Market Research – Market research is the process of gaining information about customers, competitors and market trends through collecting primary and secondary data. I will use market research to find the answer to my questionnaire i.e. what sort of business the local people in the Ballyhackamore area thought was missing and what they would like to see in the area. This is Primary research. It is also called Field Research. This will be our Questionnaire.
There is also Secondary Research. This involves looking at status from different years about topics and drawing conclusions from it. I could look at maps of Ballyhackamore to make sure I don’t create a business where it is not needed, or indeed duplicate a similar business, unless I feel the demand is there for a second one.
Bank – I am using the bank for the purpose of collecting information about anything financial, from loans to pay for property, mortgage on property and starting the best bank account to suit my circumstances. They will act like a Financial Advisor. I will check Interest Rates and get the best deal.
Estate Agents – The estate agents job will be to show me the best available premises to start my business. I will look around many different estate agents until I can find the property and price that suits my business. I will also keep checking in the local press.
Internet – the Internet will be used to show me available properties in the area but also to find out about the competition from rival companies in the area. It will also be used as advertising once the business has been set up. I could use E-Mail to send people information on the business. This may be unsuccessful because people will probably think it is Junk Mail and delete it. Therefore I will not depend on this as my only source of advertising.
Newspaper – this will be used while searching for the property but also as advertising after the business has been opened. It will also be used to advertise jobs in the business.
Invest NI –I will talk to Invest NI (the new name for LEDU) about the possibility of both capital and revenue to help until the initial set up phase of my business. Also in the medium to long term I will hope to keep my relationship with Invest NI and be eligible for future grants.
Shell Livewire – Shell Livewire is another company, the same as Invest NI that helps businesses to begin and grow. They give grants to entrepreneurs to help them in their quest for a successful business.
After completing all my questionnaires I will now put all my information into a database. I am using a database because I can perform searches on the information I have gathered to try and find exactly what I need to know. I can find different age groups, different sexes and even if the people are married or not. I will be using the database a lot until I discover which business I am going to open. I will then analyse my database and from that, hopefully find out what the public want in the area.
DATABASEINFORMATION
On a search of properties in East Belfast I found there were no available properties in Ballyhackamore that would suit setting up a business. However I did find a lot of buildings in East Belfast that could be possible sites for setting up a business.
I found a sound property on Castlereagh Street.
I also found a property on the Cregagh Road.
It is in a good location because this is near Ballyhackamore, however it is an upstairs premises so this could limit the type of people who could visit my business e.g. people in wheelchairs. New legislation coming in the next few years regarding access for the disabled means that an upstairs coffee shop without a lift to the first floor would not be viable.
I have also found a suitable building in Kings Square. This is very close to Ballyhackamore and has a small shopping community itself. This would be a brilliant place for a coffee shop or trendy coffee bar. However on further examination of the area I discovered a coffee shop above a light shop in the Square, but again, access to the first floor could be a problem in the future.
I have decided that I am going to set up my business in Kings Square. I have chosen this because it is very close to Ballyhackamore and has all the attractions of a busy shopping complex, which will ensure a large number of people passing by. It has
- A video hire shop
- A Chinese restaurant
- A large free car park
- An opticians
- A large newsagents
- A trendy shoe shop
- Large Supervalue supermarket
- A bakery
- Bank
- Health Centre
It has a very wide range of shops and on a tour of Kings Square I noticed one coffee bar, which was overstretched with long queues and waiting time. I feel that there will be the demand for a ground floor trendy coffee bar.
I think Ballyhackamore will be in my catchment area and a lot of demand will come from this area, this should make for a sound level of turnover.
Business Structure.
Because my business is going to be a small trendy coffee shop in the short to medium term, I will be the active partner. However I will need employees to staff the operation. I will take enough to keep me living and will put part of it back into the business to keep it going and possibly expand to further similar shops in the long term.
The advantage of being a sole trader as opposed to a limited liability company is:
1 - Easy to set up – the business can be set up almost immediately as there are few forms or procedures – “red tape” – to be completed. The owner usually has built up a relationship with the bank and suppliers. A sole trader will have to
- Register with the Inland Revenue, which collect income tax from the profits of the business, and also receive the tax deducted from any paid employees.
