An Entrepreneurs Guide to Launching and Managing a New Business - Research Paper Example

An opportunity for entrepreneurship within Antoniou Restaurant Industry. Outline (Executive Summary).………………………………………………………………...1 Introduction.……………………………………………………………………………………..2 Competitive Advantage.…………………………………………………………………………3 Business Structure.………………………………………………………………………………4 Business Location………………………………………………………………………………..5 The Market Analysis……………………………………………………………………………..6 Marker Trends…………………………………………………………………………………...7 The Targeted Market……………………………………………………………………………8 Marketing and Sales Strategy (Pricing and Positioning)……………………………………...9 Advertising an Promotion……………………………………………………………………...10 Operating requirements………………………………………………………………………..11 Utilities required and their supply……………………………………………………………12 Investment Cost Analysis………………………………………………………………………13 Risk Analysis……………………………………………………………………………………14 Conclusion………………………………………………………………………………………15 References………………………………………………………………………………………16 (Abstract) Executive Summary Antonius restaurant industry located at Cabo San Lucas in Mexico generated over $1.34 billion in sales in 2012. Cabo San Lucas is one of the most beautiful cities in Mexico with several tourism sites. Due to its increasing significance as the spa destination with a great variety of sites of interest built on the coast, it provides us with the opportunity to venture our business idea of selling pizza to the huge potential customers available. Our industry has experienced an average growth rate of 34% over the last five years. In order to take advantage of the market opportunity in Cabo San Lucas, the industry will launch a new full service pizzeria and bar at the beach Area in Cabo San Lucas. The new business venture will be called Pizzeria Inn. It will be located at the northern Mexico. The new industry will, therefore, feature Dine in, Take Out and also Delivery services. Introduction Most economists and researchers agree that entrepreneurship is one of the significant ingredients for stimulating economic growth as well as offering job opportunities to the jobless members of all the societies. According to Jacksack & Start (2003), globally, successful SMEs have become the primary engines of job creation and poverty reduction in the marginalized communities. As a business entrepreneur, a business plan is the only tool which can help the small business expand. It is the road map an entrepreneur needs to follow in order to realize the set goals and objectives. It is, therefore, the initial step to a successful business venture. Any business entrepreneur should, therefore, provide a business plan which acts as a guide to the whole business process. The paper, therefore, endeavors to conduct a business plan for New Antoniou Pizzeria. Competitive Advantage The new business venture will target the middle income pizza in Sparks. Pizza inn is thought to be conveniently accessible to over 90,000 targeted market consumers in this region. This includes one of the most attractive market opportunities for this venture. The competitive analysis of the business venture has identified significant market place gaps to serve as the base for the industries competitive advantage. This business venture would help Mexican middle class residents around the beach as well as far residents who come to the beach to benefit from low priced delicious dishes which maybe could not have afforded from other huge restaurants. It would also help other entrepreneurs to venture in innovative business ventures hence gain the managerial and entrepreneurial skills needed to run such a project. A total financing package of $100,000 will be used (Bygrave & Andrew, 2004). Business Structure The organization wishes to start up a Pizzeria within the existing restaurant. The name of the new business is Antonius restaurant industry taking its name from the old business. The new business plan will offer made to order pizzas and product details. Most of the products within the restaurant will be manufactured on site and retailed in a most traditional pizzeria setting. The facility of the new business initiative will feature a main dining room, bar service area, pass through window to main kitchen, service station, preparation area and a walk in area. The products will always be served in a full service dinning pizzeria setting. The dinning room area will accommodate 70 customers comfortably during peak periods (Bygrave & Andrew 2004). Business Location The business location will be instrumental to its success. The operational viability targets the middle income pizza customers in search of a lower priced menu. The targeted customer considerations relative to our location include: high feasibility, high vehicle traffic flow, most secure surroundings with plenty of packing, and highly convenient. Other competitive factors have also been highly considered like the immediate competitors within that region, proximity to customers, and police and fire protection availability (Bygrave & Andrew 2004). The Market Analysis Cabo San Lucas, especially with a population of more than 10 million people is grossly underprovided with the essential food component. For example, from cattle, less than 2kg of beef is available to an average person per year and just mere 4kg of eggs per annum is available to average person. Our business venture will feature the following food and drink specialties. Products: How products are created Services: services offered Dine-In-Service: the full service dining room will be organized and supervised by new recruited employees. Take-Out-Service: the guests will have an opportunity to place an order via phone of fax or can walk in to the restaurant and pick up their pizza. Business Hours: the management will maintain a high quality pizza service operation Delivery: delivery services will be offered to our potential customers in order to ensure that we have maintained our customers. Large scale orders which require several trips shall also be negotiated on a case by case basis (Acs, 2006). Market Trends According to the US census in 2012 data for the restaurant industry, it demonstrates a modest sales growth in the national market place. Comparing both 2011 and 2012 data for the full service eating places sector, the full service industry generated $ 164 billion in sales, up 6% from 2011. The industry has demonstrated a significant contraction in the recent years. The 2011 and 2012 consensus data shows a percentage increase of 2.3 percent over 2011. Total gross receipts for the industry were $144,649,964,000 in 2012, up 28.6 percent from 2011. The total number of workers employed in the industry was 3,904,628 in 2012, up 7.2% percent from 2011. Pizza continues to be one of the most popular oven baked delicacies in America. It is viewed as a comfort food and new topping options are rapidly capturing the interests of the health conscious public. A most lucrative market niche exists for those operations that create a most unique luxurious dinning experience as well as topping choices. The new technology today has had a positive impact on this industry. Better supply chain services have intensively expanded the availability of snack and specialty items as well as reducing costs of goods sold expenditure. Food