Business planning.
Every business needs a business plan- especially new business and business expecting significant change or growth in a near future. Business planning is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goal.
Though marketing individual and groups create and exchanges products and services with others in order to create value or satisfy wants and needs.
Business planning is the main key holder in all over the world of the business organization. In a successful business organization, a production department would not continue producing product straight away until they know what customers wants and needs.
A plan is a way of achieving something. In business, it's no different. If a business wants to achieve something, its more likely to do so with a well-constructed and realistic plan.
Strategy
Strategy is the method chosen to achieve goals and objectives
Example: Fester strategy is to grow sales and profits of our existing products and to broaden our business by introducing new products to our existing markets
Goals
Goals concern what you are trying to achieve. Goals provide the "intention" that influence the chosen actions
Aims
Aims are goals that cannot be measured in a reliable way. However, they remain important as a means of providing direction and focus.
Examples: my business aim to delight our customers
In this assignment I have decided to produce my own product called MIX FRUIT LAGER, which is a kind of business. As producing my own product by my own is known as sole trader. Sole trader is the simplest from of business organisation. There is one owner who has complete control over the decision-making and running of the business.
E1 Effective use of primary & secondary market research data and a competition analysis to complete the market analysis in the marketing plan.
Primary research involves a direct investigation of potential and existing customers' attitudes and behaviour. This I undertaken by the business itself or a market research organisation, and may done by observation or interview. An example of observation is where a market researcher watches the behaviour of customers in a supermarket, recording how many choose a certain product or a packet of a certain colures. Interviews are usually carried out using a questionnaire. They may be conducted face to face (for example by market researchers who call at your front door or stop you in the street)
Secondary research (sometimes called desk research) is carried out using existing records and sources of information. This includes the business's own sales and customer's record. The main problem with using secondary sources is that the information they contain has usually been gathered for purpose other than that for which the market researcher requires it. It may therefore be less useful or trustworthy than primary information.
What form of business organisation?
I now decide which form of business organisation will be the most appropriate for me to go on. There are three possibilities, sole trader, partnership or limited company. Strictures that will not be appropriate are public limited company because the business will not be large enough because I produces/design my own product.
I first thought that I would work alone on a small scale as a sole trader. However, after speaking to my uncle, Andy, who has some contacts in the business world, I realise that the potential is greater than I first through. I am now considering working with my uncle Andy who is prepared to bring in his business experience and extra capital.
Sole trader, partnership or limited company
Andy and my self considered forming a company at first, but need to comply with so many rule and regulation. I do not want to draw up a memorandum and articles of association. A limited company would also have to submit accounts each year to the register of the companies. For the moment I prefers keep my affairs confidential, therefore me and Andy decide to form a partnership.
A business name is important. Andy and I have chosen a business name called
"Play mate".
Help and advice
I decides to find out about local sources if help and advice available to small business in my area. I discover that there are a number of sources of help and information
Many banks, specialist agencies and government departments are keen to help 1000 new business being formed every week. Sources of help, information and advice includes:
* Local enterprise agencies
* The local TEC (Training and enterprise council)
* Small firms services
* Business link
* The government funded business start up scheme.
The location of my business is centrally situated off the Coventry ring road. The Arena offers fast access to road, rail and air links.
The business is situated on Croft Road near Coventry city centre. Follow the A4114 Holyhead Road from the A45 towards Coventry city centre. Turn right onto the ring road, and take the first exit to the left.
Questionnaire
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This is a preview of the whole essay
* Local enterprise agencies
* The local TEC (Training and enterprise council)
* Small firms services
* Business link
* The government funded business start up scheme.
The location of my business is centrally situated off the Coventry ring road. The Arena offers fast access to road, rail and air links.
The business is situated on Croft Road near Coventry city centre. Follow the A4114 Holyhead Road from the A45 towards Coventry city centre. Turn right onto the ring road, and take the first exit to the left.
Questionnaire
Below is an questionnaires on the U.K beer market, please tick one of the answers.
1. Are you?
Male ( ) Female ( )
2. What age group are you in?
18-24( ) 25-30( )
3. What Alco Pops products you like most?
Smirnoff Ice ( ) Vodka Reef ( )Bliss( )Vodka Cruiser Other ( ) Specify..........
