Bellerbys College

Business Plan

Insert Business Name and Logo

Teacher: Insert name

Table of Contents

Part 1: Business Plan2

Introduction2

1. Aims and Objectives3

2. Idea Generation3

3.Market and target market4

4.Elevator Pitch4

5.Sources of Finance5

6.Financial data: Cost, Revenue & Profit6

7.Financial Data: Cash Flow 7

8.Legal Structure7

9.Digital Strategy8

10.Evaluating my Business idea and Business Plan9

Part 2: Business Failure11

Task 1- Power Point Slides11

Task 2- Business Failure Report11

Bibliography14

Appendix16

Introduction

Business management and planning are central to the success of any business from startup to growth and expansion. In this view, this report illustrates a plan to establish a Healthy Mashed Potato company. it focuses on various aspects such as the aims and objectives of the business idea generation, targeting of prospective customers and elevator pitch. Besides, the report provides an overview of different sources of finance and indicates the most appropriate for the proposed business. It offers a summary of the financial projections it demonstrates the viability of the business. Additionally, the preferred legal structure and digital strategy of the business is highlighted. The report also reviews the failure of Pan American International Airways in comparison with Blockbusters which also failed. The review shows some of the factors that can drive the success or failure of a business.

Aims and Objectives 

The mission of Healthy Mashed Potato Company (HMPC) is to become one of the leading premier fast-casual food companies that offer healthy processed potato in the food industry. The firm aims to produce healthy foods in society amidst increasing concerns about unhealthy fast food. The primary aim of the company is to offer healthier and affordable potato food products in the country. It seeks to expand the market share of healthy food by approximately 10%. Therefore, the company purposes to achieve its mission through enhancing traffic in its stores through offering, healthy and affordable potato products.

Idea Generation

Kentucky Fried Chicken is one of the most successful brands that have succeeded through the selling of Chicken. Its success arises from its ability to collaborate with farmers and help them enhance the production of healthy chickens to ensure that the positive influence quality and reduce operations costs. Secondly, the firm drives its sales through the creation of a strong brand name essentially because of effective marketing and sales strategies (Kowalkowski, 2015). HMPC will be successful since it shares some of the strengths of Kentucky Fried Chicken. The company shall establish a close working relationship with farmers and also open factories close to the potato plantations to reduce the cost of operation. Secondly, the company aims at improving its sales and customer traffic by building a strong brand image and strategic marketing activities. The combination of these two strategies will ensure that HMPC can improve its revenues while cutting operational costs to promote its profitability. 

Graph 1: Market for Healthy Snacks

Market and Target market

HMPC aims to become a global producer and supplier of potato products. In this view, the primary target segment is young adults, teenagers, and children. The group is targeted since they are the highest consumers of the potato products across the globe. HMPC’s product is targeted at a mass market. The company does not restrict its services to the targeted consumers since anybody can be the customer of the company regardless of age. Food products are bought by all the people in the society. Therefore, the business focuses. Recently, there has been an enormous increase in the growth of healthy snacks. Currently, it dominates about 36% of the snacks market and it is expected to grow about 7.9% annually (Findholt et al., 2014). Therefore, there is still a gap in the market for healthy potato products. 

Elevator Pitch

The product offered by HMPC is Mashed Potato. While there is an increase in the production and supply of healthy snacks across the globe, there are still high concerns about unhealthy foods. In this case, HMPC aims at increasing the supply of healthy mashed potato products in the market. The products specifically target children, teenagers and the young adults who comprise the highest population of those consumers’ snacks. The product seeks to enhance the supplier of the healthy snacks to reduce unhealthy foods in the market to help in addressing the issue of obesity and overweight among children as a result of unhealthy snacks in the market (Bublitz & Peracchio, 2015). The unique selling point of HMPC is designed for every client a set of dietary according to various health conditions. The firm shall add value through sourcing natural food products used for production. 

Sources of Finance

Different sources of finance can facilitate business startup. Firstly, there is a personal investment which is advantageous because one is not under pressure of repaying. However, the challenge with a personal investment is that it is limited in some cases it may not be enough. Friends and family can also help with some money in the form of grants or loans. Its benefit is the fact that it is interest-free. The number of friends and family can be small and may cause dependence. Business loans are another source that is advantageous since one can borrow a large amount of money. Nonetheless, the interests may be high and the business owner is always under pressure to pay it. In this view, the best source is a combination of personal investment and business loans because it enhances access to the full amount of the required initial capital. However, loans can be affected by an increase in interest rates which makes them expensive to procure. On the other hand, interest rates and inflation may affect the projections of the initial capital since it results in higher prices which will necessitate the procurement of more finances. It has to be noted that a sole trader has unlimited liability and has to shoulder all the debts made against his or her business. Besides, it makes it difficult to raise funds using personal savings or consumer loans (Klačmer et al., 2014). In the case of HMPC, the 25000 pounds which is the initial investment was a grant which is advantageous as a source of finance because it offers flexibility in the management of the business due to minimal pressure of repaying the money.

