Feasibility Analysis - Example

AFM324 
Small Business Management Feasibility Analysis Yaxin Tang 220115582Roxana Gu 220119231 Sunny Sun 220102892 Justin Zhao220115754 Unit Coordinator: Bernice Kotey Submit Date: Monday, 22 June 2015 Length: Executive Summary Owning a massage store has been became a familiar business, which prefer to provide professional services for consumers and helping customers to reduce their painful and stresses. The small massage health care has a professional masseurs team and located in South hill, which near by some quiet communities in Armidale. Opening each day to provide better and convenient services with customers. A small horse is enough for our daily business and with lower rent to decreasing our business costs. This is a traditional Chinese massage business that we prefer to find some professional, patient Chinese masseurs. Within some high quality traditional Chinese medicines and professional massage services, customers will have an enjoyable service and experience in our business store. Furthermore, we also have extra visiting services, which provide maxima benefits to consumers and take care some disable customers. In addition, focusing on girls’ pursuit of beauty, we also have unique services of weight control and make up. This report will analysis the target market in Armidale and discusses current and future trends with massage business. Moreover, we will identify the opportunities and weakness within other five main competitors. Table of Contents A description of the business idea..................................................................................4 The Industry ..................................................................................................................4 Key Driving Forces .......................................................................................................4 Trends............................................................................................................................ 5 Key success factors........................................................................................................6 Opportunity pursued ......................................................................................................6 A description of target market covering.........................................................................7 Purchase decision factors.............................................................................................. 8 Current market size and sales potential for massage therapy....................................... 8 Factors affecting sales....................................................................................................9 1. A description of the business idea This business idea involves setting up a massage club in Armidale by the name Armidale Health Care that will help people reducing their stress, pain and mussel tension, which would let customers better to enjoy their life. Armidale is a smallquiet city with around 25,000 people (ARMIDALE FACTS & FIGURES, 2008). People who live in Armidale prefer to find a place and a suitable way to enjoy their life and relieve their stresses from daily work and daily life. In order to satisfied people’s need, we have a massage business plan in Armidale to providing professional services for customers. 2. The industry 2.1 Key driving forces Professional massage business relies on stable incomes and fixed customers. According to a research by Sandra et al. (2013), there are four driving forces with consumers. 1. Massage services are used for their health management, the expectation and result of positive outcomes. 2. Their treatment purposes are met. 3. Regular appointment. 4. The "massage therapy culture" or the massage therapy experience is described as positive consumer—therapist relationships, effective touch and a proactive approach to health maintenance (Sandra.K et al, 2013) Based on the above driving forces, it seems significant that massage therapy is not only an assist industry with medical science, but also being a popular relaxed style into people’s daily life. 2.2 Trends Massage therapy has a long time history, which could be found in approximately 3,000 BCE, possibly earlier. According to the earliest written records of massages therapy (History of Massage Therapy, n.d.) texts recording the medical benefit of massage therapy date back to around 2700 BCE in China. The purpose of Chinese massage methods was reducing people’s diseases and illnesses. As the development of massage therapy in the last 5,000 years, massage therapy always find a way to help people reduced their pain and diseases, which was being a useful part of medical science. However, the future of massage therapy is not only a sample function for reducing people’s disease and illness, but also being a new popular life style for people who want to relax or reduce their stress which comes from their daily work and life. Recently, a number of massage therapy industries has been developed. Healthy care or personal services take a large percentage in massage market. Some practitioners provide their personal massage therapy in different places, such as home-based practices, private clinics, spas, and high-end resorts. Furthermore, in order to take an easier massage therapy at any time, chair massages were developed and famous in the market (The future of massage, 2008). 2.3 Key success factors 1. Suitable locations and providing an enjoyable atmosphere. 2. Strict aseptic products and healthy inside environment. 3. Fixed customers who would like to usually coming. 4. Provide a unique service which other massage store lacked. 5. Having a professional masseurs team. 6. Matching with Chinese traditional medicine, using with Chinese developed massage abilities. 