Financing a business is one of the hardest things to do when having no experience in setting up a business yourself. It’s hard to gain capital and also find the funds to keep the business running when in hard times, for exams the economic decline that we are in at the moment; the recession. Capital is gained from different sources, and some of the sources mainly are form banks and larger sources which are similar. Financing the business could also be through venture capitalists that look for small businesses to invest in, grants from business organisations or loans from family or friends. Stakeholders can also be the local community or council. If your business is likely to have an impact on the local community, such as a nightclub/bar or cinema etc, these stakeholders would need to be persuaded that they would not be negatively affected in any way.
Examples of the sources of finance that a person starting a new business in the current economic climate would be:
http://www.bized.co.uk/learn/accounting/financial/sources/index.htm
Sources of finance can be split up into long and short term finance.
SHORT
Overdraft
An overdraft is a short term source of finance because it only lasts for up to a year and cannot exceed that. It’s when you ask your bank if you can go into negative numbers in your account because you are due to have a downfall in your income, but further along the line are due to have a boost in your income and will be able to pay the money back into the account. This is a good idea when there is an up and running business which needs to buy equipment or expand the business and are struggling for funds to do so.
If the money is not paid back in the time that is told to the bank, they charge a lot more than you would if you paid money back into your account by the right time. They add on a percentage of interest which you need to pay back. For example, if you owed the bank £300, and they were to add on an interest rate of 3%., then you would have to pay an extra 3% of the money owed on top which can add up to be quite expensive when borrowing large amounts of money.
Owners funds (or retained profit from other businesses owned in the past)
This source of finance isn’t hard to gain when you have had a business in your name in the past, but is hard to gain if you are starting a business of the basis of having savings from a previous job or work. It is when you have savings from another job or business which you can plug into the business to help it initiate and set up before it’s in order.
LONG
Loan
A loan is when money is borrowed from a bank in order for a business to carry out activities which require an extra amount of finance for the business. This is a long term source of finance in a way that it can last over a year and can be paid back to the bank over a long period of time in instalments each month.
Venture Capitalist
This is when a person comes into your business and invests their money in the company to help it set up and gets started, acting as a source of capital to get the business going. An example of this would be the programme “Dragon’s Den”; where high business tycoons put their money out to the best business idea they think applied to them, which they think is a good idea and will be successful, but the only thing that is holding them back is the source of finance and so therefore without the money they can’t set up their business.
The different parts of a business plan (section – ‘Information within a business plan’)
There are many different parts to making a business plan, how it works and who in the business it affects.
Preliminary Information
Preliminary information is set out in a document which is attached to the files which are there from the set up of the business. It’s a set of documents which file a general overview of the business and so for example, if someone wanted to know a bit about the business, they could just read the preliminary information and get a brief idea of what the business is about and what they aim to do by being a business.
Tabled example of preliminary Information: from ‘GCE A2 Level for OCR Applied Business’ - Heinemann
It shows a small part of what the business is and how it works, what their aims and objectives are and how they are going to manage the business to make it successful over time and towards the future.
A good example of preliminary information would be:
“The first part of the business plan must clearly outline the basic information about the business. Below is my preliminary information.
Name: Lucy’s Ledgers
Mission Statement: to offer a professional bookkeeping service to small businesses. The service will include a delivery and pick up service, working from customer’s premises and evening or weekend appointments.
Location:
130 Missenden Acres
Grange Park
Hedge End
Southampton
Hampshire
SO30 2AQ
Initially the business will target customers living in the Hedge End, and West End areas of Southampton.
Physical size of the business: I am hoping to have sufficient customers to employ a part time member of staff after the first year; but in the first year the business will only consist of me.
Type of Ownership: The business is going to be run as a sole trader. This type of ownership of business is easy to set up and there are no legal requirements to be met. It also means I have sole control of the business and will be free to make the decisions I feel would be best for the business. It also means I will reap all the profits but will also have to sustain any losses the business may make.
Goals and Objectives: These were outlined above but consist of two main aims.
