From my research I will:
- Determine what type of shop the people of Cookstown want to see open.
- Identify the appropriate prices for my products and discover what level of sales I can expect by investigation how much money people are willing to spend in the shop and how often they are considering shopping in it.
- Discover where I could locate my business and decide if the chosen location will generate sufficient custom, I will assess the competition levels in surrounding areas by visiting the local council and obtaining information on local businesses.
- Discover the average number of people who could make use of this shop this may be discovered from demographic information obtained from the local library or council offices.
- Investigate the cost of advertising a new business. This may include adverts in the local newspapers and leaflet drops must be considered.
Questionnaire review
The first three questions that were posed in my questionnaire related to the gender, age and employment details of the respondent. The answers to these three questions will help me to determine the preferences of different groups of people in the Cookstown area. I will be able to analyse the different preferences of males and females as well as analysing the choices of different age groups. These 3 questions will help me to determine the target sector of the market that I will concentrate on. The question relating to employment will be helpful in ascertaining the disposal income of people in the Cookstown area. I progressed by enquiring about their views on the shopping facilities in Cookstown and how often they felt the need to travel to another town to fulfil their shopping needs. This information is important to get a general out look on attitudes of people in Cookstown about Cookstown itself. The next question was perhaps the most important question in the questionnaire as it asked the respondent to specify what kind of shop they would like to see in Cookstown that is not already available. This is essential element in determining what shop would be most popular and hopefully most successful shop. I continued my investigation by asking how the respondents would use the shop, which they specified in the previous question, and approximately how much money they would spend in it. This research will give me a fair idea of the amount of custom I might and help me determine the level of sales I might expect.
S.W.O.T Analysis of Cookstown
I will carry out a S.W.O.T analysis of Cookstown and the local area to decide if it is suitable to set up my business. This consists of evaluating the Strengths, Weaknesses, Opportunity and Threats of the area.
Strengths:
- Population of 32,000. 60% of which are between the ages of 17-64.
- Wealthy area with a very low rate of unemployment of only 4.1%.
- Situates 26 primary schools and 2 secondary schools accommodating 5,740 students in total.
- Premise is just off Cookstown’s main street attracting customers with plenty of car parking spaces available.
- 13,500 vehicles travel through Cookstown on a daily bases.
- Over 18,000 people visit the area per year as tourists.
- 36% of the population is aged between the ages 0-24 this is significant for my shop as this will be the target age range of my shop.
Weaknesses:
- High rates burden.
- Public transport to and from Cookstown is poor.
Opportunity:
- There is an opportunity to completely dominate the market of Cookstown and the surrounding areas.
- If market domination is established there is and opportunity to expand the business.
Threats:
- The main threat comes from the current competitors in the town. Argos is a nationwide company with a good brand name and
Findings from Primary Research
From my questionnaires my aim was to determine what type of shop the people of Cookstown want to see open, how much money they would be willing to spend in the shop and how often they would be prepared to shop in it.
I summarised the information received from my questionnaires by arranging the results from each respondent in a database, as shown in appendix 1. I scrutinized my results by creating a number of filters in order to discover the information required.
The first filter I carried out was to see which shop was the most popular choice among the people of Cookstown. Copies of this filter are shown on pages 10-14. From this filter I was able to produce a spreadsheet showing the number of people that selected each type shop (p.13), - I progressed by constructing a bar graph (p.18) which clearly illustrates that a gift shop is the most popular choice. Almost half of the people (42.5%) I questioned would prefer to see this type of business open than any other type mentioned. I feel this is a substantial percentage indicating that perhaps this would be the most successful business to open in Cookstown. Only 20% of the people questioned opted for a ‘Mother and Baby’ shop to be open in the town. This is less than half the number of people who chose a gift shop as their preferred shop. Where the specialised food store and clothes shop are concerned, only 7.5% of the people questioned opted for these shops. There were also a number of additional shops suggested but since the numbers opting for any one of these was very small, it would be sensible not to consider these as my final shop.
The results of this filter clearly show that a gift shop is the overwhelming choice for the people of Cookstown. It would then be reasonable for me to consider this as a serious option for the choice of shop to open in the area. My main objective is to set up a shop that will be successful and if there is a lot of demand for this particular type of shop then this is one step to success. Since the filter shows that a gift shop is more desirable than other types of shops, I will concentrate more filters on finding out if this indeed a good business venture.
