Analysis of Retail Discount Store Business - Example

Business Plans Name Class Unit Executive summary This report looks at two business plans and gives a short description of each. The two businesses are AdGrove.com which is an online advertising intermediary and Dollar store which is a retail store. The report looks at the strength and weakness of each report and analysis them. . The main strength in Dollar store report lies in an elaborate financial summary, adequate market analysis and marketing strategy. For the AdGrove.com, the main strong points are market analysis, market strategy and management analysis. The main weakness of the business plan on Dollar store lies on financing, competitor analysis and personnel plan. The main weakness of report on AdGrove lies on competitors’ analysis, long start up time and lack of mission and vision. The report suggests that both business plan should improve on environmental analysis and look more into opportunities and challenges. The report also notes that the business plans have well defined source of their start up revenue. The lessons learnt about a good business plan is that they should have a good industry analysis, identify key business issues, elaborate financial plan, market analysis and should be clear. The report concludes that despite the drawbacks, both reports are clear and have a detailed market analysis. Brief Description Retail discount store (Dollar Store) The business plan gives the details on start up of a retail store. The location of the store is in Bend Oregon. The store plans to get its funding from the private investments which are identified as Ted Brinkman and Jim Spencer. The business plans to donate an equity which is to be cleared within a period of 36 months. The business is to be incorporated as an LLC corporation. For the company investors, they will be the shareholders and their liability will be limited to their own personal investment. The business majority owner is Ted Brinkman who will contribute personal saving. The business relies on an aggressive marketing plan that will enable it to have a steady growth. The business will be able to operate for a year with the financing in place. To cater for the needs of those in low income families, elderly and students, the business aims to create large and unique store from large owners’ investments. The customer base at the bend area is expected to be sufficient to support successful operation of the business. The business objectives are provision of large merchandise at fair prices, healthy profit margin in a year and modest profit in second year, be an active member in society. The business mission is providing variety of merchandised at a bargain price. The company mission is also based on provision of satisfactory services to the employees and fair compensation (Retail Discount Store Business, 2014). AdGrove.com Adgrove.com is an online advertising intermediary. The company provides a one stop shop which has information on the demographics, rates for the ads, campaigns’ for ad scheduling, buying ads, creative development and making sure they reduce the costs for both sellers and buyers and time for transactions. The company location is at Austin Texas and its online presence is www.AdGrove.com and is dedicated for the needs in small business. The company uses a user friendly website to provide both free and fee based services. The business customers are the advertising buyers and sellers. The company first target is the buyers and sellers who use advertising space in radio. The company invites qualified buyers and sellers to join its community with free membership. The members are provided with an account that enables them to have access to customized and valuable services. The company website is rich in information that makes it which enables the strategies being developed to be cost effective. The customers are also able to benefit from buying discounts and participate in discounted over capacity ads. The company acts as the third sales channel for radio stations which complements their national and local sales. The company offers the radio stations access to the market on a 24 hour basis. The company utilizes two forms of bussiness which are advertising and business to business electronic commerce. The company has great opportunity due to the growth in the advertising industry. The main competitors to the company are BuyMedia.com and AdOutlet.com. The company expects to receive profitability during the third year due to high investment involved in the first and second year (AdGrove.Com, 2014). Identification of the three strongest components of each plan AdGrove.com strengths The business plans have well analyses the market opportunities available for the company. The business plan has strategized the company as an intersection between two markets; advertising and business to business e-commerce. This is a market that is growing at a great rate. The plan has researched on this area and come up with the current figures. A good business plan should be able to look at the available market and analyzed it. The analysis should be carried out using the current market figures and tables. This plan have looked at the advertising market and given its market worth according to current figures as $17.7 billion. The business plan has also listed the number of the radio stations that are available and the major market. The business plan also uses strategic planning to come up with the expected growth of the advertisement sector. Use of strategic planning is important in a business plan. This is a process that involves determine how a business situation will look in a specified future period (AdGrove.Com, 2014). Another strong point for the business plan is its market strategy. The business is based on strategic partnership, public relations