- To break even within first year of trading.
- To employ a part time member of staff in the second year of trading.
- To attend college on a day release basis to gain the AAT qualifications.
I will also need to compile the following sections in a lot more detail within my plan:
• Marketing
• Human resources
• Finance
• Production”
The example above shows a general overview of Lucy’s business, and the general outlook which the company takes on board when running the business. A business plan will tell you that you need to have a section for the preliminary information for your business to make it have a successful launch and future.
When writing a business plan, you need to identify each and every section that needs to be explained in the plan. As shown above, it tells us that Lucy needs to add more information to her marketing, human resource, finance and production sections to make sure that her business plan is complete and successful.
As much as preliminary information is a key point when setting up a business, the preliminary research is just as important; without the preliminary research there would be no information, therefore in order to have a preliminary information document, preliminary research is needed first.
Marketing Plan
A marketing plan is a total strategic plan for all of the marketing activity in an organisation. This part of a business plan is vital for making the company have a successful launch. Without planning how to manage the business and marketing the business idea, you cannot expect to excel in the market area for the company. Both Primary and secondary research is needed to make a successful business.
Production Plan
A production plan is a layout and strategy for all the production process activity in an organisation
Finance Plan
A finance plan is a plan which is needed to make a layout of how to manage the money related content of a business. All the above is part of a business plan which makes a successful launch and company market.
Human Resources Plan
A Human Resources plan is a plan which is needed to set up all the staff and documentation of the business which is to be set up! It gives an idea of who will be running the business, and who will be helping run the business. The plan helps decide how to document the business.
Constraints that can impact on the successful implementation of a business plan (section ‘Constraints that impact on implementation).
Along with the things that the business plan will help the owner with, by having a guide to running the business smoothly, there are a lot of things that will affect the business and how it runs despite of the business plan made. These things range from issues such as inflation, interest rates etc.
Businesses need to take into account that there are a number of constraints that may impact on the implementation of their business plans. Candidates need to show awareness of constraints relevant to the context chosen, including:
Legal
The legal dimension in a business is when a company has to run their business to their full potential, as well as keeping within the legislations of the country they are in and also countries to which they may have imports or exports with.
Examples of change would be things such as wages:
Changes to the minimum wage paid per hour or maximum working week permitted also need to be considered. Relevant legislation should be taken into account including consumer protection law such as the Sale of Goods Act or Trade Description Act.
You will need to take in consideration a fair few points from a legal point of view:
Health and safety,
Employment law,
Consumer protection,
European Union law,
And any other relevant laws.
Financial
These constraints have a big influence on the likely success of your business. The ability to get access to cost –effective finance will affect the likelihood of success. I will need to consider any assets that could be used as a security to finance the business, the speed of service that the financier can offer and the convenience of the investment itself – is the money accessible quickly and easily in the short term or does it involve length meeting, procedures and several credit checks before the offer of finance can be made? The status of my business will affect the rate of interest at which any loan is offered. I will also need to consider any finances that I might be able to invest in the business myself.
Social
The business will require me to consider how socially responsible the business is and the effect on each and every stakeholder group, such as consumers, local community and staff being some of the main groups.
I will need to consider benefits and issues surrounding my suppliers. Is it better to choose a supplier who treats their employees more ethically and uses recycled materials or is the business profit-driven and doesn’t mind how the raw materials are produced? How will such issues enhance or constrain the business? What effect might there be on the reputation of the business and me as the owner of the business?
Trends in people’s lifestyles or tastes may be importance. Supermarkets have moved towards providing a one stop shop service for their customers. Such changes are likely to have a negative impact on trade for high street shops and smaller businesses; unless they can offer something different that will keep people coming back to them.
There may be a social impact on my business from the pressure groups – does the business use ingredients that can be produced in more than one way, such as free range eggs instead of normal battery eggs from chickens which are force fed/ fed the wrong food, or even batteries instead of using a power-point and keeping in plugged in all the time – it may be possible to keep prices low but risk bad publicity. If I was to use free range eggs as a marketing strategy, would it be worth the extra cost? And would the benefits pay off the extra cost?