After completing the filter that highlights that a gift shop is most desirable, I created a filter to discover how often people were planning on making use of this shop (see pages 20-22). I displayed these findings on a spreadsheet and I found that the majority of the people, approximately 41% would use the gift shop on special occasions. The results also show that 35% of the people questioned would use the shop monthly and 24% said that they would shop in it on a weekly basis. These results are displayed on the spreadsheets on pages 33. A bar graph was then used to illustrate the results. This is shown on page 25 . The bar graph clearly illustrates that people will make good use of this shop even though it will mostly be used on special occasions. Special attention should then be given to the profit margins of the items for sale in the shop. If people will not be using this shop every day or even weekly, the profit margins will need to be higher than those of a shop that people are using on a daily basis. If the profit margins are low it may be difficult to make the shop a success. This would perhaps indicate that it is best to go for good quality products at reasonable prices rather than a huge quantity of poor quality products at bargain prices.
The next filter created was to get an idea of the amount of money people were willing to spend in the gift shop, in order to assess the level of turnover. Page 27 shows the number of people who are willing to spend between £5 and £10 in the gift shop. Page 28 shows the number of people who are willing to spend £10 - £25 in the gift shop and Page 29 shows the number of people who are willing to spend £25 - £50. Nobody that I questioned was prepared to spend more than this amount on one single occasion.
Once again I presented these results on a spreadsheet. From this I can clearly see that nearly half the people questioned (47%) are willing to spend £10-£25 in the gift shop on any one occasion. This is a good indication that people are prepared to spend reasonable amounts of money in the gift shop. This would lead me to believe that it would be possible to make a success of this type of business.
I was able to construct a pie chart using the results from my spreadsheet, a copy of which is shown on page 32. The pie chart helps illustrates the varying amounts of money that people in Cookstown would be prepared to spend in a gift shop on any one occasion. From the pie chart it is clear that the majority of people would be willing to spend between ten and twenty five pounds.
For my final filter I decided to compare gender responses. My filter results showed that four males compared to thirteen females chose a gift shop as the preferred shop to be open in the district of Cookstown. This gives a clear indication to the style and variety of stock that should be purchased for the gift shop. Therefore the sector of the market I will be focusing on will be females.
Overall a gift shop seems to be the most popular choice amongst the survey. With a large amount surveyed saying that they would visit only on special occasions the product needs to be imaginative and high quality but not too expensive as the survey also indicated that the maximum amount spent in the shop would be £25. With this in mind I would suggest opening the shop around October November time to deal with the Christmas rush that would help in the revenue side and also the customer loyalty side.
Findings from Secondary Research
Using the information I obtained from my secondary research I was able to carry out a S.W.O.T analysis (page 41). This helps me to clearly illustrate the advantages and disadvantages of setting up a business in Cookstown.
I carried out secondary research to get an insight into the demography of Cookstown and the surrounding areas. I obtained this information from my local council (See appendix 2) From these figures I can see that Cookstown district has a population of 32,000, 60% of which is aged between 17-64. I also found that over 45% of the population is aged under 25 years. This is significant for my shop as this will be the target age range. This also helps me on deciding the variety and style of gifts and items to sell in the shop. The 26 primary schools and 2 secondary schools situated in the district will provide customers for my shop. In addition to this, the 18,000 people that visit the area per year as tourists will provide further custom for the gift shop. Cookstown has a wealthy population indicating that that people will spend money in my shop. Premises in Cookstown have plenty of car parking spaces available. This is a very important element in attracting customers to my shop knowing that they will not have far to walk. 13,500 vehicles travel through Cookstown on a daily bases providing additional custom.
From carrying out my secondary research I can see that the unemployment rate in Cookstown is at an all time low of only 4.1% indicating that people should have a moderately high disposable income which will be beneficial for my business. This also suggests that the local economy is very successful. Therefore attracting many multi-national businesses such as Copeland. The Urban Development Programme has been responsible for the assistance in 17 projects in the Cookstown district between the years of 1990-1993, costing near £75,000 it is continually supporting the development of Cookstown’s economy up to the present day. The International Fund for Ireland has also directly assisted a number of projects in the Cookstown area spending £1,223,300 between the years of 1987-1994. Other schemes and projects such as the ERDF Scheme have assisted in the advancing of Cookstown’s economy. One such project they under took was the expansion and refurbishment of Glenavon House Hotel. These schemes attract new businesses to the area as well as customers. My gift shop could benefit form the passing customers.
