Investigating Businesses

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AS Unit 2: Investigating Business

Subject Teacher: Mr. Bond

By: Bernadette Walsh

Section 1: Business Planning

Introduction

Business Concept

This project is going to investigate the feasibility of setting up and opening a Restaurant/Pub on the Bristol Road in Selly Oak, Birmingham. The concept is a Restaurant containing approximately 20 tables, which would offer a variety of food and drink and provide live music on Friday nights. It is to be set up as a partnership. The main target market for the restaurant will be students and young adults. There is a possibility, that if this business is successful, and becomes well established, it may diversify and expand into a bar or nightclub.  

There are several reasons why I believe this restaurant may be a successful investment possibility:

  • According to , there are 10 restaurants situated in Selly Oak, however none of them provide live music or any type of evening entertainment. There is therefore a niche in the market, which may be filled by the type of restaurant proposed.

  • Selly Oak is largely populated with students, who enjoy evening entertainment, and will be interested in new venues opening.

Legal Form

The business will be set up as a partnership, as they are relatively informal and easy to begin in comparison to limited companies. There is also less money involved in setting up a partnership, which means that more time and money may be dedicated to the set up of the venue rather than spending on legal aspects of the business. This may prove to be an advantage, as the business may potentially start with greater current capital, which may be used to benefit the business. This may mean that the launch of the business is more successful than if a limited company was started.  There is however greater risk involved in a partnership, as there is unlimited liability, should financial problems arise; this means that personal belongings of the people involved in the running of the business are at risk, should the company go into liquidation. Therefore, a partnership should usually only be used when there is little possibility of bankruptcy. Another advantage of setting up a partnership is that there are a greater variety of ideas and skills available, due to the greater number of people involved. This may be beneficial to the business during the development and decision making processes of the business. Finally, another advantage of having more than one person involved, is that if one of the partners is unavailable to run the business, there is more of a chance that there will be someone available to maintain it.

There are several issues involved when starting a partnership, such as unlimited liability, and complications in the distribution of responsibility and profit to each partner. The organizational arrangements and decision making processes are also made complicated because of the increased number of people in charge of the company, so there is a higher possibility of disagreements and conflicts arising, when deciding how profits are shared between partners. Disagreements may also be difficult to resolve when both partners have equal shares of the business; conflicts arising in this manor may result in poor decisions being made for the business, and therefore, a loss in customers and ultimately profit.

The finance and control in this business will be split 50%-50% between the two owners of the partnership.

The main potential risk is that, due to the unlimited liability, the personal belongings of both partners are at risk, should the company go bankrupt or liquidate.

Values

The values of my business will be that all the customers and staff are treated with respect and kindness. Staff will be hard working, polite, kind and cheerful when dealing with customers and fellow co-workers.

My values to guide me in making decisions and running my business are as follows: to be fair, thoughtful, understanding, loyal, respectful, hard working and kind.

These values will ensure the customers enjoy the time they spend, due to friendly staff. The customers will tell their friends and relatives about their experience and will become repeat customers. This will give the business a good reputation and therefore lead to a successful business.

Mission Statement

This is often simple, memorable and explains what the organisation is in business to do and what it wants to achieve.

Mission statements express the organisation’s objectives in qualitative terms and many businesses include the following variables in their mission statement: their number one priority, their product definitions, their non-financial objectives and their overall values and beliefs.

A good mission statement should be clearly defined, realistic and achievable, and at the same time should ensure that the employees’ attention is focussed towards the overall company aim.

The mission statement of my business is: ‘To provide great service, quality and entertainment to those who seek it’. 

The good service will be of how the employees treat the customers, the quality will be of the food and comfort of the bar/restaurant and finally the entertainment will be the live music on Friday nights.

Aims

An aim is something you wish to do in the long-term.

Aims for my business will be:

1. To survive

2. To increase the number of customers

3. To open more pubs of the same kind

4. To be better than competitors

5. To achieve break-even within the next 6 months

6. To make 20,000 profit in a year

7. To gain a reputation

Objectives

Objectives set out what you need to have achieved to get what you want. Setting clearly defined and realistic objectives will enable many employees to understand exactly what their job entails and achieving clearly stated objectives might be linked to bonus payments - this can easily act as an incentive and motivator to employees.

In order to find out if opening a new Restaurant/Pub in Selly Oak is a feasible idea financially, I will break the project down into sub-tasks. Each task will become a secondary objective.

Secondary Objectives

A secondary objective is a day-to-day objective, which makes a direct contribution to meeting the primary objectives.

Secondary objectives for my business will be:

1. To estimate the demand

2. To estimate the revenue

3. To identify how much it would cost to buy or rent the site

4. Find out legislation for starting up

5. Estimate the start up costs to set up

6. Consolidate

7. Recycle materials

8. Sponsor local events

Stakeholders

Stakeholders are a group of people who have an interest in the performance of a business.

The stakeholders of my business will mostly be the owners, employees/staff, common customers, suppliers, the government, the local community, university students, new local bands and our competitors/rivals.

The Employees have financial interest in the company, since their pay levels and their job security depends on the performance and the profitability of the business.

Customers are key to the survival of any business, since they purchase the goods and services, they provide the business with most of its revenue. The business must try to keep the customer loyal so that they return in the future and become repeat-customers.

Without a good supplier, a business cannot guarantee that it will always have sufficient high quality raw materials to produce the needed output. It is important for a business to maintain good relationships with their suppliers, so that the business can negotiate good credit terms from the suppliers.

The government affects the workings of businesses by tax, legislation and economic polices.

Businesses are likely to provide employment for the local community and often will produce and sell much of their output to the local residents.

Research and analysis of the market

Competitors

In yellow pages (using www.yell.com) there are 8 matches for Restaurants/Pubs in Selly Oak.

I think that the fact that there are 8 Restaurant/pubs in Selly Oak shows that there is not a niche in Selly oak for an ordinary restaurant/pubs of this type. However, as the restarurant proposed is to provide live evening entertainment, a unique selling point may be established, and so contribute to the success of the business.  

In Selly Oak there are also many other cafés and restaurants.

Again from www.yell.com there are:

13 Restaurants

1 café

6 take-away places

That makes a total of 28 eating and drinking establishments in Selly Oak. This may show that there is sufficient demand to keep these eating facilities open but also may mean that there will be a lot of competition and the market may be saturated.

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Product mapping

Using these Restaurant/Pubs (on the Bristol Road) I will make a product map:

  1. Bristol Pear
  2. Bear & Staff
  3. The Soak
  4. Goose at the O.V.T

My product map shows that there is a good spread of Restaurant/Pubs in Selly Oak.

There are 5 gaps in the market as shown below:

1. Young and expensive

2. Young and relatively inexpensive

3. Relatively young and relatively cheap

4. Old and relatively cheap.

5. Relatively old and expensive.

1. The younger generation do not tend to have much money ...

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