2.4 Opportunity pursued The location of Armidale Health Care Club are unlikely with other most massage stores in city center, it located in the South hill, which near some communities. It gives Armidale heath care club a chance to attract more potential consumers and avoid the competition with other old massage businesses. Furthermore, other massage stores, which located in the city center, have already attracted most fixed consumers. In contrast, South Hill does not have many massage businesses which means Armidale Health Care Club could have less competition and more potential consumers than others. According to the questionnaire survey, no more massage businesses sales massage chairs, recently. If Armidale Health Care Club (AHCC) could add this selling service in the future, it will also help AHCC to attract more consumers and increasing revenues. 3. A description of target market covering In an email communication on 16 June 2015, Jieqiong D., who has a part time job in Armidale Chili Health Club, introduced the club’s situation. The main customers in her club are around 40 years old and with an equal percentage of men and women. The normal diseases with customers are necks, shoulders and back of the body. Therefore, the target client of massage therapy can be any aged between 18~60 years old, and the main client group will target the middle aged, office worker and athletes, etc. Firstly, Healthy Care Massage Club will target the middle-aged people and office workers. With a stable salary and incomes, they would prefer to promote their health and take care of their physical, which makes them spend money to improving their life’s quality. According to research by WebMD Archive (Leanna S.), nearly half of the middle aged population are affected by arthritis, osteoporosis, cardiovascular disease and diabetes. With kinds of complications, they tolerate the pain day by day. Massage therapy would be an efficient way for them to reducing their painful and decreasing their illness. Focusing on the athletes in Armidale and care about their pain and muscle stress. According by the research of AMTA (2014), sports massage therapy would improve the rate at which the body recovers from injury and illness. Regular sports massage could be reducing the rate of injury, improve range of motion and muscle flexibility, resulting in improved power and performance, shorten recovery time between athletes’ workouts and also enhance elimination of metabolic by-products of exercise. For instance, a professional masseur would be familiar with each muscle of the body and how the specific movements or stresses of each sport affect them. Purchase decision factors The factors of clients’ purchase decision are discussed as below: 1. The frequency of pain and disease. 2. Relieve consumers’ stresses. 3. Keep healthy and weight control. 4. As became a part of popular life style. Current market size and sales potential for massage therapy According to the research of massage therapy in Australia by Brown & Bonello, (2014), 67.1% respondents were female clients around the 45- to 64-year age group. 68.7% musculoskeletal disorders patients have been accepting the massage therapy. Most respondents would seek the massage services again (97.5%) and were satisfied with the service (Brown & Bonello, 2014, p. 219-229). This is the target market that massage service will target the 68.7% of Australians who mentioned that they familiar with massage therapy. Furthermore, the survey shows that we will also target the middle-age females with high incomes. Those group people are increasingly payment and times to reducing their painful and relieve stresses by professional massage therapy. Also, based on the research, it significantly shows that most respondents agreed with the function of massage therapy and would like to use the massage services again. Factors affecting sales 1. Change with Australian Medical benefits. The percentage of people who did massage therapy has been decreasing recently, which is because of the reducing of Australian public medical benefits. 2. Depends on the consumers’ incomes. 3. Patients’ mind which may affected from doctors’ suggestions. 4. Changes with national policy. 5. Development of ‘massage chairs’ business. 4. Competition 4.1 strategic group map Expensive Price Cheap low popularity high Armidale Massage center quite popular massage among others as it provides the indispensable feelings of massage therapy though the opening time is limited for customers. Ella Bache Armidale and Chill Health Club appeals to their customers through the attractive price. Botanic Beautiful Studio has provided the reasonable service and pleasant environment. Thus, it becomes the most popular massage in Armidale. 4.2 rates of key factors AMC EBA CHC BBS HCM Location 3 3 3 3 2 Working environment 2 2 1 2 3 Service during massage 2 2 2 3 3 Effect after massage 2 2 2 2 3 Customer satisfaction 2 2 2 2 3 Total 11 11 10 12 14 * the rate ranges from 1 to 3 and 3 is the highest score of each item. Based on the data above, customers really care about the environment of the massage. HCM will leave a profound impression on clients by the neat and tidy surroundings. The pain of customer has been definitely relieved during massage and HCM will also provide the professional massagers to clients to relief their discomfort. 