A Strategic Road Map for Sumptuous Catering Service - Essay Example

? Enterprise and Entrepreneurial Management Table of Contents 0 Introduction 3 2.0 The business plan 3 2 Choice of products and services 3 2.2 The following table indentifies the major and minor customer types 4 2.3 Market analysis of the major and minor type of customers 5 Projected growth of the market segment 5 2.4 Promotion strategy 6 2.5 Marketing strategy 7 2.5.1 Distribution Strategy 8 2.5.2 Marketing Programs 8 2.5.3 Positioning Statement 8 3.0 Critical evaluation 11 4.0 Conclusion 14 Reference List 16 Appendix: 18 1.0 Introduction The present research topic endeavours to prepare a business plan for a non profit organisation with proper justifications like market research, projected cash outflows and inflows, projection of the sales demand. Apart from that, the business plan is also critically evaluated using academic textbooks and journals to check the viability of the plan. The critical evaluation also involves analysis of the various assumptions made while preparing the business plan (Garnier and Gasse, 2011). The evaluations of the assumptions help to understand to what extent the assumptions are valid. Finally a conclusion is provided to summarise the findings and the assumptions considered in the business plan. 2.0 The business plan The business plan endeavours to create a guideline about the market segment, the sources of fund and the cash inflow and outflows for a period of three years. The choice of non profit organisation is limited and so is the type of products and services. The non profit organisation is named as Sumptuous Catering Service. The choice of the non profit organisation is also supplemented with the choice of products and services. Sumptuous Catering Services is a food catering service that serves food both demand based occasions as well as for regular occasions. 2.1 Choice of products and services Types of products Sub categories in each type of products Boxed typed lunches Sandwich, salad, deli type salad, fresh fruits, cookie and chips Buffet type lunches Party platters, Sandwich wrap platters, Baked potato bars, Lasagna bar, and Taco salad bar Source: (Author’s Creation) The choice of the products must be supplemented with proper justifications regarding the market segmented of the product. The market segment depicts who are the target customers and the proportion of takers of the particular product in the population. The choice of the product is food and catering. The probable market segment will represent two types of customers; one who place orders on a regular basis and ones who seldom place orders. For example, the infrequent customers can include parties and get-together, celebrations of special occasions and other on-demand basis. The more frequent customer types include office lunches, school lunches, college lunches, hospital, other government sector canteen lunches and dinners. The demand from the regular type customers are more or less stable and have same type of demand for a long period of time (Garnier and Gasse, 2001). 2.2 The following table indentifies the major and minor customer types Source: (Author’s Creation) 2.3 Market analysis of the major and minor type of customers Source: (Griffith and Dorsman, 2008) Projected growth of the market segment Market Analysis     Year 1 Year 2 Year 3 Year 4 Year 5   Potential Customers Growth             Major customer types 2% 2% 2% 2% 2% 2%   Minor customer types 14% 2% 14% 16% 18% 20%   Total 16.00% 4% 16% 18% 20% 22%   Source: (Author’s Creation) 2.4 Promotion strategy Sumptuous Catering Service is a non profit organisation so the promotion strategy will be designed keeping in mind the cost involved in promotional campaigns. The promotional strategy will be a low cost, low visibility programme at least for the first year. A number of non profit organisations like the NGO and self help groups will be roped in using the word of mouth strategy and the email campaigns (Griffith and Dorsman, 2008). The self help groups and the NGO are linked to various governmental and nongovernmental organisations like the schools, colleges, hospitals, and health care institutions. The self help groups will act as brand ambassadors of the company spreading the awareness among the major customers. Here the major customers are the governmental and nongovernmental organisations (Hatten and Ruhland, 2005). Once the word of mouth spread out about the food quality and the quality of the catering service, the next step will be targeting the minor clients. The minor clients are the corporate clients. The clients are divided into the major