Raising the capital needed
Capital is a very important key necessity that needs to be considered when setting up a business. I will need to consider how much capital is needed, where it will be obtained from and how it will be managed. From my secondary research I can conclude that there are many options open to me when considering how to raise capital ranging from a government grants to a bank overdraft. My research for this can be found in appendix 4. I also investigated the help available from Ledu for small business setting up. (appendix 7)
Competition
I obtained a list of businesses in the Cookstown area, see appendix 3 this was used in accessing competition levels. After investigating these businesses I found my main competitor to be Argos catalogue shop. It is situated in the Station Yard on Molesworth Street in the town. My gift shop will differ from this shop with the advantage that my customers will be able to view their products before purchase. The gift shop will also be a lot more accessible and welcoming than Argos with a friendlier more personal atmosphere. Argos though is a large nationwide company with many stores and therefore can take advantage of economies of scale, this may result in their prices being lower than mine. After visiting I found there to be two other existing gift shops in Cookstown: “ Attractions” and “Penny Farthing”. (Appendix 7) However these shop specialise in a different variety of gifts than I plan to, selling mostly dried flowers, ornaments and generally fancy accessories for the home. However my gift shop will specialise in peculiar, out of the ordinary items and unusual accessories for the home. They also target the more mature generation of the market. As a result I am not overly concerned with the competition generated by these shops.
Conclusion
After carrying out my market research in the form of primary research I can conclude that possibly the most successful business for me to open in the Cookstown area would be a Gift shop. This conclusion was formed due to the fact that almost half the people questioned opted for this type of shop to be opened. I also discovered that people would make good use of this shop even though it will mostly be used on special occasions. The majority of people questioned would be willing to spend between ten and twenty five pounds. The final piece of information discovered through my primary research was the breakdown of males to females questioned who selected a gift shop as their preferred shop. All this information is extremely important when discovering the amount and type of custom the gift shop may receive as well as the level of sales.
From my secondary research I can conclude that Cookstown is an ideal area to locate my business. Its central location makes it easily accessible to all parts of Northern Ireland.
Where will I locate my business?
One of the factors I need to consider to ensure that my business is successful is location. The location of a business is very important as it determines the amount of custom it will receive. There are many affecting factors that influence the location of a particular business. Where a business locates depends greatly on what the business is producing: Manufacturing businesses tend to locate to where their raw materials are available or where they can obtain easy access to material by being close to ports, major roads or rail links. The amount of land available and the cost of this land clearly affect the location of a business. Large industrial estates need a large, flat site that can bear heavy loads. When locating a business planning restrictions should also be considered. A business that requires a highly skilled workforce needs to be near an area linked to the industry or a training facility for this reason many high-tech industries cluster together. Otherwise a business can locate in an area of high unemployment, this reduces the problem of staffing and the labour costs. Many businesses need good transport facilities to transport their goods therefore the infrastructure of the surrounding area is very important. It is vital that all business have an excellent communication system for the efficient functioning of the business. Governments and local authorities have become an increasingly important influence in attempting to attract large multinational firms to locate in their country and in areas of high unemployment by offering them grants and other financial incentives. Other influencing factors include natural elements such as the climate and the availability of water. These factors are especially important for agriculture.
Methodology
To obtain my information on the vacant properties in Cookstown I visited a number of estate agents: Tom Jebb- Cookstown property services, Stanley Best estate agents and Joseph Allen estate agents as well as using the inter-net .
I wanted my properties to be located on or near the main street of Cookstown, as here I will receive most custom. I collected five properties to get a good selection and variety of vacant locations. I will analyse these properties in order to find the most suitable one in which to locate my business.
I will be accessing each property according to accessibility, parking facilities, cost of premises to buy/rent, if it is already fitted with fixtures and fittings, whether there is a bus stop near by and other relevant factors I see important. I feel these are the most important factors I need to consider to ensure that my gift shop is a success. I have included a street plan of Cookstown to illustrate where each of my premises are located. (As shown on page 60)
Property one – see pages 46-47
53/55 Molesworth Street Cookstown
Location = approx. 100 yards off main street
Cost to buy= £200,000
This property is located close to a new shopping complex, consisting of large well-known firms such as Lidl, Argos, Budget DIY and Harry Corry. These shops will attract more custom to the area. There is also a bus station opposite this premise making this location easily accessible to those using public transport. This property is approximately 100 yards from the main street. This factor may also encourage custom.
