Busters Lobby Business and Key Players - Term Paper Example

 Business Plan Buster’s Lobby: “They Know Us Next Door” “Anything you can muster, you’ll find it @ Buster” Introduction Buster’s Lobby is an expansion of an existing retail store concept generating between $150,000 and $300,000 annually. This is a wide margin of difference from year to year, making sales somewhat unpredictable in this particular urban marketplace. Buster’s Lobby will occupy lobby retail space nearby from the existing business, in a new office building space which has opened for the establishment of this secondary business venture. Buster’s caters to a very wide group of customer demographics, of all different ethnic and professional backgrounds, therefore Buster’s must try to appeal to mass market customers using low-cost marketing materials. It is the goal of Buster’s to eventually expand beyond this secondary retail concept, once the gap between earnings of $150,000 to $300,000 can be better predicted. The initial mission of this new small business is to achieve the desired $300,000 annual earnings through concentrated marketing and leadership expertise. Once these sales results have been achieved in both retail stores, the business will expand further into new market territory using rental retail space in office buildings. Organization of the business and key players YOUR NAME HERE is owner and will carry on the function of senior manager for all decision-making at Buster’s. The current retail store, operating in 1000 square feet of space, requires dedicated staffing for 50 hours each week, representing the hours just prior to professional office hours and immediately afterward. These chosen market hours have been developed to capture the attention of all different markets, however after review it was determined that more pre-office customers should be identified for both business concepts, namely Buster’s. The following represents the ownership and responsibilities for operations at Buster’s: YOUR NAME HERE – The ownership will draw on personal experience in working in small businesses to successfully manage all operational details of Buster’s. The owner will also rely on educational background in business, marketing and technology to support ongoing functions such as inventory ordering/control, order input, invoicing and other important day-to-day business functions. All strategic decision-making, requiring financial investment, will also be decided by the owner. Using the support of over-the-counter business software tools, such as QuickenBooks or other software types, maintaining professional business-to-business and business-to-consumer transactions will be possible. Buster’s Legal Structure Buster’s is a sole proprietorship. Buster’s intends to gain its financing from traditional banking organizations to make sure that the owner remains in control over all business function and profitability. Because neither Buster’s or its sister retail store earns significant revenues, division of sales profit among other investors is not a quality strategic decision. When further expansion of the Buster’s chain of lobby stores is attainable, the owner may seek out other independent venture capitalists or a variety of investors looking for profit opportunities. Buster’s Management Team – Roles and Qualifications Buster’s, like its sister facility, will operate on similar hours, this being 50 per week, and will therefore require three employees, including ownership. It is generally necessary for the store owner and one employee to be present during all operational hours. In terms of staffing, in order to recruit the most qualified personnel possible, Buster’s will designate the sales associate role as Assistant Managers, to give employees a sense of belonging and importance within the organization. This has been identified as being a foundational method of keeping a positive organizational culture and creating motivation and cooperation in employees (Jackson, 2005). In the local region, the average salary paid to workers that fit this sales category is $7.50 per hour, however with the role of assistant manager, recruitment efforts will give incentives at $9.00 per hour. With this price increase comes more responsibilities for employees of Buster’s. They will be responsible for counting inventory and reporting the results to ownership and must therefore have experience in working in small business or retail. Through interview processes, the ownership will identify personnel who can assist in small-scale management duties to delegate and justify the higher pay category for employees. The owner will also, prior to launching Buster’s, develop a training program to help employees better increase their customer service skills, using templates from online or secondary research. According to several researchers, long-time customers tend to spend more money than new ones (Longenecker, Moore, Petty and Palich, 2007, p.288). This is another recruitment requirement to ensure that employees have a background in delivery of customer service either at the professional or educational level. Because the business operates in a multi-ethnic area with many different demographics, it is important that all employees have skills working with multi-cultural environments. This will also be a responsibility for the owner to develop a workable training program on ethnic diversity and