FINANCIAL DATA: COST, REVENUE & PROFIT

Variable and Fixed cost

The Fixed Costs

Item Amount in Pounds

Rent for Space 6000

Weekly Payroll 4000

Production Equipment 7000

Utility bills 3000

Variable Costs

Delivery charges 1000

Advertising and Publicity 2000

Sales commissions 2000

Total 25000

Table 1: Fixed and Variable Cost.

Figure 2: Break Even Chart

The breakeven chart is important in the management of costs, profits and volume. It helps in the examination of the relationship of volume, cost, and profit. It is a useful tool in making managerial decisions since it shows the impact on profit of changes in variable costs, fixed costs, volume of sales, and selling price (Krishna et al., 2017). Financial data: Cash Flow

Trading Quarter First Quarter Second Quarter Third Quarter Fourth Quarter Total

Cash Flow

Cash Inflow (A)

Sales 4000 5000 15000 22000 32500

Total Inflow 4000 5000 15000 22000 32500

Cash Outflows Utilities 500 500 500 1000 2500

Wages 2000 2500 3000 4000 9500

Professional fees 1000 1000 1000 1000 4000

Marketing 1000 1000 2000 2500 6500

Rent 2500 2500 2500 2500 10000

Equipments 8000 Total Outflow (B) 7000 7500 9500 11000 35000

Cash Summaries

Net Cash (A-B -11000 -2500 5500 11000 Capital 25000 0 0 0 25000

Opening Balance 0 14000 Closing Balance 14000 11500 17000 28000 Cash flow is beneficial because it helps in understanding the liquidity position of the company and how funds flow. As the cash position of the company is known, any shortfall assessed and mitigations put in place to address it (Cavusgil et al., 2015). The challenge of developing a cash flow includes slow-paying invoices, expensive debts, and incorrect sales forecasting.

Legal Structure

The business takes a form of Sole Trade in its initial stages but progressively it will be transformed into a limited firm. The sole trade is established because of its ease to form and to start doing business. The registration process and requirements are very minimal which will result in the fast operationalization of the business. A sole trader is preferred because the owner has complete control and tax filling processes are quite simple. Overall, the cost of starting a sole trader is less compared to any other form of business. It will offer flexibility in making things work and the company to start growing (Burns, 2016). After growth has started it would be easier to change to a limited company. 

Digital Strategy

The advent of technology and globalization has brought new opportunities for businesses. Ecommerce notwithstanding enables a small business to increase their competitiveness and productivity by providing a comprehensive range of benefits which include; low operational costs resulting from automation that reduces operational processes and infrastructure. Other benefits include increased revenue, greater customer acquisition, customer buying analytics, social recommendation, online presence and larger marketing ROI (Bones & Hammersley, 2015). This levels the field and allows small enterprises to punch far above their weight in customer attraction and compete against established businesses.

However, the disadvantage of e-commerce to a business idea is that it creates duplication of duties on the online and offline fronts leading to additional costs. Also, many customers still prefer the personal relationships formed by businesses with a physical presence. Security and credit fraud are huge risks for online businesses. Network unreliability and coverage create unreliability challenges. Legal issues that emerge when running on online company i.e. software infringement make investors shy away.

Ecommerce is good for business and a great experience for customers because of its convenience and easiness. Also, it can attract new customers with search engine visibility. It also decreases the cost of inventory management by using the web-based management system. It also gives the owner insight into customers’ buying habits and hence be able to provide tailor-made offers to suit customer requirements. It also allows the business to stay open and operate 24/7/365, therefore, being beneficial for customers to buy products at their convenience. It boosts brand awareness in the market through search optimization and enhances the target audience to your products (Bones & Hammersley, 2015). Finally, it offers an opportunity to expand the market for niche products.

Evaluation of my Business idea and Business Plan

A business plan refers to blueprint of a company and an essential part when starting a business. It tests the feasibility of the market by ensuring that attention is paid to the broad operational and financial objectives of the business idea to make the business manageable and effective. Business plan development requires analysis of the present situation, setting objectives, developing and instituting a strategic & financial plan. This helps to see the whole picture and give strategic focus through development of priorities, managing reforms, and enhancing accountability. It also manages cashflows, strategic alignment, and setting realistic continuous monitoring systems (Cosenz 2018). Planning holds many benefits; however, it has its sets of challenges that lead to the failure of a business. The challenges include failure to involve the relevant individuals, poor implementation, inadequate accountability issues, and spending time on irrelevant issues (Saura 2019).

