Whether the Time to Party Is Financially Worthwhile and Should Be Given the Green Light - Coursework Example

Time to party An individual decision making process analysis project A repot to analyze and evaluate whether the ‘time to party’ is financially worthwhile and should be given the green light Word count: The contents of this report examine the business opportunity ‘time to party’, analyze and evaluate its financial capabilities. Form the analysis the project may be launched or shut down. In order to accomplish the above mission, there will be market research to finds its viability, creation of a project plan and the presentation of cash flows to justify the final decision. Introduction The business opportunity selected in this report was ‘time to party’. This business project involves the provision of catering service to people who intend to hold parties at their houses. This might involve anybody from young children, teenagers and adults. Also all sorts of catering services required will be made available via the workforce available from the company. The reason why the ‘time to party’ project looks viable is that many people like to have parties in the present time. However, most of these people do not have the time and manpower to organize and execute such a celebration. However, they might have the cash to pay for the service and that is where this project fits in. however, there is one unique feature about this business that separates if form the others. Time to party will prepare the ordered food away from the party venue and transport it there. This will help to avoid privacy invasion and will reduce the amount of activities in the venue. This will also help utilize other resources that are not in the venue but are available in the company. This is therefore an investment with a bright future. Business objectives There are two main objectives that the ‘time to party’ project aims to achieve. I. Make good profits from the catering services provided. II. Become the biggest home catering services in Sheffield The enlisted objectives provide just but the big picture. All will agree that much profits means expansion of the business. When the business expands and the name is well established, there will be much room for development in this project. In addition, becoming the biggest catering company will allow room for capacity to hold many events at once without breaking a sweat thus better profitability. Competitors In the world of business, there will always be other businesses to battle with for the market share and reputation. This greatly affects not only the profitability of the project, but the ability to run efficiently and stay in the same market segment. There are seven catering service providing companies in Sheffield I. Organic fusion II. The tiffin company III. Carols catering service limited IV. The milestone on the move V. Hazels catering limited VI. Coco catering limited VII. Deli venture catering limited The largest competitor for the ‘time to party’ project is the coco catering limited. This is a well-organized and well-funded business institution. They have a high profile physical and online presence and consumer preference. This is due to their flexibility and the high quality services they provide. They also have a well-developed website that gives all their information and allow for special bookings. However, they do not offer an online payment and ordering system for home deliveries on a daily basis and this is one of the loopholes that ‘time to party’ will exploit. In addition, time to party will offer a new service that is not on their service list. With these two major issues, ‘time to part’ has the power to stand against coco catering. Target audience This project mostly targets people who have the desire to celebrate many events, have the money to do it but lack the time, resources and man power to ensure a successful execution of an event. This will include adults that work and university students that hold celebrations such as birthday or any other. This is the majority group that falls among the top desired clients. However, the company will gladly offer any other person or any other organizations their service as long as they can pay for it. If the company manages to get half the, market share, then there will be assurance that it was a worthy project. Factors that may affect the operation and profitability of ‘time to party’ There are myriad factors that may impact the operation and success of this project in either a positive or negative way. This means that they have a direct impact on profitability, growth, success and ability of the company to survive in the market. The first major factor is the demand for the service; high demand results to high profitability while low demand will result to losses. The second factor is competition; much competition will result to minimal market share and that results to poor profitability. The third aspect is the location that the business will be situated. If the business is located on a strategic place then there will be high customer turnover. However, the online presence of the business is also to be considered as it will have great impact on profitability. The fourth factor is the cost of obtaining materials needed for the operation of the company. Other important factor that will greatly influence the project will be the availability of labor, taxes and market conditions. An influence diagram has been produced (see appendix 1) to help indicate the factors that could affect the business opportunity. Research and production For the evaluation of the project, there was need for research in order to obtain data necessary for the analysis phase. The data sought included startup costs, acquisition of equipment, and prediction of profits made. In order to achieve this, there was need for proper planning. KERZNER,(2010) says that the analysis done through the data obtained from the financial models, and sensitivity analysis will become the pillars upon which the decision to go along with the project or terminating it are held. This will based upon the finance stability and meeting