Business Plan For A Company In The Food Industry. Ricer - Essay Example

?BUSINESS PLAN FOR A COMPANY IN THE FOOD INDUSTRY of Executive Summary 1 Company & Industry Riceris a London based firm in the food service industry. The firm will create an exceptional business form that will cut down on the overhead expenses by making use of mobile food vending as opposed to permanent stores. It must be noted that this is one of the most popular option to taking meals from big restaurants (Calvin, 2002, p. 97). 1.2 Products and Services Ricer will offer good quality fast food with different tastes and cultural touch found on the main theme of ‘your health your life’. The firm will cater for various cultures and tastes and which will be delivered while it’s still fresh and yummy. The services will be based cash on delivery and cash with order. Ricer’s services will be commonly known as Ricer Vending Units. The original trial was conducted in October 25th, 2012 which was highly applauded by most residents within the city and projected to be a success once it will be launched. The business intends to expand gradually through franchises to other cities and states in the next ten years. 1.3 Market Analysis The business is projected to be worth ? 250,000 which will serve the local markets that are vast and well segmented. The population consists of 50.6% of female and 49.4% of men while the median age is around 34.8 years and the entire working population is 311,300 and the residential population goes at 506,800 according to statistics done in mid 2009. The City has a higher young age profile which will form an essential market for the Ricer’s products. This profile of the population reveals that the target consumers will most likely be the young and vibrant students and the working group. Thus the products will be distributed near colleges and University campuses, weekend markets and other convenient places such as leisure parks (Daniels, 2002, p. 53). 1.4 Strategy and Implementation Ricer aims to create a brand recognition using its Ricer vending Units through positioning strategically in the entire business district within the city. Upon achieving the brand recognition, the services will be provided and eventually they will be available in major superstores and supermarkets (Stokes and Wilson, 2010, p. 3). Moreover, Ricer will then provide franchises to foster further expansion. 1.5 Management The Ricer will be owned by two ladies with massive experience in the business management, product promotion and hospitality industry. The pioneers are based from two different diversities which include; Chinese culture and the English culture. They were previous staff of a renowned restaurant in the world having worked for about ten years. They intend to employ other staff to help them in the preparation and distribution of food to the target market in the streets. 1.6 Financial Plan Ricer is projected to have a formidable starting financial base even though it will need extra funding to accomplish its goals and objectives. According to the analysis of the forecasts the revenue from the business is expected to grow to ? 7.5 million by year 5 and subsequently to ? 15.75 million by year 10 with an EBITDA amounting to ? 5 million by year 5. An initial survey from the streets it was determined that the firm would need to sell 75 meals to breakeven. The profound financial strategy ascertains that the firm will be more favorable as an acquirement for exit (Bhide?, 2000, p. 5). 1.7 Start-up funds and expenses This business plan will attract the following start up funds and start-up expenses. Start-up Expenses Legal ? 250 Marketing consultants ? 750 Design costs ? 2,500 Payroll expenses ? 12,000 Fuel costs ? 2,500 Business and Liability cover policy ? 5000 Total Expenses ? 23000 Start-up Assets Cash needs ? 250,000 Start-up Inventory ? 50,000 Other Short term assets ? 25,000 Total Short Term Assets ? 25,000 Non-current Assets ? 50,000 Total Assets ? 400,000 Start-up Funding for the fast food firm Investment for the business Rickrosly ? 150,000 Chan ? 100,000 Other $0 Total investment ? 250,000  1.8 Financial Plan Ricer will be looking for a ? 250,000 financing based on a note due in five years yet amortized over 10 years. The note will be specifically be guaranteed by the main asset which are the two vans owned by the business. The firm would be in a position to create a strong financial record through the 10 year amortization. This can also help the business to find some optional financing for any pending balance if available (Dugdale, Jones, & Green, 2005; p.713). The following payback schedule will be used by the firm in repaying the loan. Period Interest rate applicable 1-12th Month No payback of interest or principal 13-24th Month 20% interest plus 15% of net profit 25-48th Month 15% interest plus 20% of net profit 49-60th month 10% interest plus 25% of net profit It must be noted that the proprietors of Ricer do not have intentions of taking away the profits from the enterprise till the long term debt has fully been fully settled. Any extra profits would be injected back into the business for the long term growth of the business by purchasing of more inventories. 