Managing Business Growth and Sustainability - Example

Managing Business Growth and Sustainability Name Institution Table of Contents Table of Contents 2 Plan and its purpose A business is a road map indicating where an organization or a business wants to be in future. The plan outlines the objectives to be achieved, methods of achieving the objectives and control to regulate the objectives. (Chen, Yao and Kotha, 2009, pp. 199-214), business plan outline the background facts on how an organization achieve its goal. Managers use a business plan in analyzing the feasibility of the business. Business Description Organic Spa Business is the official registered name of the business entity, which is an organization that offers beauty products which are organic. The business also offers hair dressing services such as plaiting, blow-dry, hair setting, steaming and chemical treatment to individuals at personal and learning institution. Provision of quality services to the customer is the main objective of the organic spa business with an aim to gain customers’ loyalty for survival in the market. Mission Statement The mission is to provide quality services and products that satisfy customers’ needs . The Vision Statement Quality services and products for satisfaction of our customers Objectives of the Business The main target of organic spa and salon is to satisfy customers’ by providing quality services and products. (Doyle, 2007, pp. 123-132) This enables the business to regularly increase sales thus earn more revenue to maintain normal operation of the organization. Market Plan Organic Spa Business provide services with the latest technology, discount of 20% to customers visiting the premises for the first time and provide door to door services on request. The business offers superior services and products than their competitors. The business provides free services for example nail varnishing. To retain the employee, organic spa provides incentives and motivation through training & development, payable holiday’s schemes, compensation schemes in case of injury during working hours, employees insurance and medical schemes. Capturing a large market share is a need of any business. Organic Spa Business have achieved this through provision quality services by use of modern technology, offering after sale services to all the customers such as free nail vanish. The business uses market penetration strategy where it is lowest price service provider. Furthermore Organic Spa Business is the lowest cost producer which it gives it an advantage over others. The business tends uses market penetration strategy where it has deliberately set low prices for its services and products to attract as many customers as possible, maximize sales and also to keep distance the competitors Clarke (2007). The method was effective as the business was entering the new market. After achieving the desired level of market share, the salon has gradually increase its prices to maximize profit Although there are many salons already existing in the market today, Organic Spa Business have carried out business promotions such as after sales services to all customers in form nail varnishing for free, discounts to loyal customers and door to door services. The business has also involved in sponsoring sporting activities, education and preservation of the environment to improve its reputation or public image. Posters and billboards have been placed at strategic locations displaying the photo of the premise, services offered and the working hours. There will also be two placed strategically. The business uses its website to receive customers’ expectations and complaints and act upon them. The uses of social media platform such as twitter and facebook have successfully bore fruits in advertising the business. Organic Spa Business faces stiff competition from three (3) salons namely; Eurega, Georgia, and Victory hair salons. COMPETITORS STRENGHS WEAKNESSES Eurega -Long life in business and therefore has experience. -skilled personnel -High quality services offered. -poor motivation -offer no credit services Georgia -long life in the business, therefore has experience -modern tools and equipment -quality services offered -has many loyal customers -short working hours -lack of employees training and development. Victory -skilled personnel -long working hours -after sell services -quality services -poor motivate of employee. -lack of door to door services. Organization and Management Plan In order for any organization to achieve its set goal, there must be a well laid down management that foresees the implementation of the business plan Berrone (2010). The responsibility of managers is make key decision which ensures that the organization meet its set targets Organization Chart Key Personnel 1. Manager Decision making. Overall supervisors. Hiring and firing employees. Co-ordinating all the activities in the firm. Setting the objectives, mission, vision and business strategies. Delegating responsibilities to employees. solving business disputes Controlling cash in-flow and out-flow in the business 2. Accountant Duties and Responsibilities Maintains all the account books(ledgers) in the business Prepares trial balance for the business Prepares balance sheet of the business to show financial operation of the business. Prepares trading, profit and loss accounts to shows the profitability and financial performance of the business Prepares cash flows to show the cash inflows and outflows 3. Financial Controller Duties and Responsibilities Prepares financial loan for the business Prepares payrolls of employees Advises management about financial opportunities 4. Internal Auditor Duties and Responsibilities Evaluation of financial statements and advice management to set sound risk management systems and internal control system. 