Demographic changes may constrain my business. There are more working parents than ever before so the need for devices such as dishwashers, ironing and home cleaning services has increased. The makeup of the population is changing: The Office for National Statistics predicts (March 2005) that by 2015 there will be more people in the UK ages 65+ than there will be children under 16. If my business target market is young people how might this affect my business? It could meant that customers will be hard to gain and maintain because some of them night move away, or only be temporary when they come to visit the area.
The recession (although financial) has a great impact on how people are socially reacting and how much money they are spending now because they are more wary of how the future may be, so therefore are saving as much as they can now, so that if anything like this happened again and the economical climate fell again, they would have money to survive off.
environmental;
Environmental constrains may also have social and legal constraints attached to them. Is the business constrained by the need to recycle its waste, and what effect does the production have on the environment as a whole? If the business is a cleaning business, is it constrained by the need to use appropriate material and chemicals to protect the environment as well as being effective at cleaning, and what are the consequences for others in both the short and long term? How is the business constrained in terms of its distribution and the associated effect of pollution from cars or planes? Being environmentally sensitive should be looked at in conjunction with social impacts because what may be seen to be environmentally sensitive may seem more insensitive in terms of people. Wind-powered electricity generators provide an environmentally sensitive source of electricity for an area but have been causing a lot of noise and spoiling the landscape communities.
technological;
Competitive.
Candidates need to evaluate these constraints and discuss how, and in what ways, they may impact on the successful implementation of their business plan.
The listed problems above show that there are many other things that contribute to having problems in a business and the way the business runs.
Ideas for businesses:
Mobile henna tattoos
Mobile carwash
Mobile hairdressers
Logo designer
Mobile Nail artist
Personal shopper/advisor
Task 2
Introduction
After a lot of thought and research about the competitors in the area, I have collated and concluded that I will set up a Mobile Henna tattoo business. I will name the business Mistry Mehndi, and use the following as my mission statement:
“To provide professional services in the comfort of your home, stress free luxury”-
My business will be mobile, and so wherever the client is, I will travel to them, keeping to the mission statement – having the luxury of henna in the comfort of your own home. Because the business will be run by me and only me, it will be a small sole trader business. The business will be a small independent company and will have goals and objectives which will help establish the business more and get the reputation of me and the company up high, making sure that my business is at the top of the range when comparing my business to my competitors.
I have set up a website as a advertisement and promotion strategy. Although it is simple and doesn’t have many photos (http://mistrymehndi.webs.com/apps/photos/) to promote the service, it is just a small part of the strategy which will contribute to the advertisement and promotion of the business as a whole and the service I have to offer the community (at a price).
Aims and Objectives:
Gain customer base within first 5 years of running
Maximise advertisement and promotion during first 6months-1year of business set up
Increase price of service after 1 year – at a competitive rate (after building up customer base and reputation)
The goals above are good for the business I am setting up because it is a mobile business which needs to gain customer base and reputation before it can be successful.
Task 3 (AO3)
I will carry out my primary research to collate realistic ideas which may portray the potential of my business. My primary research will include a questionnaire and a further interview with a large player in my market. I hope to discover my target audience via the completion of my questionnaire, enabling me to guide my marketing strategy to bring the business up. I then plan to carry out a second questionnaire, purely directed at my target age range identified. The analysis of my questionnaire will aid me to find all the key points I need to focus on when setting up my business which will hopefully help me complete my business plan to a high standard. Further along in my coursework, I plan to put together a SWOT/PEST analysis both for my business and my top competitor, which will outline the weaknesses and threats which are aimed towards me so that I can overcome them and limit the number of competitors.
Primary research:
It is important to carry out primary research for your business, this is because it helps you gain first hand information about who and what the main competitors are and how they are going to affect you business according to the public and other sources of information/guidance. Interviews, Questionnaires, Surveys and general conversation are all types of primary research.