1.9 Key Financial Indicators Inventory turnover will constitute of the most vital financial indicator. The business management will see to it that a minimum of five times of the inventory turnover is maintained to prevent destructive effect on the cost of sales and on the cash flow of the business. Collection period will also be very vital since the business does wish to allow the average collection period to go way over 45 days. This is because it would lead to critical problems with the cash flow of the business given the business working capital is tight. Besides, the business will have an obligation to maintain a gross profit margin of at least 90 % and maintain a marketing cost of at most 20% (Higgins, 2006, p. 113). 2.1 Introduction Ricer will be a privately owned firm which is a fruit of two pioneers Mrs. Chan and Mrs. Rickrosly. The firm intends to major in vending of fast foods rich with all the nutrient content and adherence to the health standards. The firm intends to operate in the Bradford city and its environs where according to the market research and analysis it has proven that the target exists. The firm is projected to have a strong financial base given the initial capital employed by the investors. The foods that will be served by the firm will be run by two main vans each with one of the investors who possess vast experience in the hospitality and food industry. The following business plan applies to the business in the sense that it provides a clear blueprint for its financing process. 2.2 Facilities & Locations At the onset of this business, the food sales revenue will majorly be the lunch time and breakfast meals to customers in the busy offices of the Bradford city and the entire central business district. A small office will be set up between Thornton road and Godwin’s street. This will serve as the headquarters of the firm. 3.0 Products and Services 3.1 Product Description The fundamental product of Ricer will be fast served, delicious Chinese and English styled individual meals. The meals will be established on the main theme “Your Life Your Health” yet they will have an elastic level of personalization or customization to fulfill the tastes and preferences of the clients. Second, yet significant will be the preparation of individual meals on order. The Ricer vending unit has been particularly designed to prepare meals within the least time possible. The business will make individual meals in huge functions such as weddings, graduation ceremonies and corporate meetings and organized meetings by different stakeholders. The services will be offered in all the centers of the Bradford city including the neighboring Leeds city and other neighboring cities when service calls. 3.2 Features & Benefits Fast and Affordable meals The Ricer vending Units will prepare meals before the clients in the shortest time possible using fresh healthy ingredients. The taste sensation of the freshly prepared meals which also be served conveniently on clean disposable plates, that will be quite appealing to the customers. In addition the meals will be offered according to the market segments. The main segments will include; the students and the young non-employed population, then the other segment will be the working class. The main purpose of working with the market segments will be to ensure that the offers and benefits are well executed to the respective market segment. Home deliveries and other personalized services to offices and working places will be some of the services that will be offered to the esteemed customers (Birley & Muzyka, 1997; p. 17). Ricer Vending Units and the Sensitivity to Health Concerns The increasing concerns for healthy eating and escalating risks of health in regard to the type of food taken by the population has put the population on alert on the type of food consumed. Various health activists provide the stipulated type of diet to be taken which consists of a well balanced diet with less fats and cholesterol levels. Therefore, the firm intends to have strict adherence to the standards of the foods offered to the consumers. Using its main theme of “your health your life” the business will be particularly concerned with the lives of the consumers which will make the firm to tick. The Ricer vending units will have a completely self contained which will be then mounted on movables and completely mobile. There are two vans already in place which will be fully installed with cooking gadgets and refrigerators for effective preparation and storage of food. At any time according to the demands of the customers food might be prepared or served to satisfy their demands. Loyalty of customers through customization and convenience will be created to build a formidable brand for the business. All the foods whether prepared or in the process of being prepared will be well packaged or served in alignment with the needs of the customers (Schmidgall, Hayes & Ninemeier, 2002; p. 43). 