Desharn Milkshake Truck Business Strategies - Example

All these milkshakes, which will be provided are worth the cost and whatever makes it interesting is that they will be offered at the doorstep of the customers. The business track will move all over Los Angeles to meet the needs of the prospective customers. Also, there will be a provision of offering snacks which enables the firm to gain more profits in cases whereby the customers are not interested in milkshakes. Since the milkshake business works in order to favour the customers, it will be able to provide its services at a reasonable price in order to satisfy the needs of the customers. The price ranges of the milkshakes will be lower than those of the competitor firms. The prices of the milkshakes will range from 0.7 to 0.9 dollars overall. This is cheaper than the competitors who offer the products at higher prices. Apart from selling only, the business will be able to offer training and consultancy to the people who want to start such businesses too (Shouse, 2011). A lot of research has been done on the market, which will help this business to grow faster as compared to its rivals. The brands which will be sold will be innovative products since they will all be special blends and the other normal brands of milkshakes. Using the latest blending tools in the market, the quality of the milkshakes provided will be very high which will capture the entire market of milkshakes. The milkshakes will be served either warm or cold depending on the specifications of the customers. The truck will come with refrigerators and also serving points and seats which will make the customers enjoy the milkshakes in a conducive environment with their specifications provided.

• Sales and marketing strategies

The sales and the marketing strategy which will be used by this firm will enable the business to stand a chance in the competitive environment. The marketing part involves advertisements to the public which will be done through posters and also passing the information through the use of ads (Matthyssens, 2006). This is the best method to use since the target market will be people staying in Los Angeles. Posters will be spread allover Los Angeles with the specific days which the milkshake truck will be at each estate. Ads will be used as a method of marketing the firm which will enable the firm capture the entire market in Los Angeles. The customers need quality products and therefore, the milkshake truck business will provide quality milkshakes and appropriate services through a team of much trained personnel. There are few competitors in the market, but the services which the competitors provide are of low quality. This means that the business has to incorporate a lot of time to develop good products and also add more services which the competitors will not be offering. Through this, the firm will offer very advanced products which are better than the ones offered by its competitors. The business will take the advantage of the weaknesses of the competitors who offer low quality products to edge past them in providing quality services. Competitive prices will be offered by this business compared to the other businesses in the market. These prices will be set according to how competitive the market is and also according to the quality of the milkshakes.

• Competitive analysis of the business

The market in which this business will be operating is competitive. The business will be able to compete successfully with the other firms which are found in the market because it provides a variety of milkshakes at affordable prices. The quantity of the milkshake will be high with cheap prices attached to it making it the appropriate product to be used by the customers. The customers will choose the type of milkshake they want since there will be varieties of milk shakes which will be offered by this business (Mintzer, 2015). Innovativeness in the way the special blends are prepared will make the business reap more profits from its customers, which will make the business to be successful. Most of the competitors limit the time which they stay in a place. Therefore, this business will offer its services longer than its competitors, which will make it successful. The prices also will be very cheap which makes the product sale more than the other products in the market (Myrick, 2012). The general prices of the products range from $0.7 to $0.9 in all categories of the milkshakes offered. Most of the businesses are mobile venture in a variety of products and therefore offering milkshake as a specific product will make the business concentrate on quality products. Therefore, analysis of the competitors and using the analysis to gain more sales is important for the business.

• Operational structure and choices.

The success of the business depends on the structure which it uses to carry out its activities. A larger truck will be required to enable the business run its activities smoothly and appropriately. A bigger truck will be appropriate since it has a larger carrying capacity as compared to a smaller truck and also it will be able to carry more milkshakes as compared to the small ones (McLaughlin, 2009). The licensing procedure of this business is not strict since it involves very few procedures and it takes shorter time to process. The procedure requires $500 and also a national ID card only. Other requirements which will be needed for the business to start include machines for making the milkshakes, chairs, tables, fridges, the products necessary to make the milkshake, and trained personnel. If all these work together well the business would grow very first enabling it to achieve its goals after a short period of time.