With a good business plan, it is easier to show all interested parties your commitment to building the business. The plan establishes milestones that are laid out for the success of the business. It forces you to analyze the competition hence getting an in-depth understanding of customers. It brings out previously hidden assumptions and tests their viability. It assesses the feasibility of the venture and documents the revenue model (Chang 2017). The plan also determines the amount of capital needed and its usage. This forms the basis for financial proposals and provides answers to key questions. It is a gateway to research and a firm understanding of market trends. This is necessary in attracting a talented management team as it plots a roadmap of its operations and direction to look on in times of doubt. It also establishes partnerships and positions for the business hence widening the scope of customers, investors, and partners. The plan gives a clear view of how to judge the success of the business. It repositions the business when dealing with changing conditions and documents the growth patterns of the business. All these are essential in determining its viability, forecasting the company’s needs and uncovering new opportunities (Hinterhuber 2017).

In the development of the business plan, I was able to complete the business idea sections effectively but experienced challenges with financial data. The framing of the business idea and identification of the market segments and targets was done well. I was able to explain and identify the best sources of finance. Besides, the development of the legal strategy was effectively done. However, I need to improve on the financial data presented to ensure that I can effectively capture all the expenses, sales focus and use it to develop the break-even charts and the cash flow statement.

Part 2: Business Failure

Task 2 – Insert Power Point Slides

Task 2 – Business failure report

Pan American World Airways (Pan Am) established in 1927 and was seen as a symbol of aviation’s historical days and the largest international carrier in America for many years dead cease business in 1991 due to business failure related issues. At its peak, the company set the world record by using B747 (Kunert & Staar, 2018). After 64 years of growth and prosperity, the business ceased its business due to challenges such as unfavorable poor management, fierce competition, and poor brand image but the name continues to live on but it has now been adopted by a private rail company.

Reasons for Pan American World Airways Failure

Poor management

 Pan America World Airways failed because of poor management. Despite its growth and successes throughout the 1970s, the management of the airline was not able to navigate through different economic challenges. Due to the inability to operate in the domestic routes and the rising cost of fuels, the airline started making losses. Unfortunately, this was a challenge that effective management would have addressed immediately. Strategic management entails the ability to creatively and innovatively influence the growth of business and its sales despite different economic situations. The management ought to have developed policies and frameworks to navigate through the challenges that it experienced in the 1980s (Salpukas, 1991). In 1988, Pan Am B747 crashed in Lockerbie increasing the woes of the businesses. The FAA found that the airline had 19 security failings and fined it. These show that the management was not diligent to ensure that the safety of passengers is guaranteed. Consequently, the company lost about $300 million in lawsuits causing more losses. In the subsequent years, it was estimated that the company was losing about $3 million per day which made its operations unattainable (Kunert & Staar, 2018). In this view, Pan Am lacked strategic management and leadership which would help it navigate through competition and other economic challenges.

Fierce Competition

The aviation industry has been very competitive since when it was founded. Like any other business, expansion can result in bankruptcy or profits. The airline industry is largely influenced by the advancements of technology and change is constant. Such changes and the need to continue to maintain competitiveness in the market may result in losses (Kunert & Staar, 2018). Pan Am in the effort to enhance its competitiveness, adapt to the changing regulations, and consumers need experienced losses. Fierce competition in the market drove the fares down while the fuel prices were increasing and the expense concerning meeting changing demands of consumers and the market continued to rise. The United States government also tilted the favors of competition against Pan Am when it refused to allow it a connecting dome tic-route network. At the time, the domestic-based Transworld Airways dominated the local travels (Salpukas, 1991). Such issues affected the ability of the airline to increase its revenue base within the domestic market and also made it difficult to compete with airlines with both domestic and international travel rights.

Poor Brand Image

The management of Pan Am failed to effectively manage its brand image to gain goodwill and attraction among the consumers. Its problems started with the inability of the firm to build healthy working relationships with different agencies in the sector, for instance, the government and FAA. At one time the Department of Transport secretary indicated that the airline might cease operations soon. Coupled with a bad presser, lack of travel agents and fear, the fate of the airline in public perception and perspectives was sealed. Terror activities largely influenced the negative public image of the airline. In 1986 Pan Am Flight 73 was hijacked in Pakistan and in 1988 terrorists bombed Flight 103 above Lockerbie damaging its reputation (Salpukas, 1991). Despite these challenges that affected its public image. The airline did not put in place effective public relations strategies to improve the confidence of its customers.

Comparison to Blockbuster

Blockbuster had grown and had more than a million worldwide but ceased its operations in 2010. Like Pan Am, the company was affected by several factors. However, one of the major reasons was that the business failed to adapt to the rapidly changing environment of providing movies. Pan Am remained with the renting of physical DVDs (Monaghan, 2013). Similarly, management is blamed for the failure of the company because it failed to acknowledge the new trends in the industry and attempt to develop strategies to overcome its challenges. The company’s management did not innovate yet; technology was rapidly developing within its environment. Blockbusters did not increase their streams of revenue. The brand image of Blockbusters also caused its failure the same way it caused in the failure with Pam Am. 