4. Would you recommend having new product like mix fruit lager?
Yes ( ) No( )
5. Do you recommend having four types of flavours of mix fruit lager?
Yes ( ) No( )
6. What flavours would you like most?
Banana ( ) Strawberry ( ) Grapes ( ) Pineapple ( ) Others ( ) Specify.....
Now please try sample
7. How would you rate the new product (mix fruit lager)?
Good ( ) fair ( ) poor ( )
8. What do you think how expensive will this product be?
£1-£3 £4-£6 £7-£10
Fairly low ( ) fairly ( ) fairly high ( )
Thank you, for your co-operation.
Beer: U.K beer sales analysed.
As the graph shows that the "on" sales in the U.K has been decreased steadily. This is because no one nowadays goes to pub to drink because it might bit expensive in pubs rather than in "off" sales. In "off sales" for i.e. off license shop gives their customer good value of price of products for i.e. multi packaging to attract more customers than in "on" sales.
The "off" sales have been increased sky high as we can see in the graph. This is because people like to drink and chill at their home with their family rather than goes to pub. It is more convince for people to go off license shop as a variety of drinks there as well are cheaper than in pubs. The advantage is that it is unlimited for the peoples to buy their dinks in an off license shop to stock up their house for their special events for i.e. charismas.
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Competitor's analysis.
There is only one competitor in this business in the immediate area. . My competitor is called Fester brewery.
Fester brewery is small business which deals their locally customers for last 2 yrs. Fester currently has a production orientation and a functional structure that includes and administration, accounts, purchasing, production, distribution and sales but no marketing department. There has been no formal marketing planning and market research undertaken.
Fester brewery has low shares in the market. The company is tying to moves towards to their product oriented later in the future but must charge high price from the customers to have some profit so it can remain in the market. Fester brewery also have a limited finance at the moment this is because the company is charging relatively low prices from their customer and will doesn't have profit at all if they are charging at the same price. This company provides to their customers for i.e. beer, lager and etc at a very high quality.
What advantage and disadvantages does my competitor have?
In the known of the company description, my competitor is dealing with the customer for last two years, which means they been in the market before me. So the customers would rather go for Fester this is because the customers might be have good customer service, which is an advantage.
The disadvantage to my competitor is that they will be charging higher price to their customers to survive. Charging high price the customer might go to other business to purchase the item. Fester brewery provides high quality of product to their customer so there will difficult for my business to provide good quality as well.
Partnership agreement
Andy and I have decided to have a partnership agreement. This means that partners are jointly and severally responsible for business debts, meaning that each is responsible for the same action of the other. we prepare a summary of the principal terms to enable their solicitor to draw up a formal partnership deed.
Principal terms for the partnership agreement for eclipse
Capital to be invested thus; Andy £5000 me £10000
Profit sharing each partner to take drawing of £1000 per month
Otherwise profit to be retained in the business.
Roles:
Andy to provide contacts
I have to design the beer bottle.
Security:
The house belonging to me will be pledged as security for any external finance which is necessary.
Decisions:
All business decisions must be unanimous
Cheques:
All cheques to bear the signatures of both partners.
Duration of partnership.
Minimum of 3 years,
Retirement:
No retirement during the first 3 year, thereafter a partner may retire on giving 6 month's notice.
E2 A description and explanation of the choice of product/service, the price(s) of the product/service, the promotional methods for the product/service & how the product (or service) is distributed to (or provided for) customers.
Product
Product is the main important thing for the customer wants and needs. Customer can pay any sensible price if they found some thing special about any product or quality of product. It depends on the organisation what product they want to make it.
The new product of my company "play mate" is a MIX FRUIT LAGER. This product has many flavours for the customers. As seen the result of my questionnaire peoples like this kind of product.
Size of the bottle medium
As seen above of my new product is going to be like. The product also got company name on it. The size of the new product is medium with the bend edge of it. As seen on the Bootle there is much variety of colours with a lady shown it. This is because to attracts the customer because of fruit lager. As says play mate on the Bootle label which makes different kind of images to customers. This product is going to be selling in a restaurant because it can attract customers of the bottle look and image.