and minor types according to the market segment (Kourilsky and Carlson, 2006.). Though it must be remembered that the minor clients account for the biggest source of revenue, the promotion strategy is to build a good reputation as a brand name in the food catering service and then to use the goodwill as an entry card in to the corporate market segment. More specifically the promotion campaign will include three things which are observation, visibility, word of mouth and community service. The objective is to serve the major type of customers with quality food and excellent catering services. The catering service will include free giveaways along with a little note of thanks, address and company details (Leitch and Harrison, 2007). The customers who will use the service will refer to colleagues about the quality of service and food of Sumptuous Catering Services. Acting on the word of mouth customers may contact Sumptuous Catering Services to serve on personal occasions. Apart from word of mouth promotional strategy, more elaborate promotional strategy will also be applied like maintaining cordial relationship with the local media, advertisement in the Community Service sections of the local newspaper and TV coverage (Littunen, 2012). The promotion strategy is effective as long as the marketing strategy is effective. Without an effective marketing strategy the promotional strategy will not be able to yield the desired result. 2.5 Marketing strategy The marketing strategy is designed to communicate the unique value of Sumptuous Catering Service to the customers. The corporate and the non corporate clients will be supplied with high quality foods and the food will be prepared by at-risk youth students. The involvement of the at-risk youth students has special significance. The employment cost of these youth students is low, thus in this way the company will be saving a lot of money on labour cost (Montago, Kuratko, and Scarella, 2006). The motto is increase employability in the region by taking in more and more number of youth students, so that they can continue their education with the labour money and at same tine constantly stride for better quality food and catering services (Ronstadt, 2007). The marketing strategy involves three distinct phases which are distribution strategy, marketing programmes, positioning strategy and pricing strategy. 2.5.1 Distribution Strategy The distribution strategy involves three basic principles, which are order delivery within deadline, reducing the chances of degradation of food quality during the transit (Stumpf, Dunbar and Mullen, 2001). The third principle is to make sure that the Sumptuous Catering Service is able to partner up with major companies that provide free home delivery services which saves on transportation cost. 2.5.2 Marketing Programs The marketing programme is spearheaded with two objectives in mind. Since catering of food is all about aesthetic beauty, so marketing should involve elaborate details on how to present foods. The beauty and delicacy with which a food is served evokes an urge (Vesper and McMullan, 2009). So apart from concentrating food quality and services, greater focus will be given in the presentation of foods. 2.5.3 Positioning Statement The positioning strategy has to be planned out in such a way so that the company can be differentiated easily from its competitors in terms of price and quality. Since the company is catering mainly to the non profit organisation so the choice of positioning strategy has to correlate with the nature of the company (Weerawardena, 2006). Most of the major clients are schools, colleges, and health institutions. These institutions are related to educations, health care and social services. In other words, the institutions contribute directly or indirectly to the social cause. Sumptuous Catering Service can contribute to social causes like reducing unemployment and help in increasing literacy by involving at-risk youth students. Students who are willing to continue their education but find it hard to pay the educational expenses can benefit from such employment opportunities (Leitch and Harrison, 2007). The companies which are committed to contribute to various social causes would want to associate themselves with Sumptuous Catering Service due to the close association of the latter with matters of social causes. The preparation of the positioning strategy and marketing strategy is effective as long as the company is able to make more or less correct assumptions about the profitability of the business. The profitability of the business is measured in terms of cash flow. In