As the company grew it lost focus on the core customers resulting in low trust levels among consumers. Consequently, the business started losing clients over time directly impacting its brand image and reputation. Overall, poor management of blockbuster led to a negative brand image resulting in failure (Walls, 2014). The firm’s management did not focus on its relationship with the customers to ensure that I develop a strong brand image and reputation through customer-centered services. Therefore, the causes of failure of the two companies are fairly related.

Conclusion

Based on the review of the failure of Pan American Airways and comparing it with the Blockbusters, it is evident that the management of a business is at the center of all business failures. Both companies failed because of a lack of innovation and creativity to navigate through the challenges within their industry environment. Besides, competition and poor brand image cause business failure. In this view, it is essential for businesses to focus on having effective, creative and innovative management that focuses on the strategic growth of the company. Besides, it is essential for a company to develop proper strategies to address the changing demands and needs within the environment. Again, the reputation and brand image of a company determines its success or failure. It is important to create strategic marketing policies that address public relations to ensure that the company maintains a reputable brand image.

 

Bibliography

Bones, C., & Hammersley, J. (2015). Leading Digital Strategy: Driving business growth through effective e-commerce. Kogan Page Publishers.

Bublitz, M. G., & Peracchio, L. A. (2015). Applying industry practices to promote healthy foods: An exploration of positive marketing outcomes. Journal of Business Research, 68(12), 2484-2493.

Businesswire.com Global Health and Wellness Food Market 2018-2022. Adoption of Healthy Eating Habits Boost Demand. Retrieved from HYPERLINK “https://www.businesswire.com/news/home/20180723005413/en/Global-Health-Wellness-Food-Market-2018-2022-Adoption”https://www.businesswire.com/news/home/20180723005413/en/Global-Health-Wellness-Food-Market-2018-2022-Adoption

Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.

Chang, W. L. (2017). Online training for business plan writing through the World Café method: the roles of leadership and trust. Universal Access in the Information Society, 16(2), 313-324.

Cosenz, F., & Noto, G. (2018). A dynamic business modelling approach to design and experiment new business venture strategies. Long Range Planning, 51(1), 127-140.

Hinterhuber, A., & Liozu, S. M. (2017). Is innovation in pricing your next source of competitive advantage? 1. In Innovation in Pricing (pp. 11-27). Routledge.

Findholt, N. E., Izumi, B. T., Nguyen, T., Pickus, H., & Chen, Z. (2014). Availability of healthy snack foods and beverages in stores near high-income urban, low-income urban, and rural elementary and middle schools in Oregon. Childhood Obesity, 10(4), 342-348.

Krishna, K. M., Pandey, N. K., & Thimmalapura, S. (2017, December). Break-even analysis and economic viability of powertrain electrification—An analytical approach. In 2017 IEEE Transportation Electrification Conference (ITEC-India) (pp. 1-6). IEEE.

Klačmer Čalopa, M., Horvat, J., & Lalić, M. (2014). Analysis of financing sources for start-up companies. Management: journal of contemporary management issues, 19(2), 19-44.

Kowalkowski, C. (2015). Business marketing: A Nordic School perspective. Kowalkowski, Christian (2015),“Business Marketing: A Nordic School perspective”, in The Nordic School: Service Marketing and Management for the Future, Johanna Gummerus and Catharina von Koskull (Eds.).

Kunert, S., & Staar, H. (2018). Failure in organizational change. In Strategies in Failure Management (pp. 9-25). Springer, Cham.

Monaghan A. (2013) Blockbuster to disappear from high street after 25 years. The Guardian. HYPERLINK “https://www.theguardian.com/business/2013/dec/12/blockbuster-disappear-high-street-close-dvds”https://www.theguardian.com/business/2013/dec/12/blockbuster-disappear-high-street-close-dvds

Salpukas A. Dec 5, (1991). Its Cash Depleted, Pan Am Shuts. The New York Times. Retrieved from HYPERLINK “https://www.nytimes.com/1991/12/05/business/its-cash-depleted-pan-am-shuts.html”https://www.nytimes.com/1991/12/05/business/its-cash-depleted-pan-am-shuts.html#

Saura, J. R., Palos-Sanchez, P., & Grilo, A. (2019). Detecting indicators for startup business success: Sentiment analysis using text data mining. Sustainability, 11(3), 917.

Walls, W. D. (2014). Bestsellers and Blockbusters: Movies, music, and books. In Handbook of the Economics of Art and Culture (Vol. 2, pp. 185-213). Elsevier.

Appendix

Appendices 1: Market Share of Healthy Food

Retrieved from Businesswire.com (2018)