How often do you go up to Main Street? (p.w) Never 1-2times 3-4 5-6 7+
How do you get to Main Street? Walking Car Bus Train Bike
Do you think there should be any other types of businesses on Main Street?
Would you visit a gift shop selling small gifts and major gifts (e.g. balloon rides etc)? Yes No Maybe
How often do you buy small gifts? Every week Every fortnight
Every month Less than once a month
When I need to Never
How often do you buy major gifts? Every week Every fortnight Every month Less than once a month When I need to Never
Would you buy small gifts for yourself as well as others? Yes No Maybe
How many children do you have? None 1 2 3 4 5+
If you saw a gift you liked, would you mind if you had to wait approx 24 hours until it was ordered in?
Yes No Maybe
Do you often plan parties? Never Not often Sometimes Very often
What times do you usually visit Main Street? Morning Lunchtime Afternoon Evening When I need to
LETTER TO A BUSINESS
It would be a good idea to write a letter to a businessperson who owns a business in the area who could maybe give me some advice and tips about opening a new business. This is what the main part of the letter would look like:
I would have to ask them many questions which could help me setting up and also they could help in working out my break even if they know of the fixed costs etc.
PEOPLE COUNT
I did a people count outside both locations to see how much passing trade each one gets. I did this for 5 minutes in every situation and recorded the following information:
LOCATION 1
MORNING –
LUNCHTIME –
AFTERNOON –
EVENING –
LOCATION 2
MORNING –
LUNCHTIME –
AFTERNOON –
EVENING –
LOCATION
It is very important to take time and consider where the location of my business should be. This is because there are many factors that determine whether your business will be a success, and you need to be aware of the advantages and disadvantages surrounding a certain location. If I don’t think about it and just buy any place then most probably my business will be a failure.
The facts to consider; the questions you ask yourself when looking at different locations include: Which shops is this place near? How much passing-trade will I get? How much space is there? Are there many car-parks and bus-stops nearby? And the one I believe to be most important for a starting business; how much will it cost me in total? (Including rents/bills.)
On Main Street, which is where my shop would be located, there are two main locations to look at. One is in the middle/bottom near larger PLC’s e.g. HSBC and Lunn Poly and the other would be further up near the smaller, self-owned shops e.g. Bike Shop and China Shop)
= Location 1
= Location 2
Location 1
This would probably cost me approximately £400 per week which is more expensive than Location 2 however there would be more passing-trade.
The shop would probably be a lot smaller though and more compact. There are many car parks around this area and just as many bus stops, so it is easier for customers to get there.
The Rent and Bills would be about £20 000 per year on a 10 year lease.
When I have big deliveries, this would be better than the other Location because there would probably be more room for a larger delivery van.
As I would be starting an entirely new business, this may not be the best Location for me because it is quite expensive however there is more passing trade which could suggest a better profit than if I was in Location 2.
Location 2
Location 2 is not too far from Tescos supermarket. This large company has many customers per day, so there consumers could be passing my shop, however this could be the same case with Location 1.
This store would be a lot cheaper per week (approx £200 less than the other site), which is better for a starting business.
The shop area would be a lot larger, however most probably a lesser passing-trade than Location 1. With the shop being larger and more spacious, there is a lot more area to store products and extra space can be sub-let, if not used to make more money.
There is a large car-park nearby and smaller areas for cars/lorries etc. There are many bus-stops nearby too.
Which location should I choose?
I would choose Location 2 to have my business as it would probably be bigger, which is better as I need more space as there are 2/3 sections to my shop. Also it would be better to have more space to stock the small gifts.
Having my business further up the street, there may not be as much passing-trade, this may not be a problem however as there are no other shops further down the street near Location 1 that sell the type of products I would do.
Going for this location would mean that the rent would be cheaper which is better for a starting business trying to establish itself.
There is the large Tescos car park nearby which is good for business and also a small area for cars further up the street.
If, for some reason, I did not need the extra space, I could sub-let it and then I may get more customers walking through my shop and my costs would decrease as I would be receiving rent from the person I was sub-letting to.
COMPETITION
The competition will be the other companies that sell similar products to me. I have to compete with these for a market share.
There are many factors to determine who the better competitor is, these include;
- RANGE OF PRODUCT – wider range of products, the more customers
- PRICES OF SIMILAR GOODS – normally you would undercut
- IMAGE – logo, colour scheme, bags uniform etc
- QUALITY – in goods, no cheap bad quality products, advertisement
- MARKETING – internet, advertising
- OPENING HOURS – late, early, ones that suit a majority of customers
I have chosen three main factors for my business, these are;
- RANGE OF PRODUCT – I will be able to beat my competitors by using this factor as I am going to be selling small gifts, major gifts and will b party planning. Research shows that the more variety there is more chance of survival.
- IMAGE - If I have an image that stands out -in my logo, colour scheme and carrier bags then more people ill notice and may visit the shop. I think that a better image gives out the impression of better quality.
