Successful Take-Off of the New Business - Term Paper Example

 1 Executive Summary This business plan presents all the processes that should be implemented in order to successfully run a medium-sized business. The business description is provided in this plan, emphasizing on why the class of middle-aged male users is chosen over other groups. There is also an industry and market analysis which highlights the volume of footwear industry in the United States. The competitive analysis of this kind of business is described as well as the marketing strategy. Other significant factors that are outlined in this business plan include operational issues and human resource requirement as they will affect the proposed new company. Business Description The products to be sold are washable slippers—they are mainly used in the bath tubs and within the house. They are not designed for outdoor purposes. Their texture is soft, and the material they are made from is flexible and water-proof; that is, the washable slippers neither contaminate nor pollute the bathwater. This business plan details the procedures necessary for selling a brand of washable slippers for middle-aged male users. Though other categories of consumers can use the slippers; however, the initial research on this product was carried out with middle-aged male consumers in mind. Below are the data and chart that reveal how profitable the business is going to be when the target consumers/market is given ample consideration. 2 Table 1: Preferences for the Washable Slippers Comfortable (%) Uncomfortable (%) No comment (%) Middle-aged Male Users 75 20 5 Middle-aged Female Users 62 30 8 Teenagers 45 45 10 The data above was obtained by asking 20 middle-aged men, women and teenagers to fill in their preferences in questionnaires concerning another pair of washable slippers. Their responses are tabulated above to demonstrate the likeness middle-aged men have for washable slippers. 3 Figure 1: The Comfortability of the Washable Slippers Figure 1 above reveals how comfortable the washable slippers are to middle-aged men; and this is why they are the main target of the market. Also indicated in the data is the fact that both middle-aged women and teenagers could also purchase and use the washable slippers; but the recognition middle-aged men have for the slippers surpassed that of other groups of users. The form of organization chosen for this business is partnership. The major reasons for making this choice are that: (i) the size of the business is small; (ii) the capital to run the 4 business is limited; (iii) the partners can equally share the liability and profits accruable from the business; (iv) and being a medium-sized business, the partners would be able to concentrate more on rapid business development (Lazonic, 1993). Industry and Market Analysis The footwear industry in the United States is a large business: according to the US Census 2003, the value of men’s slippers that were manufactured alone in that fiscal year went up to about $3.6 million, while the total amount of slippers was $20 million (US Census 2003). However, the industry offers great opportunity for medium-sized enterprises to operate without undue competition from big players in the industry. And this is the main reason this business would be partnership, and the partners would be able to compete evenly in the production of middle-aged men’s slippers without losing edges (Lazonic, 1993). Competitive Analysis Washable slippers are relatively new in the footwear industry. This kind of product will be so competitive in the market against the following primary and secondary competition. Primarily, rivals in the footwear industry normally compete on (i) price; (ii) look or appearance; (iii) durability. The washable slippers to be produced and marketed can 5 overcome these primary competitive indices by (i) offering considerable or moderate prices for the slippers; (ii) designing washable slippers that would have light weight and float easily in the bathwater; (iii) using good material to produce the slippers. Similarly there are some secondary competitive factors, which include but are not limited to (i) market reach; (ii) huge deposit of capital for manufacturing purposes; (iii) and better organized marketing and organizational structure. However, as a medium-sized business, the partnership business to be established work hard to command an appreciable section of the market through effective marketing and modern customer services. If needed, the partners can use their positions to raise more money for the business to cater for its financial needs. The good news is that a medium-sized partnership business is easier to manage than the big corporations that have tens of workers and require complex management structure (Laconic, 1993). Marketing Strategies To succeed, the partnership business requires effective marketing strategies. Some of the following marketing strategies should be applied to the business to make it veer over its major competitors in footwear industry. (i) Pricing:- it is advisable that the business offers prices that are fairly below the market price in order to draw initial customers to its products. Although this pricing regime may be changed as the number of washable slippers users increases. 6 (ii) Promotion:- The best promotional technique to apply is using discount sales method to attract middle-class buyers who may be afraid of spending a lot of money on buying slippers. There will be moderate advertising budget, to be managed by both partners in the business. Hence, as the number of customers increases, the business should switch to more expensive form of advertising as the prices of the washable slippers are raised gradually. (iii) Distribution:- The business will adopt direct distribution by selling washable slippers to users through both on-site and online sales channels. However, to avoid spending money on warehousing, most of the slippers would be sold as wholesale, while a very small portion of it would be retailed through online sales and shopping outlets. (iv) Product/Service:- In order to outperform the washable slippers already in markets, the new product will be sold with a two-year warranty that would give customers some satisfaction. After-sale customer services would also be implemented to attend to users’ complaints about the products (Lazonic, 1993). It is rare that companies offer after-sales services for the sale of slippers: establishing this service will help the partnership business to win customers’ loyalty and long-time patronage. (v) Business Projection:- to constantly understand customers’ needs, the business would set up feedback system to be overseen by the business partners as well as every other employee in the business. This will make the business to be 7 consumer-centered and work only to satisfy their requirements or demands on continuous basis. Doing this will also lead to business continuity, which is one of the goals of the business. Poor business-customer relationship has been identified as one of the bad practices that could cause a business to fail (Lazonic, 1993). Operational Issues The following are the operational procedures that would be undertaken by the business in order to maintain a lead in the production and distribution of slippers. (a) Production:- For the first year of operation, most of the production processes would be outsourced to a reputable footwear manufacturer, not necessarily in the vicinity where the washable slippers would be marketed. (b) Suppliers:- there would be strict rules outlined in choosing the appropriate suppliers that would provide the raw materials needed for the production of the washable slippers so as to manufacture high-quality products that customers would like. Also, the suppliers for hardware, software and other utilities would be screened and made sure have been in the business for years. (c) Communication systems:- Modern Information System would be used to create an effective communication network among the employees of the company as well as with the customers to create smooth channel for getting customers’ feedbacks, and vice versa. 