Tie the Knot Wedding Planning - Example

Tie the Knot Wedding Planning A Business Plan BY YOU YOUR SCHOOL INFO HERE HERE Tie the Knot Wedding Planning EXECUTIVE SUMMARY Tie the Knot intends to be a respected and foremost leader in wedding planning services in London. By integrating knowledge of market characteristics with effective advertising and other promotions, the business will receive more referrals so long as service is aligned with consumer expectations. Tie the Knot provides a variety of services, ranging from full-range to partial planning and implementation services, as well as generic management of established pre-planned events. All of these services are priced at a premium model. Tie the Knot requires service of only 11 markets monthly at an average price of £386 to achieve break-even. If the projections follow the reality of the real-world environment, the company will profit over £60,000 after considering all expenses of running the business. Tie the Knot Wedding Planning – A Business Plan 1.0 Introduction Tie the Knot is a wedding planning service designed to facilitate effective service delivery for tangible and intangible service dimensions. Tie the Knot will be servicing the London region, capitalising on growing trends in the consumer marketplace for outsourcing planning and implementation work in the wedding environment. This business start-up will be established as a sole trader business, as the owner wants to maintain absolute control over administration, budgeting, management and accounting. The limited restrictions associated with sole trader business formats and ease of business exit (if appropriate) justifies the sole trader format. Tie the Knot is primarily a service-oriented business, offering a limited variety of products for the budget-conscious market whilst focusing on outsourcing products for higher resource buyers. Products at Tie the Knot include: The party pack – Consists of disposable cameras, cutlery, tablecloths, napkins, musical compilations on CD, invitations and thank you cards. Events guides – Published business literature teaching lower-resource purchasers the proper methods for a worry-free party, outsourcing resource information, recipes and other appropriate planning materials. Software – In partnership with local software developers, the business will be offering an interactive planning technology package allowing customers to play with different themes, decorations, music and facility modelling to assist in creating their own wedding plans. Tie the Knot will be offering the above mentioned products, however the majority of service dimensions involve direct coordination with a variety of professionals in the industry (e.g. photographers, caterers, florists, videographers and even bands and DJ services to facilitate an effective wedding event. To keep overhead and labour costs low, the business will be outsourcing these expert positions rather than keeping them on staff as business resources. This will require Tie the Knot to be flexible when working with external wedding-related talent sources. A critical area of success for Tie the Knot is the promotional function in order to gain market presence. Therefore, this business plan emphasises marketing in detail, using a variety of respected models in advertising and psychographic methodologies to describe how the business will position itself among growing volumes of competition. Another critical factor is the social condition in the existing wedding planning market, as consumer emotions, values and attitudes will be paramount to achieving effective referrals for future business. The business plan structure therefore focuses intently on consumer characteristics and consumer behaviour models to illustrate how the business will achieve relationship development with identified target markets. In this business, it is the intangibles of service delivery that make the most difference with buyers. Intangibles are those elements of service delivery that consumers sense prior to making a final purchase (Hoffman and Bateson 2009). Tie the Knot is also operating in a high risk environment in which there are many supplementary needs for competent risk management. The business plan therefore focuses on what factors and costs are associated with risk evaluation, using strategic management models to justify and critique the business’ approach to building a successful start-up organisation. 1.1 Objectives Be esteemed as one of the top five wedding planners in the London area by 2014 Establish a vision and mission statement, coupled with value proposition, which positions the business uniquely among competition. Gain three percent of wedding planning market share by 2015. 2.0 Industry statistics The 2011 Real Weddings Survey using a sample of 18,000 brides indicated significant opportunities for Tie the Knot. The average cost spent on weddings was £27,021, including facilities, catering, photographers and many other supplementary services (Jaeger 2012). Of this expenditure, £1,753 was allocated to the outsourced services of wedding planners (Jaeger 2012). As economic conditions in the UK and abroad continue to improve slowly, brides and grooms are less concerned about finances and are increasing their budgets for wedding planning and necessary wedding services to create an unforgettable moment. The job outlook for wedding planners between 2010 and 2010 is 44 percent with an estimated 31,000 new competitors being added to the job market in this time frame (BLS 2012). With such a high outlook for outsourced planning servicers, there are opportunities for long-term longevity in this market as demand for planners continues to escalate. 