could prove crucial to the success of my restaurant, as passing trade is one of the best ways to attract new customers.

        As more of a continuation of my previous point, my business is situated in an area that is easily accessed. There are multiple available free and pay-and-display car-parks available. People coming from outside the town centre could specify this as a necessity, since ease of access may set myself apart from other competitors, potential customers may prefer my establishment since it is more customer friendly.

        Furthermore my business is targeted at a younger audience. As i have stated before in this project, the 18-35 year old category is where there is the higher potential for generating maximum profit. Having already designed my business to provide for these people, by attracting the younger generation I can not only ensure return custom, but also have potential customers for many years to come. Also, if I generate a good impression within my specific market, it can increase my reputation within the Ballymena Borough Area, further increasing business.

Weaknesses

        This area is designed to highlight all the potential weaknesses and faults within my business plan;

My first weakness is the size of my business. I situated my business on the site of an old Tesco, thus the building itself is quite big. Since i aimed to create a restaurant area as well as a bar/nightclub part, it could easily hold my planned design, but will also leave quite a substantial amount of space left unused. This means that my business is paying for rent and security on an area of the building that isn’t being used, a waste of money.

Since my business is quite a large project, it requires a lot of equipment and finance to start off. This leads to larger start up costs than were previously predicted, and of course the larger amount of money paid at the beginning means potential larger debts in the long term if money is loaned from a bank or other type of external investment. Furthermore, the larger the business is, the larger the fixed and variable costs are likely to be, as more money needs to be paid out on a regular basis.

Furthermore, as a first time business operator, there could be potential problems with my lack of experience. Since it is a large business that aims to create a good reputation, good management is essential. This could damage finances as external help may be required, be it investing in finding an experienced business partner, or hiring specialists such as accountants or experienced assistant managers.

Also, since my business aims to cater for a drinking as well as eating aspect of the market, finding experienced, previously trained chefs and bartenders could prove to be a problem. Even though i plan to run a training scheme to train chefs and other bartenders, i will need to employ experienced people as head chefs and bar supervisors, who will be placed to make sure new staff are doing their jobs properly. Other businesses may have an advantage that they can borrow staff from fellow establishments; i will not have this luxury as this business is the first of its kind, especially in my enterprise.

Opportunities

The third of the four SWOT analysis areas is the opportunities and aspects that can be exploited in order to generate maximum profit;

        Firstly is my idea to target the younger area of the Ballymena town. Since the closest establishment for a younger audience is either in Belfast or Toome, by creating such an establishment within the town centre is likely to attract much interest as less travel is involved. Furthermore, if the people from Ballymena are positive about my business, then it means that people from outside the town, in the borough area, are more likely to be attracted to it due to a larger crowd of friends in a place that is closer than other establishments for the same experience.

        Since my business is a new brand name and business idea, it means that there is little chance of my establishment being categorised alongside other similar places. This gives me an advantage over my competitors. Other places have already established themselves and built a certain reputation, if it is not the reputation desired, then there is a good chance the business could fold. By giving my business the opportunity of creating a reputation from scratch, I can ensure that a good reputation is created from the start. By starting offers and promotional strategies such as lower prices, i can generate a good image, thus ensuring repeat custom.

         

Threats

This aspect is to detail the potential threats to my business that could hinder its progress. By observing these in my business plan, it means i am better coped to deal with them if my business is created;

        Firstly, is the amount of competition in the Ballymena town area. As i evaluated before there are 22 different alcoholic selling premises in the Ballymena Borough, including the town. The sheer number of opposition has to be highlighted as my main threat. Mainly because no matter how small the establishment, they still hold a percentage of the market share. It is utilising this and aiming to attract competitor’s customers that can mean greater profits for me in my first year. If i can attract and maintain the customers gained from rival businesses, then i can gain their market share and establish myself as one of the largest competing businesses in Ballymena.

        

Another large problem for my business is i have maybe segmented my target market a little too much. By targeting my aforementioned 18-35 year old category, i am not catering for other segments of the available market. Older age groups, labelling my enterprise as for a younger generation, may be unwilling to try my business and will opt to stay away. This could prove to be a problem for my alcoholic premise during the weekday time. Since most of the business generated at that time is of the over 50 age group, not attracting them could mean there is very little custom in my bar, and thus more pressure is placed on the restaurant function.