8 (d) Transportation: Since the products would be produced by leasing the production out to external manufacturer that is not located in the same areas as the business, it is important to have an efficient transportation system in place. The company will use trucks and vans to move the manufactured products from the plant to the company’s warehouse. Human Resources Requirement This is an important area in setting up the business: qualified and hardworking workers are needed to make the operations of the business successful. As a partnership company, it is possible to start with a small number of employees, say, ten workers, including the two partners forming the business. The categories of workers that are needed for the prompt take-off of the business include the following: (a) Production Assistants:- Those who work with the out-sourced manufacturer in every stage of the production. They would make sure that the quality of the washable slippers are maintained; they would liaise with the plant operators to make sure that contaminants are not allowed to touch the final products that would be sold to customers. (b) Administrative Personnel:- These are the people in charge of administrative work, accounting, bookkeeping and other functions related to the overall management of the company. Their actions would be helpful in determining the business’s success, 9 its advancement, and future prospect. The administrative personnel will work in collaboration with the two partners acting as co-directors of the company. (c) Marketers:- These are the workers in charge of marketing the washable slippers to the prospective buyers. They would be versed in convincing prospective buyers to try the new products. They would also be helpful in collecting feedbacks from the customers about the quality of the products, their preferences and knowing about the way the company can better help the customers. (d) Customer Services:- This will comprise of the employees that had been trained and advised to do their best in offering assistance to the customers as they buy the company’s products. Since washable slippers are new products, the customers would require a lot of explanations to get used to the products. And it takes the efforts of hardworking customer services representatives to make the customers’ experiences with the company to be worthwhile. These representatives would work in collaboration with the other employees in the company so as to fashion out the best approach for solving any problems that may arise in the course of marketing the products. As a matter of fact, the marketers and customers services workers should consult with each other to design a workable approach for satisfying customers’ desires. (e) Information System Manager:- One information manager would be hired to handle all information technology functions: these could include but are not restricted to designing appropriate software, purchasing the required hardware and making the 10 appropriate link among other workers in the company in order to achieve optimal success in the company. Financial Projections The financial projections for setting up this business are outlined in Table 2 below: Table 2: Financial Projections for the Washable Slippers’ Business Expenses (Annually) Cost (Approximated) Office Rentals $36,000 Production Outsourcing $135,000 Salary/Wages $340,000 Advertising/Marketing $50,000 Transportation $75,000 Insurance/Other Contingent Expenses $20,000 Customer Services Expenses $25,000 Total $681,000 Table 2 gives an approximated cost of running the washable slippers’ business. Since it is going to be a medium-sized business, it will cost a total of $681,000. As shown above, a sizeable amount of money is set aside for advertising and marketing; this is to 11 reach out to the prospective customers who may want to try out the new product. Expectedly, the cost of employment happens to be the largest expense the new company has to make—this is because human elements of any business can never be underestimated. Without well-trained and committed employees, it would be impossible for the business to proceed successfully. Transportation cost appears to be significant, too, because the washable slippers are produced in another location; more so, transportation is needed to convey the products to the buyers. Outsourcing the manufacturing of the slippers has many advantages: (i) it will help the new company to reduce overhead expenses that could have been required in maintaining the machinery/manufacturing plant; (ii) money would be saved for not hiring experts to man the manufacturing plant; (iii) the products could be made in smaller quantities—this means that the company can save money on producing only the products that would be bought by the customers; it is not necessary to spend a lot on warehousing products that would not be immediately purchased. With the initial operating capital estimated at $681,000, it is possible for the two partners to raise this amount without having to go through laborious banking procedures. And for the fact the company can run on its paucity of funds, this will indirectly or directly reduce the expected liabilities of the new company. These financial projections are not quantifiable; they are just estimation of how much it would cost the two partners to operate their company. 12 Conclusion/Recommendation This business plan is comprehensive enough to guarantee a successful take-off of the new business. As a partnership business, the liabilities each partner would be exposed will be limited. And it would not take much time to raise enough capital to run this medium-sized business. The procedures outlined in this plan are modern, effective and helpful for continuous development of the business. However, each of the processes described in this business plan must be critically considered and implemented before the new business can be successful. It is highly recommended that each step should be checked for quality to guarantee that everything will end well. 13 References Lazonic, W. (1993). Business organization and the myth of market economy. Cambridge: Cambridge University Press. US Census Bureau (2003). Current industrial reports: MA 316A—Footwear. Retrieved from http://www.census.gov/manufacturing/cir/historical_data/discontinued/ma316a/index.html Read More