other words the cash flow helps to assess the cash inflow and cash outflow activities. The cash flow is supplemented with start up funding statement. Table 1: Start-up Funding Start-up Funding Start-up Expenses to Fund $15,551 Start-up Assets to Fund $16,449 Total Funding Required $32,000 Assets   Non-cash Assets from Start-up $0 Cash Requirements from Start-up $2,750 Additional Cash Raised $0 Cash Balance on Starting Date $2,750 Total Assets $2,750 Liabilities and Capital   Liabilities   Current Borrowing $0 Long-term Liabilities $0 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $0 Capital   Planned Investment   Grantor 1 $40,000 Other $0 Additional Investment Requirement $0 Total Planned Investment $40,000 Loss at Start-up (Start-up Expenses) ($37,250) Total Capital $16,449 Total Capital and Liabilities $16,449 Total Funding $32,000 Source: (Author’s Creation) Table 2: Cash Flow Particulars 2013 2014 2015         Cash at the Beginning 2750 24609 25788 Operating Activities       Cash Inflow       Cash Sales 19340.00 80365.00 194320.00 Total Cash Inflow 19340.00 80365.00 194320.00 Cash Outflow       Cost of Sales $7,934.00 $40,773.00 115056.00 Salaries & Wages 5500.00 30000.00 65000.00 Promotion 500.00 1000.00 1500.00 Rent 1500.00 2000.00 3000.00 Utilities 700.00 1500.00 2000.00 Telephone bill 100.00 150.00 200.00 Electricity bill 70.00 145.00 30.00 Website maintenance 500.00 370.00 556.00 Miscellaneous Expenses 700.00 1600.00 2564.00 Total Cash Outflow 17504.00 77538.00 189906.00 Net Cash Flow from Operating Activities 1836.00 2827.00 4414.00         Investing Activities       Cash Outflow       Purchase of furniture & Fixtures 3500.00 _ _ Purchase of Vending Machines 6500.00 _ _ Net Cash Flow from Investing Activities (10000.00) 0 0         Financing Activities       Cash Inflow       Equity (Owner's capital) 10000 _ _ Borrowing (Loan) 22000 _ _ Total Cash Inflow 32,000.00     Cash Outflow       Repayment of loan 740.00 271.00 137.00 Total Cash Outflow 740.00 271.00 137.00 Net Cash Flow from Financing Activities 31260.00 -271.00 -137.00         Net Cash Flow 23096.00 2556.00 4277.00 Cash at the end of Period 25846.00 27165.00 30065.00 Source: (Author’s Creation) 3.0 Critical evaluation The critical evaluation reflects the critique of the various assumptions considered in the project. The whole business plan is based on different types of assumptions. The critical review tries to produce an argumentative picture of the business plan set by the entrepreneurs at the onset of the project and the actual path or plan followed by the entrepreneurs in the execution of the project. Most of the literature reviews are qualitative in study and very few of them produce statistical analysis of the entrepreneurship management. In a survey conducted by Inc. 500, in 2010, 49% were established since 2006, while 90% were found to be less than 5 years old (Garnier and Gasse, 2011). The survey also found that nearly 43% of the survey participants prepared a formal business plan before launching their business. Among these 65% accepted that there was large scale deviations between the original plan and the actual plan or path followed. Numerous studies conducted by independent research bodies indicated that in 2012 only 30% prepared a formal business plan before starting their business. The numbers are even lesser than what was found in the study conducted in 2010 (Gillin, 2006). Most of the time the business plans is just a plain proposal, a proposal to raise funds, a proposal that would have enough convincing power in order to raise the required funds. Most of the information presented in the business proposal acted as screening information. The investors screened the information to find the viability of the business plan, and likewise took decision whether to provide funds or not. Although the main motto to write a business plan for an entrepreneur is to convey the gut feeling about a business plan and likewise invite others to join, so that enough venture capital can be gathered to initiate the project (Griffith and Dorsman, 2008). Strikingly only a handful of entrepreneurs ever get access to venture capitals, and most of the time the capital is gathered from friends and family members and through liquidation of own assets. At times when the entrepreneurs cannot get the required capital then the banks provide the capital through loans and overdrafts. While it may be right to think that one of the main reason for which the business plans are prepared is for financing purpose but it is wrong to assume that it is the only reason. A business plan can be thought to contain intrinsic