- Register with the HM Customs and Excise if turnover exceeds the lower threshold for VAT
- Seek approval from the local council for change of use for the proposed premises
2 – Easy to run – as a sole trader/partnership, decision-making is a relatively simple affair – no committees! Legal people and accountants do not have to be employed under any legislation. The books of account can even be maintained by the sole trader/partner.
3 – Tax advantages – the tax system for a sole trader is different to corporate taxation.
Examples of disadvantages are:
1 – unlimited liability – any money put into the business at start up time and thereafter, plus any assets used as guarantees against any loans, plus any private wealth of the sole trader (even if not used in the business) could be lost if the business fails.
2 – Lack of continuity – when the sole trader wishes to retire, if his/her children do not take over the business, it will simply stop trading, until an outsider can be persuaded to buy the business. Otherwise the business is dissolved, and any debts settled.
3 – Illness – If the sole trader were to fall ill for an extended period, the business may not be able to continue.
4 – Long hours – Many small traders have to work very long hours to keep the business going.
5 – Difficulty in raising capital –
6 – Limited economics of scale –
Another option for me is to find a partner to invest either time or money, or both, into my venture.
Advantages of a partnership are very similar to those of a sole trader:
1 – Easy to set up – a deed of partnership is a good idea to formalise their relationship in term of ownership, profit sharing and any rules concerning dissolution of the partnership.
2 – Privacy of information – the Inland Revenue only need to know how much profit the partners are earning,
3 – Profits belong to the partners, who usually work in the business.
4 – Usually partners have a good relationship.
5 – Extra capital is normally available. I.e. two or three people can add more to the venture than one individual. Bringing additional partners on board is a way of increasing the capital and expertise in the business.
A “sleeping partner” is one who, while owning a share of the business, takes little or no part in the day to day running of the operation. These partners are extremely useful when starting up or expanding as they can supply much needed capital, but will enjoy the result of my efforts! I think the best sleeping partner would be a family member.
The main disadvantage of a partnership is if the relationship between the partners breaks down. The end result could be that one partner forces the sale of the business because the individuals cannot work together.
A third type of company available to me is a LIMITED COMPANY. This simply means the directors i.e. Partners are liable to pay any debts if the concern becomes insolvent is limited to the amount of money they have invested. Another advantage of a limited company is that it is easier to persuade extra shareholders to invest money in the business, because their liability is limited to their stake. The major disadvantage is lack of privacy regarding business information. Detailed audited accounts must be submitted on an annual basis to the Companies Office, where they are held on file, which is open to the public for a £1 fee. These audited accounts are expensive to produce
£700 per annum for a Private Limited Company
£100,000 per annum for a Public Limited Company
The latter may grow too large whist ownership could change overnight through a take-over bid by a rival competitor. Also the directors’ interests may well be different from those of the shareholders because the ownership and day-to-day control are quite separate. Another problem could be that the PLC has a few large institutional investors e.g. insurance or pension fund companies, who hold so much control that they are very powerful.
Following the rules of the Stock Exchange can place a financial burden on any company hoping to be quoted.
Human Resources.
As service is the primary aim of my business I realise that I must attract experienced staff. I will require
2Catering Staff
3Waiting Staff
JOB DESCRIPTION
Work Details
- Catering Manager/Assistant
- McNally’s Coffee
Emporium
Kings Square
Belfast BT4
- Prepare continental sandwiches, hot snacks, homemade soups
- Menu development
- Operation of Espresso and Cappuccino coffee machines
PERSONAL SPECIFICATION
Details Of Person
Personal Qualities
- Pleasant, enthusiastic attitude, ability to ‘muck in’ with staff to get the concern of the ground
Experienced Qualifications
Certificate in Food Preparation and cooking
NVQ level 2
Advanced Certificate in Food Hygiene
REFER TO APPENDIX
Castlereagh College
Prospectus Pg 26&28
Work Experience
- Absolutely imperative
- Similar position i.e. similar set up
- References Required
- Physical/Medical attributes
Smart Appearance – all staff to wear uniform with company logo.
My staff will be my greatest asset. I am hoping to sell a “coffee experience” served by helpful experienced staff.
They will:
- Dress well
- Appear on time
- Be helpful and chatty to customers
- The customer is always right
- No smoking
These are just basic rules.
