An effective business plan - Essay Example

An effective business plan An effective business plan is vital in a company’s long term strategy to success. Having a business plan for a car hire service may be the difference between successfully raising it, and taking it to the ground. Business planning offers the car agency’s management and its shareholders a chance to set their targets and goals. An effective business plan for the car hire service lays out the perfect strategy to realise targets and objectives. By having the capability to read the agency’s future, it is practical to form feasible strategies that work in favour of the service. In this case, it is critical to form a business plan to assist the agency’s long term objectives. This is especially if it is the first time trying to make it in this entrepreneurial venture (Barringer 2008). Some of the aspects that surround this business need addressing so as to make it simpler to deal with the hurdles that these businesses face. This paper will examine such a plan in the car hire service, and how it may impact the growth and development of the business, in the long run. The chosen business plan needs explaining because not everyone might comprehend the concepts being introduced in the car hire service. It must, therefore, articulate and explain these details to everyone so as to find out what might be needed to make the agency a success. The business plans formulated ought to look at all factors surrounding the business; the good, the bad, and the ugly. These are part of the aspects that create a well-written plan. It must acknowledge the presence of all factors present in the environment that might enable it to grow, decline, or remain stagnant (Barringer 2008). The plan is there to tell the car hire’s story, and eventually, it decides whether the agency will be a success or a failure. The rental types In order to attract a wide variety of customers, it is vital to have an image of the cars that are to be hired. In this fast globalising environment, the cars that need hiring are personal that are capable of running for many miles. These include personal cars that can accommodate a fairly large amount of individuals. Nowadays, individuals are keen on having the fun day out while visiting different areas. Having a car hire service that can address these needs is fundamental in the business’s growth. It is vital to understand their needs so as to have the right car to provide the customer (Barringer 2008). The sort of cars Many young couples are interested in cars that are out for their interests. This means that; they want cars that are trendy and lavish to match the new lifestyle (Barringer 2008). The common vehicle models from popular vehicle industries are the right cars for the job. This is if they want cars for pleasure. In the event they need cars that are for business, there are also a variety of them around to fulfil this desire. The price of hiring these cars might range depending on the make and model of the car. The different assortment of cars may offer customers a variety to choose from, and their availability may make the business a top choice among clients. Everyone, in this day and age, wants to be affiliated with a posh lifestyle. To address this desire, cars that are cheap, but look desirable and lavish, are likely to be present. They all serve the same purpose, and the customer ends up feeling gratified with the selection they have made. Toyota’s Premio is an example that might serve this purpose. However, having a variety of the Toyota product is an exceptional idea, especially for customers who want bigger cars for their activities (Barringer 2008). The rates to be charged The rates of hiring the cars are likely to range. This is because not all the cars are the same. The power most of the cars exhibit may set these cars and the rates apart from each other. The rates at which the Mercedes and Toyota models in the business go for cannot be the same. The presence of these varieties of cars presents the clients and customers with alternatives to choose from, whenever the need arises. Presenting them with this variety makes it easier to decide what they want, and the price is pocket-friendly (Barringer 2008). The location of the business is fundamental in allocating the prices and rates of the hiring services. If the closest town centre is a few miles away, it would be advisable to have rates that are lower, than if the business was located near a town centre. It may be easier to cater to the needs of people if one understood their daily routines. These rates could then alternate depending on the loyalty of the client, and how much they are invested in the business (Barringer 2008). Loyalty in any business is fundamental in its growth. The marketing strategies to use In a start-up business, it is vital for management to check out the competition in their immediate environment. This is regardless of whether they are large or small. Diverting customers from the competition is instrumental in covering the business and some of its costs. Rentals can be maximised through this method, and ensure a customer’s loyalty to the business. The business location is critical in ensuring that individuals get to see the splendid venture one is into, and this prompts the growth of the customer base. This logistical approach can offer the business the capacity to cut down on the unexploited inventory in the business (Barringer 2009). Advertising on the diverse rentals the business has is critical in the growth and developmental stages of the business. Through print and electronic media, the business is at an advantage over its competition, which might not be fully aware of advantages brought on by advertising. Also, through relationships and partnerships, the business may grow. By articulating this marketing strategy, one can understand the advantages brought on by having partnerships with hotels, travel websites and agencies. This may work toward building the structure of distribution of the rentals. Combining the power of these other agencies may increase the business foundation, hence; providing the powerful tools to expand. Moreover, by having deals to have re-sales of older car models, the business could have a channel to make additional revenue (Barringer 2009). The market for the rental agency There is a diverse market for the rental agency. Many individuals, incapable of buying cars, may find the rental business a relief to their needs. Most of the