of breakeven points. Explanation and evaluation of models used This process id done for the purpose of making sure that the business process will be feasible and successful. In this process there are a number of tools that are employed in the analysis of statistical data to ensure that all the checks and balances are good for business. Explanation and evaluation models will allow us to analyze whether ‘time to party’ is a business that can be able to initiate, run smoothly, bring profits and sustain itself with little or no intervention financially. Influence diagram An influence diagram is a tool for analyzing how the business will affect and be affected by the profits, revenues and losses of the business. This also analyses how the stakeholders of the business will be affected by the same occurrences. The influence diagram is aimed at ensuring the business has a complete image of the environment they will be operating in and therefore they will know which area to venture into and those not to. There should be a keen look into the positive aspects of the business that needs to be maximized for total success. In addition to this there should be a thorough look up at the negative sides of the business operation that should be avoided at all cost and if that is impossible, then they should be minimized. This is a very good tool when it comes to evaluation; however it has a major disadvantage. It gives the organization very may factors to look at, and that might lead to a deviation of the initial project proposal. The major advantage is that a keen looking into all the stated factors will delete any miscalculations that may lead to poor performance of the business later in time. Project planning Many will agree to the fact that there is no plan or project that can be well executed and achieve success without a proper plan in place. It is therefore important that there be a good plan for ‘time to party’ as a project in order to ensure that everything is realistic and achievable. In essence, planning is therefore a process of attaining balance between the project and the project in place and the product to be produced. According to WYSOCKI (2012)Creating a balance between these two major factors will ensure that business remains profitable. Planning is a very crucial process because it allows people to identify the weaknesses of the project. Identifying the weakness allows one to either avoid the weaknesses or find a way to deal with them. After removing all the weaknesses, planning allows us to focus on the strengths of the project. Strengths of any project are crucial because they determine the profitability and sustainability of any project. Once a project is profitable, then there can be looks at the feasibility of the project, its ability to grow. If all the facts are put right, then the project is headed towards the correct direction. Advantages of project planning by far outweigh their disadvantages. Planning is very crucial and there is no way a project will be successful without planning. Planning helps create order into how things are done. Planning helps identify various aspects of the project that might be forgotten yet crucial for its success. Planning also helps create documents that can be used for reference later in time during or after implementation of the project. Planning also helps in the creation of time for every activity in the project and how to source for funds. If the timing of even a single process is affected, there are high chances there will be interference in time or money. Finally an advantage of planning is that it gives room for exploring many tools, techniques and options that can be incorporated to ensure the project is successful. Looking at a couple of aspects makes it easy to deal with problems because there is always a backup plan in place. However, there are some disadvantages of planning. For example people tend to over plan more so when it comes to the budget of kick starting and maintaining the project. This usually leads to deficiencies during the starting phase of implementing the project and may pose adverse effects to the success of the project. Financial model As the name suggests the financial model deals with the financial aspects of any project. There are many tools to be utilized in financial modeling such as NVP, cash flow and revenue forecast among many others. The NVP is very essential. This is because it allows for the company to calculate the profits or losses incurred and thus allow them to view or predict whether the project is bringing in money and whether it will be able to repay the initial investment. Through such an analysis, the managers will be able to see whether to continue with the business or stop. Another important tool used in financial modeling is the cash flow document. This will simply analyze the flow of money into the business. In essence, it will indicate whether too much money is used in running the business or there is enough money to run the business and get much returns inform of profits. The cash flow will also show whether the business is running on total losses instead of creating revenue. Finally there is the use of the revenue forecast. As the name suggest the revenue forecast is all about playing with figures so as to ensure that the investment moves as the manager’s desire or as initially planned. The managers will know whether to increase an investment on a specific part of the business so as to obtain more profits depending on the market forces. They will also know whether to reduce or stop investment on certain products or services because they are doomed to failure. Financial modeling has advantages and disadvantages just like any other tool of analysis. Starting with its advantages, KERZNER, H. (2013) says that there is no doubt that it will assist in predicting the future of any business through financial forecasting. This will enable to plan for the future despite living in the present. Secondly, the NVP will allow for the business to know its progress overtime say every month. Since it can show whether there was profit or losses, then it will allow for necessary