5. Marketing Manager Duties and Responsibilities Carry out marketing activities such as promotion, pricing, advertising on behalf the business 6 Chemical Specialists Duties and Responsibilities Wash customer hair Apply right chemical for the right purpose Wash out chemicals and set the hair depending on customers’ style. Give customers advice how to maintain the treatment. Budget for chemicals needed in the salon 7. Plaiters Duties and Responsibilities Ravel customers’ hair. Apply oil on customers’ hair. Plait under the customers’ requirements. Re-apply oil on scalp Advice the customers on how to maintain the hair 8 Weaver Duties and Responsibilities Ravel customers hair Apply oil on customers hair Plait lines depending with the desired style by the customers Weave in the weave according to customers’ requirements Apply conditioner on the woven weave Comb the hair according to the customers’ requirements Give customers needed advice on how to maintain the weave 9. Blower Drier Duties and Responsibilities Apply on customers’ hair Wash and blow dry the customers’ hair Apply the right oil for right hair salon Ravel customers’ hair 10. Security Guard Duties and Responsibilities Guard the premise Direct customers Operation/Production Plan The organic spa operates a two-roomed rental house measuring 3 by 5ft with a rental charge of 24 pounds per month. The room is well ventilated, with suitable power points and smooth flat surface for the machines. The premise bears a decorative carpet on the floor, side mirror all over the room and charts displaying different fashions and hair style postures. Flower vessels with beautiful flowers are well arranged in the reception room with comfortable chairs. In addition soft music is also available in the salon. The materials required by are mostly chemicals and hair oils which will are highly available in the local supermarkets within Doha city. Production Facilities and Capacity List of Facilities and Capacity Item Quantity Cost Per Item Total Cost 1 Blow drier m/c 3 5000 15000 2 Drier M/C 2 15000 30000 3 Tongs 2 3000 6000 4 Rollers 10sets 50 500 5 Combs 8sets 50 400 6 Steaming cups 2 5000 10000 7 Scissors 4pairs 60 240 8 Pins 6sets 20 120 9 Hair oil 6 sets 2500 15000 10 Furniture 10 500 5000 TOTAL 31180 82260 Production Process This involves the stages used by organic spa in giving out its services to the customers. Change of technology highly influences the business operation. Blow-Dry Weaving Washing hair by use of water Unravel customers’ hair and comb it till it to remove dirt and oil. becomes straight and clean. Straighten hair by m/c in which Apply oil and recomb to make even more a large comb is inserted till fairly straighter. straight. Apply oil on scalp and the hair Plait lines considering the desired style of the make it soft and ready for the next customer. step. Blow-dry using a small comb till Weave in the additional hair by use of a hair is very fine and soft. darning needle and thread. Apply oil and comb as desired. Apply conditioner on the weave and comb it well. Chemical Application Plaiting Wash hair by use of warm water to Unravel customers’ hair. remove dirt and oil. Apply the right chemical for the right Apply oil on the scalp and hair generally treatment desired by the customer. comb till it is straight and clean. Set the hair in the steaming cup Plait style as desired by customers. for the required time. Unset and wash the hair to remove Re-apply oil on scalp. the applied chemical. Apply the right hair conditioner or Rolling Hair oil to both the hair and scalp. Apply oil on the skin and scalps. Comb hair as desired by the customer. Set rollers on the hair. Set the head on the steaming cup. Remove rollers and comb well. Recruitment, Training and Promotions Organic Spa Business has developed a job description that shows duties and responsibilities of each employee with an intention to prevent duplication of duties and conflict of interest. Job opportunities are clear advertised on daily newspapers, notice boards, business website facebook and twitters with qualification requirements of each of the particular job. Short listing process is fairly done by top management depending on the qualifications and experience of the applicants. Proper interviews are conducted by the managers and outsourced qualified people. Employees are strictly hired depending on the qualifications, experience and set standards by the business. Orientation is carried out to the new workers by qualified personnel in the business Due to fast rate of change in technology, there will be need for training to be conducted to employees so that they can remain relevant to the market requirement and demands. Organic Spa Business uses on job training where tutors are invited from the hair dressing school of Qatar Doha after every three months to update the employees about the current technology and trends in the salon industry. Business also allows the workers to attend seminars, exhibitions, shows and competitions concerning their areas of operations to help them increase their levels of understanding and to acquire more skills and knowledge in their work. The business carries out its promotion depending on the merits, qualifications, experience and any other set standards. Other factors put into consideration includes: level of discipline, punctuality, employee commitment and the duration the employee has rendered his or her services to the business. The organization highly encourages internal promotion to increase employees’ motivations. For any business to prosper, employees need to be motivated and well paid. Organic Spa Business offers allowances such as medical allowance, transport allowance, insurance allowance and education allowance in addition to the basic salary. Organic Spa Business also builds employees’ morale by provision of overtime payment for any job done past the normal working hours. For any addition hour the employee receives 1% increment in his monthly salary. Employees are also provided with insurance cover against accidents. Protective clothing such as gloves and aprons are provided to employees during working hours. As a caring organization it is also