Business Plan of Game Heaven UK - Term Paper Example

? Business Plan BUSINESS PLAN Introduction This business plan seeks to begin a start up e-sports bar known as Game Heaven UK. The e-sport’s bar clients will be able to play video games at the sports bar, as well as have a place to communicate comfortably. This e-sports bar will be meant for strict game enthusiasts with the bar’s theme being sport themed, which will include football, cricket, and rugby. In addition, the sports bar will aim to hold its own tournaments for gamers, as well as screen international tournaments from all regions in the world, just as normal sports bars do for big European and world matches. The gaming room will have approximately fifty computers for the gamers, as well as play stations while they can also have refreshments, although high alcoholic drinks will not be served at the counter. This is because the equipment at the bar is sensitive and drunken gamers could destroy them. In addition, the bar will also provide game discs, consoles, and information at reasonable prices, which, together with the excellent service that will be provided, will be the core point for the bar. The staff at the bar will be expected to be gaming enthusiasts, and they will be trained by professional players in order to offer better service. Game heaven expects to have its own website for promotional activities where clients can interact and set up games. Industry Analysis The idea for starting Game Heaven came from the fact that more and more individuals who want to play the battle arena video games. However, despite the increasing interest in this game, there are no battle arena video game and sports bars, around the Birmingham area. Game Heaven is going to have to serve several sectors of the market. In the sports and gaming bar industry, it is important to have a family atmosphere where the gamers feel part of an exclusive group (Rail, 2011: p300). In addition, it will serve several uses, such as watching big games, gaming tournaments, and personal gaming time. The bar also plans to begin offering light food, although the dining areas will be separated from the “family” by a wall. However, wherever one sits, there will be a big screen TV showing games, whether cricket, football, or rugby, especially since the plan involves having multiple screens in these areas. The business will face regulatory issues, especially with regards to employee wages, liquor licenses for the big matches, local ordinances, building permits, and others that could be of effect to the business (Rail, 2011: p301). Objectives Management at Game Heaven is confident that it has the ability to replicate its success with the plain Sports bar concept into an e-sports bar concept. It has established several objectives: Have at least two stores operational by the end of the second year Sales of approximately ?150,000 in its initial year A net profit margin of 35% Net profit margins of approximately 14% Maintain a tight control on operations, as well as costs, by hiring quality staff, while also making use of automated control Keep beverage costs under 30% Select additional locations on the basis of meeting success parameters Grow the location to a ?1 to ?2 million yearly business. Mission Game Heaven UK will strive to become the premier e-sports themed bar in the Birmingham area. Our goal is to stay ahead of competitors, as well as allowing clients to enjoy their leisure time the best way we can. In addition, the bar will provide more computers and more screens showing more matches than all other sports bars in the Birmingham area. Game Heaven UK provides audio control, which is state-of-the-art at all computer and play stations, as well as in TV areas that allow the customer enjoy their gaming and watching experience without background noise interference. Through a combination of atmosphere, quality service, ambiance, and menu selection, to create a valuable and excellent entertainment experience. Keys to Success In order to achieve Game Heaven UK’s goals, the bar will seek to: Give quality service and products Manage the bar’s finances in order to enable us open a new location Control the bar’s cost all the time sans any exceptions Develop management controls to ensure operations are replicable in both locations. This will also apply to financial, service, and product control. Marketing Strategy Through a combination of local media, radio, local gaming internet sites, and print media, the bar expects to make gamers aware of the experience that awaits them at the bar (Rail, 2011: p304). As soon as the company has established itself in the sports bar market, we will utilize broader media. The pro-sports tie-ins and live broadcasting will be a strategy to gain free publicity for Game Heaven UK, which is expected to be more effective than contemporary advertising that the company could purchase. Marketing Programs Game Heaven aims to create a marketing strategy that is identity oriented using executions in the Birmingham area local media. Print ads, radio spots during live broadcasts, and promotion in sports stores will be designed to transplant into an e-sports bar (Rail, 2011: p304). Part of the budget for advertisement and promotion will be set aside in order to develop the programs as envisioned. Pricing Strategy The bar will price its services and products moderately with average tickets for a gamer, going for between ?5 and ?8, which is inclusive of drink and snacks. However, ticket prices will be higher for clients who game all day. The average customer at the bar will be expected to spend approximately more than the industry average in establishments that are moderately priced (Rail, 2011: p306). According to us, we think this is due to the creation of an atmosphere, which encourages clients to game for longer and spend more while also allowing adequate turns at the gaming stations because of the appeal of extended hours. Promotion Strategy The bar aims to promote gaming and sport, especially because its global appeal is growing and is at its highest point in history. An area like Birmingham has a high growth for the service industry than most areas in the UK. Most residents, as well as those moving in, are big fans of sport, especially football as can be evidenced by the dividing rivalry between Aston Villa FC and Birmingham FC. Game Heaven aims to be a place for everyone with rooms with each football team’s theme, as well as a tournament room for both sets of fans. Patrons can also watch a game of their interest with enabling technology being the bar’s benchmark (Rail, 2011: p308). Promotion of gaming tournaments and advertising budgets will be an on-going management process that is geared towards brand name promotion, as well as keeping the bar at the gaming and sports themed establishment forefront in the Birmingham area. In addition, there will be funds allocated for the launch of the bar and lead generation, which are at approximately 15% of projected e-sports bar sales. Sales Strategy Game Heaven UK’s sales strategy aims at building and opening at least two locations in the Birmingham area to raise revenue. Both locations will go on building their client base over the initial three years of operation, although the second location is to be opened one year after the first one. The bar’s goal is to attain ?1 to ?3 million in yearly sales for each e-sports bar. Every e-sports bar will be considered to have matured when it crosses ?1.5 million in yearly sales. Organizational Structure The company’s future structure will be inclusive of a store operations director after the second operation starts. This will aim to provide a level of supervision between the level of store management and the executive level (Rail, 2011: p309). The company will also add a marketing/sales director and a full time accountant, both to oversee the expansion effort after the first e-sports bar takes off. This will be in order to support existing business growth, as well as execute the e-sports bar expansion strategy. Management Team Joseph Coquelin Personal Data: Born: 12/23/82 Married for four years with one child aged five Good of health A member of the UK RAF from 2002 to 2006 in top security and communication surveillance Current Manchester FIFA 2013 gaming champion Education: University of Hull, BS, Finance, MBA Finance Professional Experience: Corporate development, strategic planning, and finance Resigned, in 2011, to open sports themed bar in Manchester Management Team Gaps There are specific opportunities in the supervisory area for store operations, as well as in franchise sales development. However, the two positions are not immediately required. Game Heaven UK expects that it is possible to recruit the said people from the Birmingham area, especially with a mushrooming of franchises in the area. Beverage managers are plentiful, as are store managers. Operations The key suppliers for beverages at the e-sports bar will be Pepsi and Coca Cola while Heineken is to provide alcoholic beverages for big live broadcasts only. Sony will provide the play station consoles, whereas Dell and GenEx will provide computers. Both of the latter companies provide similar products and, finally, it will be up to the management to make a choice on whom to deal with. Game Heaven UK will most likely go with those who provide the bar with the best prices, exceptional time of delivery, and store credit. The office supplies for the gaming section will be sourced from Office Max, whereas the supplies for the light snack restaurant will be sourced from Atlas Suppliers. Order taking, processing, and inventory management will be handled on touch screens that will be placed throughout the bar area, although there is a counter that the client can walk to. These touch monitors have to be sourced, as will entry units that are hand-held. The bar will use Digital Dining software that is a premier bar and restaurant software, which can be altered for the needs of the business (Cassavoy & Shelton, 2009: p111). It will include credit card sales, office management, bar and quick serve, inventory control analysis, point of sale menu, and gaming ticketing. In addition, Game Heaven will provide for a training program that seeks to assist with quality control and client service. It will be inclusive of PR, marketing, organization standards, software use, beverage management, quality control, and inventory management. The size of the facility that Game Heaven is seeking is one that could seat approximately 120 people with approximately 20,000 sq. feet. While it may sound big, the nature of sport, especially football, in Birmingham, will ensure that we can pack the place if we get the atmosphere right. The bar will also have to purchase arcade games, playstation consoles and games, tabletop monitors, audio