Business of Classy Food Meal Cart - Essay Example

?Business Plan Contents Business Plan Business Plan 15 1.Executive summary 3 TOTAL CASH IN 12 Critical Evaluation 12 1. Executive summary I would like to start a meals cart business at Cambridge, Grand Arcade. The business will be named Classy Foods Meals Cart and will be under my full ownership. It will be dealing with all types of foods and soft drinks. However, it will concentrate more on fast foods and snacks since they are usually on higher demand at Cambridge streets. It will be supplying high quality snacks, hotdogs and soft drinks among other types of foods. The services to be offered will be of high quality as well. Food served will be in accordance with the health code so as to ensure good health for our esteemed customers. The main target customers of the business will be the young people especially those in college. About two to three employees will be hired to assist in offering services. The cart will be moving around the street to places where there are more customers in order to maximize sales and revenue simultaneously. The business is expected to grow steadily in the foreseeable future. More meal carts will be opened in the future as a strategic growth. Marketing will be done through the cheapest methods so as to minimize operation costs. The mission of the business will be to provide high quality foods at a low price and acquire steady growth. Introduction A business plan is a document that states the goals and objectives of a business that is about to start. It also states how the goals are to be achieved and the strategy which are to be applied. In addition, the business plan states how the business will be financed as well as how the initial set up of the business will be. It can also show the cash flow forecast for the first few financial years. This article represents a business plan for a meal cart that is about to start at Cambridge, Grand Arcade. 2. Business Description Classy foods meal cart is a start- up business whose aim is to serve all kinds of food at the best prices in town. The business is to start following the growing demand of foods owing to the increasing population. Classy foods meal cart will ensure that it meets the current demand, offer best quality foods and services. The business has a long term plan of opening several service centres within Grand Arcade. The business will concentrate more on fast foods since this is what most people like. The business will be a sole proprietor but will have a number of workers who will assist in service delivery. I will be the sole owner of the business. I have experience in business management and therefore I have the ability to prepare budget and business cash flows. I will also take the role of bookkeeping and overseeing all the activities of the business. Classy foods meal cart will create a strong brand name within the town and thrive to get a large share of the market (Hormozi et al. 2002). The business will concentrate more on fast foods since these are the once that have a comparatively higher demand in the city. Many people who dwell in the urban centres prefer fast foods for lunch. In addition, fast foods do not require much capital to start off. The main customer targets will be the young people. This makes fast foods choice a viable idea. Many young people like eating snacks, hotdogs and ice creams among other types of fast foods. The business will also be selling other types of foods. However, these will not be part of the major products. The business will ensure that it satisfies all groups of customers- young, old and kids. 2.1 Location The location of the business is very important for its competitive advantage. It should be located in a site where it is visible to the potential customers. A meal cart has an advantage in terms of location since it is mobile and it can move to where customers are. Classy Foods Meal Cart will be operating along the major highways of Cambridge but will be centred at Grand Arcade. Most of its operations will be along Victoria Avenue, Eden Street and King Street. This area does not have many similar businesses and therefore more customers can be accessed. The advantages of the location are; low competition, accessibility, many customers can be accessed, and the good visibility of Grand Arcade. 2.2 Ownership of the business I am the sole owner of the business. However, in the future there are plans to form a partnership with the appropriate partner so as to allow for quick expansion and growth of the business. I will work with a number of employees who will assist in executing duties. I will be making the important decision for the business. Further, I am the one who will be handling all the financial issues of the business. The employees will be assisting me in catering services. I will also be the business manager and therefore all management roles will be mine. In case of a partnership in the future, capital contribution will have to be 50:50. It is advantageous to be the sole owner of the business since the chances for wrong decisions will be limited. Having knowledge and experience in management and accounting I believe I will be able to effectively manage the business. I will also be able to effectively maintain the business records. However, it will be a problem to raise enough capital and as a result I will seek funding from other sources. 