Sandwich Shop Business Development - Case Study Example

BUSINESS DEVELOPMENT: SANDWICH SHOP Introduction Setting up a business and developing it as per our expectation is one of the most exciting yet frightening experiences of ones life. It is exciting, because in most cases we are creating something from nothing, especially sole trading entity. Operating a business and developing it further is not some-thing that we can learn overnight. Even with years of experience business people fail; and those who continue to learn new techniques and ideas and learn how to respond to a changing marketplace and changing world will only succeed. The purpose of this business plan is to show you some basic steps results. By learning these very basic steps, running our own business and developing it can be both exciting and rewarding. It is our ability in developing and implementing strategies effectively that will avert stressful and unpredictable situations in business. “It is a truth that the sandwich business is a rapidly growing segment of the fast-food industry as demonstrated by the growth of various brands across the globe. (Emerald MangementXtra). Hence, there is opportunity to every player in the market, and scope for improvement. Business development: Getting started The decision to develop products and services can mark the beginning of an extremely difficult process for many businesses. In fact, new product development is often considered to be the cornerstone for building any successful business. Without it, businesses tend to stagnate, and then eventually decline. This is particularly true for small scale businesses. It is a proven fact that products and services you are offering will serve as the catalyst that drives your business to higher levels of success. Business development should never be a long and costly endeavor. Objectives & Plans Objectives of any enterprise is to establish its unique presence in the related business activity, sustain, develop and surge ahead, by being dynamic and growth oriented, through planning. Planning is the backbone of any business venture –be it a small sandwich shop or a multi national organization. A step by step plan is the core requirement for developmental process, along with proper resource and budget allocation. Business development: Key areas to focus Market Research This step is of utmost importance to gather relevant inputs for business development, especially information pertaining to the latest trends in the food industry, potential of the market etc. Market analysis This step is detrimental to the organization to sustain and develop further in the market. A SWOT (Strength, Weakness, Opportunity and Threat) analysis need to be carried out to identify our established strengths related to the products/services offered by the establishment, our competitive edge, existing and target customers, their expectation, sales and marketing strategies, pricing, an effective marketing plan, and promotional strategies. Business structure It is another important step, where we identify and measure our manpower strength; advantages and disadvantages of the location, and generally the structure of the organization, which eventually determines the flow of activities. Financial Plans This is yet another step to focus, where we continuously monitor resources and performance, especially staffing (Example 1), forecasting profit and loss (Example 2), balance sheet (Example 3), cash flow (Example 4) etc.. "You need to involve (customers) at all ends, at the beginning and at the end, inviting them in to kick the tires." - says Dave Crandall, vice president, manufacturing and distribution, for Steris Corp., a surgical instrument maker in Mentor, Ohio (Unlock The Full Profit Potential of Your Sandwich Shop Business. 2007). It is obvious why the customer is considered “The King” in any business. Staffing: We should never underestimate the importance of the people that work for us. The greatest asset for most businesses is their staff. Anyone who is evaluating your business plan will want to know how many people you employ and what type of qualifications and experience are needed for each position. Describe in detail the roles and responsibilities of each position and what experience and or qualifications you require for those positions. A simple way of showing the various positions and how they relate in the business is to use a diagram. This is also called an organization chart. Example 1: (Organization Chart) STORE MANAGER ASST. MANAGER SALES PERSONNEL CUSTOMER CARE PERSONNEL CHEF / SANDWICH MAKER CASHIER PACKER/DELIVERY PERSON CHECKOUT ASSISTANT Example 2: Profit and Loss statement – 1st Quarter Income Jan Feb Mar Apr Sales 2000 2500 3000 3000 Cost of Goods Sold 800 1000 1200 1200 GROSS Profit/Loss 800 1500 1800 1800 Operating Expenses Advertising 35 35 35 35 Bank Interest 85 80 78 75 Insurance 240 240 240 240 Office Supplies 35 35 35 35 Rent 200 200 200 200 Salaries 350 350 350 350 Telephone & Fax 45 45 50 55 Transport 35 40 45 45 TOTAL EXPENSES 1025 1025 1033 1035 NET PROFIT (Before Tax) 175 470 767 765 A Profit and Loss statement is a measure of business performance over a period of time. Many who are evaluating your business plan will review this section very closely. Make sure your estimates are as precise as possible. A profit and loss statement is best presented over a 12 - month period on a month-to-month basis. Developing budget: Imagine that you want to add a new sandwich to your menu. The following is a list of the expenses you will expect to incur in developing a new sandwich and bringing it to market. He and one other employee will do most of the work. Since he is the owner, he is not including his time as an expense. Develop your budget. Remember to include estimates for all the resources that you plan on using. For example : Expenses related to employee time, material and external services in all aspects of concept development, concept testing and marketing activities should be accounted for budgeting purposes. Example 3: Tentative Budget Particulars Amount Amount Rent – 3 months advance @ 200/PM 600 Capital Expenditure Cash Register 850 Plastic Boxes 45 Ice Chest 85 Uniforms 280 Knives 120 Display Decoration 55 Labels and Signs 95 TOTAL CAPITAL EXPENDITURE 1530 One Time Expenses 500 * Business License, Permits, Registration etc… Contingency Costs 1000 TOTAL SETUP COST 3630 Example 4 - Cash Flow Statement Particulars Jan Feb Mar Apr CASH RECEIPTS 1000 2250 2750 3000 Advertising 35 35 35 35 Bank Loan 500 500 500 500 Insurances 150 150 150 150 Office Supplies 35 35 35 35 Rent 200 200 200 200 Salaries 350 350 350 350 Telephone and Fax 45 45 45 45 Transport 35 40 45 45 TOTAL 3440 2210 2415 2420 Net Cash Flow (2440) 40 335 580 Bank Balances (1440) (1400) (1065) (485) Caution! Credit can be dangerous in this type of business. Obviously, the best way of running your business is to maintain a positive cash flow. However, if your business experiences cash problems there are a number of ways you can overcome this. 1. Retrieve your cash receivable sooner (get the payments owed to you) 2. Increase your profits by increasing sales, and or reducing costs 3. Extend your credit