and educational relations to attain a good market base. The business plan have already identified the strategic partners whom to forge partnership with. For example, the company has already identified Radio advertizing Bureau as a strategic partner. The company also aims in forming alliance with U.S Chamber of commerce which is one of the world largest business federations. The US chamber of commerce represents 96% of the small businesses which gives the company a large market base. The business also aims at driving volume to their website and converting them to customers. Having a well laid out marketing strategy gives the company an upper hand in establishing a market and creating brand awareness. For a new company, strategic marketing plays a great role. The marketing strategy will ensure that the business is able to target the customers more strategically and maximum utilization of resources (AdGrove.Com, 2014). Another strong point in the business plan is the fact that it has analyzed the management strength and weakness. This gives them an upper hand in knowing where to improve on management, how to utilize their talent and coming up with an appropriate structure. The business plan has looked at the expertise that is held by each of the management personnel carefully which justifies their position. Each of the personnel in the management is well versed with their field as well as business operations. Their qualifications are related to their business which will enable ease of management (AdGrove.Com, 2014). Dollar store strengths For Dollar store, the three strong components are; an elaborate financial summary, adequate market analysis and marketing strategy. The report has a detailed financial analysis which gives all the sources of money required. There are financial breakdowns on all the aspects of the business which makes it easy to determine how the raised revenue will be utilized (Retail Discount Store Business, 2014). The report gives all the required details on the market analysis. The analysis looks at the market to be tapped, its potential and the type of pricing that will attract the customers. The company has a target market in mind which us the lower income portion. The plan is also elaborate on market segmentation which shows how to target the market appropriately. The targeting looks at the price conscious segment of consumers (Retail Discount Store Business, 2014). The company marketing strategy looks at sales promotions and mass selling. There is a clear focus on the marketing with an effort being put on the consumers who needs a store that can provide variety of goods at fair prices. This has helped the company to be able to centre all the efforts on sales promotions and personal sales (Retail Discount Store Business, 2014). Identification of the three weakest components of each plan AdGrove.com weaknesses Weakness of the AdGrove plan lies in three areas. One of the areas is the competitors’ analysis. The plan does not fully analyze the competitors available in the field. AdGrove looks at only two competitors who are have been launched recently. Though the company uses differentiation to gain a competitive edge, there is need to use other methods to gain a competitive advantage. The business plan fails to look at all related business in the field of radio advertising (AdGrove.Com, 2014). The company start up plan is designed to take a long time. For the company to start officially, it will take two years. This may lead to a lot of revenue being used in the first and second phase which can be avoided. The company should reduce the start up time to reduce the startup expenditure (AdGrove.Com, 2014). The business plan fails to give its mission, vision and objectives. The three concepts are very important when writing a business plan. This is due to fact that once a company have a mission and a vision, it becomes easy to direct efforts towards a common goal (AdGrove.Com, 2014). Dollar store weakness Dollar store have three main weaknesses which are in the financing, competitor analysis and personnel plan. The company requires a lot of financing in the startup but the means of raising the cash are not enough. The company intends to raise the cash through borrowing and owners investments (Retail Discount Store Business, 2014). The competitor’s analysis is not also very elaborate. The business plan has not analyzed all the competitors in the industry. Though the company depends on a competitive edge, the industry is congested and highly competitive hence need for more analysis (Retail Discount Store Business, 2014). The business plan also lacks credibility in some areas such as personnel plan. The salaries listed should only be used if the business has done enough research on the industry. The figures may not concur with the current pay standards (Retail Discount Store Business, 2014). Suggestions on how the business plans could have been improved Both business plans have to look more on their business environment. Environment scan helps the business to relate to the external environment. This can be achieved through a SWOT analysis of the companies and the competitors. Through this, the business plans will have a good overview of their competitors. Both reports have weakness in analyzing their competitors appropriately. Dollar store does not analyze their competitors while AdGrove have not fully analyzed their competitors. Competitor analysis should be looked at by both plans and be improved (AdGrove.Com, 2014). Both reports should also look deeply into the opportunities and challenges that may be faced by those funding them. The resources and funders play a major role in any business. The plans needs to look at the critical success factors associated with each business. This is through considering the factors that are necessary for