3. Products Classy Foods Meal Cart will concentrate on selling fast foods. Soft drinks will also be sold. The major reason as to why the business will concentrate on fast foods is that they are famous amount the urban dwellers. Most people who leave in the urban areas are always busy and they do not have much time to sit for meals (Thomas, 2012). In addition, one does not have to wait until its lunch time to eat a snack or a hotdog. Fast foods can be eaten at any time of the day and therefore sales will be maximized. Similarly, soft drinks can be taken at any time of the day. It is important to note that the lifestyles of city dwellers have changed greatly and most people today prefer fast foods. This explains one of the reasons as to why big retailers like McDonalds have made it great in this industry. This line of business is the most viable for Classy Foods at the moment. Other types of foods will also be offered but not in large quantities. They will only be available for lunch time hours. 4. Market Analysis Market analysis is very important activity that one has to carry out before starting up any form of business. Customer expenditure on fats foods have increased significantly in Cambridge. Customers are now spending more on fast foods. The increase in the number of foods carts over the last few years has been one of the reasons as to why customer expenditure on street foods has increased. The meal carts sector has shown significant growth over the last couple of years. This gives us the confidence that the business will be viable. In this section, the overall strategy of the business will be outlined. It will focus on the industry, competition as well as the marketing strategy (Schiraldi and Silva, 2012). 4.1 Industry Food industry is very wide and is composed of sit-in cafes and meal carts. Meal carts are mobile but they provide all types of foods that the customer may request. The major point for this industry is hygiene as well as quality service provision. Many businesses in the industry are privately owned. In fact, it is not easy to find a meal cart that is publically owned. Meal carts are small businesses that are mostly owned by a sole proprietor although it is possible to find some that are owned by partners. The history of this industry can is long but the meal cart businesses came to be known in the 21st century. Its development was as a result of new establishments in the early 2000s such as fast foods, hotdogs and ice cream. The industry has grown since then and is still growing with more meal carts being established. However, it is worth noting that most of the food businesses are conducted in sit- in cafes (Mintzer & Entrepreneur Press, 2011). 4.2 Competition Meal cart business is revolutionizing in the United Kingdom. Mobile food caterers are in the increase in most cities where there are many people. The competition is therefore increasing each day since more of the businesses are being established. The fact that the business does not require much capital to start has led to many people thinking that way. Meal cart business also faces competition from truck foods businesses. These are food providers who operate on a vehicle that is self -propelling. The mobility of food trucks is a threat to meal cart since they can be able to move more easily and faster to where the customers are unlike the carts which have to be pushed manually and hence cannot reach many customers. The other competitor to this business is the sit- in restaurants which offer fast foods. An example of such restaurant is McDonalds which offer quality foods at a low cost that is pocket friendly. 4.3 Marketing Marketing is a very crucial part of any business that wishes to be successful in the future (Greenley, 1989). Classy Foods Meal Cart has developed marketing strategies that will help it gain a competitive advantage over the rest of the competitors (Paswan, Blankson and Guzman, 2011). The strategy of Classy Foods Meal Cart will be to serve all the markets well. This will be done by offering the best services and best quality foods. The strategy during the first days of the business will be to establish a strong identity in the market. First, advertisements will be used in order to promote the business. Posters will be made all- over the town and in the newspapers. As a result of lack of sufficient start -up capital, the business will not be advertised in the media during the initial stages. However, in the future when capital expands, the business will be expanded to more parts within Cambridge and advertisements will be made in the media. The target customers will be young men and women since they are the ones who eat more from the street cafes. College students are seen as the major customers and therefore promotions will be conducted in a number of colleges around where food will be sold to them at a subsidized price. This will catch more customers who will be coming to eat from Classy Foods Meal Cart. Once the business expands, free lunches will be offered on certain types of foods on certain days and to a certain group of customers as a method of promotion. 