service technology has continued in making food safer, fresher and easier to prepare and serve. The computerization process has also improved the customer access, service and tackling capabilities of the industry. Much of this technology will be integrated in to our operation (Acs, 2006). The Targeted Market The business targets middle class pizza market segment. Our customers will be attracted by our menu, accessible location and above all, our new strategy of cheap pricing. According to the 2012 US census statics, it clearly shows that the total expenditure of food purchased away from home as $2,434 per consumer unit (3 people) in 2012. This clearly shows that there is already a viable market for our new business idea for 2013. Core strategies will also be applied to target potential customers like the college level students, customers aged between 18-30 years of age, mixed gender and generally the average income earners in Cabo San Lucas. Entrepreneurial strategies like offering competitive pricing will be used. Considering that the competition within this region is quite huge, we have to differentiate out strategy from the rest of the competitors in order to realize our competitive advantage (Acs, 2006). Marketing and Sales Strategy (Pricing and Positioning) Our pricing strategy will capture and maintain the market share in Cabo San Lucia. Our pricing strategy will be convenient to the expectations of our potential customers. A flexible pricing mechanism will also be employed and it will allow us reflect the potential competitors within this region. In order to strategize ourselves effectively, we shall also be selective in our menu and services offered to our customers. Average price of menu item=$14 Food requirements $3.50 Labor costs $4.20 Total Costs $ 7.70 Price $ 14-Total costs $7.70 =$6.30 gross profit. Advertising and promotion Tested advertising strategies will also be used by the restaurant. The industry will use direct mails, coupons, flayers around the universities in Mexico as the main advertising mediums. Therefore, our advertising message and menu offered will mainly be offered to attract the demands of the diverse customer base (Acs, 2006). Operating requirements Production of the service The kitchen will be fully equipped with the following: adequate work station, storage and freezer space will be required for the progress of the business. Two separate telephone systems will also be provided to serve our customer services. The expected outcome of the business idea would be: revenues from the sale of pizza. The revenue capacity is expected to increase by 89% after the first two years of operation and to 91% beginning from year five. The entrepreneurial skills impacted to entrepreneurs in the market would help them in creating their own business ventures which would improve drastically the standards of living in the community hence empower them (Cohen, 2006). Utilities Requirement and Supply A number of utilities would be put in place in order to ensure smooth functioning of the farm. These utilities include: a) Water Supply, b) Supplementary Electricity supply, c) Paved Road Transportation, d) Drainage Facility a) Water Supply Clean water supply is a sine qua non of restaurant business. Hence, there should be provision for an alternative source of water since constant and clean water supply can only be ensured through provision of an internal borehole and, a minimum of, one overhead water tank of 5000 litres capacity. b).Electricity Supply Since public power supply is not reliable, provision will be made for a 250 KVA generating set to supplement National Electric Power Authority supply, and ensure uninterrupted supply of electricity (Cohen, 2006). Investment Cost Analysis The cost of the business plan is estimated under two main headings, viz: Capital/initial cost and operating/maintenance costs. Capital/initial Cost Based on the estimates gathered during the market survey as well as internet searches, the principal cost component of the project are [1] equipments required and delivery costs [2] lease improvement and remodeling costs [3] start up advertising [4] delivery vehicles and [5] utility hook up deposits and [6] CAM costs. These are summarized below: • Equipments required and delivery costs 200,000 • lease improvement and remodeling costs 50,000 • start up advertising 50,000 • Delivery vehicles and 50,000 • Utility hook up deposits 50,000 • CAM costs 50,000 Operating and Maintenance Costs The operating and maintenance costs are estimated on the basis of assumptions of usage rates for utilities: Water, light, fuelling and sundry expenses on a daily basis. This is much in line with average rates of utilities consumed daily (Cohen, 2006). Risk Analysis The operation of any business involves certain risks which can either be to the employees, customers and equipment. Risk refers to the possibility of adversity or loss. It is the uncertainty that affects an individual’s wellbeing. Risk involves probability of losing money, possible injury on human health, repercussions that have an effect on resources and more. In order to control risks, risk management strategies need to be applied to ensure that all these uncertainties can be minimized if not completely controlled. Consequently, risk management comprises of choosing among alternatives in order to reduce the effects of risk. It requires, therefore, the assessment of tradeoffs among adjustments in risk, the expected returns, entrepreneurial freedom and other variables. A well understanding of risk can be extremely significant to any market venture or producers as it helps in making extraordinary options in circumstances where adversity and loss are potential (Stolze, 2009). In order to control all these risks, Hazards Analysis Critical control Point (HACCP) system will be used and has been developed by the certified food protection manager. Safety in the dining area will be a priority in order to keep our customers safe. Slip and fall is the most common risks in restaurants. To avoid this menace, a yellow wet floor sign will be marked on the slippery floors sites in order to warn customers of slippery services. Safety equipments will also be provided including slip resistant floor mats and handlers. Medical services will also be offered as it is outlined at our employee compensation insurance policy to any employee injured when in line of duty. In conclusion, a research study by Paul (2012), states entrepreneurs with just the strategic section of a business plan have 50 percent more profits unlike those entrepreneurs who venture directly into a business without a business plan. The above business plan will help our new business idea to progress and be able to compete effectively in the global market. References Acs, J. (2006). “How is Entrepreneurship Good for Economic Growth?” Innovations, MIT Press Journal pp.97-107. Bygrave, D. & Andrew Z. (2004). The Portable MBA in Entrepreneurship, NJ: John Wiley & Sons. Cohen, A. (2006). The Entrepreneur & Small Business Problem Solver, NJ: John Wiley & Sons. Jacksack, M., & Start, R. (2003). A Successful Small Business, 3rd Edition. Chicago: CCH Incorporated. Stolze, J. (2009). Start Up: An Entrepreneur’s Guide to Launching and Managing a New Business. NJ: Career Press. Read More