3.3 Competition There are quite a long chain of competitors in the food industry who might pose a threat to the business (Aldrich, 1979; p. 5). Such rivals include; McDonalds, sushi bars, Kebabs, Sandwich, among others. However, this kind of rivalry has already been predetermined through intensive market research conducted. Therefore, the company’s strategies in the current market to offer customized services to the consumers will surely be a tactic to beat in the turbulent market. Moreover, the various assortments of foods from different cultural background will be an added advantage to the business in beating the stiff competition from large food chain stores and supermarkets. Furthermore, provision of fresh and healthy foods in consideration of the consumer’s health will also propagate the business to success. 3.4 Barriers to Entry in the food industry Exceptional modality of availability of fast food with unaligned times of preparation. Fresh, Healthy, quick, quality, price competitive option. Lower costs of capital and high overheads inclusive of high margin sales units via a wide exposure Segmented target of huge market not presently used by the rivalry. Fresh funky, recognizable brand, expatriate approach and profound administration 4.0 Market Analysis Summary 4.1 Target Market The fundamental target of the consumers will be the working class consumers whom as described in the executive summary will comprise of individuals aged 19-64 years of age. Most of these will be high income earners and hence they might never have the adequate time to prepare meals for their families hence quick but healthy meals from Ricer Vending Units will be most convenient and favorable (Rainsford & Bangs, 2001; p.7). With the orientation of the healthy and fresh lifestyle medium to high income earners would do anything but to have experienced venders to prepare their meals according to the available health standards. Hence in the first phase of the business brand building will be essential in achieving a good customer loyalty to the product brand. This will be important particularly in growing the awareness of the brand among this set of customers who will form the major segment of the customer profile (Govindarajan & Trimble, 2005; p. 67). Second, upon building the brand awareness, plans will be in place to ensure effective franchising which will be implemented to provide employment opportunities and to grow the marketability of the brand. The products will also be distributed to the students in colleges, University campuses and other recreational places or facilities with a high concentration of small and medium income earners. Events and celebrative occasions will also be targeted through contractual agreements with the respective parties. 4.2 Market Size With the sales revenue of about ? 7.5 million by the end of year 5, the market for fast food will be considerable enough and the chance to create and develop a fresh and healthy product with a stable brand will be a reality. Chinese style food discussed in this paper will account for about 40% of this revenue collected. On the other the English style based food will account for the remaining percentage. The food industry market is a mature market with high concentration of sellers and buyers and greatly segmented based on quality, price, style, modality and the available chance for niche markets such as the Ricer’s customized provisions. In addition, the emphasis of health first will be appealing in the sense that customers will feel appreciated thus a tendency to create loyalty to the brand. Borders of age, preferences and culture will also be drawn in the market for efficient service delivery (Charantimath, 2006, p. 67). 4.3 Market Trends Currently the outlet of modern food ensures that it holds onto its appeal in the bounds of health conscious market. This is something that Ricer will be making efforts to capitalize on. There are critical concerns globally of a world diet that is mindful of the people’s health. Thus modern entrepreneurs maintain their drive to make abnormal profits from such ventures which are based on health conscious meals. Fruit juices in their natural forms are more preferred compared to processed ones. Junk foods are highly discouraged among the teenagers to prevent health concerns such as the obese and diabetes. The fiscal environment for the market achievement will take into consideration the aspects and circumstances that affect the potential of the available target market in affording the products provided. The modern consumers especially those located in the central business district in the big towns and cities have more income to dispose. Ricer will be seeking to entice a greater market through differentiation of products which is the main tactic for the business in beating the market (Barnard, 1938; p.97). 4.4 Financial projections Projected Income Statement   Year 1 year 2 year 3 Year 4 year 5 Income           Sales Revenue ? 2,000,000.00 ? 2,500,000.00 ? 4,500,000.00 ? 5,000,000.00 ? 7,500,000.00             other income  0  0  0  0  0             Costs           formation costs ? 