interpersonal skills to help support the business’ long-time customers who are most likely to spend more and maintain loyalty for Buster’s. Contractors/Vendors Buster’s will sell such a large variety of different novelty, snack and hobby items for the professional workers that it will be highly important to have quality long-term, sustainable business-to-business relationships with multiple vendors. In order to gain bidding access and rights to certain price reductions, there is an interpersonal element that must be considered in order to be successful. Buster’s will have certain compliance requirements for each vendor, such as delivering during non-peak hours and in return for these honored agreements, Buster’s will provide vendor visitors and their staff representatives with reduced cost merchandise for their partnership and support. Otherwise, no special requirements for outside vendors will impact Buster’s success. Financials Buster’s will require the following at start-up, prior to launch: Start-up     Requirements       Start-up Expenses   Legal $2,500 Stationery etc. $400 Insurance $1,500 Rent $1,500 Computer $1,000 Total Start-up Expenses $6,900     Start-up Assets   Cash Required $1,000 Start-up Inventory $15,000 Other Current Assets $5,000 Long-term Assets $2,500 Total Assets $23,500     Total Requirements $30,400 The $30,400 start-up requirements include all legal obligations for permits, licenses or other necessities demanded by different local or business requirements. Stationary, at $400, includes all needed office supplies and printer/scanner paper. Rent for this lobby facility is expected to fall within a range close to $1500 monthly, along with the computer and information technology support tools needed to begin operations. Start-up inventory includes all needed display cases, registers, and other assets the business will require and can be procured online or in a variety of different sales catalogues for business clients. The start-up inventory costs at $15,000 include all food and non-perishables the store will need to open on the first day of business, including excess stock housed in the storeroom for immediate stock replenishment. The chart below represents the salaries that will be allotted to each employee, including ownership with projections of increases over a three year period. The owner will consider the $20,000 payroll payment to be an investment and savings opportunity for the business. Personnel Plan   FY 2011 FY 2012 FY 2013 Owner $20,000 $25,000 $30,000 Asst Mgr $15,500 $16,000 $16,500 Asst Mgr $15,500 $16,000 $16,500 Total People 0 0 0         Total Payroll $51,000 $57,000 $63,000 Buster’s Break-Even Point Buster’s will need to earn $7,496 monthly, approximately $249 daily, in order to break even on all operating expenses. This, based on the market size, is very attainable and the sales result in the sister lobby retail store are much higher on a daily basis. This break-even cost includes all payroll obligations as well as operational expenses and cost-of-goods-sold. Buster’s Sales Forecast All inventoried items included in the sales forecast, for the sake of values, have been identified as either food/beverage, non-perishables, gifts or books and associated. These sales figures are projected at their lowest potential, rather than the $300,000 goal of sales, to remain realistic based on existing market availability. Sales Forecast   FY 2011 FY 2012 FY 2013 Sales       Food/Bev $60,000 $65,000 $70,000 Books, Etc. $50,000 $55,000 $60,000 Non-Perishables $20,000 $30,000 $40,000 Gift Items $50,000 $55,000 $60,000 Total Sales $180,000 $205,000 $230,000         Direct Cost of Sales FY 2011 FY 2012 FY 2013 Food/Bev $5,000 $5,500 $5,500 Non-Perishable $5,000 $5,500 $5,500 Subtotal Direct Cost of Sales $10,000 $11,000 $11,000 Buster’s Cash Flow Pro Forma Cash Flow   FY 2011 FY 2012 FY 2013 Cash Received               Cash from Operations       Cash Sales $108,000 $123,000 $138,000 Cash from Receivables $66,200 $81,194 $91,194 Subtotal Cash from Operations $174,200 $204,194 $229,194         Subtotal Cash Received $174,200 $204,194 $229,194         Expenditures FY 2011 FY 2012 FY 2013         Expenditures from Operations       Cash spending $51,000 $57,000 $63,000 Bill Payments $54,675 $60,458 $66,163 Subtotal Spent on Operations $105,675 $117,458 $129,163         Subtotal Cash Spent $105,675 $117,458 $129,163         Net Cash Flow $68,525 $86,736 $100,032 Cash Balance $69,525 $156,262 $256,293 Buster’s maintains realistic profit expectations, based on the available amount of potential customers available for walk-in or walk-through business. Cash from receivables, in the chart above, represents sales made on credit, which will likely be up to 40 percent of all sales conducted. Bill payments and cash spending represent all utilities, rent, payroll and materials which were listed in the start-up requirements and are expected to be similar to the start-up totals during all months of operations in the first three years. The three year investment, based on projections, offer Buster’s a handsome $256,293 of cash balance, not including the approximate $60,000 payroll offered to the business owner. These sales are expected to increase through effective advertising and promotion that is targeted to the right customer groups most likely to buy Buster’s products. March 2010 – Feb 2011 Projected Cash Summary – Buster’s