4.3 analyses of threats and barrier 4.4 strengthens and weakness Strengthens: visiting service, fresh material and essential oil, discount for membership card and beautiful natural scenery. HCM provides visiting service especially for those disabled clients. They just need to book the time and the staff from HCM will massage them at their property without any additional fees. That is the most distinctive characteristic other than other massages. Moreover, Wiese, Grant and Smyth (2015) has reported that the duty for all imports between Australia and China are free. Under this policy, the massage material including the essential oil is available now to get from China. That not only insures the quality of the material, but it also enhances the diversity of essential oil, which supply more alternatives to select. In addition, clients will get discounted if they join the membership. Once the members get ten or massage experience, they will get a free special massage for clients. They will also get souvenirs at the end of the year as a membership of HCM. Away from the city center, HCM survives in an isolated area which has unique scenery of the nature. Customers tend to massage in such a fascinating natural environment. Weakness: advertising and Building the Chinese massage in South hill instead of city center, we avoid staying in the same area with several competitors. However, that enhances the difficulties of publicizing the business. Printing some brochures might appeal to the concentration of people, there is still a long way to go. 5. Service description The working time of Health Care is from 10:30 am to 6:30 pm between Monday and Saturday, 10:30 am to 2:30 pm on Sunday. This opening time convenience those people who want to have massage during lunch break and after off duty. Customer can order the service by phone or make appointment in store. But both of these two kinds of appointment have to be one day in advance. The receptionist in the front desk records the requirement of customer and the description of their illness. Then the receptionist contact with masseurs and tells them the needs of customer. Based on the information provided by receptionist about client’s requirement, masseurs provide all staffs will be used in service. When customer comes into the store, masseur makes further communication with them to get the detailed information and the final decision on which specific service will be offers to customer. Massage way: Health Care massage store offers seven kinds of massage service. The seven service item will be shown in the table below as well as some of the competitor’s service item. Service item table Service item Armidale massage center Massage and Minds on Mash Health Care Remedial massage yes yes Yes Sport massage yes yes Yes Manual lymphatic massage yes yes No Relaxation massage yes yes Yes Myofascial massage yes no No Pregnancy massage No yes No Hot stone No no Yes Cupping yes no Yes Pedicure No no Yes Facial massage No no Yes Relaxation massage can benefit those customers who need general relaxation, stress and muscular tension reduction and health management. It can be effective at pain felief, rehabilitation and muscle function improvement. This therapy is especially suitable for people with high strength job or high stress working environment. There is also a special form of relaxation massage called hot stone supplied in Health Care. The smoothing volcanic stones will be heated before the beginning of the massage to make sure it would not be too hot for human skin. Customer can stimulate circulation and deep relaxation. Sports Massage is an efficient therapy for injury prevention and pre/post sports event preparation and injury recovery as well as a good way for performance improvement. This is especially aim at those target customer work in sports related profession and obsessed with athletics. There are more than one sports team active in Armidale, if any member suffers injury during the training and competition; Health Care would like to provide the professional therapy to them. Remedial massage is the kind of massage that can help release the pain of injury and musculoskeletal disease. Customer who suffers injury or has chronic muscle and skeleton illness can get a better recovery by having our service. Clients who choose this therapy usually are elderly or from some high-risk industry (such as builders). Facial massage aims at promoting the facial circulation, improve facial complexion and shaping a better facial outline. This therapy is supplied for female customers who want to be more attractive and help those female outdoor workers (such as tour guides and farmers) to maintain their facial health. Cupping and pedicure is popular in China. These two therapies use traditional medical techniques and knowledge to treat the illness and release the pain of customers. Cupping can energy the channels in local organs, pedicure can promote blood circulation by press the foot points. The price of different therapy is same. Based on some survey among different massage stores, the charging standard of Health Care is shown below: Service time Charging standard Less than 60 minutes $10 plus $1 multiply minutes spend on service Equal or more than 60 minutes $1 multiply minutes spend on service Health Care also provides door-to- door service to a better benefit of customers request and convenience the disable client and elderly. If client asks for door- to- door service, they need to provide their ID and address to the store to protect the personal safety of masseurs. And there will be as extra fee charge for visiting service. Distance between store and visiting service location Charging standard Within 5km $20 Between 5km to 10km $30 Between 10km to 20km $50 Beyond 20km No services as it is too far 6. Marketing plan Effective marketing planning is particularly desirable in the contemporary market environment characterized by a shifting of power to customer, greater product, service offerings for selection, value propositions changes, marketing media fragmentation