value. The intrinsic value states what the opportunity conditions are, the reasons for their existence, the present entry strategy and the growth strategy. The importance of a former business plan has become so important today that there are companies dedicated to prepare business plans completed with strategic plan and market research (Vesper and McMullan, 2009). Despite the fact that the preparing business plan has flourished into a full-fledged and fully functioning sectors, the idea of preparing a business plan has been criticized by eminent scholars. The argument is that too many business owners are spending too much time in preparation of business plans, although only 10 to 20% of all the ideas are at all implemented in reality (Kourilsky and Carlson, 2006). Whenever the business owners want to start a new business venture, they would simply start preparing a business plan in a bid to gather and accumulate all the knowledge that is possible in one pace and link them to create a logical framework. This framework is supposed to give a structural support to the business venture. The argument provided here is that the accumulation of great amount of knowledge in one place does not necessarily produce quality framework. It is because of the reason that there are as such no systematic knowledge about starting new business so most of the time the business plan merely becomes a crutch and nothing more. There are score of examples where companies that took the pain of preparing a road map of business plan suffered immensely in business in comparison to those who did not prepare the road map. The scholars who are against the idea of preparing a business plan argue that planning puts too much restriction on businesses which are young in nature in their early stages. Instead of preparing business plans that puts too much restriction on the business, the need is to formulate actions. The comparison between two groups of people, one who insisted on developing a business plan and the other who insisted on not going for a business plan reveals an interesting picture (Weerawardena, 2006). The people who did not settle for a business plan and instead went ahead and got involved vigorously in the operational activities of the business ended up having huge cash turnover. While those who still insisted on tweaking a business plan trying to patch here and there could manage only half of the turnover. At time some business owners will fail to notice any association between the business plan and the actual business at all. The other arguments are that the preparation of business plan has become more of a fashion than what is needed to be done. Business owners try to copy the blue print of success of other players and this leads to the preparation of the business plan. Most of the time the business owners end up forgetting the main reason for which the business plans are produced in the first place. The argument put forward here mainly discusses about the shortcomings and the demerits or the problems and the apparent leverages that are present. Despite the presence of apparent disadvantages involved in the preparation of business plans there are at the same time huge evidences that point to the success rate associated with companies that carry out detailed business plans (Stumpf, Dunbar, and Mullen, 2001). Studies have indicated that planning assists in the overall growth and success of new firms. For example, it is found that in new business ventures the business plan in the first year has a significant and a positive correlation to the actual revenue and the expected revenue in the next year. 4.0 Conclusion The business plan stated here helps to create a strategic road map for Sumptuous Catering Service. Sumptuous Catering Service is a non profit organisation that is dedicated to provide employment to the students at risk and at same time cater the customers. The business plan helps in the identification of the different type of customers as well as the percentage share of those customers. Apart from the business plan also includes detailed promotional strategy, marketing strategy, distribution strategy, marketing strategy and marketing programmes as well as positioning strategy. The various resources of funds that can be used to gather capital are also mentioned. Along with that a cash flow is prepared with projections for three years. A business plan is a not full proof plan for success but gives an entrepreneur a brief idea to start from somewhere. The business plan presented here is thus not devoid of shortcomings. The business plan presented here is thus critiqued with the help of