1,000.00 ? - ? - ? - ? - material costs ? 150,000.00 ? 175,000.00 ? 180,000.00 ? 200,000.00 ? 275,000.00 equipment costs ? 15,000.00 ? - ? - ? - ? - labor costs ? 800.00 ? 1,500.00 ? 2,500.00 ? 2,900.00 ? 3,000.00 non-direct labor ? 200.00 ? 500.00 ? 500.00 ? 1,000.00 ? 1,000.00 heat; light; power ? 200,000.00 ? 250,000.00 ? 250,000.00 ? 250,000.00 ? 300,000.00 Fuel costs ? 2,500.00 ? 3,000.00 ? 3,900.00 ? 4,500.00 ? 5,900.00 transport costs ? 25,000.00 ? 25,000.00 ? 25,000.00 ? 15,000.00 ? 10,000.00 Marketing analysis ? 750.00 ? - ? - ? - ? - legal fees ? 250.00 ? - ? - ? - ? - accounting and audit ? 100.00 ? 100.00 ? 100.00 ? 100.00 ? 100.00 patents ? 3,000.00 ? 1,500.00 ? 1,000.00 ? - ? - licenses ? 4,000.00 ? 2,000.00 ? 2,000.00 ? 1,500.00 ? 1,000.00 founders salaries ? 150,000.00 ? 150,000.00 ? 150,000.00 ? 150,000.00 ? 156,550.00 Design costs ? 2,500.00 ? 900.00 ? - ? - ? - Payroll costs ? 12,000.00 ? 12,000.00 ? 12,000.00 ? 12,000.00 ? 12,450.00 Insurance premiums ? 5,000.00 ? 5,000.00 ? 5,000.00 ? 5,000.00 ? 5,000.00 Total costs ? 572,100.00 ? 626,500.00 ? 632,000.00 ? 642,000.00 ? 770,000.00 Net Income ? 1,427,900.00 ? 1,873,500.00 ? 3,868,000.00 ? 4,358,000.00 ? 6,730,000.00             Projected sales and sales estimates From the initial survey it was established that the firm will require selling 75 meals to breakeven in a single day. A plate will cost about ? 10 on average depending on the market segment and the preference of the customer. Thus the main sales revenue from the business will come from sell of meals. As shown in the income statements above this will be reflected in the business sales revenue. Critical Evaluation Strategy & Implementation Mission and vision The mission statement of the business shall be “To scheme a fresh, energetic, best quality product brand in the food industry to offer a fight to the well grounded current market offer and to create an image that is a robust business dimension that cares for the consumers’ health and capital outlay.” The vision for the business shall be “My health, my life my wellbeing” this will ensure creation of a strong product positioning in the supermarkets and other social grounds. Marketing Strategy Provided the influx of fast foods consumption firms and customers the main strategy that will be used in the market will be found on the objective of penetrating the existing turbulent market (Bartlett, 2002; p. 7). This will be implemented by the Ricer Vending Units by strategically positioning the products in different locations where there is a high probability of consumption of take away meals. Expansion of the number of outlets through franchising and distribution by placement of various subsidiaries will be effective in achieving a competitive advantage. The anticipated income after tax for all franchisees in the next five years will be about 15% (Bamford, Dean & Douglas, 2004; p. 911). Social media usage will also be effective in penetrating the product. Attractive pictures of delicious take away meals will be displayed on the social media to enhance the marketability. Sales Strategy The main Objective of Ricer will be to place itself in such a position to achieve the loyalty of customers. The objectives of marketing will include among others; Sustain a high gross margin on the meals (Etemad, 2004, p. 37) Take advantage of brand via diversification by use of franchises and product expansion such as supermarket positioning and catering services (Charantimath, 2006, p. 67). quickly create an identifiable brand via the vendors (Chell, 2004, p. 81) Place the businesses a new, delicious and healthy option to the earlier fast food (Tyagi, 2002; p. 51). This early initiative will commence at Bradford central business district and eventually spread to other sections of the city and outside the city by end of 15th month. Operations Ricer operations will mostly be an internal affair where with the help of skilled labor of about six employees. The employees who will be recruited to move along with the vans will be very qualified and those who can make various delicacies once they receive their order. On top of that the two pioneers Rickrosly and Chan will be always in charge of receiving and processing orders and later passing them onto the skilled chefs. Each van will be managed by each pioneer in designated areas where they will make decisions to set up and where they feel demand is at its most high. Product Production and Preparation Raw fresh ingredients will be sourced from the selected suppliers. Given the fact that it is a competitive market with more room for various suppliers to expand on the risk vulnerability, the business will also make sure that the customer’s orders are received and processed within the shortest time. The master chefs in each van with two other chefs will normally process the food ordered. In overall each van is managed by three chefs and one of the owners. The process of making orders, restocking and control of quality will also be managed by a built in computer system which will also helps to track