4.3.1 Pricing strategy The prices for all the foods offered at Classy Foods Outlets will be aimed at attracting as many customers as possible. The fact that the main target customers are young people especially the college students means that the prices must be as friendly as possible. It is understood that students do not have a source of income. They cannot afford a high priced snack. Lowering the prices of fast foods will also attract other customers since most people are always willing to spend as little as possible but are keen to get quality services (Smith, 2012). This will be helpful in giving the business a competitive advantage and getting many customers. The prices of our products will be reviewed every four months so as to ensure that they stay competitive. Fair prices will give the business a competitive advantage (Mills, 2002). 4.4 Sales strategy The sales strategy of the business will be to expand and open new outlets so as to increase the revenue (Newby, 1999). Each of the outlets will be expected to have its own customer base. Therefore, as more outlets are opened in different parts, the customer base will increase and the total revenue will also increase. Peak sales are expected during summer holidays when most college students are not in school. At this time, most young people like hanging out in towns and they are likely to buy more. The sales strategy will also aim to increase the annual sales at a rate of 10% for the first years but is expected to increase as the business establishes itself. The market trend for first foods and for meal carts in particular is on the increase in the United Kingdom and therefore the sales are expected to grow in the future courtesy of the nature of the market. Business promotions and advertisements will be used in order to increase the sales volume. Adverts are very effective if done in the right way. They can attract customers from all corners and increase the sales volume. Another strategy that will be used to increase the sales volume will be to ensure top quality foods and services which will be offered at a relatively low price. Customers are always willing to spend as little cash as possible and get the best quality possible. Classy Foods recognizes these wish by customers and is willing to give them what they want. Meal cart is mobile and therefore this advantage will be used to increase the sales volume. The cart will be moving to areas where more potential customers are perceived. Therefore, the cart will be expected to be moving along the major streets of the town and to areas where there is more population. Since the main customer targets are the youths, the cart will be moving to areas where there are more youths. During weekends, the sales are expected to be increasing significantly since many people like to have fun. Many youths are never in schools during weekends and therefore are likely to hang out in town and buy our products in the process. To take advantage of this, more food will be prepared during weekends. 5. Business Operation This refers to the delivery of goods and services to our esteemed customers. The business operation will be carried out by several employees each of whom will be working on the area they are specialists. A meal cart is not like a large restaurant or a sit- in cafe. There is no space for many workers. Only two or three people will be hired for the first days of the business. The employees will be increased as more carts are opened within the city. The business operations will be running from 8 A.M to 8 P.M Monday to Saturday and 12 noon to 8 A.M on Sundays. It will also work closely with the suppliers so as to ensure that food is always available at any one time. Stocks out leads to walk outs and we would like to avoid this as much as possible. When a customer walks out, he or she goes to the competitor for service and this does not give a guarantee that they will come back later. The business will also work closely with other similar service businesses. Since it is a start- up business, consultations with other established businesses will be made so as to seek any relevant advice from the experts. This will be helpful since it will minimize the mistakes that are likely to occur while starting a business or will actually eliminate them completely. 6. Financial plan I am the sole owner of the business and therefore I am the one to contribute all the capital required. However, since I do not have enough capital, I will seek loan from the bank which will be payable within the time that I will agree with the bank. The loan is expected to be a long term funding though the repayment period should be within a maximum of two years. The start- up capital will be 4000 pounds. I will contribute 2000 pounds and the bank will lend an extra 2000 pounds to make a total of 4000. A number of assumptions are to be taken into consideration when preparing the financial plan. First, it is to be assumed that there will be no major economic changes in the foreseeable future that are likely to affect the food industry. A major change in the economy is likely to lead to great loses. However, the economy is relatively stable at the moment and is expected to stay that way in the near future (Dellepiane, 2004). The business will have established itself and will be stable. Secondly, it is to be assumed that there will be major changes in the interest rates for banks and also in the government grant funding. Another assumption is that the cost of foods will not exceed the total direct costs. It is expected that the costs of food will be less than that of direct expenses. Finally, it will be assumed that the demand for our foods will increase steadily for the first four years and therefore the operating expenses are likely to increase. This assumption will be important when preparing a cash flow (Arffa, 2001). 