However, I realise that to staff the shop in the morning, over lunch and supervise any younger girls who may be interested in after schoolwork, I will have to recruit more mature staff. Therefore I will advertise in the local paper and make arrangements with the local job centres to find suitably qualified staff. I will also approach the local colleges – e.g. Castlereagh College of Further Education. where the students may have completed the foundation, intermediate or advanced Certificate in Food Hygiene. This would be so important considering the health, safety and hygiene regulations currently in force.
I would encourage all my staff to continue studying.
I will send them through various courses to give them high levels of hygiene and cooking courses so, in time, we could develop and start making our own food.
Waiting Staff.
Job Description.
Waiting Staff in McNally’s Coffee Emporium
King’s Square
Belfast BT5
Duties.
Waiting on tables serving specialty coffees, teas and light snacks. Cleaning duties.
Special Features.
Interest and knowledge in the various unusual coffees and teas served. Detailed knowledge of all dishes on menu as regards origin and ingredients. This is very important with so many odd allergies.
Special Equipment.
To be able to use steam coffee and tea machines.
Person Specification.
Pleasant attitude to both customers and staff. Helpful manner at all times. Enthusiasm at being involved in a new business. Willing to wear staff uniform with pride.
Qualifications.
At least Foundation Certificate in Food Hygiene Hospitality and Catering NVQ Level 1. Refer to Castlereagh College Prospectus page 26 & 28.
Work Experience.
Preferable but for the exceptional person, on the job training will be given.
Physical/Mental Abilities.
General interest in people and places involved in coffee/tea industries. Willingness to learn facts and figures in order to “sell” themed coffee events. Pleasant, neat appearance – hair to be tied back.
Method of Staff Advertisements – External.
Job centre
Employment Agencies, who specialise in the catering trade, or who will have a hospitality department. However this will cost as a fee is paid when a suitable candidate is selected.
Newspapers and magazines.
Traditionally the local paper i.e. the Belfast Telegraph, print a jobs supplement, every Friday evening, which is widely read. However, a smaller “freebie” local paper e.g. the Herald and Post, may well serve me better, as it is delivered through my catchment area.
Approach local colleges and speak to staff in the catering department. Even ask if advertisements can be put up on the college notice board.
Selection.
On the basis of the other replies to the advertisements where CV’s have been requested, the next step is a follow up interview.
The interview
At an interview the interviewer can:
Check whether the interviewee’s communication skills are up to the required standard
Assess the interviewee’s social skills
Check their physical appearance (regarded as important for some jobs, e.g. sales force, receptionist)
See how confident the interviewee is
Discuss information on the application form
6. Judge whether the interviewee will work effectively with colleagues in the department
We often forget that an Interview is a two-way process.
The interviewee can:
1. Discuss future prospects, such as the possibility of promotion
2. Check the working conditions
3. Ask about training and other opportunities
4. Judge the friendliness or otherwise of the existing staff
5. See the facilities available
Selection Tests.
Staff – intelligence in numeracy and personality.
Selection tests
Some firms run a series of tests to help decide which of the short-listed applicants is most suitable for the post. These tests may be designed to assess a candidate’s intelligence, personality or aptitude (suitability) for the post.
• Intelligence tests are designed to check an applicant’s mental abilities, and may involve testing verbal and numerical reasoning.
• Personality tests try to discover an applicant’s personality, attitudes and beliefs in an attempt to find out whether he or she will fit happily into the company
Contract of Employment.
Must include the following
CONTRACT OF EMPLOYMENT
Job title
Employer’s name employee’s name
starting date hours of work
pay and pay intervals holidays and holiday pay
sickness and sickness pay pension details
length of notice required disciplinary rules
The following legislation must be adhered to:
1979 Equality Pay Act – which means that the rates of pay for a woman doing the same job or a job with similar demands, must be the same as that paid to a man.
Health and Safety at Work Act 1974 – This lays down standards in health and safety in the workplace, where inspectors will check on premises, equipment and procedures at regular intervals. Also includes entry and exit arrangements, especially emergency exits.
E.U. Laws. These include:
Working Time Directive – maximum of forty-eight working hours per week.
Parental Leave Directive – right to unpaid leave after birth of a child.
Part-time Work Directive – equal treatment of full and part-time employees.
Race Relations Acts 1968 & 1976 – cannot discriminate on the ground of race, nationality or ethnic origin.