• Financial plan

The initial starting up cost of the proposed business is $ 150,000 raised from owner’s equity, a loan and contributions from friends and family member. The loan will be paid in a period of 4 years at a 12% per annum on the reducing balance. The financial plan will outline the financial expectations of the business from the pre-operational costs, the expected working capital of the business, the expected profits. The cash flow will be shown and the breakeven level will be calculated. The expected profitability ratios will be shown in order to determine whether there was any return on equity . The expected risks and problems will be analyzed and ways to over- come them sort. The initial sales forecast of this business will be very high (Williams, 2012). This is because the business will incorporate all aspects concerning provision of quality services to make it very competitive in the market. The speculated number of sales amount to $120,000 annually.

• THE FINANCIAL REQUIREMENT OF THE BUSINESS

The initial starting up cost of the proposed business $150,000 which is raised from owner’s equity, loans and contributions from friends and family member. These sources are important since they will give the business a certain period before returning the cash back. The loan will be given at an interest rate of 12% for a period of 4 years. A larger percentage of the money which is needed to start the business is borrowed from the bank. $20,000 will be borrowed from the bank, $100,000 from owners’ equity and $30,000 will be from contributions from friends and relatives. Borrowing from friends and the relatives is very important since the money is not returnable. This will boost the business in a big way since the owner will not spend much money from himself while starting the business. All these sources of finance to this organisation are appropriate since they will enable the start of the business very fast. The financial sources are reliable and fast in processing the requests for money. Therefore, this will make the business the business to start within a period of less than 30days. These sources are also efficient and flexible, especially the contributions from friends from this source can be more than the anticipated amount which is projected to be collected. Due to various requirements which are needed before the start of the business, this source needs to be very reliable so as to achieve the expected objectives of the business.

The bank will be the main source of funding this project. This is because, the start of the business needs a large capital and the owner of the business is not well off financially. This source is reliable because of the relationship existing between the owner of the business and the bank. This good relationship will enable the owner of the business to secure a large sum of money easily and the period set for payment is manageable for the business since it expects a growth in its sales as it establishes itself fully in the market which is faced with competition (Weber, 2012). The owners’ equity is not the main source of funding since the owner can only raise $100,000 which is needed for the operation of the business.

The startup capital will be used in achieving many things such as fueling the vehicle. Daily the vehicle uses fuel worth $20, and the cost of advertisement will cost the business $900. The total assets of the firm which include the long term and the short term assets will add up to $50,000 because the quality of the assets needs to be very high to facilitate for more sales in the business. The rest of the money will be stored as the opening capital of the firm.

• Profit and Loss Statement Table

2016

Revenue

$120,000

Direct Cost

$8,000

Gross Profit

$112,000

Expenses

License and Permits

$500

Supplies

$700

Furniture

$500

Fuel expenses

$3000

Utility bills

$100

Repairs and Maintenance

$400

Advertising cost

$900

Depreciation

$1100

Total Expenses

$7,200

Operating Income

$104,800

Other Expenses (& Other Income)

Interest Expense

$4,000

Total Other Expenses (& Other Income)

$4,000

Income Before Income Tax

$100,800

Income Taxes

$3,000

Net Income

$97,800

The income which is derived from the business in the year 2016 is expected to be $97,800. The expenses of operating the business are low as compared to the profit derived from the business operation which makes net income to be more.

• Cash Flow Statement Table

2016

OPERATING ACTIVITIES

Net Income

$97,800

Depreciation

$1100

Accounts Receivable

$(8,000)

Accounts Payable

$3,000

Net Cash from Operating Activities

$93,900

INVESTING & FINANCING ACTIVITIES

Long-Term Assets

$(50,000)

Investments

$30,000

Long-Term loan

$20,000

Dividends

$(20,000)

Net Cash at hand

$(20,000)

Net Change in Cash

$32,500

Cash at End of Period

$73,900

The net cash used in operating business is more than the cash at hand in the cashflow statement which makes the net change in cash to be more. this shows that the business will be expected to operate well under the set plan making good profits in its operation.