and development demand pattern (Ferrell and Hartline, 2012). Marketing planning includes various elements, such as the design of product, the quality of the product, the price of the product and the features of the product (Robinson, 2014). The biggest superiority of our massage store is the unique Chinese massage service item and the door- to- door service. Pedicure and cupping massage are usual in china, but not well known in Australia. According to our research among the massage stores in Armidale, visiting service is not as common as in- door service. So the emphasis of our promotion plan is to advertise the door-to- door service and unique Chinese massage service of our massage business. The effective promotion will be one of the most important aspects of becoming successful. Lamb, Hair and McDaniel says that promotion plan describes the way of how a business uses all the promotion aspects they grasped in the optimal combination to realize the best result on marketing mix and no matter how well the goods and services are developed, priced and distributed, only a few of them can be successful in the competitive market without effective promotion (2008). So the promotion strategy has to be set up carefully. We acknowledge that Armidale do not get an independent television station, but there are several FM radio stations and a local English paper—Independence in the town. We can broadcast advertisement and publish advertisement on the newspaper to propagandize our massage business. Another way to advertise our massage store is printing the leaflets. We not only sent the handouts into the mail box in front of every house but also cooperate with supermarket and fast food store to print the advertisement on the back of their receipts. We also can seek the help from social networking service such as Facebook, Twitter and Instagram to expand our awareness. According to the data from Australian Bureau of Statistic and Social Media News, the user of Facebook in Australia is 13,400,000 and the population of Australia is about 23,860,000(2004, 2005). SNS is popular in Australia. It could be an effective way to advertise our business by apply a SNS account and give out the information of our store every day. The free 10 minutes in-store service could be useful as well. We can launch this free service within one month after opening and attract more potential customer get into our store to try our service. Last promotion method is spread our high quality service by our regular. If the regular customer considers our massage service is special and good, we will ask them to introduce us to their friends and family members and if they bring another new customer into our store, both of the will get a 15% discount at that time. 8. Human Resource Plan 8.1 Employees and position Initially, Health Care will recruit one senior massager as a major massager in store. In addition, proprietress is responsible for the booking and to be a cashier; proprietor’s duty is to purchase the relevant tools, products and accessories, which aim to promote sales to the consumers. A month later, if there are a growing number of consumers coming to do massage, it is necessary to employ an apprentice who will learn knowledge and skills from senior massager and help to prepare the materials. Health Care store is becoming quite popular and has good reputation in some degree; afterwards, we will add one more apprentice and sales assistant. 8.2 Terms of employment As a service work, massagers need to work for many customers on a quite busy day. Under this situation, it is essential to guarantee the consumers’ health and safety, when we recruit massagers. Fundamentally, massager candidates need to provide their relevant certification (appendix) and health certification on themselves. Furthermore, our Health Care store will provide contract (appendix) for chosen employees obey the rules of Australian employment. 8.3 Recruitment sources The senior massager need to be experienced and mastered skills, which will be recruited by the reliable friends from the proprietor and proprietress. In addition, apprentices could be recruited from the professional organizations and educational institutions. Proprietor would utilize one of his family members as sales assistant who should be have a good communication skill. 8.4 Training and Performance appraisal Firstly, all the employees would be informed the whole working process, relevant people in store and their duty and workplace within induction process. Secondly, on-the-job training will be use as training method. In Health Care, the senior massager will teach newly apprentices skills and knowledge. On one hand, when senior massager doing the massage service, apprentices can stand by the senior massager to have a look on the manipulation therapy. Additionally, apprentices are able to do some practice on the human model during and after the senior massagers teaching period. On the other hand, as for the sales assistant, proprietor will impart relevant knowledge on communication and selling the products. For example, when customers are queued to wait for the massage, salesman can chat with customers and enquire what kind of massage they will do, and their jobs. Meanwhile, according to the different people’s situation, salesman can introduce some relevant products to them, for instance, massage oil, tools used in massage and some accessories, like massage armchair. The customers will assess performance. After the massage service, each consumer will be given an evaluation form, including assessment of the skills and attitudes in order to give us the feedback to the employees, the store and others. And each week, we will have an internal evaluation test among all the people in store. Every monthly good performance employee will gain rewards in order to stimulate the employees’ enthusiasm and improve the store’s efficiency and enhance its competitiveness. 