Disability Discrimination Act 1995 – unlawful to discriminate against a person on the ground of their disability.
Data Protection Act 1998 – Employers must follow certain rules regarding the storage of recruitment and employment details.
Marketing.
Before we can launch our venture we must satisfy ourselves that we can attract enough customers prepared to spend enough money on our goods or service to enable us to make the profit needed to meet our objectives. Then we have to decide how to reach these customers and sell goods or service at the right price. Finally, when the business is under way, we have to decide what steps to take to maintain or expand the volume of sales.
Getting the message to the customers.
Many different channels are available to the new venture yet the message must be persuasive and informative.
Leaflets – can be single sheet, simply laid out detailing opening hours, food and drink available and perhaps the date of the grand opening with details such as ‘a free pastry and drink’ if the customer produces the leaflet. As I have plans of an ‘Up-Market’ coffee house, I must devise a high-class flyer. It might well be sound economic sense to use a professionally produced sheet if this will draw in the customers. Price of production may be a barrier but some desktop publishing packages for the home computer can create surprising results.
- These leaflets can be hand delivered by myself and friends in the close catchment area
- An arrangement with local newspapers to include leaflet in their delivery for no charge.
Advertising in Press/Newspapers.
As I am only launching a small business advertising in the daily or Sunday papers would be expensive and pointless, as I would only catch the attention of the local readers, therefore a local paper, and free newspapers would be a great starting point. Again specialist magazines would be costly and probably not beneficial.
And editorial feature on my new venture in either the Belfast Telegraph on the “Free Sheets” would be an effective and free means of getting my name known. It would be useful to invite Editorial Staff to a preview evening and/or the Opening Ceremony and hope that the would write a favourable review.
Owing to the ‘Trendy’ image that I am trying to highlight I have decided to advertise in the local ‘high-society’ magazine – the UlsterTatler. A full page at £1300 or a quarter page at £400 is out of my range. However a small ad in the Dining Out Guide would be £80 - £90 and an ad in Select Services section could be as little as £60 a month.
I would be very keen to be included in a “named space” where a business such as S.D. Bells the coffee supplier, takes a full page, and their customers contribute £20-£30 each to have their name and address at the side of the advertisement.
Please refer to Appendix…
This magazine is read by the kind of ‘trendy’ people I am hoping to attract to the business. I feel this would be money well spent. Again I would hope that over time I would persuade the Editor to review my ‘Specialized’ Coffee emporium.
Broadcast Media.
Again my small budget would stop me advertising in commercial TV, and national commercial radio, which would literally reach millions of people. However an approach to a local commercial radio stations – ‘Cool Fm’ and ‘Citybeat’ may be another useful tool.
Outdoor Media.
This involves Posters and illuminated signs. Again a large-scale poster campaign would be beyond our means but a small poster dotted around local shops announcing the opening event would be helpful. The cost of an illuminated sign above the shop may be too expensive but would be an extremely helpful means of catching attention to the shop when it was dark.
Promotion.
This aims to give a short-term boast to sales e.g.
Money Off
Belted Value Offers
Competitors
Free Gifts
Discount Vouchers
Of the above I feel the most appropriate method is Discount Vouchers. On receipt of one of the leaflets on their first visit customers will be given a free pastry and on a return visit a free cup of coffee.
I hope to establish the ‘Boomerang Principle’ by encouraging the customers back with several sets of discount.
Also a small dish of mints/jelly babies etc. will be placed beside the till and the customers will be invited to take a few. Everyone likes to feel that they are getting something for nothing.
Advertising – Flyers with discount coupons attached in the King’s Road and Ballyhackamore area, which are the basis of my questionnaire. These can be quite economical to produce (beware forgeries) and with the help of family and friends can be delivered to homes at a very economic rate.
The opening is to be advertised in the local press – Herald and Post, the Belfast Telegraph may well prove too expensive – with hopefully a celebrity of some sort to attract as many potential customers as possible. Friends, family, banking, accountancy and legal groups may be able to suggest a suitable candidate.
As I am hoping to open a trendy coffee shop, I have approached the Ulster Tatler, whose readership is one quarter of a million in Northern Ireland of cosmopolitan people.
Pricing
This is broken down into two factors
- Internal or Cost Based i.e. – costs of supplies are the main influence
- External or Market Based i.e. – competitors prices.