equipment, screens, and computers, as well as video game discs. As far as benchmarking is concerned, Game Heaven will compare itself to Olympus Sport that also seeks to have an e-sports bar on top of its sports bar. We will measure the daily number of guests, waste percentage, and supply costs and, with this, we should be able to premiere Game Heaven UK in Birmingham. Competitive Analysis Game Heaven UK is a casual e-sports bar whose geographical area will cover Birmingham and other surrounding towns. With the e-sports bar, we hope to attract clients that travel to London or Manchester for a weekend of sport, which should increase the market share (Cassavoy & Shelton, 2009: p131). While there are a number of sports-themed bars in the Birmingham area, e-sports themed bars are lacking. He closest e-sports bar is a fifty-minute drive away, although it does not offer clients the opportunity to watch sports on big screens. Our top competitor will be BW3 that is a sports bar offering extensive menus, sporting events on multiple screens and full bar service. This bar caters to the same clientele that Game Heaven seeks with a casual sports bar experience. Game Heaven will differentiate itself from BW3 through offering stress free gaming facilities, a close to home atmosphere, as well as offering a 3-D watching experience for big matches. The SWOT analysis for BW3 should aid Game Heaven UK to understand their business, develop a plan for marketing, and determine their target market. Strengths Target market includes, those willing to watch sport in a bar atmosphere Its is strategically located Offers video and audio equipment of high quality for the pleasure of the client Has a recognized brand name Has huge social media following Possesses a qualified and highly trained staff Weaknesses The location is a long way from the main road They do not offer light snacks Opportunities (for Game Heaven UK) It is located close to the town center Will have an atmosphere that is family-like Will possess an entertainment room for teenagers Has the ability to take a share of the nightclub market (Cassavoy & Shelton, 2009: p140). Threats (for Game Heaven UK) The probability of another e-sports bar moving into the Birmingham area People could decide to watch sports and games at home Retaining efficient and trained staff The recession has led to more people watching sport and gaming indoors (Cassavoy & Shelton, 2009: p140). Financial Plan The financial plan in totality for growth will allow Game Heaven to use the money that is generated by the e-sports bar. Infusion of debt of approximately ?1 million should allow Game Heaven UK to expand its store than it could accomplish from its cash flow. External capital will also allow for an excess funds buffer that will allow short-notice revision of expansion plans. All opportunities will be leveraged to accelerate expansion if there is excess cash above projections for the initial e-sports bar. Game Heaven also expects to build brand name equity, as well as plans for a future IPO. Important Assumptions This financial plan is dependent on essential assumptions. These are: The bar assumes that continued sports and gaming popularity in the UK, as well as the demand for sports and gaming themed bars, will not end The bar assumes no other major recession and a slow growth economy The bar also assumes it will access financing and equity capital that will sustain its financial plan. Assumptions Financial Year 2013 Financial Year 2014 Financial Year 2015 Plan Month 1 2 3 Current Interest Rate 8% 8% 8% Long term Interest rate 9% 9% 9% Tax Rate 30% 30% 30% Other 0 0 0 Key Financial Indicators Game Heaven UK’s most important indicator will be the inventory turnover. Turnover, in the sports bar business, exceeds 30 (Cassavoy & Shelton, 2009: p150). In addition, beverage costs must be below 20%, snack costs must be below 30%, and the controls need to be maintained over the e-sports bar. Game Heaven will use state-of-the-art inventory systems and management control. The background of Coquelin in corporate finance should indicate the fact that Game Heaven understands the fundamental nature of control systems. Financial highlights Break Even Analysis Break even of monthly revenue Assumptions Mean percentage cost of variation 28% Monthly fixed costs estimate Forecasted Profit and Loss FY 2013 FY 2014 FY 2015 Sales ?2,042,444 ?9,198,000 ?16,084,000 Direct Cost of Sales ?577,638 ?2,531,380 ?4,435,640 Other Costs of Sales ?0 ?0 ?0 Total Cost of Sales ?577,638 ?2,531,380 ?4,435,640 Gross Margin ?1,464,806 ?6,666,620 ?11,648,360 Gross Margin % 71.72% 72.48% 72.42% Expenses Payroll ?484,800 ?2,800,000 ?4,850,000 Marketing/Promotion ?69,500 ?512,000 ?860,000 Depreciation ?69,996 ?280,000 ?320,000 Rent ?52,800 ?197,000 ?460,000 Utilities ?28,800 ?150,000 ?180,000 Insurance ?36,000 ?96,000 ?125,000 Payroll Taxes ?0 ?0 ?0 Other ?0 ?0 ?0 Total Operating Expenses ?741,896 ?4,035,000 ?6,795,000 Profit Before Interest and Taxes ?722,910 ?2,631,620 ?4,853,360 EBITDA ?792,906 ?2,911,620 ?5,173,360 Interest Expense ?0 ?0 ?0 Taxes Incurred ?238,560 ?868,435 ?1,601,609 Net Profit ?484,350 ?1,763,185 ?3,251,751 Net Profit/Sales 23.71% 19.17% 20.22% References Cassavoy, Liane. & Shelton, Sonya. (2009). Start your own bar and club : sports bars. Irvine : Entrepreneur Press. Rail, Genevie?ve. (2011). Sport and postmodern times. Albany : State Univ. of New York Press. Read More