the trends in the behavior and responses of consumers (Bates, 1990; p. 553). Exit Strategy It is Ricer’s purpose and objective to be taken over by another large retailer in the next ten years by registering huge amount of revenues and considerable EBITDA. Moreover, options for merger on top of IPO might be considered if economic crisis looms (Kaplan, 2009; p. 121). Organizational Structure Ricer will be led by the two business owners Rickrosly and Chan where Rickrosly specializes in matters of finances and administration and processing of orders while Chan deals with management of human resources and supervision of the meal preparation. Rickrosly is a graduate of Harvard Business school specialized in matters of finance and administration. She holds a masters degree in strategic management and also a degree in hospitality and tourism management. She is a trained chief chef. Chan is a native of China and also a trained human resource manager and chief chef. Personnel Needs In the long term, the ratio of employee to income generated per employee will be about ? 75,000 per every employee. Ricer will operate on a lean operation where focus will be sales and food processing. In the next three years the sales staff will increase from the current six to about 55 same will apply to the production staff. As the business grows further, the management will also grow the number of fixed assets such as the van for food processing and transport (Bourne, 2005; p. 77). Conclusion From the business above and the overall critical evaluation, it is thus fundamental to conclude that from the prevailing market in the food industry that total employment in the Bradford is estimated to about 311,300 (Allinson, Chell & Hayes, 2000; p.37). Besides, Bradford has an average rain day of about six months which helps in planning of the type of order anticipated and how to prevent some accidents or staff truancy. It is also vital to note that according to the market analysis the wastage of food is estimated to be about 10 % over all related food served and the revenue estimates replicate the financial ratios. Last but not least, training, and management of quality and operations of franchises will be expected to be in place by year 3 Bibliography Aldrich, H. E 1979, Organizations and Environments (Englewood Cliffs, NJ: Prentice Hall). Allinson, C., Chell, E. and Hayes, J 2000, “Intuition and entrepreneurial behavior.” European Journal of Work and Organizational Psychology, 9(1), pp. 31 – 43. Bamford, C. E., Dean, T. J. and Douglas, T. J 2004, “The temporal nature of growth determinants in new bank foundings: implications for new venture research design.” Journal of Business Venturing, 19, pp. 899 –919. Barnard, C. I 1938, The Functions of the Executive (Cambridge, MA: Harvard University Press). Bartlett, S 2002, Seat of the Pants, Inc. Magazine, October. Available at http://www.inc.com/magazine/20021015/24772.html (accessed 26 November 2012). Bates, T 1990, “Entrepreneur human capital inputs and small business longevity,” Review of Economic Statistics, 72(4), pp. 551 – 559. Bhide?, A 2000, The Origin and Evolution of New Business, New York: Oxford University Press. Bourne, M 2005, New Year, new planning and budgeting system. CIMA Insight, Available from: www.cimaglobal.com/insight [accessed 26 November 2012]. Birley, S. and Muzyka, D. F. (1997) Entrepreneurship (London: Pitman). Calvin, R. J 2002, Entrepreneurial management. New York, McGraw-Hill. Charantimath, P. M 2006, Entrepreneurship development and small business enterprises. New Delhi, Pearson Education. Chell, E 2004, Entrepreneurship: globalization, innovation and development. London [u.a.], Thomson Learning. Daniels, P 2002, Restaurant business start-up guide. Chino Hills, CA, Venture Marketing. Dugdale, D., Jones, C. and Green, S 2005, Contemporary management accounting practices in UK manufacturing. CIMA Research Executive Summary. London: CIMA Publishing. Available from: www.cimaglobal.com/researchexecsummaries [accessed 26 November 2012] Etemad, H 2004, International entrepreneurship in small and medium size enterprises: orientation, environment and strategy. Northhampton, MA, Edward Elgar Pub. Govindarajan, V. and Trimble, C. (2005) Building breakthrough businesses within established organizations. Harvard Business Review, Volume 83, Issue 5, pp 58-68 Higgins, L 2006, Financial fitness: upping the performance of your finance function. CIMA Insight, Available from: www.cimaglobal.com/insight [accessed 26 November 2012]. Kaplan, J. M 2009, Patterns of entrepreneurship. Hoboken, N.J., Wiley. Rainsford, P and Bangs, D. H 2001, The restaurant start-up guide: a 12-month plan for successfully starting a restaurant. Chicago, Dearborn. Schmidgall, S., Hayes, D and Ninemeier, J 2002, Restaurant financial management basics. New York, John Wiley & Sons. Stokes, D and Wilson, N 2010, Small business management and entrepreneurship. Andover, Cengage Learning. Tyagi, R 2002, How to evaluate a demand planning and forecasting package. Supply Chain Management Review, Volume 6, Issue 5, pp 48-55 Read More