Conclusions and Recommendations

This investigation was set up to establish whether it would be feasible to open not only a themed sports bar, but a daytime restaurant in the Ballymena town centre. Having carried out extensive research, both in the primary and secondary research, and using financially analytical tools available to me, I believe that it there is a high chance of success for this business idea.

My secondary research lead me to gather a lot of information on the alcoholic consumption market and the public house market. Through this i was able to determine that my bar has a different tag compared to most, commonly referred to as a ‘Superpub’. They are open long hours, well in to the morning on weekend nights, while also providing a function for eating and socializing throughout the day, superpubs benefit from a larger versatility alongside a wider variety compared to competition, as well as a potential large volume of customers.

        The Superpub market is a constantly growing one within the UK, a key factor for the choosing of my business idea. Having identified this before I began this project, i felt that this was a market that could be exploited in the Ballymena, since there is no exact establishment already in place.

Having established the 18-35 year old age category as my target market, roughly 14,000 within the Ballymena fall in to this category. This statistic is based on the 2007 Ballymena census; personally i think this should be a large enough audience to support my bar.

        Unfortunately, over the last 3 years unemployment has had an unsteady progression, before finally settling on the unnerving figure of 6 million, the highest it has been since 2002. This could have a knock on effect for my business, since if there are more people without jobs, less money is then available to them, and thus they are less willing to spend money on luxury exploits, for example eating out or enjoying themselves on weekends.

        Despite an ever steadily growing number of closures within the public house industry, research has shown that there has been a larger increase in the value of sales taken from each individual public house. Through Key Notes I was not only able to gather this figure, but also information gained from a questionnaire completed by the website that there is an ever increasing demand for more public houses to be available in smaller areas throughout each of the countries, and especially for Superpubs.

        From the questionnaire that i produced during this project, I was able to gather that around 35% of people visit their local pubs or bar facilities throughout one week. I am aware of the danger that this repeat custom my competitors currently have, alongside the fact that a low percentage of these people would be willing to visit my establishment on such a regular basis, could be crucial to my businesses success. If i don’t have an effective marketing and advertising plan, as well as a well situated premises, then attracting and potentially stealing these customers could become difficult and affect my businesses sales on a day to day basis.

Often offers to raise custom are an important means of raising revenue during off peak times, especially throughout weekdays when sales will inevitably be lowest. Free samples of food, free drink promotions, afternoon deals on selected products and offers on beverages during weekday evenings could prove to be effective means of attracting this revenue as well as ensuring customers feel they are getting value for their money.

        The only part of this plan that worries me is the potential loss i stand to make during the first period of opening. Heavy advertising and marketing ventures can be costly, but i feel that a loss in the short term could prove to be more beneficial in the long term, as it will help me establish a more regular and flowing customer base which will inevitably pay off the initial losses over time.

        Groups like football teams, supporters clubs and even staff nights out are groups that are going to be attracted to my business. Since there is a sporting setting and theme to my bar, the sporting groups mentioned may see this as an ideal place to go to enjoy their favourite sports, while participating in a team bonding experience and social atmosphere. An idea would also be to offer groups such as these in order to attract them initially with the idea i just stated, therefore maybe ensuring they return if the idea was carried out effectively.

        Business professionals are also a potential market to exploit. If i were to offer a suitable setting for business lunches, maybe again offering discount during lunch times, may attract these lunches to be held at my establishment instead of others.

        Numerous and high quality of competition mean that a high level of produce, as well as an excellent service provided by the business and its staff could be the key factor in establishing myself as a main contender in my chosen market.
        High levels of hygiene in places such as my toilets, my kitchen and in the surrounding area in the street are crucial in establishing myself with a good reputation. Furthermore, embracing the recent smoking ban by providing a sheltered but aired and legally acceptable area for people wishing to smoke can also affect how the public view my business.

With regards to staff within my business, I plan to provide a polite and efficient service. Hiring fully trained staff to begin with may be more costly, but this has the knock on effect of having my newly trained staff picking up small tips from those more experienced. Experience is key in any kitchen for example, as an experienced head chef will have a dramatic effect on the speed and quality to which orders are produced.