adjustment an analysis of the factors that causes the effects experienced. Finally the cash flow will allow for a real time analysis of the business and that will allow for constant adjustment to ensure that the business moves as intended. There are a couple of disadvantages in the financial modeling tool. First, a poor analysis of the figures can lead to a poor decision making situation. For example if the company did not bring any income in the past three months, then an investor would want to pull out of the business. However, this might have not been caused by lack of customers or poor sales, but because money on the income was being spent on expansion of the business. A person who does not have an analytical mind may easily ruin a project. The second disadvantage is on the cash flow. For example the business might indicate a week of no profits deposited to the bank and that is not good news. An investor might have doubts on the business; however, the money may have been used for restocking purpose due to increased number of customers/ increased market demand. All in all financial modeling is very crucial for the purpose of gaging the progress of any project and making predictions for future planning. Analysis of finance In order for ‘time to party’ to run efficiently there are a number of resources that needs to be acquired. First there will be the need to rent a building in which the cooking, the equipment storage and offices will be held. This will ensure that the business will be able to run efficiently and that people will be able to get access to it. The total cost for renting a space that will serve the business well is estimated at 200€. The total coat for a whole year assuming there will be little or no changes in rent results to 2400€. I addition, there will be need for purchase and maintain a van which will be used to ferry food to the site where the party will be held. The total sot of buying a good van and maintaining for a year will total at 5000€. There will also be the need to get employees that will be paid a total of 1000€ every month. Finally, an estimate of 4500€ used for catering materials will be bought. Therefore the total expenditure for the first month of operation will be 12900€. The estimated service per customer ranges from as lows as 200€ and to as much as 1000€ and beyond. Based on the research gathered, late November into December is usually a festivity season and thus there will be high chances that the business will experience a great profit of around 35% for its first month of operation. This will be mostly from adults who seek to hold celebrations for their families. The school children are not targeted during this period because they will be out of school for the holidays. However after the public is aware of the services offered by ‘time to party’ it is estimated that the profits will shoot greatly to double the initial, resulting to 70% of profit. Deducting the profits from the operational costs such as transport, rent and payment of employees, it is estimated that the project will be able to input at least 3000€ every month and that means that after four months, the project would have arrived at its breakeven point. There is therefore no doubt that this business if worth the try. Conclusion There will be no need to initiate a project that will not be able to reach a break-even point and start giving proper profits to its owner, however, ‘time to party’ does not only show a unique potential in its operations, but also its ability to bring back profits fast and expand its operation. After a series if data analysis, it is estimated that the company can produce a minimal profit of 36000€ a year. This is by far much than what was used to develop it and put it in place. I addition, the project requires minimal effort to start it with a few numbers of employees, yet it is very promising. The business will also be able to reach its breakeven point in less than five months and everybody will agree that that is very impressive. This project also requires very little capital to start up and will hardly cause financial strains to its investors. All one needs is a van, an office, few workers and all is good to go. The simplicity of setting up the business gives any investor an ample time with limited stress to come up with the business and initiate it. With even a little advertisement, this project can be able to do wonders. There is great future for the ‘time to party’ project. There is good demand for the services offered and the dynamics of today’s world make it very easy for anybody to seek the services of the company. Easy setup and operation gives little room for failure as everything is straight forward and crisp clear. There is no doubt that there will be success if the project is implemented. References KERZNER, H. (2013). Project management: a systems approach to planning, scheduling, and controlling. Hoboken, New Jersey, John Wiley & Sons, Inc. NICHOLAS, J. M., & STEYN, H. (2008). Project management for business, engineering, and technology: principles and practice. Amsterdam, Elsevier Butterworth Heinemann. GIDO, J., & CLEMENTS, J. P. (2012). Successful project management. Australia [etc.], South-Western Cengage Learning. WYSOCKI, R. K. (2012). Effective project management traditional, agile, extreme. Indianapolis, IN, Wiley. ROSENAU, M. D., & GITHENS, G. D. (2011). Successful Project Management a Step-by-Step Approach with Practical Examples. Hoboken, John Wiley & Sons. NICHOLAS, J. M., & NICHOLAS, J. M. (2004). Project management for business and engineering: principles and practice. Oxford, Butterworth-Heinemann. RAD, P. F., & ANANTATMULA, V. S. (2010). Successful project management practices. Bingley, Emerald. MEREDITH, J. R., & MANTEL, S. J. (2012). Project management: a managerial approach. Hoboken, NJ, Wiley. WILLIAMS, M. (2008). The principles of project management. Collingwood, Vic, Sitepoint. KERZNER, H. (2010). Project Management Case Studies. Chichester, John Wiley & Sons, Inc. http://www.msvu.ca:2048/login?url=http://www.msvu.eblib.com/patron/FullRecord.aspx?p=624550 Appendix 1 Appendix 2 Read More