. As my business is producing new product, the product is going to be in the introduction level. It is because every single new product start with the introduction level in the market place and later it growth, but some products declines straight away which is a threat. But as I think my business product isn't going declined straight away because as appears in the questionnaire, peoples out there like to taste new product like mix fruit lager so which means they are waiting for this product to released in the market. So I don't think the product is going declined rather than in going growth
Price.
The price of the new product as I concerned is going to be at low price which is about £3.50. It is because prices charge for the new product is set artificially low to gain market share. "PLAY MATE" is new in the market and their product is also new at the market and they should no first 4 weeks how their products are doing with low prices as I concerned. If their products are doing well in the market, I think I am going to higher the price. This is because once the market share is achieved and on the other hand the price increased, there will be profit at; last. This is use to attract new clients.
Promotional method
Promotion method is what how to promote the product of the company. There are many types of element that business can use to promote, but I am going to chose one which will be popular use of selling the company new product..
The new product of my business is going to promote by advertising. It is the best way to gain response from the target market. As I think promoting this new product by advertisement can attract customer because of its looks and of it types of flavours. The new product put sign to customers because of is different fruit flavours. It is also the best way for the company to gain sales from their advertising as peoples will start having interest for this product and may purchased it.
How I am going to distribute my product?
Distribute the product is the main important thing for the organisation as they have to decide where they want to place their new product. As new product is a virtual in the market so it's up to the organisation.
The new product fruit lager is going to be selling at the Indian restaurants. It is because in the all-Indian restaurant they only had an Indian lager. So as I think selling my product in the Indian restaurant can raise more sales as well because of their one alcohol product. As I have done my question air, a number of peoples like the new product before realising. As the product also target males. So the best way is there to sell product in the Indian restaurant. As peoples will like it because of their flavours of the new product had.
I can also sell my product in a pub, as a lot of English peoples like to drink different kinds of drink so why no distribute in a pub? It can raise my profit and also it can be famous. I will go for two of the option, which I have listed above to distribute my product.
E3 The production process for the product/service including quality assurance.
Business must keep various aspects of customer service under review.
* Reliability. A reputation for reliability helps business to increase sales by retaining existing customers and attracting new ones.
* Friendliness. Most customers appreciate being made to feel welcome. They like the sense that the business, represented by the person serving them, values them as a customer. A smile and a friendly word cost nothing but, as many businesses have found out, are respects of customer service which customer's rate highly. Many businesses, such as major supermarkets and restaurants, give special training in greeting and serving people to their staff who have direct contact with customers.
* Availability of goods and service. Customers are more likely to go to a business if they know that the goods or service they want will be easily available when they require them
.
* Speed of delivery. In the same way, customers expect goods that they have purchased, but which may be too heavy or bulky to take away them, to be delivered promptly. For i.e. if you buy a new computer system, you want it delivered in a few days so that you can start using it. If a retailer is unable to deliver it until next month, you will probably look to buy it somewhere else. You also want it delivered on the day it is promised.
* Customer safety. Customer safety must be paramount. All customers have right to expect any business organisation supplying them with goods or services. To take all reasonable precautions to ensure their safety and well being. This applies on the premises of the business, in the customer's home and elsewhere.
* Published policy for exchange or refunds. Many businesses have policy of exchanging goods if they are faulty or do not meet the needs of the customers. Customers are encouraged to buy, confident in the knowledge that if their purchased turn out to out unsatisfactory in any way. They can exchange it or obtain a refund. Marks and Spencer for example, has a well-publicised policy of exchanging goods or giving refunds. Obviously the policy is open to abuse; for example, some people take back their Christmas and birthday presents, preferring the money instead. However, the option of being able to return goods for exchange and refund encourages more sales, which more than offsets the number of people who return goods.
For customers to want to buy an organisation's products, the product must be:
* The right product (the product that the customer wants)
* At the right price (a price customers are happy to pay)
* In the right place (where customers want and expect to be able to buy the products)
* At the right time (available when customers want it)
In this circumstance a business undertake market research in order to find out:
* What customer think of the product
* The existing and potential sales of product
* The attitudes of customer to a product.
* Expect trends in the market and in demand for a product.