2.1 Market segmentation and characteristics In order to build the brand required to successfully outperform competitors, Tie the Knot must select the appropriate target consumers. Illustration 1 outlines the market segments and their expected share of buying. The business will be seeking out the Baby Boomer market, a market with grown children and with higher resources available. Baby Boomers, in today’s market, want lavish and flashy parties to celebrate their children’s weddings and other special events (Entrepreneur 2013). Baby Boomers often pay the majority of wedding expenses, thus it is imperative to understand this market’s lifestyle, attitudes and values in order to build relationships. Illustration 1 outlines the other market share associated with identified target markets available for Tie the Knot. Illustration 1 – Market Segments (Pie) The business will utilise what is referred to as psychographic segmentation, which is a holistic marketing effort aligned with attitudes, emotions and lifestyles of buyers (Boone and Kurtz 2007). To establish a powerful brand, the business must, first, establish relationships with customers and this requires transparency and trustworthiness as a foundation (Goodson 2011). Furthermore, the 25-34 year old markets are known to be content with their lives. This market category gravitates toward premium products in order to justify their identities and prefer luxurious products and services (Executive Digest 2008). The wedding and wedding planning industry is, by design, opulent and flashy and understanding what drives purchasing behaviour of this market that is expected to encompass 40 percent of all customers is critical to establishing relationships identified by Goodson (2011). The 35 to 55 year old market segment also maintains very high resources compared to their younger counterparts, however many have already established families and married. Thus, this market is projected to encompass only 20 percent of all buyers, but might likely contribute more expenditure toward the planning function through higher resource availability. 2.2 Targeting strategies The most important higher resource markets, the Baby Boomers, maintain purchasing decision behaviour that aligns products and services with their ethics and personal values (Myron 2012). Since this market represents the most viable market for improving profitability, all marketing efforts must be aligned with their values. Fortunately for Tie the Knot, most consumer markets are not aware they are driven to purchase based on motives (Blackwell, Miniard and Engel 2006). This gives the management of the business a competitive advantage by having in-depth knowledge of motivational theory in psychology that can translate into better and more effective relationship management. It is why branding is so critical to this business, as this function illustrates a sense of continuity between business values and consumer values to “nurture and innovate market-based assets” (Abimbola 2001, p.98). Tie the Knot will not be able to effectively reach its target consumers and establish trustworthy relationships without illustrating how the business can improve their social condition and ethical needs. 3.0 The business’ pricing structure Pricing will be critical to maintaining competitive advantage and also to make Tie the Knot appear valuable to the target consumers. It is intended for Tie the Knot to position the company according to premium quality, which serves as justification, long-term, for a higher pricing structure. When a business is able to build loyalty, customers are more willing to pay premium prices and provide superior advertising through word-of-mouth (Chaudhuri and Holbrook 2001). The first foundational effort is to build a solid business reputation with the most profitable markets that will allow the business to establish premiumisation in the pricing models. The following reflects a projected pricing structure for planning services with each market identified: Consultation Services £700 Full Package Planning (facilitating total holistic wedding services from start to completion) £3200 Partial package planning £1650 Management of integrated wedding service contractors/experts £600 Budget planning with product fulfilment £900 Facility development and management £1100 Decorations planning and facilitation only £700 Under some of these package schemes, the customer will be responsible for all elements of the supply chain in their contracted events budget. Under the full schemes, the business will absorb these costs to ensure complete fulfilment of the celebratory environment, management, tablecloths and other facility-related decor, and similar relevant supplementary products and services. In some cases, the sole trader will take on only the responsibility of managing different contracted experts involved in the wedding simply to ensure smooth facilitation of the event. 