To make my questionnaire a fair test which has reliable and accurate results, I will use a random sample of 100 people in Milton Keynes to answer my questions. Taking in consideration the moral respect and rules which apply when asking the general public questions, no person will be forced to participate in my questionnaire.
Questionnaires
Do you know what henna is?
This question will help find out if the public are interested in knowing what henna is. If people don’t know what henna is then it means that the product needs to be promoted and advertised a bit more to make sure that the public knows what it is. If people don’t know what something is, its hard to get them to be interested in it.
Does Henna capture your interest?
Similar to the above question, there are some people who may know what henna is, but this doesn’t mean that they have an interest in the product. For example, everyone/most people know what football is, but not everyone takes an interest to it, and not everyone gets involved when the world cup comes around.
Have you ever had henna done?
This question will help me find out how many people actually have henna done in the area, which also shows the level of interest shown and known by the people who live in the area in which I will carry out my questionnaire.
Would you happily pay for it to be done?
The question above will show me how many people who are interested will actually pay for the service, because its not going to be a very effective business, if people aren’t willing to pay for the service, no matter how interested stakeholders are, if there is no money coming into the business, the business will not be successful, and will not grow.
What age category do you come under?
5-10 years
11-15 years
16-20 years
21-30 years
31-40 years
40+ years
This question helps me find what age group id the most popular, and what to aim my designs at. For example, if most of the population which I ask are over 16 years, then they are more likely to know a little more about the idea of henna and are more likely to ask for their own design, whereas if most of the people who I asked were under 10, then they are more likely to not know much about henna, and not have any specific designs, just “something pretty”.
Would you travel around your area to get it done?
This question in particular shows how effective the business will be, when being a mobile business. If people are willing to find their own way of transport to the place where they can get their henna done (location of business) then is the cost of petrol when being mobile a cost or benefit for the business. Would it be more cost effective if the business was situated in a fixed place, either at home or renting out an office?
Would you have it done often?
The question above indicates whether the business will be constantly successful and effective when in action. If the interest of people is temporary and there aren’t going to be many people getting it done more than once, then the business won’t be successful with a continuously changing customer base. Whereas if the questionnaire showed that customers would return to have the service done again, may suggest that this is a good business idea and it will be successful with some regular customers.
What would be more convenient for you?
Mobile service
Shop (own run shop)
The question above will show what people prefer when it comes to the location of the business. Some people may find it easier to have the service come to them so that they can have their henna done in the comfort of their own home, whereas some other people may feel its better to go to a salon type set up to have their henna done. Depending on the result of this question, the mission statement may have to be altered; it is currently:
“To provide professional services in the comfort of your home, stress free luxury”-
The mission statement above is about how the luxury of having your henna can be done in the comfort of your own home.
Where do you spend most of your spare time?
Shopping
Work
At home
Abroad
Pubs/Clubs
Other
This question is effective when finding out how much spare time people will actually have to get their henna done. For example, if there is someone who spends most of their time at work, then they are not going to be able to have their henna done, especially if they have a family, because their lifestyle is most likely to be: Work – Make Dinner – Sleep, and at the weekends, they may have to spend time with their children or partner.
How much would you pay for the shown design?
£1-5
£6-10
£10+
The question above will help me find out how much people are willing to pay, if any at all. The design above is simple and usually costs around £5; but if people aren’t willing to pay that much then it may question the businesses ability to be successful and grow like other business ideas may.
END OF QUESTIONNAIRE –
Results from questionnaire:
The Questionnaire was carried out in Milton Keynes Shopping Centre, where most of the public which I will be aiming my business at, shop. This is a good location for the business I would like to set up because I will be aiming my business at people who live within the area of Milton Keynes, Buckinghamshire and Northamptonshire. This shows that Milton Keynes Shopping centre was a good location to carry out the research for my business. To add to the reasons why Milton Keynes Shopping centre is an idea location is because id I was to set up a stall by which people could come and sit and get their henna done, it would be located near the shopping centre, catching people who want to be able to the business easily and maybe after/before they go shopping.