By finding out what customers want, a business can supply a product that will satisfy them. This may be an improvement to an existing product or a new product that more closely meets the customer requirements. Other market research information will enable the business to respond to changes in demand and to meet challenges presented by the activities of competition.
Customer service
All business needs customers to buy their products and services. In today's increasingly competitive world, business must ensure that they provide what their customers want, so that they do not go elsewhere. This means that business must not only provide a high-quality product or service that is safe and reliable does what it is supposed to, and offers good value for money, but they must also ensure a high standard of service in dealing with customers.
A customer is likely to shop elsewhere if he or she has received poor service, perhaps because the store's staff are rude or unhelpful, even if the product itself is satisfactory. This aspect the customer relations are so important that many large organisations have established dedicated customer service departments to deal with customer's enquiries, complaints and request.
All organisations must strive to meet their customer's needs by;
* Providing information
* Giving advice
* Providing credit facilities
* Delivering goods
* Providing after-sales service.
A business that meets these needs provides a high standard of customer service, some times called best practice customer service. The benefit is customer satisfaction and this is reflected in a high level of sales and repeats business.
The individual needs of customers and the methods of providing customer service vary between different types of business. In fact, the methods of providing customer service even vary between organisation providing the same goods and service. These methods range from simple notices in shop windows giving information about opening hours, to customer service staff specially trained to deal with customers' enquires, requests for refunds and complaints. Other methods of providing good customer service include:
* Taking action to reduce the time taken for customers to be served.
* Producing leaflets and information about products, their effects on health or the environment, and the business itself.
* Providing improved access to premises and facilities for customers with special needs.
Training staff to greet customers with a smile and a friendly gesture, making them feels welcome and valued by the business.
E4 A sound basis for the financial plan on a market analysis which identifies sources of finance & includes a budget, breakeven analysis, cash flow forecast, projected profit & loss, and a start up balance sheet.
Sources of finance.
There are many sources of ways to get our financial help to start up you own business. Such as;
* Loan from bank or other financial institutors
* Borrow money from your family or relatives
But the financial help I have got is from my family. This is a good way of having a finance of my family, as there is no fee, interest rate or security needed at all. As this is a kind of back up from my family. If I go for bank to borrow some money, the bank will charge me a high interest rate on that period, which I will have to put more money in to pay of my debts. As there is a big risk of borrowing the money from bank, as they need security before you borrow such as house etc. So after that I've decided to borrow money from my family, as there are not special terms at all.
The amount I had borrow from my family is about £20 000 which is enough for me to start up a niche business to produce my own product and Andy my business partner is going to invest £5000.
Start up cost/Budget.
The starts up cost are those have to be met before a business can begin producing and selling its new product. Any business planning to produce a new product must identify the start up costs. This is because these start-up costs will be incurred and must be paid before the business begins to receive any revenue from the product.
Typical start up cost involved in planning a new product include;
* Market research
* Premises
* Machinery
* Fixtures & fittings
* Staff cost etc
These are the main important sources, which I have to include in the cash flow forecast.
The following are,
* Opening balance £20 000+Andy £5000
* The total sales of my business for the first eight month as I think are
Jan-£4 000 Feb-£6500 March -£ 8000 April- £12000 May-£15+ 000 same as the other months.
Expenses
* Electricity £500 every after 3 months
* Telephone bills £100 every after 3 months
* Materials £1000 for Jan £200 for Feb £500 for may £1000 in Jul and £500 in Aug
* Computerised system cost about £ 2000 should be paid immediately
* Wages £ 200 every months
* Rent £ 2000 every month
* Lighting £100 every month
* Gas points £100 every month
* Office furniture£1000 must be Paid immediately
* Other cost £200 every 3 months
Break-even point.
The break-even point (BEP) is the level of production and sales at which cost and sales revenue are equal so that there is either a profit or loss. When looking at a new project a business will want to know at this point. The BEP can either be calculated or shown graphically.
FIXED COSTS:
* Rent £2000
* Wages£200
* Electricity£500
* Telephone£100
* Lightning £100
* Gas point£100
* Computerised system£2000
Total=£5000
VARIABLE COSTS:
* Material£1000
* Stocks£3000
* Office furniture£1000
Total =£5000
TOTAL COSTS=£10,000