our duty to provide meals for the employees during working hours. Position Number Of Employees Salary Total Manager 4 4000 16000 Accountant 1 2000 2000 Financial Controller 1 2000 2000 Marketing Manager 1 2000 2000 Internal Auditor 1 2000 2000 Chemical Specialist 4 3000 12000 Plaiters 5 3000 15000 Weaver 2 3000 6000 Blow-Drier 2 3000 6000 Security Guard 1 2000 2000 Total= Ksh.65000 Licenses, Permits and By-Laws The management has put in place proper arrangement to ensure that licenses are obtained and renewed annually. Rules and regulations pertaining to normal operation of the business have been acquired by the top management to ensure the business do work against the laws. Table of Licenses and Permits Item Where It Is Obtained Cost Permit Registrar of companies 85 renewed per year Licenses County government of Doha 3500renewed per year Total 4350 For the smooth running of the business, Organic Spa Business have sought support services from Eco-Bank-Doha Branch by acquiring loans to ensure smooth running of the business. Electricity that will be used to run the business will be obtained from the Kenya Power and Lighting Company. Postal and telephone services will be offered by Posta and Telkom Kenya Limited. The business will also open websites accounts, twitter and facebook accounts which help it in advertising its services. The business have lawyer who handles any legal matters and a part time doctor whose many duty is to ensure employees health are checked periodically. Risk Management Strategies In any business, there must be risks involved. Organic Spa Business expects to face risks such as fire breakdowns due electricity default, employees’ injuries and theft. Organic Spa Business provides insurance cover for all the employees and to all equipment and the premise. The business is also installed cctvs automatic fire extinguisher and burglar alarms. Financial Plan Enough capital is required for the smooth running of the business, (Chrisman and Liano 2010) Proper financial analysis using books of accounts and financial ration enables the management to make informed decision on the operation of the business and predict where business would likely to be in future Organic Spa Business Operational Cost Description Cost Renovation Licensing and permit Electricity Telephone Banking services Advertising Machinery and equipment Furniture and fittings Purchases Miscellaneous Rent TOTAL 10000 4350 3000 1500 1000 8000 150000 10000 30000 10000 4000 231850 Organic Spa Business Working Capital Year 2014 Year 2015 Year 2016 Current assets Debtors stock prepayments Cash at hand Cash at bank Total current assets Current liabilities Creditors Short term loan accruals Total current liabilities Working capital 10000 20000 30000 60000 200000 320000 20000 100000 50000 170000 150000 20000 30000 40000 70000 220000 380000 40000 50000 30000 120000 260000 30000 40000 50000 80000 240000 440000 60000 70000 20000 150000 290000 Organic Spa Business Profit and Loss Account For the Last Three Years Year 2014 Year 2015 Year 2016 Sales Sales return Net sales Opening stock Add: Purchases Less: Closing stock Cost of goods sold Gross profits Less: Expenses Salary Rent Electricity Bank charges Telephone expenses Permit and license Total expenses Net profit before tax Less: tax (3%) Net income after tax 990000 10000 980000 20000 100000 (30000) 90000 890000 200000 48000 36000 2000 18000 5000 307000 583000 17490 565510 1200000 20000 1180000 30000 200000 (50000) 180000 1000000 220000 50000 40000 3000 20000 5000 338000 662000 19860 642140 1210000 40000 1170000 50000 250000 (70000) 230000 940000 300000 60000 50000 5000 30000 5000 450000 490000 14700 475300 Organic Spa Business Balance Sheet for the Last Three Years Year 2014 Year 2015 Year 2016 Fixed assets Equipment Less: depreciation(10%p.a) Furniture Less: deprecation (5%p.a) Premises Less: depreciation (2%p.a) Total fixed assets Current assets Debtors stock prepayments Cash at hand Cash at bank Total current assets Current liabilities Creditors Short term loan accruals Total current liabilities Working capital Capital employed Long term liabilities Long term loan Financed by Capital Less: drawings Add: retained earnings Capital employed 500000 (50000) 450000 50000 (2500)47500 100000 (2000) 98000 595500 10000 20000 30000 60000 200000 320000 20000 100000 50000 170000 150000 745500 100000 100000 500000 (320010)177990 565510 744500 500000 (100000) 400000 50000 (5000) 45000 100000 (4000)96000 541000 20000 30000 40000 70000 220000 380000 40000 50000 30000 120000 260000 801000 9000090000 58860 652140 801000 500000 (150000) 350000 50000 (7500) 42500 100000 (6000) 94000 486500 30000 40000 50000 80000 24000 440000 60000 70000 20000 150000 290000 776500 80000 80000 221200 475300 776500 Break Even Level Expenses ×100 Gross profit 1st year= 307000×100 2nd year=338000×100 3rd year=450000 ×100 890000 1000000 940000 = 34.49% =33.8% =47.87 8.6 Return on Equity Net profit after tax×100 Owners’ equity 1st year=565510×100 2nd year=642140×100 3rd year=475300 ×100 500000 500000 500000 =113.10% =128.428% =95.06% Break Even Analysis Gross profit= net sales – cost of goods sold 1st year=980000-90000 2nd year=1180000-180000 3rd year=1170000-230000 =ksh.890000 =ksh.100000 =ksh.940000 Gross profit margin= gross profit ×100 Sales 1st year= 890000×100 2nd year= 1000000×100 3rd year=940000×100 980000 1180000 1170000 =90.8% =84.75% =80.34% Return on Investment Net profit after tax+ interest ×100 Total investment 1st year=565510+12000 ×100 2nd year=642140+120000 ×100 300000 300000 =192.5% =254.04% 3rd year= 475300+120000×100 300000 =162.43% References Berrone, P., Cruz, C., Gomez-Mejia, L. 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Resource configuration in family firms: Linking resources, strategic planning and technological opportunities to performance. Journal of Management Studies, 45(1), 26-50. Ward, J. (2016). Perpetuating the family business: 50 lessons learned from long lasting , successful families in business. Springer. Read More