The Data shown in the graph above shows that most of the people asked knew what henna was. Because most of the people which were asked showed that they knew what henna was, shows that the business will have some customers already set out for them, and that the cost of marketing and promotion will be less than if there were less people who knew what the business was about. This is an advantage for the business because it means that I can spend more money on other departments of the business. It will also help with finding stakeholders which will contribute to the business because a lot of the public already know what my business is based on.
The graph shows that 67% of the people asked said that they knew what Henna was. This is a high percentage over 50% which means that the business has a more than likely chance to become a high competitor in its target market area. Only 22% of people asked said that they didn’t know what Henna was; this means that when I market the business, I will need to use a strategy which gains people’s attention the second that they see/hear/smell it.
These results demonstrate how the public answered when they were asked if their interest was captured when relating to Henna. Most of the people said yes, but despite the fact that the majority of the people agreed, there was a lot of people who said “sort of”. This means that there may be some people who don’t completely understand the concept of henna, or don’t really know enough about the product to take and interest in it. This suggests that when I start my business, I will need to make sure that as well as promoting the business, I will have to explain what the service is about and how it works.
There is a lot of information one can gain from asking this question. People may understand what the business is but if they do not take an interest in the business, it may suggest that the company will not thrive. A business is based upon the stakeholders it gains at the beginning of the business. If the company has few stakeholders, it shows that it has less people who show an interest in the business.
The data above project the results of how many people have had henna done on them before. This shows and contributes to show the percentage of the public who show and interest in the business. The graph also shows that there is a lot of people who have henna done before which can suggest that the business will be successful because people already know what the business is about and show an interest in it; proven by the fact that so many people have already had Henna done on them before.
There is a lot of information which can be gained from this graph – but the most important thing which we can conclude from this graph is that there were still a few people that didn’t remember whether they had had Henna done on them before – this can suggest that there are still a few people who didn’t take interest in the service – hence couldn’t remember. This means that when I set my business up, I will need to make sure that everyone who sees hears or smells the advertisements will be drawn in and persuaded to take an interest in the service.
The graph above shows how many people out of the 100 asked could pay to have Henna done on them. Results show that 67% of people asked said that they would pay to have the service done which means people will approach the business with intentions of paying for it. An issue which I discovered when carrying out my secondary research was that, there are a lot of people who think that “if the product can be bought for £1 or £2 a cone, then why should we pay a lot for labour”. A suggestion would be to refer to how everyday shopping would be severely overpriced if everyone approached products like that – e.g. supermarkets make profit on everything they sell; a loaf of bread can cost up to 5p for production, but it’s sold in supermarkets for 35p – 70p. This shows that people have to make profit on products and services even if the stock price is low.
As well as a lot of people said that they wouldn’t pay for the service – most people said that they would. This is an advantage for the business because it means that there will still be a lot of people willing to pay to have Henna done which will avoid with any conflict with people not wanting to pay to have Henna done.
The percentages on the pie chart above shows how the public answered when they were asked their age. The information gained from this question can help me decide what age group I will be aiming my business towards. The results show that most (of the people who were asked were between 16-20 years old. This means that in the area which I did my study for primary research, most of the people were ages between 16 and 20; which suggests that when I set up my business, it will be aimed towards people who are between the ages of 16 and 20 and that all the marketing strategies used will have to be aimed towards that age group, but also to encourage other age groups to take part and become a stakeholder.
Although the most popular age group was 16-20, the next most popular age group was 21-30 with a percentage of 32%. This shows that there is still a high percentage of the people asked were generally ranging between the category of 16-30. This means that there is a large age group which I can’t aim my business as a whole towards.
Shown above are the results of when the public were asked if they would be willing to travel to the location of the service. The projection suggests that most people would come if time, work and other circumstances suited them. This means that appointments for clients may be difficult because of usual working patterns, e.g. Milton Keynes workers, usually finish work at 5pm, therefore the time between 5pm and 7pm is when most people are likely to be able to come to have their Henna done, unless it’s a weekend and they’re not doing anything/ have no plans.