Cost Based Pricing
This is where a company adds a profit mark-up onto its costs of production. It has two main disadvantages
- It is not easy to work out accurately the unit of supplying all types of food and drinks. Some are bought in as they are and sold on at a higher price but others e.g. sandwiches are made on the premises by transforming raw products into finished goods.
- It ignores competitor’s prices and products. However break-even analysis and marginal costing can be used to help decide on the most appropriate prices i.e. high enough to cover all raw material costs, overheads and still leave a profit yet not to price the service out of the market all together. This is the trick of the Pricing Sector
The industry norm in my business i.e. the Catering Business is a Mark-Up of 2.5 times.
Pricing Strategies
There are many pricing strategies available
. With a skimming strategy, a firm launches a new and unique product, and decides to charge a high price to ‘cream’ the market (it is also known as creaming pricing). Some people will buy the product at this high price because of its ‘status symbol’ appeal. As this appeal dies down and competitors — attracted by the high profit margins — start selling their products, the firm reduces its prices.
• A maximizing strategy may be used: where there is great demand for a product or service with a short life cycle, the manufacturer will try to maximize profits by charging high prices.
• Premium pricing is used when a firm regards its product as the best in the market: as a result, it believes consumers will be prepared to pay for the high quality and the prestige (it is also known as prestige pricing) that comes from owning the product.
Low-price strategies
• Using a penetration policy, a low price is set so the firm can obtain a large market share. Prices may be increased later, to earn higher profits.
• A capturing strategy may be used if a company is making a range of products that are linked in some way. If, for example, the company is producing items of ‘hardware’ (equipment) and also making the software used by this equipment, it may sell the equipment at a low price and rely on charging high prices for the software.
• Firms may use the loss leader approach, selling a product at below cost price (or with a really low profit margin) in order to attract new consumers and increase its market share.
These include the following:
1. Odd pricing. Prices end in odd numbers, e.g. 99p, £1 .95.
2. Psychological pricing. This makes the
item look cheaper by pricing it just below
a ‘round figure’, e.g. £9.95 rather than
£10, £2995 not £3000.
3. Discrimination pricing. This sets different prices in the different market segments. A good example comes from our public transport, where ‘off-peak’ fares are cheaper at set times of the day or week, and certain groups (e.g. students, senior citizens) can travel the same routes more cheaply than other users.
4. Market pricing. A ‘price taker’
sets product prices at or near the current market rate, in order to avoid a price war.
Finance
The business needs cash for two purposes
- To set up the business
- Then to finance the day-to-day operations known as the ‘Working Capital.’
The first calculation is to discover how much cash is needed before trading starts i.e. equipment, rent, supplies, uniforms etc before revenue starts to flow in. a further amount must be included to cover personal living expenses. A careful person will also add a further amount to cover any ‘contingencies’, which may have been forgotten, or if things just don’t go according to plan.
Internal Sources of Finance
- Owners Own Capital
- Retained Profits (eventually)
- Sale of Fixed Assets e.g. machinery, premises. If funds are tight selling the Fixed Assets can raise money and renting them back – this is known as Sale and Lease Back.
- Sale of Stock
- Debt Collection
External Sources of Finance
- Bank Loan/ Overdraft – The former is borrowed form the bank and paid back by instalments with interest added on. This is useful in the ‘Set-Up’ period.
- An overdraft facility allows the business to borrow over and above their normal Cash Position, which is helpful if there us delay between paying for stock and selling it on at a profit. However this type of interest is calculated on a daily basis and tends to be more expensive.
Additional Partners
Share Capital.
This is where a share in the business is sold for cash. In a LTD company the Directors and or other shareholders of the concern but a PLC the shares can be held by the general public hold the shares.
Leasing Assets
A firm would lease some of its assets e.g. spare space in a building to another company.
Hire Purchase
This is useful for buying capital items as a relatively small deposit is made and regular (usually monthly) instalments are paid. This means that there is no larger initial outlay but rather the cost of the asset is spread over a longer time period e.g. three years, five years. Whereby the revenue will be flowing in.
Mortgage
A ‘Long-term’ loan that is secured on property. Obviously if the repayments are missed the property could be repossessed buy the lender, resulting in the closure of the business.