the company to attain success in future (AdGrove.Com, 2014). Challenges Each plan requires adequate financing but there are not enough sources. The two businesses are likely to face challenges as they look for finance. This is due to fact that there is need for more capital during start up. For both businesses the first round financing is high. For example, AdGrove requires $2 million in their first round financing (AdGrove.Com, 2014). The Dollar Store requires high start up costs which they want to finance from the combination of owners investments and short term borrowing (Retail Discount Store Business, 2014). Due to high costs involved for start up, the companies should look for more sources of finance. This can be done through looking for long term loans and strategic partnerships. Another challenge for the new business is time needed for the business to establish a client base. For AdGrove, the company is set to start making profits after three years (AdGrove.Com, 2014). The same happens to Dollar store who expects to start making profits in the second year though minimal (Retail Discount Store Business, 2014). The companies should lay out a comprehensive marketing plan that will enable them to increase their client base in the shortest time possible. Source of finances in both plans Both businesses have different sources of finances. For Dollar store, the company will require $ 3,000 for the lease in a period of four years. The company aims to finance their start up cost through owner investments and short term borrowing. The startup expenses for the company are at $13,000, total assets of $73,500. This means that the business have to look for total requirements of $86,500 (Retail Discount Store Business, 2014). For AdGrove, the company requires $2 million for the start up. The company will not be able to make profits in the first two years. The financing will give the investors a return on investment (ROI) of 70%. The company wants to derive its primary revenue from transaction fees on radio advertising spots brokerage and sales (AdGrove.Com, 2014). The company also expects to get fees from value added market research transactions and advertisement paid promotions. A statement of five lessons learnt about business planning. For a good business plan, there is need for scanning the business environment. This involves looking at the business strengths and weakness. In this aspect, the business have addressed the environment in which they are working in. this involves making sure that the plan looks at the business human resources, strategies and expected outcomes. The business plan should look at the critical success factors that are held by the business. The business plan should have the organisation values and principles. These are very important as they help in defining and differentiating the business. Business environment analysis should identify the strengths and weakness that are held by it. The business plan is supposed to identify the key issues and questions that are to be addressed. This would help in giving the issues priorities depending on their importance. A good business plan should have an elaborate financial plan. The plan should look at the sources of revenue and make sure it will be possible to raise enough startup revenue. In both business plans, sources of revenue have been addressed in an appropriate manner. Each report lays down its expenditure guidelines and where it expects to get the funding. This is done in a detailed manner with all the revenue required being tabulated. Market analysis is vital in any business plan. Analyzing the market enables the business to determine the expected returns and the market size. Both business plans have looked at the market analysis in order to come up with the projected sales. A good business plan should be elaborate and clear. The plan should be easily understood and have all the details available. Competencies demonstrated The business plans have been able to give a detailed market analysis. This involves looking at the available opportunities and coming up with an appropriate marketing strategy. AdGrove.com has an elaborate financial overview (AdGrove.Com, 2014). The business plan gives all the required expenditure for the business startup and the sources. The same happens with Dollar store that are able to give a clear financial breakdown as well as the sources for the finance (Retail Discount Store Business, 2014). Both reports are clear and comprehensive. Conclusion The two business plans are well drafted with appropriate information on business startup. Each plan has its own weakness and strengths. The main strength in Dollar store report lies in an elaborate financial summary, adequate market analysis and marketing strategy. For the AdGrove.com, the main strong points are market analysis, market strategy and management analysis. The main weakness of business plan on Dollar store lies on financing, competitor analysis and personnel plan. The main weakness of report on AdGrove lies on competitors’ analysis, long start up time and lack of mission and vision. Both business plan should improve on environmental analysis and look more into opportunities and challenges. The business plans have well defined source of their start up revenue. A good business plan should have a good industry analysis, identify key business issues, elaborate financial plan, market analysis and should be clear. The reports are clear and have a detailed market analysis. References AdGrove.Com. (2014), ‘AdGrove’. Retrived (14 August 2014), from ‘Center for Business Planning’, http://www.businessplans.org/AdGrove/adgro00.html Retail Discount Store Business. (2014). ‘Dollar Store’. Retrieved (14 August 2014) from ‘Bplans’, http://www.bplans.com/retail_discount_store_business_plan/executive_summary_fc.php Read More