The results have suggested to me that the most effective way to have the business would be to have it as a mobile service, that way people don’t have to plan around their day, and they can experience the motto of the business “stress-free luxury”. This will add to the promotion of the business because it will be marketing the business using the mission statement which was decided on before the business was created.
Although there are a lot of people who said that they would travel to the place of the service, there were a high percentage of people who said that they wouldn’t travel anywhere. This shows that the business will be best fit to be a mobile business, providing the customers with a home service which is most comfortable for them, and cost effective for them if they are living far away from the service/salon etc.
The graph shown above indicates that more people would prefer the business to be mobile so that they don’t have to travel to the place of service. This information shows me that the business will be predicted to be unsuccessful because of the high percentage of people who want/think that that business will be most effective if it were to be a mobile service rather than a business which is located within a salon or shop.
There is a 74% vote by the public asked, which shows and supports the reason for me setting my business up as a mobile business. Having the business as a mobile business means that I will save money on venue and rent; which also means that I can spend more money on better products and also more money on marketing the business as a whole.
The fact that only 26% of the people asked said that they would prefer the business to be in a salon or have a specific location where people come to the business to have the receive the service- suggests that if I were to have the business located in a specific location, it wouldn’t be a as successful as if I were to have the business as a mobile business.
It brings me to a temporary conclusion of having my business as a mobile run business where I (the owner of the business) to travel to where the customer is located.
The Data demonstrated above projects the results from when the public were asked where they would spend most of their spare time. 46% of the people asked said that they spend most of their spare time at home. This suggests that having the business as a mobile type of business would be most effective, taking in consideration that most people will be at home when they aren’t busy (studying, working, training, ect.)
The data demonstrated in the graph above shows an indication that most people wouldn’t say yes or no, but maybe. This means that there’s no certainty of having long term customers which would have their Mehndi done often, or even stay with the same business to have it done.
Although the majority of people asked said maybe to having their henna done often, there was a high percentage of people who said yes. This means that the people, who were to have their henna done often, would need to be convinced to stay with the same person- me.
Secondary Research:
It is just as important to carry out secondary research when preparing a business plan for a new business idea. This is because as much as primary research is important, the secondary research is used by a lot of people and so therefore a more generalised view on things which primary data can not always show because the information is a concentrate of data.
Examples of secondary research are: Internet research, news articles, other adverts, books (libraries), case studies, government databases, business plan exemplar documents etc.
Internet research showed the following:
The above link is a webpage of the daily mail online. It shows one of the cases which occurred due to an allergic reaction to black Arabic mehndi. I thought that this would be a good example to show what message my business puts across. All the materials which I use for business, Henna, oils etc are purely made from Henna leaves, water and caster oil (for making skin smooth). All of the Mehndi I use to Indian Mehndi and is light green, very different from Arabic mehndi which is black and has chemicals to enhance colour in it. Being a multi cultural tradition which is spread far across Asia, there are going to be many different people approaching my business, Indians, Muslims etc, therefore saying on the advert that I use Indian Mehndi might put people in the assumption that the service only applies to Indians, so on contact with the customer, they will be notified what type of Henna it is and all clarifications of sensitive skin etc will be made, to avoid any such cases as the one demonstrated in the link above.
Competitors:
http://javeys.co.uk/
The competitors above are national competitors; which shows that there aren’t many local competitors. Because the business is such that travel and transport is key, so the competitors are going to be competing over how far they are willing to travel to gain and maintain customers.
Most of the competitors which I will be competing against are people who are going to be able to travel around and get to their customers as effectively as possible. My business will allow to me travel to customer’s houses within a 5-10mile radius and anything further than that will have to be added onto the price of the service as petrol cost.
MARKETING
Who is your target audience?
My target audience are people in Milton Keynes aged between 16 and 30. This was shown in my primary research strategy, when I asked the public what their age group was (if they wanted to answer, their data was collected, if they didn’t then it was noted as N/A)
My target audience is based on the demand in age groups which I have seen in my area in which I will be setting up my business. Promotion and Advertisement will be aimed towards those age groups and therefore will be most effective because I know who my target audience are, so that it attracts them to my business.