        Personally, I aim toward providing the best service available to my customers within this business, and even though it may cost more to employ such staff to begin with, the small difference in monetary output will be made up when my business soon becomes preferred to my competitors due to its excellent service.

With regards to external influences that my business has no control over, my first point is that of ‘binge drinking.’ Recently there has been talk of introducing a removal of ‘happy hours’ and banning drinks promotions, such as 2 for the price of 1. The government has considered these actions, and campaigns to install such laws have been campaigned by groups determined to thwart binge drinking and to reduce the level of alcohol fuelled violence or drunk driving. If such laws were to be placed it would have a detrimental effect on my business, since I have already mentioned that drink promotions are to be crucial to attract customers who are either loyal to a competitor or people that live outside Ballymena and see more local options as a better alternative.

        My second main reason for concern is the ‘credit-crunch’ atmosphere that seems to have hit the people of the UK inside the last year. Even at times like Christmas, people are having to cut back and not spend as much, so there is a very real possibility that there will be an even further drop in people willing to spend much demanded money on luxuries like alcohol and slightly pricier food. This is not an effect that will help my business in any way at all, in fact in the last year alone, according to Mintel, money spent in the alcoholic industry has fallen 6%, and with the continuation of recession it could fall even further, potentially crippling my businesses sales.

        With regards to my primary research, my questionnaire proved a positive point of feedback when it came to judging whether there was need for another bar or public house in Ballymena. Many people seemed open to the suggestion, and even though they seemed reluctant to leave their local establishment, the lure of a new USP and different atmosphere within a Superpub may prove too much to resist. In my opinion the public house idea is declining, as is shown from the KeyNote figures of 2007, showing a 16% drop in the number of such establishments since 2002, the new SuperPub may be the future, and to leave such a market open to be exploited by another would be poor business.

        From the calculation of figures shown clearly in my balance sheet, and an interview with my uncle who currently runs a bar himself, the start up costs of such an establishment can range from what i calculated, £110,905, to what my uncle stated of as much as £300,000. The revenue however proves to be equally as substantial, ranging from my uncles figure of £1.2 million, to my calculation of £797,504. The numbers speak for themselves in that there is clearly a substantial profit to be gained, even within my first year, and after heavy marketing and advertising, the majority of said profit is still available.

Through my own knowledge and aid or research, i think that by plotting a market map, there is a gap in the market for a sports themed bar.

        Many successful businesses are based on an idea and run on initiative and ambition, like Virgin and Microsoft, in my case however I think my research points toward a success even without such qualities.

        Firstly, is a reference to the businesses location. I feel Ballymena is a perfect place to locate my business. It is a town constantly progressing, and recently discussions have been made in to whether it should receive city status. It has a large sphere of influence, attracting many people from many surrounding villages and smaller towns, most notable places like Antrim, Randalstown, Portglenone and Rasharkin, to name but a few. It is in direct competition with the likes of Belfast and Derry, already cities, it can easily compete with regards to shopping and transport, alongside an active social life and tourism opportunities.

        In recent years, Ballymena has attracted even more people to live within its limits, by generating an ever rising number of jobs with the building of places like B&Q, JJB and the new Tesco’s.

        My idea as to the exact location of my business, locating at the site of the old Tesco’s. There are many advantages to this, not least the size. It provides ample room for the restaurant facility, with large open floored areas, as well as further large spaces for the bar or nightclub area that I aim to put in alongside. Able to easily cater for 700 or more people, I can assure a large increase in revenue at peak times. However, high rent and rates may be damaging to businesses profits since a large building will inevitably have high costs in these areas.

        Finally, in conclusion, to ignore the religious tension in Ballymena would be naive of any business aiming to site here. It is important that i situate in a neutral area in order not to show allegiance to one particular group, in the same way that I must distribute my promotion evenly. Hopefully I won’t be forced with the same issue as places like The George or The Slemish, two establishments who are wrongly aligned.

         A unique style is one that will achieve prominence in today’s culture. There are already a substantial number of similar businesses, the public house atmosphere. Whereas a business with something different to offer is one geared toward success. My businesses style of offering excellent service, a social atmosphere, a sporting theme and contemporary outlook could be one destined for success.