Trade Credit
The owners may take advantage of the credit (time delay in payments of goods) offered to them by their suppliers and reduce the credit periods they offer to their customers. As I am hoping to start a service based on concern, which tends to have immediate cash payments by the customers, the latter point is obsolete.
Factoring
The firm can sell its debts to a debt Factor company, thereby receiving up to 80% of the debts value immediately rather than waiting for anything up to six months. The balance is paid over less a fee basis for interest and charges when the debt is settled.
Government Grants.
1. Loans or Grants can be given if manufacturing of food products is undertaken
2. European Union
3. Central Government
4. Local Government agencies e.g. Invest NI
My Finance Plan is
- Bank Loan with Overdraft and Facility for Working Capital
- Sleeping Partner – For set-up costs e.g. stock
- Lease Equipment
- Mortgage/ Rent the Property not buy it outright at the Start.
- Take advantage of trade credit but keeping a watchful eye on prompt payment discount
- Grants.
TYPE OF BUSINESS
I am hoping to open a TRENDY coffee shop.
HOW I REACHED MY CONCLUSION
I came across this idea after the public completed my questionnaire, and a Trendy Coffee Bar was what the majority if the public felt was missing in the area. From this pie chart, which was calculated from the Database, we can see clearly that nearly half of the people I questioned thought that a Trendy Coffee Bar was needed in the Ballyhackamore area.
WHY THIS IS THE CORRECT CONCLUSION
Opening a Trendy Coffee Bar is the right decision in the Ballyhackamore area because of a number of reasons:
- I took an opportunity after completing my questionnaire to walk around the area and take note of the types of business in the area. It was apparent that there was a gap in the market for my idea, although there were a few of the original ‘ tea and scone’ coffee shops, no Trendy Coffee Bars.
- The Pie Chart and Questionnaire show us that what 49% of the people questioned felt a Trendy Coffee Bar was missing.
- From my Cash Flow Forecast I can see that the idea does have a sound financial basis i.e. forecasted profit of £14,000 after 12 months.
LOCATION
Ballyhackamore
HOW I REACHED MY CONCLUSION
I decided that I would open my business in the greater Ballyhackamore area due to a number of factors.
- I know the area very well, not only do I go to school there, but I also live in the area.
- There are several large schools in the area, so there will be the opportunity to attract the older children during lunch breaks and after school.
- Ballyhackamore, as you can see from the Database, attracts people of all ages and different tastes. So this means that a lot of different people will be entering the area and with that bringing different tastes and likes, so our wide variety of coffee should cater for everyone.
- It has very good transport links, with buses every five minutes and several taxi companies operating in the area. So even people from outside the area can easily come and visit the coffee bar.
WHY THIS IS THE CORRECT CONCLUSION
I know that the location is correct because from the questionnaire we can see that the majority of people thought that they needed some sort of Trendy Coffee Bar in their area.
It is also a lively place, although it does not have all the hustle and bustle that a coffee bar in the city centre may have.
Ballyhackamore also has a lot of other shops that are used everyday by many people. This means that already there is a large amount of people in the area during the day.
The cross section of the shoppers has revelled in my questionnaire shows that the area appeals to I wide range of people. People who shop here on a daily basis as well as those who visit the area less frequently. The shopping area is in a residential belt, which hopefully will attract many of the local residents who can walk to and from the shops to my business.
My one main concern in finding the right premises is the lack of parking in the whole area. One of the people who were asked to complete my questionnaire felt that a car park was needed. This shows what an important element it is to find the right location because if people cannot park easily they will drive on by.
PROPERTY
King’s Square, Gilinaherk
HOW I REACHED MY CONCLUSION
I reached my conclusion by using the brochures given to me by Estate Agents. I also looked on the Internet to find properties, and this one came out to be the best possible for my business. There are also units either side of my business, so there is a possibility for expansion into a double fronted shop, if I see that it would be the best thing for the expansion of my business.
I also walked around the area to check any new properties coming onto the market.
WHY THIS IS THE CORRECT CONCLUSION
I was actually forced to into this decision.
There was no property that was for sale in the Ballyhackamore area that would have been appropriate for my business, however the property in King’s Square is ideal as it is on the ground floor and has access for everyone – it is wheelchair friendly.
There is also a lot of room for expansion if I feel it is necessary to grow.