young people find these services working in their favour. This is because they can hire cars, have fun, and enjoy the advantages of having vehicles to transport them from place to place. People who visit from different states also might have an easier time with rental cars (Barringer 2009). This is because, the laws and rules in place in states they visit might not allow for the movement of cars from different states. In some instances, it becomes hard to get around in a car from a different state. The rental agency may have customers in the form of these visiting groups. They can offer cars for some time, and eventually, attain a vast number of clientele. This growth slowly leads to the control of an immense rental service, which is what every business is keen on attaining. The older people in society are also at an advantage if they use the rental agency. They might have an opportunity to use some of the cars they cannot afford to own. Also, business travellers may have contractual agreements with their companies and the rental agency, hence; provide the much needed client base (Barringer 2009). The amount of funding needed As with any other business, the capital needed to start this business needs to be adequate. This is so as to facilitate the necessary requirements needed to cater for all aspects of the business. For instance, capital may be needed to purchase or enter into partnership with car agencies to have cars and vehicles ready for the transport business. In order to have the business up and running, employees need to have assurance of salary at the end of the month. This capital and all expenses incurred at the start may be more than what may be used once the business is settled. Moreover, the car hire service needs to have taken care of the legal requirements before setting up the business (Barringer 2009). All these require capital, and are fundamental in ensuring the consistency of the service, in the long run. Many people believe that business plans are meant only for businesses that are coming up in this ever expanding market (Finch 2006). This is one myth that any smart businessperson should forget about, and strive to make business plans after every financial year. While evaluating the goals of the previous years for other businesses, one might get to realise if their previous targets were attained. If they were not achieved, this may be time to come up with new strategies to assist this new service. To have a foothold in the car rental industry, one needs adequate capital to improve the relations between them, and other agencies in the same surroundings. Successful rental agencies have effective asset management, which means the business needs to monitor the selling and buying of vehicles in the agency (Finch 2006). How to allocate capital and the amount of sales that will be reinvested into operations  In order to provide capital to enable the business to grow and give the shareholders their share, funds need to be managed appropriately. This propels management to hire the services of a financial strategist to assist in assessing the use of capital in the business. Employees will have a fixed salary. Upon the delivery of clients, they will get commission depending on the services they offer the firm. It is a fair deal, which prompts them to work toward bringing in high-end customers to the business (Finch 2006). All the capital that is saved after the provision of services will go back to raising some of the business’s fundamental activities. These include taking care of the vehicles in the firm’s possession. Capital Allocation Period (years) Pricing Amount Servicing -car balancing -tyre checks -engine checks annually annually semi-annually $ 1 000 $ 350 $ 500 $ 1000 $ 350 $ 1 000 Salaries -finance strategist -staff Semi-annually annually $ 20 000 $ 20 000 $ 40 000 $ 20 000 Table showing capital allocations in the car hire service This helps keep customers attracted to the services and products that are being offered. In the long run, ties to the business will be unbreakable as customers will always opt for quality in the products they use. While getting this publicity, one might take advantage and use the popularity to get more agencies involved. By having hotels and touring agencies invest in the service, it is highly likely that the profits may increase. This may force the business to hire more employees, and increase the quality of services provided (Finch 2006). Expansion is likely because of this growth and increase in profits. The firm’s operations will no longer be rooted in one locality, which will enable it to reach more people. Personal Plan As a car hire service, it is vital to have insurance. This, as a personal plan, is a wise move. The insurance policies that may be in place offer clients and cars protection and cover in case of any issues that may arise. The presence of insurance policies and covers can offer customers the safety net they need, so as to get involved with the business (Kuratko 2008). Whenever something does happen, it becomes easier to address the issues if insurance companies are involved. This is because; they can assist in solving most of problems especially when it comes to injury and damage to either the clients or the vehicles. Personal agreements between the parties involved ensure that these requirements are met to reduce misunderstanding and fallouts. Furthermore, it is critical to review some of the operations that the service offers. Some of these operations may lead to a decrease or a reduction in the annual revenue the business gains. To curb the loss of unused inventory, it will be paramount to offer these operations to other agencies to handle (Kuratko 2008). This is while taking some percentage from these dealings. This is a deal that will have the business acquire more capital from dealings it does not engage in, on a daily basis. This saves on capital, and the manpower is reserved for another day in the business. Capital Allocation Period Pricing Amount Personal Plan -insurance -permits -company contract -taxes Annually Annually Annually Annually $ 500 $ 3 000 $ 10 000 $ 600 $ 500 $ 3 000 $ 10 000 $ 600 Table showing personal plan on capital use Cash flow Monitoring the amount of capital spent in the business is fundamental in understanding how it is fairing. Office supplies and other expenses can be regulated to prevent excessive consumption of capital that may be hard to come by at the start of the business. Risks and warning signs may be