For this assignment I have been given the following task of "You are to look at the possibility of setting up a new retail outlet in your local area."

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 For this assignment I have been give the following task of “You are to look at the possibility of setting up a new retail outlet in your local area.”

My interpretation of this brief is that I am to look at the prospects of success that a new retail outlet would have in my area (Burnley). In order to assess the prospects of a fictional retail outlet it is necessary to create a business plan, as would be the case with a real business.

Before deciding whether or not there is scope for a new business can be assessed, it must first be decided which market the business will enter. I have chosen to consider the following three types of business so that one of these can be the subject for my business plan:

  • Sport and Leisure facilities, a gymnasium with the objective to expand to become a sports centre.
  • Health and Beauty facilities, a small beauty salon with the objectives to expand into a health farm.
  • Clothes Shopping facilities, a small designer franchise.

Sport and Leisure facilities:

The advantages of entering this market are;

  • This type of outlet belongs to a market which is not brand name dominated therefore a new business would not be at a significant disadvantage to large companies in the same market due to the lack of a recognised brand name.
  • Burnley’s facilities in this market are limited meaning there is limited competition in general in Burnley for a new business therefore it will have more chance of success. Though there are existing businesses in this market meaning that the market is not saturated and there is opportunity for a new outlet to enter this market and succeed.
  • A small gym does not require a high amount of human resource, which cuts the capital and retained profit required to set up this business and maintain it in its early years.

The disadvantages of entering this market in Burnley are:

  • Because of the established “Classic World of Fitness” gym in Burnley and the new “Living Well” development in Nelson, if Burnley were chosen as the location for the new gym as a franchise in order to limit the risks of starting a new business would be unlikely to be obtained. However alternative locations like Colne or Padiham as a franchise and the benefits, which accompany it, would be easier to obtain, as there are no existing franchise outlets in these areas.
  • Because of the same two developments: if Burnley was chosen as the location for this type of outlet the most likely source of finance, a bank, would be difficult to obtain therefore the chances of being able to set up this type are limited. However there is a possibility of running a gym as a separate business on the same premises as the “Living Well” leisure centre, which does not have a gym facility, this may be mutually beneficial to both businesses.
  • In this market there is strict health and safety legislation therefore establishing a new outlet in this market is not as easy as establishing an outlet in a different market where there is not as much health and safety legislation. Also an accident in a gym could severely damage this type of outlet, this disadvantage is not just to be considered in starting up a gym but also every day the gym is open. Reputation is what all the success a business has or does not have is based on, establishing a good reputation and keeping it in order to obtain repeat trade, is harder in this market than in others. This could be a key disadvantage in the establishment of a new gym.
  • Though the amount of human resource is not high the staff that are required to staff a gym are required to be specially trained and good staff may be hard to find in Burnley as the population is not particularly large and training facilities for staff are not particularly good in this area.
  • Sport and leisure facilities are a luxury good and in a town like Burnley and in areas of the town where the inhabitants are not particularly wealthy means that the demand for this type of outlet in these areas is not great therefore this limits the chances of a new gym succeeding. However somewhere like Manchester where the inhabitants are better off there is likely to be a demand for this type of outlet so the chances of success are better for this outlet.
  • A gym is a business that can be of many different sizes. However to begin with the gym must be well equipped to reach a basic standard and therefore be used. This means that that the start-up costs are high and must be found all at once which would be a danger as the degree to which the gym is equipped would not be able to be built up over time. This increases the risk of entering this market.
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Health and Beauty facilities:

The advantages of entering this market in Burnley are:

  • The amount of human resource required at first is not high therefore reducing the amount of money which is required to start up the business and maintain it in its first years therefore increasing the chances of success for this business.
  • No expensive machinery or equipment is required when the salon is new  which further reduces the amount of capital required and therefore the amount that must be borrowed or retained therefore increasing the chances of the business succeeding.
  • There is no real established market leader ...

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