I have chosen this because although it is not in the ideal area, I King’s Square has a lot of bonuses e.g.
- A large free Car Park
- A Trendy New Shoe Shop
It has a wide range of shops, which will hopefully generate lots of customers for my business. While on a tour of the Square I realised there was only one other coffee shop, which was overstretched with long queues and waiting times. I feel that there will be the demand for a ground floor trendy Coffee Bar.
FINANCE
Bank etc.
HOW I REACHED MY CONCLUSION
I found, after looking through many brochures and leaflets given to me by Northern Bank and Invest NI and speaking with family members that the best way to finance my business is to get a loan from the bank of £10,000 and get a Sleeping Partner (family member) to input £10,000. This was calculated using the Cash Flow Forecast.
The equipment will be leased from a specialised company, such as Admiral Leasing plc so that a huge amount of money is not spent in one go on a machine while the business is being set-up, when income is restricted.
I will apply to Invest NI for a grant. Invest NI gives grants to companies setting up in the Secondary sector, so this is perfect for my business.
WHY THIS IS THE CORRECT CONCLUSION
I think I have made the right decision with my finances because I have the correct amount of money I need to set up the business, which was proven in the Cash Flow Forecast that with the £20,000 given to me through the Bank Loan and sleeping partner I can create a profit of £14,000 within 12 months. The business can manage the cost of the loan.
I will be paying back the money in instalments set out by the bank, whereas the sleeping partner (family member) will accept his/her money back over a greater period of time and with a much smaller amount of interest being paid. This means if the business is doing exceptionally well one month he/she can be paid more or be paid less if the business does not so well in a month. This will reduce the pressure of having to meet full repayments every month until the business is well established.
EMPLOYMENT/RECRUITMENT
2Catering Staff and 3Waiting Staff
Found in Newspapers, Magazines, Job centre
& Employment Agencies
HOW I REACHED MY CONCLUSION
I realise that staffing is my USP – Unique Selling Point. I will make ensure that my staff are well qualified and I will encourage them to continue their development at the local college i.e. Castlereagh. Thus giving me the best possible staffing service that is always improving to make the customers time in the coffee bar as good and restful as it can possibly be thereby the business, while this would be the most effective from of advertising.
I will use Newspapers, Magazines, Job Centres and Employment Agencies because these are reasonably inexpensive means of advertising and have a huge catchment area. The Local Newspapers and Magazines will be seen all over the locality, while the Agencies will find me the best possible people they have. The job centre will be used to find people who are not attached to any agencies.
WHY THIS IS THE CORRECT CONCLUSION
I reached this decision because one of my main aims in a Trendy Coffee Bar is to provide a memorable service, so I will have 2 waiting staff always on hand to serve the customers while the 2 catering staff will be preparing the food and coffee. This means that the customer should have a waiter/waitress with them a.s.a.p. and not be waiting a long time to place an order.
I am using my methods of recruitment because all my methods are reasonably inexpensive, which is good for my business while it is starting off. It will also bring me people from a lot of different areas and backgrounds.
It must be stressed that I think the people will probably mainly come from the agencies because they will most likely have the best people for the job in that they will have been interviewed and checked their qualifications and references.
They will also need to be trustworthy because they will be handling money.
Advertising/ Promotion
Money Off, Belted Value, Offers, Free Gifts and Discount Vouchers
HOW I REACHED MY CONCLUSION
As I will be opening a reasonably small business I will not have a lot of money for advertising so I will make the most of what I have and use it to my advantage. As I will be buying coffee in bulk, which is cheaper because of Economies of Scale, I can afford to give small amounts away by having offers such as,
‘Buy five cups and get a free coffee coupon’
A flier advertising both the opening and such discount offers would be an inexpensive yet very effective way of promoting my business. I could design and print the flier myself and persuade family members and friends to help with the distribution.
WHY THIS IS THE CORRECT CONCLUSION
This is correct because as I am only starting off I cannot afford to have a huge opening or spend a lot of funds on advertising. I cannot afford to have Television advertising or an advert in the papers, however I do hope, that in time, I will be able to advertise in magazines, such as the Ulster Tatler,
I can afford to do small offers like the one mentioned above because I am buying in bulk, which is always cheaper, so I am saving money by buying in bulk rather than just when I need more (just-in-time production.)