seen in case of poor cash flow management (Kuratko 2008). In such a case, management needs to work out a strategy to monitor the receivables in the business to prevent the overreliance of one product. This overreliance may prove detrimental in the growth of the business as individuals need a variety in their everyday life. Also, by monitoring and ensuring that appropriate valuation methods are used, cash flow in the business may prove advantageous to the business. To achieve this, there is the need to concentrate on raise the productivity of the services provided. By creating and retaining an efficient business structure, there is the probability of utilising the company’s resources. Since most cash flows are addressed at the end of the month, the difference in retaining some of the capital the business gains should be for paying for and financing motor vehicles (Kuratko 2008). This is to maintain their longevity. Sensitivity analysis As a start-up business, it is fundamental for one to be apprehensive about the issues the market may be facing. One of these issues may be an economic downturn. The economic activities that surround this service are a vital aspect in the continuation of the business. A reduction in activities occurring in the environment means that, there is a chance of having a reduction in the activities done by the service (Kuratko 2008). As a growing business, one needs to be sensitive to such needs by the customer, lest they decide to move on to other businesses that cater to their financial necessities. Overall customer satisfaction is another sensitive area to look into in the business. Customers prefer to have access to information. The ability to provide this access at a rapid pace means that, they will be inclined to get more involved with the business. This works in boosting the annual revenue acquisition. This is where technology comes into play in the business. Offering customers information leads to more interaction, which is the primary focus of the business. Government regulations are also a sensitive area to look into while trying to grow the business. Price regulation by the government on the rate at which cars are hired should be monitored (Kuratko 2008). All these sensitive areas might determine if the business will grow and expand, or if it will remain stagnant as at the start of business. Implementation Plan Individuals need to have the right understanding of why the business exists. Once this is understood, they might try to comprehend the urgency of having the agency’s name on the global, competitive market. The strategies in place need to have an articulate manner in which they communicate the agency’s objectives and goals. Management can allow workshops to allow employees to voice some of the concerns they have about the growth of the agency. In these workshops, they might indicate what the agency needs to do to ensure they are gratified with operations in the agency. All the issues put across in the workshops can allow management to have an avenue to put them into practice (Lane 2002). They need to come in steps to allow for extra revenue gained to be put into other operations. Also, focus needs to be placed on extra operations that the agency can offer clients. The introduction of a high-end car wash can create employment for local individuals around the agency. It is also an avenue to make extra capital with the introduction of a rest stop (Lane 2002). It might offer customers delicacies whilst their cars are being washed and serviced. The introduction of these operations may make the business an appealing avenue to bring in investors who might offer advice on how to expand while bringing in capital. Tidy market analysis A tidy market analysis involves conducting surveys to find out if the agency is meeting its business requirement of fulfilling its customers’ desires. This analysis will then work toward helping the agency attain some of the primary objectives it set out to achieve. People are always interested in knowing if the businesses around them are out to benefit them, or if they are in it for themselves. By introducing questionnaires into the market, honest and reliable information may be acquired. This may assist the agency in building their business operations (Lane 2002). Conducting interviews that are neutral and unbiased may project the agency’s capability to handle a large customer base; before or after expansion. As seen earlier, an effective business plan is capable of projecting the future of an agency. The failure to address some of the planned issues in a business plan is tantamount to failing in the growth of the agency. An analysis may project the agency’s fate with some of the regular customers it may have, now and in the future. This survey can project if in five years, the agency will have made any steps toward its growth and development. It may show the agency’s weaknesses and its strengths (Lane 2002). One of the greatest things to do with these facts is to build on them, and ensure they work for the benefit of the group and most of its operations. Conclusion Effective and well-written business plans offer beneficial advantages to the prospective business. This usually goes a long way in ensuring that all areas are covered, well before the start of the business venture. The growth and development of this car hire service is dependent on the fact that, individuals need to be fully involved. The business plan is likely to attract investors. They might be willing to risk getting involved in a venture that is just beginning in this highly competitive market. The business plan can help them throw caution to the wind, and most of them will be interested in finding an avenue to raise the business venture till it is fully grown. Nurturing a new business is no easy feat. However, with the right pointers, any business person might be enthusiastic about taking the chance and starting a business (Kuratko 2008). Only time might ensure it is competing in the global market, as any other globally recognised business. References Barringer, BR 2008, The truth about starting a business, PULP, New York. Barringer, BR 2009, Preparing effective business plans: An entrepreneurial approach, Sage Publishers, London. Finch, B 2006, How to write a business plan, Macmillan Publishers, London. Kuratko, DF 2008, Entrepreneurship: theory, process, practice, Free Press, New York. Lane, M 2002, A guide to the effective business plan, Oxford University Press, New York. Read More