reference from various sources. For example the critical analysis indicates that most of the time the business plan are prepared keeping in mind the financing need for the project, but in almost nine out of ten cases the business owner fails to acquire the required funding. Keeping this fact in mind the business plan is prepared with fund requirements that are minimal compared to what competitors need. Instead it focuses more on the ability to cover for the expenses than to gain profits as depicted in the cash flows. One of the most unique features presented in the business plan is the positioning strategy. The ultimate aim is to gain the corporate customers through effective band building. The company has plans to employ students at risk. The corporate society can either take this as a good sign that the company is doing its own bit for the good for the society or the use of students at risk can produce negative company image. The fact is that the persons employed are after all students and employing students sometimes does not go well with companies. Reference List Garnier, B. and Gasse, Y., 2011. Utilisation of local newspapers for training potential entrepreneurs. Jsbe, 5(3), p. 20. Garnier, B. and Gasse, Y., 2001. Training entrepreneurs through newspapers. Jsbm, 28(1), p. 73. Garnier, B., Gasse, Y. and Raynal, C., 2007. Evaluation of a televised course in entrepreneurship. Jsbe, 9(1), p. 25. Gillin, L. M., 2006. Entrepreneurship education: The Australian perspective for the nineties. Jsbe, 9(1), p. 60. Griffith, J. and Dorsman, M., 2008. SMEs, new technology and training. Isbj, 5(3), p. 30. Gupta, A., 2003. The informal education of the Indian entrepreneur. JSBE, 9(4), p. 63. Hatten, T. and Ruhland S., 2005. Student attitudes toward entrepreneurship as affected by participation in an SBI program. Journal of Education for Business, 7(4), pp.224-227. Kourilsky, M. and Carlson, S., 2006. Entrepreneurship education for youth: a curricular perspective. Entrepreneurship 2000, 19(3), p. 213. Leitch, C. and Harrison, R., 2007. A process model for entrepreneurship education and development. International Journal of Entrepreneurial Behaviour & Research, 5(3), p. 83. Littunen, H., 2012. Entrepreneurship and the characteristics of the entrepreneurial personality. International Journal of Entrepreneurial Behaviour & Research, 6(6), p. 295. Montago, R., Kuratko, D. and Scarella, J., 2006. Perception of entrepreneurial success characteristics. American Journal of Small Business, 1(1), p. 8. Ronstadt, R. 2007. The educated entrepreneurs: A new era of entrepreneurial education is beginning. American Journal Of Small Business, 11(4), pp.37-53. Stumpf, S.S., Dunbar, R.L. and Mullen, T. P., 2001. Simulations in entrepreneurship education: Oxymoron or untapped opportunity. Frontiers In Entrepreneurship Research, 6(8), p. 6. Vesper, N.J. and McMullan, W.E., 2009. Entrepreneurship: Today courses, tomorrow degrees. Entrepreneurship Theory & Practice, 13(1), p. 7 -13 Weerawardena, J. M., 2006. Investigating social entrepreneurship: a multidimensional model. Journal of World Business, 41(1), p.21–35. Appendix:   Quarters 1st Qrt 2nd Qrt 3rd Qrt 4th Qrt 5th Qrt 6th Qrt 7th Qrt 8th Qrt 9th Qrt 10th quarter 11th quarter 12th quarter Product sold for major customer types   660 790 1050 1250 1860 2500 3670 4870 5640 6580 7150 8250 Products sold for minor customer types   50 70 5 92 125 157 155 254 273 278 294 299 Cost per product   $2.00 $2.00 $2.00 $2.00 $3.00 $3.00 $3.00 $3.00 $4.00 $4.00 $4.00 $4.00 Sale price per product for major type customers   $4.00 $4.00 $4.00 $4.00 $5.00 $5.00 $5.00 $5.00 $6.00 $6.00 $6.00 $6.00 Sale price per product for minor type customers   $ 20.00 $ 20.00 $ 20.00 $ 20.00 $ 20.00 $ 20.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 Revenue from non corporate customers   $2,640.00 $3,160.00 $4,200.00 $5,000.00 $9,300.00 $12,500.00 $18,350.00 $24,350.00 $33,840.00 $39,480.00 $42,900.00 $49,500.00 Yearly Revenue from non corporate customers         $15,000.00       $64,500.00       $165,720.00 Revenue from corporate customers   $ 1,000.00 $ 1,400.00 $ 100.00 $ 1,840.00 $ 2,500.00 $ 3,140.00 $ 3,875.00 $ 6,350.00 $ 6,825.00 $ 6,950.00 $ 7,350.00 $ 7,475.00 Yearly Revenue from non corporate customers         $ 4,340.00       $ 15,865.00       $ 28,600.00 TOTAL REVENUE FROM BOTH TYPE OF CUSTOMERS         $19,340.00       $80,365.00       $194,320.00 Quarterly cost   $1,420.00 $1,720.00 $2,110.00 $2,684.00 $5,955.00 $7,971.00 $11,475.00 $15,372.00 $23,652.00 $27,432.00 $29,776.00 $34,196.00 Total yearly cost         $7,934.00       $40,773.00       $115,056.00 Read More