LAUNCH/OPENING
Local Press
HOW I REACHED MY CONCLUSION
I am a new business trying to set up and be successful, so I do not have a lot of money and cannot afford a HUGE opening party. I will have, hopefully, a local celebrity – possibly a newsreader or football player to make the Coffee Bar look trendy and up market. I will then invite the press. I will be inviting reporters from local newspapers and magazines, such as the East Belfast News (this is delivered free to all houses in East Belfast) and Ulster Tatler to the opening and launch so I hope to get a lot of good, free publicity from this.
WHY THIS IS TO BE THE CORRECT CONCLUSION
This is the right decision because I cannot afford to have a star-studded opening and have not enough money to pay for adverts in local papers, so inviting the press to do a story on the opening of my business is the perfect way to attract free publicity. Also having the local celebrity will make my business look up market and Trendy.
This will only be an excellent idea if all the “important people” – newspapers and celebrities turn up.
However I know that I will also have to continue advertising as the business grows.
EXPANSION
Expand on same premises, and open a new retail outlet
HOW I REACHED MY CONCLUSION
I have come up with this idea after looking at my questionnaire and realising how many people thought that a Trendy Coffee Bar was needed in the area. This means there is a big demand for a Trendy Coffee Bar in this area. So if I can find other areas with the same demand and think the business expanding into this area would be worth it, I will. However before opening more retail outlets, I will first expand on the same premises. I am opening in King’s Square, which is a series of units in a square shape. So if my company is doing exceedingly well after a period of time, I may look into the possibility of buying the unit next door to me and have a coffee bar twice the size, and hopefully selling at least twice the amount of coffee. This expansion could allow me to maintain control on the business and costs on a daily basis, which is extremely important to me.
WHY THIS IS THE CORRECT CONCLUSION
I think that the idea of expanding into the unit next door is a good idea. If, when the coffee bar opens it does very well in the first few months, I must decide, ‘can this level be sustained, or can it grow?’
However there may still be other people in different places that feel they should have my type of business located in their area, so I will use a lot of Market Research, mostly Field Research, to find out if there would be a great demand in another area.
I believe that the aim of my coursework has been met and I have created a successful business plan.
I feel that my offering the TRENDY customers a very modern setting with unusual coffees, teas and continental food I will have a sound business base. With the amount of foreign holidays taken by people these days that experience what is known as ‘Coffee Culture’. I feel the demand is there, which the Pie Chart above reinforces. I realize that in order to succeed I must offer the customer a little something extra in both surroundings, quality of service, food and drinks, to ensure that I can entice them away from the traditional ‘coffee and scone’ type of shops in the area. To succeed in the medium to long term I must ensure that the customer enjoys a memorable experience and wants to come back again and again i.e. the “Boomerang Principle.”
Marketing will follow several avenues
- Leaflet Drops at the Start-Up period
- Small ads in the local society magazine
- Small ads in the local free paper
Lastly but not least, I hope that the success of the marketing off my business will include word of mouth. Happy customers will promote the business.
Have decided to open my business as a Partnership, however as my partner is a family member who will be a Sleeping Partner, the day-to-day running will be left to me. Further finance will come from a Bank Loan for Working Capital (day-to-day expenses.) My Fixed Assets (coffee machines and ovens) will be leased rather than paid for ‘Up Front’ as this will help my Cash Flow allowing a monthly charge over the lifetime of the equipment rather than a massive initial Capital Payment.
I will also rent my premises rather than purchase them outright during the Start-Up period. Perhaps over time with increased profitability I will look to purchase.
My long-term plan is to open more Coffee Emporiums in similar busy shopping areas thereby increasing my overall profit by both increased sales and Economy’s of Scale.
Anyone for coffee?Bibliography
“How To Start, Run, Succeed In Your Own Business” by Derek Jones, W.H. Perry
“ Business Studies GCSE 2nd Edition” by Alain Anderson
“Be Your Own Boss Kit” by D.S Watkins, P.R.G Chaplin, P.M. Chisnall – Yorkshire Television Publication
“Crowning The Customer - How To Be Customer Driven” by Fergal Quinn
“The Small Business Start-Up Guide” by Ulster Bank
“Starting Your Own Business” by T.S.B (NI) Small Business Unit
Internet
Castlereagh College Prospectus 2003-2004