2000 pounds will be spent on assets and start- up operations. 6.1 Break- even Analysis A break- even analysis will be based on the costs that are expected to be incurred for the business operations. The fixed cost will include the cost for acquiring a cart. The marketing expenses will be minimised as much as possible. In- expensive means will be used for marketing purposes. The average revenue will be based on the number of units sold and the price set for each unit. Having made assumptions on the total amount of costs expected to be incurred; this gives an insight on the number of units that should be sold and price to be set per unit so as break even. This will be important since it will be an indicator of the level of marketing needed. It will also ensure uninterrupted business operations. 6.2 projected cash flow The table below illustrates the layout for a simple cash flow forecast. JANUARY FEBRUARY MARCH APRIL MAY JUNE Cash sales 2500 2750 3025 3327.5 3660 4026 Credit sales 500 550 605 665.5 732 805 TOTAL CASH IN 3000 3300 3630 3993 4392 4831 Stock 1000 1100 1210 1331 1464 1610 Wages 500 500 500 500 500 500 Other costs 500 550 605 665.5 732 805 TOTAL CASH OUT 2000 2150 2315 2496.5 2696 2915 NET MONTHLY CASH FLOW 1000 1150 1315 1496.5 1696 1916 Opening Balance 1000 2150 3465 4961.5 6657.5 Closing Balance 1000 2150 3465 4961.5 6657.5 8573.5 Critical Evaluation The business is expected to be viable since the strategies that are set are all capable of giving it a competitive advantage. First, the business will make its products know through advertisements on newspapers and posters. The adverts are expected to bring customers from all over the town since the business location will be indicated on them. Our target customers are young people and low income earners. Young people are known to eat snacks and soft drinks. College students consume a lot of snacks and fast foods on their way from school and during lesson breaks. The low price that will be set on the products will attract most young people and low income earners. Further, the fact that the cart is able to reach customers where they are is an advantage and will assist in increasing the level of sales. Secondly, to reduce the expenses all the marketing activities will be done at a low cost. In addition, a few numbers of employees will not be costly for the business. Raw materials for preparing food will be sourced from cheap places. The high expected level of sales will give the business good profit margin. It will be possible to achieve the projected growth rate and also the projected cash in -flows. I have knowledge in management and accounting and therefore I will be able to manage all the finances and activities so as to ensure that the business achieves its goals. Conclusion Classy Food Meal Cart is expected to succeed since the economic environment at the moment is favourable. The industry is growing and this represents a real chance for the business to grow with it. The business is set to start as soon as the start -up finance is available. The town is always busy and therefore there are many customers hence the sales turn- over is expected to be high. Reference List Arffa, R. C. 2001, Expert financial planning: Investment strategies from industry leaders, Wiley, New York Dellepiane, N, 2004, Integrating the operational and financial components of the short-term company plan, Managerial Finance, Vol. 30 Iss: 5, pp.3 – 28 Greenley, G, E, 1989, An Understanding of Marketing Strategy, European Journal of Marketing, Vol. 23 Iss: 8, pp.45 – 58 Hormozi, A. M., Sutton, G. S., McMinn, R. D., and Lucio, W, 2002, Business plans for new or small businesses: paving the path to success, Management Decision, Vol. 40 Iss: 8, pp.755 – 763 Mills, G. 2002, Retail pricing strategies and market power, University Press, Melbourne Mintzer, R., & Entrepreneur Press, 2011, Start your own food truck business, Entrepreneur Press, Irvine, Calif Newby, C. 1999, Sales strategies: Negotiating and winning at corporate deals, Kogan Page, London Paswan, A. K., Blankson, C, and Guzman, F, 2011, Relationalism in marketing channels and marketing strategy, European Journal of Marketing, Vol. 45 Iss: 3, pp.311 – 333 Schiraldi, H, and Silva, J, 2012, Writing a business plan: reference tools to assist budding entrepreneurs, Reference Reviews, Vol. 26 Iss: 8, pp.7 – 9 Smith, T. J. 2012, Pricing strategy: Setting price levels, managing price discounts, & establishing price structures, South-Western Cengage Learning, Mason, Oh. Thomas, E. 2012, How to start a home-based food truck business, Globe Pequot Press, Guildford, Ct Read More