4.0 Start-up costs The business will need to maintain an office where walk-in patrons either on referral or through promotion are able to engage with the business. The main rationale for why consumers select a wedding planner is because they lack the time and knowledge to conduct these complicated activities themselves (Kimball 2011). Thus, they need a place (the servicescape) that provides the aesthetic appeal needed or premium pricing and premium brand identity. Furthermore, this industry is largely driven by referrals from other satisfied customers and certain markets strongly value the opinion of their colleagues when making this type of decision to outsource planning (Schultz and Doerr 2009). Referrals must have a point of contact to be interactive with the planner and will not likely make a final purchasing decision without this face-to-face sales environment. Tie the Knot will be procuring loans from local London banks with a 15-year repayment structure. As this is a privately-owned business, it will not be building additional capital through share issuance in a public trading forum. Table 1 – Start-up Requirements Rent £1400 Technology systems £1800 Legal £1200 Insurance £1800 Party pack inventories £5000 Utilities £400 Multi-line telephone services £400 Tie the Knot branded vehicle £22,000 Total Start Up Needs: £34,000 5.0 Cash flow To come up with an average purchase price per service encounter, Tie the Knot took all services and divided by the number of services to find a median price. This is £1,265. Under the assumption that the business will be servicing at least 110 customers annually, total annual revenues total £139,150. After considering all average revenues and costs, the business will sustain a positive cash flow of £62,340. Labour payments are reflected on the cash flow as a periodic (variable) cost as labour usage will rely on part-time employees that are utilised only during the service activity and not as in-house regular staff. These functions will be managed by the wedding planner sole trader. 6.0 The marketing function Place is one of the most important elements for the business. The sole trader will be establishing an office in a commercial district in London with a higher rent reputation that caters to the higher resource consumer. Monthly rent at £1400 allows for an 800 sq. foot facility that will be developed with a superior servicescape for aesthetic appeal. The size will also allow for a more intimate encounter with the planning manager that will assist in building trust and relationships. The start-up costs associated with inventories will also cover installation of marble fixtures, high-end curtains and draperies, and the furnishings required to facilitate a more aesthetically-pleasing service encounter with referrals and other walk-ins. By designing the business interior to look like a sophisticated wedding-centric environment, Tie the Knot will gain more consumer respect that assists in building a final purchasing decision. Promotion will be vital to the business. The company will be using direct mailing pamphlets highlighting wedding planning service reliability, experience in this industry with Tie the Knot, and a phone number and address by which to get a customised quote. There will be no discounting in this venture as this can cheapen the business reputation which would conflict the premiumisation strategy in place for Tie the Knot. Various press releases will also be developed to highlight certain events with notable social actors in London, providing even more visibility in the market for the business. 7.0 A breakeven analysis The equation for breakeven analysis is: BE = Fixed costs / (Unit selling price – Variable costs) It has been determined that the fixed costs for Tie the Knot are inventories which are allocated at £1000 monthly for party pack products, advertising at £200 monthly, rent at £1400, utilities at £150 monthly, and £150 allocated to gasoline monthly. Fixed costs, in total, are £2900 monthly. Variable costs include labour payments and telephone services which will fluctuate monthly per usage. Unit selling price was determined by taking the average monthly revenues of £11,595 and dividing this by 30 days. Average selling price is £386. BE = 2900 / (386 – 102) = 10.21 customers per month 10.21 x £386 = £3,941 In order to break even, the business must service at least 10.21 customers monthly at an average selling price of £386 to earn £3,941 monthly. This is definitely achievable as the lowest price structure for any product or service at Tie the Knot is £600. The breakeven total was achieved by taking into consideration all operational expenses and average monthly revenues expected divided over a 30 day period. All other cash receipts over £3,941 will achieve profitability for this business. 8.0 Risk assessment strategies This business has many liabilities associated when dealing with the public in a variety of food service facilities and other public facilities. Insurance and legal services at start-up include £3000 worth of expenditures combined which is to cover the business in the event of consumer slip and fall, food poisoning, or a variety of problems that often occur unforeseen in this business industry. To reduce risk of higher insurance rate premiums caused by improper planning, Tie the Knot will consult with the Health and Safety Executive and legal representation to determine how the business can build a culture of safety and protect clients whilst also protecting personal liability. The role of the sole trader is much like that of a project manager that must ensure safety of all recruited employees during the service encounter. To facilitate knowledge of how to improve the safety environment, the sole trader will also consult with reputable journals and industry publications that identify opportunities to remove business risk. Higher insurance premiums could radically reduce profit achievement, thus the business must be ever-aware of how to remove all liabilities in the service model. 