Marketing/Sales The following chart represents the potential customers for Buster’s over a five year period, with growth rates (CAGR) to the right for each market group. It is a goal of Buster’s to increase pre-hour customer visits with deluxe coffee offerings and different pastries from local vendors. Market Analysis     2010 2011 2012 2013 2014   Potential Customers Growth           CAGR Pre-Hour Clients 20% 9,000 10,800 12,960 15,552 18,662 20.00% Operational Clients 20% 50,000 60,000 72,000 86,400 103,680 20.00% Post-Hour Clients 10% 9,000 9,900 10,890 11,979 13,177 10.00% Walk-Ins 20% 30,000 36,000 43,200 51,840 62,208 20.00% Total 98,000 116,700 139,050 165,771 197,727 19.18% Visual of percentage of potential Buster’s customers Buster’s management must be realistic and understand that it cannot successfully market to individuals in the consumer environment who are not likely to enter the building for other business. Therefore, as mentioned earlier, quality customer service and keeping existing in-house customers satisfied is crucial to business success for Buster’s. The marketing strategy is simple, and will draw on the business success of the sister organization. The first strategy is to link the business with quality and dedication to giving top-level satisfaction. The top marketing strategy is to ensure that the business can be marketed successfully with mass market groups of different preferences, cultures and values. Therefore, setting up a solid brand name, through brand-building activities, is the direction that marketing will take for Buster’s. Product and Pricing Buster’s only carries inventory items that are likely to appeal to the available client groups. These include on-the-spot drinks in fountain format, along with bottled water and soda/juice varieties, and will be priced moderately higher than most retail stores. Buster’s, along with the sister organization, are very convenient for in-house workers who do not have to travel outside to get their lunch, hobby or other convenience needs. This service is worth the price and therefore the pricing model will reflect this without dissatisfying or angering business clients. Pricing for an average large size fountain drink, as one example, will be $1.99 with competing stores generally pricing at $1.29. Books and other non-perishables will be priced with similar competition pricing in mind, conducted through online searches and visitations to other in-store retail lobby store formats. Since the goal is for brand-building to link quality with convenience at the consumer level, there is little need to focus consumers’ attention on pricing in any marketing strategy undertaken. Promotion Promotion will be the key success factor for Buster’s. According to one business expert, in today’s workplace, “instant messaging is here to stay” (Flynn, 2004, p.37). With workers in office buildings being able to connect with one another in email or instant messaging format, word-of-mouth advertising is very important for keeping a strong brand reputation for Buster’s. If workers perceive too high of pricing or any activities that do not keep in line with customer expectations for quality, they are likely to stop frequenting Buster’s. This is something that cannot occur. An expert involved with the online social networking environment offers, “Everyone’s a critic. It’s true and its driving entrepreneurs crazy” (Chafkin, 2010, p.48). This is a reality in this type of business where there are inter-mixed professionals with access to instant communications. Reputation is key to success at Buster’s. The company’s slogan, “They Know Us Next Door”, will first be used to link Buster’s with the success and high reputation of the sister organization down the street. This is the brand recognition exercise designed to help the new customer market segments understand that this is a trusted business. Word-of-mouth testimonials from favorite customers at the sister business will also be included in all marketing literature to build this recognition and trust instantly with Buster’s. This is part of the branding strategy. After a period of six months, after the name Buster’s is common in the social network environment for the new customer groups and has established a solid name, the It’s @ Buster’s logo and special trademark will help to link quality and value with the Buster’s name. Over time, as people respond to this, which can be measured by business analysis and sales review, special discounts and incentives will be offered to in-house professionals to show loyalty and support for their in-house needs. Based on the volume of returned coupons or other incentives materials, these promotions will be ongoing or adjusted to invite people to frequent Buster’s rather than competition down the street. Place In this situation, Buster’s is not concerned much with matters of place, since it is the vendors and the in-house talent that will be frequenting the organization. It is located in an area where convenience and gift needs are desired and common, however there is the limitation of less walk-in traffic occurring. In order to increase any potential walk-in traffic, special incentives coupons will be offered in flyers, distributed over a two to three block radius, inviting first time purchasers to experience sizeable discounts on gift or non-perishable merchandise orders. The added revenues will only secure