What-if and Contingency plan

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What-if:

What if analysis shows what will happen to my business if things change. It is useful for me as it allows them to prepare for these changes. If negative outcome occurs, then I would need to produce a contingency plan for these factors. A contingency plan is the action I need would take if the factors occur.

One of the main factors that is likely to affect my business is if there is an increase in sales. If sales of my fast food restaurant increase than it would be beneficial for my business because it would mean I generate a larger profit and will allow me to meet my aims of increasing profit.  From my profit and loss account, I can see that my net profit is £23,522 before tax which can become greater if my sales increase. Moreover an increase in sales will result in a better cash flow forecast which would benefit my business for the reason that my cash shows that I would be having cash flow problems at that beginning. This would then put my business in a stronger position when applying for the loan because bank managers have more confidence in my business because it is in a stronger financial position. From my primary research, I have gathered that my competitors mainly offer meal deals offering the chance for the customer to save money if they buy selected products together therefore in order me to compete with them, I will try offer similar promotions but at a lower price. This will allow me to meet my objectives of offering competitive pricing. As well as this, I will offer some promotions that are unique to my business for a chance for the customer to try out something new and different such as loyalty cards or student discounts.

If my business were to experience an increase in then I would not need to carry out a contingency plan because it is a good thing. I would however motivate my employees to carry the way they are working which would then see my business carry on with the increase in sales. I would motivate my employees with bonuses or a pay rise

On the other hand my business could experience a decrease in sales. If this occurs, it would put my business in jeopardy because it would mean I may not have any money to pay off any debts or overheads for example the lease on my premises.

My contingency plan if sales decrease would be to decrease the price. In doing this, it would attract more customers and will hopefully increase my sales. However I have to be careful not to put the price too low as it could put off customers as they may think the products are of a low quality. Another reason why I wouldn’t want to put the price too low is because I would be making less gross profit per products which would affect the amount of profit I will make.

Another way I could prevent the decrease in sales is to increase my promotion activities for example I could offer discounts on certain products and have a buy on get one free offer. I have chosen to do this because from my primary research, I can see that 30% of males and 40% of females said they prefer BOGOF promotion over others. By doing this it will attract more customers as they will be getting products at a cheaper price and would encourage them to continue to purchase from my business. Furthermore, I will also increase advertising to get more customers aware of my fast food restaurant and to attract to a wider market.

This contingency plan would help me to meet my objectives of increasing sales which will then allow me to meet my aims of increasing profit.

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Another factor that could affect my business is if my advertising campaigns are not successful. There are a number of reason why this could happen including the advertising were not appealing enough, I advertised in the wrong locations or the content of the advertising wasn’t relevant.

If the advertising wasn’t appealing enough to my target market, then I need to find out ways in which is most appealing to them. My primary research shows that leaflets/flyers and newspapers with 40% of males choosing leaflets/flyers and 45% of females choosing newspaper therefore I chose to advertise using these methods. However, ...

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