Who are your competitors?
My competitors are national because most henna artists travel around the country to offer their services. However knowing that during the first part of the life of my business I will be located in Milton Keynes due to transport etc, I will need to allow my marketing strategy and technique to maximise my stakeholders to enable me to possess a large market share of customers in Milton Keynes.
List of competitors:
http://javeys.co.uk/
The competitors above are national competitors; which shows that there aren’t many local competitors. Because the business is such that travel and transport is key, so the competitors are going to be competing over how far they are willing to travel to gain and maintain customers.
Most of the competitors which I will be competing against are people who are going to be able to travel around and get to their customers as effectively as possible. My business will allow to me travel to customer’s houses within a 5-10mile radius and anything further than that will have to be added onto the price of the service as petrol cost.
What marketing techniques are they using?
As shown above, all of my main competitors have their own website on which people can see their work, so that they don’t have to have “trials” etc, like hair salons and beauty salons may need to have before they were to offer a service and get a booking.
So far, I have only come across very large organisations such as ‘Joshiv Mehndi’ who advertise on television, but only on Asian television. This suggests that in the future, television advertisements could be a unique way to market my business and let more people know about the service I offer.
There are a lot of businesses who offer the same service as me, who advertise in magazines and newspapers; and have visually attractive advertisements, which illustrate their most prestigious designs to show people what standard they can deliver their service. This suggests that if I were to advertise my business in a magazine, I would need to show what work I can do and to what standard. However most of my competitors have detailed and intricate work on their adverts, however not everyone likes the same design, so putting on a range of images to attract people to my business to show that I can offer all types of designs, and not just intricate designs which only cover one type of style.
From primary and secondary research I have not come across any of my competitors to advertise their service on the radio, however advertising something that is completely visual is a tricky and inappropriate way to market the business type I am focusing on, therefore, as much as it is important to make marketing techniques interesting and unique, there are some forms of marketing which don’t apply to certain business types all together; just like Radio advertisements do not apply to Mehndi Businesses.
What media do your potential customers read, view, and listen to? How much will this cost me to use?
My target audience are people aged between 16 and 30. This shows that whatever they read, view and listen to will need to be where I market my business to make them aware of the service I offer and why they should approach me to have the service done.
16-23 aged people are either at school, college, university or just at home- If I wanted to market my business to them I would have to aim my advertisements towards what Medias they are interested in. The types of Medias which that age group would be interested in would be: magazines, film related books, posters, TV {adult cartoons (South Park, Simpsons, Futurama [E4, Living, Sky1 and ITV])}. This shows that I would have to either have to aim towards advertising my business in magazines, not just beauty related ones, but younger generation magazines, such as Heat, Shout etc. This strategy may be expensive to begin with, but the outcomes could be high because there are so many teenagers and young adults who read those magazines.
Business cards: Most of the businesses who share the same market as me, and are competitors always have business cards. This means that whenever there are customers, they are able to give out their business card so that if anyone’s asks "oh, where did you get your Mehndi done", they can refer to the business car. This is a word of mouth type of marketing strategy and is low cost and effective at the same time. Also if there were people asking "Where can I find someone to do my Mehndi?" then again the business can be promoted through recommendation which is a very positive way to market the business by people who know what the service is like, and can give honest recommendations.
How, from where and when do your customers want to receive the product/service?
From primary and secondary research, I have gathered information which shows that most of the people asked said that they would prefer the business to be a mobile business which comes to the customers house and provides the service in the comfort of their own home. I had hoped to have the business as a mobile business, therefore took the liberty of keeping my mission statement which emphasises that the business is mobile.
“To provide professional services in the comfort of your home, stress free luxury”
My business is aimed at anyone who wants to have their Mehndi done; therefore 'WHEN' people are able to receive their service, is up to them. Bookings have to be made and deposits will be 10% of what the total amount will be. I hope to set up my business to allow me to start gaining customers by the end of the year.