more profit for Buster’s. Buster’s will also be available in the online environment, with a dedicated website showing weekly or daily specials along with different incentives coupons or promotions. Sampson (2009) suggests participating in blogs during times of economic uncertainty, therefore Buster’s will have interactive features where clients can even talk with store representatives in the virtual environment real-time during special discussion events. This will give the business more word-of-mouth with in-store office workers and build more brand loyalty away from competition. Operations The business will be operated on a 50 hour working schedule, extended when sales results have been noticed for post- and pre-hour clients. It will operate from 7:30am to 5:30pm. Loss prevention will be the only special procedure necessary for this research store, since it will encompass approximately 1,000 square feet of space with minimal staff. Therefore, the company must invest a considerable amount into loss prevention by teaching staff awareness techniques and installing a monitoring video system. Since the business does not manufacture any of its inventoried products, operational efforts involve basic retail selling procedures and talents. Fortunately, Buster’s is relatively self-sustainable at the operational level so long as adequate stock is available and all employees are engaged in loss prevention activities and risk management awareness. Legal Issues Again, due to the nature of the business as a retail store, compliance to legal obligations does not require much investment on behalf of the owner or employees. These issues will be addressed with a competent attorney prior to start-up to make sure that all compliance issues have been addressed. On an as-needed basis, attorneys will be contacted for advice or consultation in the event that their assistance or expertise is required. Issues of intellectual property, such as branding and business signage, will be handled by copyright and trademark processes. Even software programs, such as NOLO, can be used to help Americans translate legal information to usable, easy-to-understand information and can help Buster’s succeed. NOLO software is “the most respected provider in the nation” for this service (Phillips and Rasberry, 2008, p.42). Issues of ensuring fair treatment for employees, such as compliance with OSHA obligations, have been identified with the sister organization and will carry over into training at Buster’s. Meeting with EEOC guidelines and other compliance will occur as a matter of management activity during recruitment and during day-to-day human resources activities undertaken by the ownership. The simple nature of this business and its location make legal issues virtually non-existent. Major Challenges The largest challenge will be improving the profit margin from the $150,000 mark to the desired $300,000 mark by finding mass market advertising and incentive schemes that can build higher consumer interest. Because professionals are busy, with different socio-economic backgrounds and beliefs, mass marketing convenience products is not an easy task, but can be conducted through low-cost brand-building and word-of-mouth exercises. Keeping customers happy is not only a success factor, it is a necessity for Buster’s and must always be the focus. Public relations appearances, such as sending a sales representative into different office areas to sample a new product for free, can also assist in building higher recognition if existing promotional tools do not meet with expected sales results. The company may even consider using focus groups, with in-house professionals, to help identify their needs. An advantage of focus groups, according to McDaniel and Gates (2008), is that they can be conducted quickly and low-cost. Another major challenge will come in the form of ensuring that the inventory of goods purchases and offered for sale are relevant to buyer tastes and needs. To avoid the high cost of clearance merchandise in an attempt to sell old stock, inventory levels must be monitored closely. If this becomes difficult, the company will purchase a more expensive BRP system which can help plan better inventory cycles and ordering processes. The non-staple items, such as soda and chewing gum, are important to sales and therefore need to be priced to sell quickly and not stay in the stock room waiting for price reductions. Buster’s inventory control is a key management responsibility to stay profitable and reach the goal of $300,000 or more in sales. Buster’s Projected Yearly Sales by Category References Chafkin, Max. (2010). “You’ve been yelped!”. Inc Magazine, 32(1), p.48. Flynn, Nancy. (2004). Instant Messaging Rules: A business guide to managing policies, security, and legal issues for sale IM communication. New York: AMACOM Books. Jackson, J.H. (2005). Human Resource Management, 10th ed. Thomson South-Western. Longenecker, J., Moore, C., Petty, J. and Palich, L. (2007). Small Business Management, 13th ed. Thomson South-Western. McDaniel, C. and Gates, R. (2008). Marketing Research Essentials, 6th ed. John Wiley & Sons, Inc. Phillips, M. and Rasberry, S. (2008). Marketing Without Advertising, 6th ed. Berkeley: Nolo Publishers. Sampson, Brent. (2009). “Top 7 Marketing Tips to Boost Your Business During the Recession”. The American Salesman, Burlington. 54(7), pp.13-17. Read More