terms with suppliers 4. Borrow money 5. Establish more equity – put more money of your own into the business, or obtain partners, etc. Example of Projection; Estimated income and P & L for first three years of operation No Particulars Amount Income 1 1st Year 23000 2 2nd Year 26000 3 3rd Year 28500 Profit and Loss 1 1st Year (2500) 2 2nd Year 3000 3 3rd Year 9000 Develop a Marketing Plan Marketing plan is the back bone of any successful business venture; and business development demands continuous improvement of your plan based on the market you are operating. Your marketing plan should continuously focus on three key areas: Pricing Pricing strategy has a strong impact on how well our product performs in the market. If we are competing with some established products, then we may need to introduce your product at a lower price. The results of our concept testing should help us determine our pricing strategy. If we need more information to develop our pricing strategy, we may need to do some additional market research. This will give you a better idea of where the competition is and how you should position your new product in the existing market. However, we should never compromise too much on pricing aspects. For example, as part of his concept testing activities, visit your competitors store; test their products and see their price structure; prepare your price structure accordingly, a little lower than what they are offering; once your products is established, cut your costs by buying larger quantities of ingredients. This would allow you to increase your profits without raising the price of the sandwich. Promotion Develop a marketing plan that explains how you will introduce and promote your products to the target market. This plan should include any media, point of purchase, mailing, telemarketing or other advertising you plan to use. If you market through a sales force, then you will need to develop some sales strategies and prepare your sales people with all the promotional tools and information they will need to promote products. These include items such as brochures and updated price lists. “Effective techniques for promoting products include introductory offers such as giveaways, contests and coupons. Do some early promotions before the product is released so that customers know that it will be on the market soon. If done effectively, this can build consumer anticipation and result in a successful release” (Featured Product, 2007). For example, to promote a new product a Sandwich shop owner decided to have some point-of-purchase advertisements developed by a small graphics company. They designed some dangler’s at very little cost. The owner also had the graphics company design a coupon that was printed in the local newspaper, which offered a free drink with the purchase of the new sandwich. Delivery You will need to develop a delivery plan for getting your products to the customer. As a retailer you will need to have orders and establish a delivery method ahead of time. Make sure that your employees are trained well enough to deliver services effectively. In short, create a detailed plan addressing all the products to the market. For example, a sandwich owner decided to expand his business by accepting orders for home delivery. They established a contract with a delivery service that could handle packages of that size and deliver at site. External influences: For a modern organization, an awareness of those external forces that will influence a business entity is detrimental. Generally speaking these factors are at ‘macro’ and ‘micro’ levels. At a closer micro level the external elements include suppliers, competitors, consumers, and at a wider macro level external factors includes elements such as: economic (national or international), social, technological, demographic, governmental and natural environment factors. It should be evident that these environmental forces can have dramatic consequences for a business. Eg: The unexpected major crisis such as the Foot and Mouth outbreak in UK (2001) Quality and continuous improvement Quality is not an empty slogan anymore. It is a practice, that is detrimental to any product service and business entity as a whole. As we are aiming to expand and capture market share with your new product, you must remember to stay focused on meeting your customers needs. Conduct customer surveys to find out what they like and dislike about your product. Talk to them personally and ask them what they think. If your business is driven by a desire to continually improve your products so they meet your customers needs, then you will always be successful. Customer Satisfaction: Distinct edge of business development “In each case, success is dependent on just three factors, especially in launch of new products: customers, customers and customers” Customer satisfaction has always been the distinct edge for many small scale business entities. Though it is an important aspect price, variety, quality of your product and quality service - they are also important areas to be considered and focused. Customer Care Policy Statement for organization: “To be dynamic and growth oriented and strive to gain the respect and trust of the customers by providing unparalleled service” Conclusion In addition to your customers and employees, other organizations may be sources for business development and new product ideas – these resources include patents, research reports, large companies, exhibitions etc… Finally, measure your success by applying standard rules applicable to the performance of your business. One should continuously monitor the market and individual business performance. It will be helpful to keep an eye on sales of related products, individually and by other competitors, market share, profit and loss, and all other key measures that apply sandwich business. Use this information along with customer and employee feedback to improve your services and thus develop business as per desired objectives. You can now complete your sandwich shop business plan in the knowledge that you wont make many of the mistakes committed by others. A properly laid plan will solve many of your problems i.e. Incomplete financials, over ambitious projections, poor understanding of marketing etc.. It is always ideal to continuously monitor and assess our business performance and success by applying standard business measures. Areas such as sales, market share, profit and loss, and all other key measures that apply to this study. We need to gather information on a continuous basis, and take timely feedback from customers and employees to improve our performance, with emphasis on quality. Learn from our present experience and utilize the information for future development efforts. Works Cited Emerald MangementXtra. Emerald. Retrieved April 22, 2007, from http://www.emeraldinsight.com/10.1108/14626000710727863/link Unlock The Full Profit Potential of Your Sandwich Shop Business. (2007). Teneric Business Plans. Retrieved April 22, 2007, from www.teneric.co.uk/sandwich-shop-business-plan.html Featured Products. (2007). Gourmet Foodmall.com. Retrieved April 22, 2007, from http://www.gourmetfoodmall.com Read More