9.0 Conclusion The service industry is complicated as there are so many unique behavioural components involved when attempting to build market interest and attachment to the business brand. Shiffman and Kanuk (2010) reinforce that consumers often rely on their own personal stereotypes and physical appearances when making a final purchasing decision. This means that Tie the Knot must be constantly aware of what drives attitudes and prejudices with certain markets and either remove them from the business model or exploit these in advertising concept development. To combat further risk, the business will be conducting regular customer satisfaction surveys and questionnaires and also interviewing previous customers to find out about their perceptions of the service experience. These interviews will help the business understand the complex behavioural elements of certain markets to build a promotional strategy to better attain their interest and loyalty. To measure an attitude, a person must rely on inference and cannot rely on quantitative statistics (Henerson, Morris and Fitz-Gibbon 1987). Since promotion and relationship development are so critical to success of this new business, engagement with markets during their evolutionary social changes will be paramount to achieving success in the venture. With market research being conducted, along with regular risk assessment, Tie the Knot can emerge a recognised and respected wedding planner in the London area. References Abimbola, T. (2001). Branding as a competitive strategy for demand management in SMEs, Journal of Research in Marketing & Entrepreneurship, 3(2), pp.97-106. Blackwell, R.D., Miniard, P.W. and Engel, J.F. (2006). Consumer Behaviour. Mason: Thompson South-Western. BLS. (2012). Occupational outlook handbook: meeting, convention and event planners, Bureau of Labor Statistics. [online] Available at: http://www.bls.gov/ooh/Business-and-Financial/Meeting-convention-and-event-planners.htm (accessed 17 March 2013). Boone, L. and Kurtz, D. (2007). Contemporary Marketing, 12th ed. UK: Thompson South Western. Chaudhuri, A. and Holbrook, M. (2001). The chain of effects from brand trust and brand affect to brand performance: the role of brand loyalty, Journal of Marketing, 65(2), pp.81-93. Entrepreneur. (2013). Chapter 1: The events planning industry. [online] Available at: http://www.entrepreneur.com/downloads/guides/1313_Event_Planning_ch1.pdf (accessed 16 March 2013). Executive Digest. (2008). How to market to the over-looked 25 to 34 year old age segments. [online] Available at: http://www.marketing-execs.com/news/11-08/2.asp (accessed 17 March 2013). Goodson, S. (2011). Is brand loyalty the core to Apple’s success?, Forbes Magazine. [online] Available at: http://www.forbes.com/sites/marketshare/2011/11/27/is-brand-loyalty-the-core-to-apples-success-2/ (accessed 15 March 2013). Henerson, M.E., Morris, L.L. and Fitz-Gibbon, C.T. (1987). How to Measure Attitudes. Newbury Park: Sage. Hoffman, K.D. and Bateson, J.E.G. (2009). Services Marketing: concepts, strategies and cases, 4th ed. Mason: South Western Cengage. Jaeger, C. (2012). Wedding Industry Statistics: Real Wedding 2011 survey release by the Knot. [online] Available at: http://weddingindustrystatistics.com/ (accessed 16 March 2013). Kimball, C. (2011). Start your own Event Planning Business: Your Step by Step guide to success. Entrepreneur Media Corporation. Myron, G. (2012). Conscientious consumption, Journal of Marketing Management, 19(2). Schiffman, L.G. and Kanuk, L.L. (2010). Consumer Behaviour, 10th ed. Upper Saddle River: Prentice-Hall. Schultz, M. and Doerr, J.E. (2009). Professional Services Marketing: how the best firms build premier brands, thriving lead generation engines and cultures of business development success. Hoboken: John Wiley and Sons, Inc. Bi-Annual Cash Flow Forecast Tie the Knot Wedding Planning Services Pre-Startup EST May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 Total Item EST Cash on Hand (beginning of month) 34,000 3,200 8,545 13,890 19,235 24,580 27,425 32,770 38,115 43,460 46,305 51,650 56,995 56,995                               CASH RECEIPTS                             Cash Sales 0 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595   TOTAL CASH RECEIPTS 0 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595 11,595 0 Total Cash Available (before cash out) 34,000 14,795 20,140 25,485 30,830 36,175 39,020 44,365 49,710 55,055 57,900 63,245 68,590 56,995                               CASH PAID OUT                             Inventories 5,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000   Office Supplies 200 50 50 50 50 50 50 50 50 50 50 50 50   Advertising 200 200 200 200 200 200 200 200 200 200 200 200 200   Car, delivery & travel 22,000 150 150 150 150 150 150 150 150 150 150 150 150   Legal Services 1,200 0 0 0 0 0 0 0 0 0 0 0 0   Rent 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400   Telephone services 400 50 50 50 50 50 50 50 50 50 50 50 50   Utilities 400 150 150 150 150 150 150 150 150 150 150 150 150   Wages 0 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000   SUBTOTAL 30,800 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 0 Loan principal payment 0 250 250 250 250 250 250 250 250 250 250 250 250   Capital purchase (specify) 0 0 0 0 0 2,500 0 0 0 2,500 0 0 0   TOTAL CASH PAID OUT 30,800 6,250 6,250 6,250 6,250 8,750 6,250 6,250 6,250 8,750 6,250 6,250 6,250 0 Cash Position (end of month) 3,200 8,545 13,890 19,235 24,580 27,425 32,770 38,115 43,460 46,305 51,650 56,995 62,340 56,995 As illustrated by the cash flow forecast, the business, after all expenses and revenues achieved, will achieve a cash flow at the end of Fiscal Year April 2014 of £62,340. This is within industry expectations and norms for a start-up, sole trader business. Read More