The fact that this building is a grade B2 listed building creates a limitation to the amount of work and refurbishment that could be carried out on it. Expansion on the current property may also be difficult due to the listing and this may prove a disadvantage in the long run. There is also accommodation included in the sale price and this could be rented out as flats or offices increasing profitability.
Another disadvantage of this property is that it is located close to the business I consider as my main competition. This location could reduce the amount of custom my shop receives.
Property Two – see pages 49-51
54/56 James Street Cookstown
Location = main street
Cost to buy = £230,000
My first impression of this premise is that it is in need of repair. This will undoubtedly increase the cost of setting up the business in this property.
It is located on the main street of Cookstown, which would certainly attract more customers to the shop. However there is limited parking facilities immediately surrounding the premise which may affect the amount of custom. It is also not exactly in the town centre and customers may have to go out of their way to visit. There is a bus stop placed approximately 30 yards away increasing the accessibility of this location to prospective customers using public transport.
The existing living accommodation could be rented out as apartments or offices generating more revenue. This property can be purchased for £230,000 which includes a large yard with out-houses. Alternatively the building alone can be purchased for £120,000. If purchasing this property I would consider buying the building itself rather than the land as a whole. Potentially there is room for expansion if required so this will be kept in mind when making the decision.
Property Three– see page 53
4 Molesworth Street Cookstown
Location = just off main street
Cost to buy = £19,950
This is a relatively small property but it is closer to the centre of the town than the 2 previous properties I have considered. It is also a lot cheaper than them too costing only £19,950. There are limited parking spaces in the immediate vicinity, which could deflect prospective customers from using this shop. Being closer to the centre means that the shop may attract more potential customers than the previous two premises. Having a larger spread of customers will make this property less of a risk but due to the small size of the property there is no room for expansion or refurbishment. Such a disadvantage may not be a problem in the immediate future but it may be detrimental in the long-term for the business.
Property Four– see pages 55-56
46 Oldtown Street Cookstown
Location = very top of the town
Cost to rent = £100 per week
This is also a relatively small premise with a total area of 105.3m2. This property is situated at the very top of the town and it is quite a distance from the main shopping area compared to the other properties I have evaluated. The parking spaces are limited to along the main street as there are no car parks in the close surrounding area. This property can only be rented and not bought. Due to this and the other obvious disadvantages of investing in this property I am reluctant in considering it as a serious option.
Property five– see page 58
18 William Street Cookstown
Location = main street
Cost to buy = £400,000
This is the largest and most expensive property I have considered. It is situated in a prime location in the middle of the town encouraging the most potential customers. Separate access to this property maybe obtained from Union Street, a road running from a housing estate that may also attract more customers. This would provide additional parking for this location. Such a location is a greater risk than the other four properties due to the high cost of it. It’s exactly double in price than the next expensive property on the market. Along with the shop floor there is also substantial storage room that would allow me to buy in bulk saving money through economies of scale. This could prove very advantageous if considering expansion. There is also development potential that is another plus point for the property.
Map showing the location of each premise on a street plan of Cookstown
Key
Findings from property investigation
After evaluating and analysing each property I feel that the ideal property is: property one; 53/55 Molesworth Street Cookstown. I came to this conclusion after assessing each property. Property two needs extensive refurbishment and the costs would be too excessive for a sole trader. There are three floors two of which could be used for apartments but as previously mentioned the costs are very high and there are not many retailers near the premise attracting potential customers for my gift shop.
Property three is close to the main street which would attract customers but it’s downfall was the size of the building. Expansion isn’t an option and there is no storage space at all, floor space is also limited. Therefore this property is definitely not suitable for my business.
Property four is too far away from the main street and there is also a lack of parking facilities for customers. This shop was also quickly ruled out for placing the business.
Property five was the best option for storage and also for future development. The downfall of this particular premise was the price. £400,000 is just too expensive for me setting up a business as a sole trader.
Although my chosen property is not located on the main street I still feel it is within acceptable distance from the main shopping area of the town. This property has the most parking facilities compared to the other properties and there is also a car park nearby and I consider this very important in attracting customers. Another strong advantage of choosing this property is that the existing living accommodation could be rented out as apartments generating more revenue which could be important if there are start up problems with the business. These apartments are already fully fitted and therefore no additional work will be required. After deciding where to locate my business all that is left for me to do is open the doors for business!
Conclusion
The property I have chosen is in an ideal area within the town itself. I have found there to be no existing shops matching this specific criteria of my Gift shop in the local area. Therefore competition level will very low. This should increase the success of my business.