8.5 Remuneration plus justification In remuneration part, our store will take a mix method, which means employees not only have its basic salary but also gain additional rewards under deduction wage system. The basic salary for full-time senior massager is $24/hour; full-time apprentice is $20/hour; part-time apprentice is $22 and full-time sales assistant is $18/hour. Additionally, the deduction wage per consumer or per product is $2 and daily upper limit is $28. The above data refer to the Fair Work in 2015. Using appropriate number of experienced employees with mastered skills, which can make sure that the whole remuneration expenses won’t have an expansion. 8.6 Legal requirement Each employee will be given the Fair Work Information Statement; the contents of legal requirements are as follow: Tax File Number is needed for any employees in order to deduct income tax from wages. All employees’ working time is limited, up to 40 hours per week. Employees should have their annual leave, sick leave, personal/carers’ leave and parental leave, which could help employees to get a balance between work and life and also improve themselves effectiveness and efficiency (Fair work Act,2009). Employers are required to protect customers and employees personal information from leaking (Australian government, 2015). 9. Management 9.1 Legal structure The legal structure of the Health care is a sole proprietorship. This is to ensure that the ownership and control still remain in the members’ hands. In addition, it is simple to establish and operate the business with low costs. And it could be easy to change legal structure, when the circumstances change. () Furthermore, there will be a greater opportunity to raise capital to other business ownership forms, particularly the sole proprietorships (Horngren et al., 2013). 9.2 Management structure The management structure of Health care will be based on the lean employees. Daft (2012) states that functional organizational structures are effective for the technical service industries as for the massage service. From the top, the proprietor will have an overall view and sales management of the Health care, under the proprietor will be the sales assistant. Next will be the proprietress who will be responsible for the cash management. Finally, the senior massager is committed to do the massage service, under the senior massager; there will be an apprentice who will learn skills from senior massager. When the business grows, one more part-time apprentice will be absorbed in the Health care. The diagram of management structure for Health care is represented below. Figure: Health care management structure 9.3 Salaries Each position salary are shown in the following: Position Wage/hour Hours weekly Additional rewards Weekly wage Total Annual Wage Senior massager (full time) $24 40 $2~$28 $962~$988 $46,176 ~ $47,424 Apprentice (full time) $20 40 $2~$28 $802 ~ $828 $38,496 ~ $39,744 Apprentice (part time) $22 20 $2~$28 $442 ~ $468 $21,216 ~ $22,464 Sales assistant (full time) $18 40 $2~$28 $722 ~ $748 $34,656 ~ $35,904 Table: Each position salary 10. Feasibility assessment (We have no idea under this question. Could you please help us to give some ideas or outline? We think it may better and easier for us) Thank you very much for your extra works Reference AMTA. (2004) ‘How massage aides athletic performance’Retrieved from http://www.monumentalmassage.com/articles/massage_aids_athletic_performance.html Australian Bureau of Statistics, 2015, population clock, retrieved from:http://www.abs.gov.au/ausstats/abs@.nsf/0/1647509ef7e25faaca2568a900154b63?opendocument ‘ARMIDALE FACTS & FIGURES AUGUST’. Retrieved 2008, from http://www.armidaleregion.com.au/files/armidale-facts-and-figures.pdf ‘History of Massage Therapy’, (n.d.) Retrieved from http://www.naturalhealers.com/massage-therapy/history/ Ferrell, O. C. and Hartline, M. (2012). Marketing Strategy. Cengage Learning. Mason, OH Lamb, C., Hair, J. & McDaniel, C. (2009). Essentials of marketing. Mason, Ohio London: South Western Cengage Learning distributor. Leanna Skarnulis.(n.d.) Reviewed by Louise Chang, MD ‘7 Health Challenges of Aging’Retrieved from http://www.webmd.com/healthy-aging/features/aging-health-challenges Robinson, L. (2014). Marketing dynamism & sustainability: things change, things stay the same. proceedings of the 2012 Academy of Marketing Science (AMS) Annual Conference. Cham: Springer. Sandra K. Anderson, BA, LMT, ABT; Beth; MK Brennan MS, RN, LMBT; Jolie Haun PhD EdS LMT, ‘Why Do Clients Keep Coming Back for Massage?’ Retrieved from http://www.massagetoday.com/mpacms/mt/article.php?id=14853 SocialMediaNews, 2014, Social Media Statistics Australia – August 2014, retrieved from: http://www.socialmedianews.com.au/social-media-statistics-australia-august-2014/ Salt Lake Valley Board of Health (2006). Massage Facilities Regulation. Health department. Retrieved from http://www.mass.gov/ocabr/licensee/dpl-boards/mt/regulations/269-cmr/269-cmr- 600.html SocialMediaNews, 2014, Social Media Statistics Australia – August 2014, retrieved from: http://www.socialmedianews.com.au/social-media-statistics-australia-august-2014/ Whitney Lowe. (2008) ‘The Future of Massage’. Massage & Bodywork magazine. Retrieved from http://www.massageandbodywork.com/Articles/2008/JanFeb2008/TheFutureofMassage.html Wiese, R., Grant, L.&Smyth, F. (2015). China Free Trade Agreement: What is crucial for Australian importers and exporters? Retrieved from http://www.hunthunt.com.au/news-and-publications/cgt/chinafta Read More