How do your competitors get their product/service to their customers?
My competitors are also mobile and travel to where their customers are, this means that I will have competition more with the businesses to are willing to travel further than me, seeing as I have had to temporarily restrict my business area down to Milton Keynes. There are many ways in which other businesses get to their customers, most of my competitors drive, therefore can get to customers effectively and quickly. However some competitors take buses, taxi's and also ask customers to pick them up (in rare cases, when the price of the service is very low due to experience or travelling limitations)
What price will your customers be prepared to pay?
Market research has shown that competitors charge:
Brides: £150- £850
Mehndi Nights: £35- £45 per hour
Children's parties (up to ages 15): £20 per hour
Brides and Mehndi Nights combined: up to £1000 a day
All the prices above are dependant on how much experience the person has had, how confident they are, and whether they have any qualifications for Mehndi designs. Therefore, being a new business with less than 10 years experience, my customers should be prepared to pay the lower end of the price ranges mentioned above. This could act as an advantage and could be seen as a VERY competitive rate to those which don't know that price is dependant on experience and qualifications.
What price are your competitors charging?
Prices above are mentioned. They have a large range in which their prices differ, however as referred to above, most pricing with these types of businesses are based upon the amount of experience the person has, and how many qualifications they have if any. This is important when setting my prices because; my business will be brand NEW! And being 18, I don’t acquire high levels of experience or any qualifications. Therefore my prices will have to start low, and then with experience and ratings by customers I will then be able to put my prices up and compete with higher ranked competitors, which could start to expand my customer base to National, rather than just Milton Keynes.
SWOT Analysis
Strengths
Mobile business: The business has no location, because it is a business which travels to the location of the customer to offer the service in the comfort of their own home.
Make my own appointments, therefore have the ability to be flexible and suit the customers as much as possible.
Working on my own as a sole trader, therefore retaining all profits and making all my own decisions regarding the business.
New business, therefore able to compete with prices by keeping them low to gain customers.
Weaknesses
Small individual business with so many similar competitors.
Limited funds for marketing, seeing as all the capital spent on marketing the business primarily will be coming out of my own pocket.
Working on my own, therefore could limit the customer opportunities I have due to being so fully booked, as an individual.
No qualifications or recognised certificates – this may slow the process of customers approaching me as this can limit the professionalism of my reputation.
Opportunities
Being an individual business, when opportunities come along, I will be able to make decisions swiftly, writing out the possibility of missing opportunities.
Having no one to confer with and satisfy when making decisions, and being flexible with timings and appointments, it will allow me to participate in charity type events which will boost my reputation and customer base.
Threats
Because there are so many similar businesses like mine in the area in which I want to set my business up, it will be hard to gain a loyal customer base who will keep to the same company when having Mehndi done.
PEST Analysis
Political
The influences which relate to my business regarding the political sector refer to changes in government, tax policies, regulations and international/national trade agreements – however in my case, my business is only aimed on a national scale at present. All these factors can influence the profitability of the product.
Another aspect of the political sector would be
Economical
Social
Technological
PRODUCTION
What equipment and machinery do my competitors use to produce their product/service?
What equipment and machinery will I need to produce my product/service? How much will this cost?
What are the different stages of production that I will need to complete in order to get my product/service to my customers?
What methods are available to ensure my product/service is always top quality?
What supplies to I need to produce my products, where will I get these from and how much will they cost?
FINANCE
What do my competitors charge for their product/service?
What will my customers be prepared to pay for my product/service?
How often will my customers buy my product/use my service?
What are the different expenses that I will incur in the running of my enterprise?
Where can I obtain finance?
How much is this going to cost me?
HUMAN RESOURCE
What are the employment/unemployment levels in my local area?
What is the average wage for my local area?
Where are jobs advertised locally?
How much does it cost to advertise a vacancy?
How many people do I need to employ, how many hours will they work and how much will I pay them?