- MARKETING – If I advertise my shop and my products using good marketing skills and techniques then more people will know about the business and may want to find out more.
I think my competitive advantage is that I have a range of things to offer, so I am almost three shops in one.
I have selected three companies that I could be in competition with, 1 for small gifts, 1 for major gifts and another for party planning.
COMPETITIVE ADVANTAGE
I believe that I have a competitive advantage over my competitors because I have a range of different products. I don’t only specialise in small gifts, but also major gifts and party planning. There are different aspects to all these products. With small gifts, you can have anything from £1 to £50, and there is a wide variety for many different people. The major gifts are diverse in comparison to many other shops and the consumer would have to go as far as Leeds City Centre to a large branch to purchase them. You can have anything from helicopter rides to golf lessons to vouchers for ski slopes. Also, there are few places that do party planning and it could be for any ages from 1 to 101 years of age. I have three products to offer to customers and each of these has other things to offer which are diverse.
MARKETING
My marketing budget is the money I have foe advertisement for my shop. There are many methods to advertise for example leaflets. The price can vary for the different methods and so does the audience size, ease of use and outcome.
Possible marketing techniques for my business
I could include money off vouchers for methods 2 and 3 which may mean that more customers come into the shop, wanting to use this voucher and then may spend more than they expected because they see something they like.
With my marketing strategies I need to consider the 4 P’s, these are PRODUCT, PLACE, PRICE and PROMOTION.
Place – this includes the location the product is sold in and how it gets there.
Price – this is the sales price of the products or any special deals
Promotion – use of advertising for the products
Product – this is the logo, high brand recognition and contrasting colours of product, window display and advertisement methods.
SHOP LAYOUT
It is important to think about my shop layout so I can be organized and also so everything looks good. If, in my shop, all products are in no particular order and maybe squashed together or there are too small spaces then customers would not want to stay in the shop and would leave without buying something even if there was something they may like.
Location 1 would be like this but larger.
WINDOW DISPLAY
If I didn’t have a window display then the shop would look very boring and not interesting. Having a very eye-catching window display would help the business because customers will want to come and have a look at it and they look inside also. My window display would be very colourful & bright to attract customers to the shop. It would advertise every aspect of the shop; small gifts, major gifts and party planning.
LIABILITY
For my business, I would have to choose whether I wanted unlimited or limited liability. I need to consider what both liabilities entail, before I come to a decision.
With unlimited liability, your personal life is not mutually exclusive to your business life, because if you are declared bankrupt, then everything you own including house etc will be taken off you apart from the clothes you are wearing at the time and the tools of your trade. However your accounts are closed, so no other companies can see them.
With limited liability, your personal belongings are not taken off you if you go bankrupt so you still have somewhere to stay and also, personal bankruptcy is not an issue and so more people may want to partner with you and your business. However with limited liability, your accounts are open and so people can pay to look at your accounts, which may help them be a better business than you.
I think my company should have limited liability because I wouldn’t want my personal belongings being taken away from me if they are nothing to do with the company. Because I am starting a new business and have never done so before, this would be my better option.
BREAKEVEN
I need to find out my breakeven point to see whether my business will be a success. Once I have done the calculations I will have a figure at the end which tells me how many products I need to sell so my profit is equal to my loss. If there is any extra money then this is my profit and is a bonus.
Breakeven = fixed costs
Profit contribution
= fixed costs
sales price-variable costs
For Location1:
Rent = £1,000
Rates = £700
Insurance = £40
Phone = £40
Wages = £500
£ 2,280
(£50 as average price of product)
= 2280
50-40
= 2280
10
= 228
In Location 1, I need to sell 228 products at £50 each per month to reach my breakeven point.
For Location 2:
Rent = £800
Rates = £ 600
Insurance = £ 30
Phone = £ 40
Wages = £500
£ 1970
CALCULATIONS ON NEXT PAGE
= 1970
50-40
= 1970
10
= 197
I would need to sell 197 products per month at £50 each per month to reach breakeven in Location 2.
BUSINESS PLAN
A business plans is the setting of targets for the opening of a business. It is important because you can set yourself targets which are achievable and can you can monitor yourself. Also, it is good because if you want to borrow money then the loaner may want to see it and if it is good, there is a better chance of getting the loan.
Business Name: 3
Business Logo:
Key People: Natasha Furness – Owner
Costs & Breakeven Point: My fixed costs would be rent, rates insurance phone and wages. My breakeven point would be to sell 228 products at £50 each in one month. This works out as 32 per week and 8 per day. I think I would be able to reach this because even though it is a large amount and some small gifts are a lot cheaper than £50, the party planning and major gifts exceed £50.
Products: I would be selling a wide range of small gifts for example trinket boxes, teddies etc and major gifts like balloon rides, go-carting experiences and days at health spas. Also, I would arrange parties for any age person and organise the things with it.
Marketing: To advertise my company I would use leaflets, the internet and a small advertisement in a local paper for example Leeds Weekly News. Please see my main page of marketing strategies.
Cash Flow:
With my Cash Flow I have shown that I will make a profit in 6 months, my in-goings doubling over this time period. I used the last 6 months of the year because I thought this would show a good increase of profits and be a better of example of a cash flow. As you can see the in-goings increase further along this time period because people will be buying more small and major gifts and planning more parties as it gets towards December for Christmas and New Year.
Sales: I would be selling on average £500 worth of products each month which will decrease due to the party season, most probably.
Premises: Situated on Garforth, Main Street, ¾ of the way up.
Objectives:
- To make a profit
- Have a variety
- Have more customers than competitors
- Have a bigger market share than competitors
EXTERNAL INFLUENCES
External Influences are the factors which affect your businesses performance and are out of your control.
Here are some examples:
Competition: If there are more competitors than this means you have a smaller market share. Also if there are new competitors opening near your business then it will cost you approximately £50 of your profit, so you are losing sale and you could end up making a large loss if your sales go down too quickly. The likeliness of a major loss to my business, or a complete failure, is not very high. However recent statistics, courtesy of yahoo finance show that “Bankruptcies have hit a 10year high”, which if I don’t sort the business out correctly, could happen to my business. This could be good for me though because it reduces the amount of competition I have if more people are claiming bankruptcy.
Economic Conditions: For example increased interest rates. This can happen at any time and if this did happen then disposable income would increase, sales would go down and if it were on a loan or mortgage it would take the person a longer time to pay it back. Because these conditions can alter at any time, to my business, economic conditions are a large factor.
Government Regulations: These are the things that the government may tell you to do and if laws change. As with economic conditions, these may change at any time so for my business it is a large factor.
Taxes: If taxes increase as does disposable income and sales decrease which could lead to bankruptcy and business collapse. Taxes probably will not go up and o this is not a very important factor for my business.
CONCLUSION
I have considered in my coursework about opening a business in Garforth and have proved that it is a good investment. I researched different aspects of opening a new business and I am now going to conclude my findings.
I first looked at the wealth of the area and have proved that it is quite great. I have showed that in Garforth and Swillington only 1.9% of people are unemployed and also in the Leeds are the most popular type of house is semi-detached which is one of the most expensive types. This shows that there are wealthy people in this area meaning they will come into my shop with money to spend. If my shop was in a poor area then my disposable income would be very low. However my business would be in a wealthy area; Garforth and so my disposable income would be greater so I could spend more on luxury items.
I also took out a questionnaire asking people many different questions which would help with my business. Some of these questions helped me with proving that Garforth was a wealthy area and many were to see if my shop would be popular. I completed an analysis of my questionnaire and showed 5 of my most important questions which would help me with my business.
I wrote a letter to a businessperson of the local area to ask them questions, which would also help me with my business. Some were to do with the customers however some were to help me with the shop and getting to know the area. Asking these questions would then help me get to know the area in a business-way.
I then discussed the location of the business and where it would be best to open it on the Main Street in Garforth. There were two locations to look at, which I did people counts for and I decided on location 2 which would be bigger and cheaper however less people walking past. Choosing a suitable location and discussing the matter thoroughly was a good decision because if I just picked one at random then it may not be the best choice and I would not have considered the good and bad points.
Next, I looked at competition I would be facing; companies sharing the same market share as myself. It was good to realise the competition I would be facing and to work a unique selling point which would make my business be more popular and I realised I had a good competitive advantage. This was that my shop would be selling a wide range of products and so the customers would have a greater variety to choose from and it can attract different classes and types of people.
I looked at marketing then and discussed the 3 marketing techniques I was going to use, which are using the internet, delivering leaflets and putting an advertisement in a local paper. I also briefly discussed the 4 P’s which are marketing strategies which would help me in my campaign.
After that I planned the layout of the shop so that I can be organised and I have showed where everything would be going and how it would be set-up. Having a smart and presentable shop would probably want to return to the shop which is good to make a profit.
I then showed a sample of how the window of the shop would look and how it should be set out because if I didn’t have one or it looked boring and people would probably not want to come in or it would not attract a customer’s eye, which it needs to.
I chose a liability next and decided on having limited liability so my personal life would be separate from the business so if I did go bust then my own belongings wouldn’t be taken off me.
I worked out my breakeven point which was good planning because I told me basically whether my business would be a success or not. It tells me how many products I should be selling per month/week and then I can decide whether it would be a good investment.
My penultimate piece of the project was my Business Plan which included many things e.g. Cash Flow showing whether I would make a profit or not and my Objectives for the company. Having a business plan would help with arrangements for my business and also good if I wanted to borrow money because the person e.g. bank manager may want to look at it to see if I am reliable etc.
The last and final thing to my project was discussing external influences; things that could manipulate the way my business works or how much profit it makes. This helped me in seeing the potential obstructions and so I could find a way to deal with them.
To conclude I do believe that my business would be a success because of all the things I have discussed in my project. I do believe it would make a profit and would be a successful shop in an area like Garforth.
