Success Strategy and Business Factors of the Sift Company - Essay Example

Introduction & Company Background In the year 2008, Andrea Ballus decided to open a Cupcake shop: Sift. The idea for Sift came, as she would not find creative cupcakes for her wedding. Andrea had a history of baking as her mother often baked and decorated her birthday cakes from when she was little. This childhood baking experience along with her passion propelled her dessert bar into the Bay Area spotlight. Andrea has also received much help from her husband who manages the finances of Sift and is at times in the business offering a helping hand in the baking and delivery all in an effort to make Sift a better business and a successful one too. Since its inception, a few members of staff have been on board and they include Corey Fanfa who joined the Sift team after quitting her career. She spent most of her childhood with Andrea, the baking business was not new to her either, and she quite enjoyed it. Sift has been enlisted on several Food networks including the cupcake wars where Andrea and Corey entered. This gave Sift the much edge that they needed and helped improve the skills of the business and learn what they needed to do to make the better cup cakes. For Sift, the business is just not a business but a passion for them as they are engaged in an activity that they love and are a passionate about. Sift has a wide market being in a college town and ensuring that the customer is satisfied with the product has seen the business grow in leaps and bounds to where it is today. Evaluation and Strategy Andrea, Her Husband, Jeff and Corey are the managers of the business and the key decision makers and they feel that is about time that the business expanded and became the premier cupcake business of choice in the Bay area of San Francisco. Cupcakes are an extremely popular product in the United States base on the fact that they are cheap and also very sweet and yummy. They are also easily accessible and when well made, they give the client a satisfying feel. The product was made popular by the movie Sex and the City and has since then grown to the extent of having a food channel Cup Cake Wars, which Sift occasionally, display their product offerings. The main problem facing the goal that Sift wants to achieve is their line of Credit. They needed to hire more staff that will help the business to rapidly expand and become the premier cup cake shop. The current line of credit that they have in the bank cannot be used as it will hamper the efforts that they have of seeking the small business loans which they badly need to ensure that they become the premier cupcake shop in san Francisco. To be able to achieve these goals, Sift needs to clearly map its goals and objectives as well as know what it wants to achieve as of now. What is important to them as of now is to acquire the capital through the loan and hence expand to become the premier cup cake shop. However, their efforts can be hampered by the lack of expertise as the three of them cannot quite manage to handle the bigger business and they will require more skills and competencies to be able to meander through it. The business has several factors working for them against those working against them. Firstly, there is a huge demand for cupcakes in the market. This means that in spite of the harsh times, there will always be demand for the cakes. The cost is relatively cheap which means the consumers can afford the product. The size of the cupcakes is small and hence not a big indulgence especially with everyone being weary of their health. The product is viewed as a snack for getting the much needed sugar fix as people watch what they are eating. The other success factor for the business is a market niche, which is already established. The business has a huge customer base in women who are high-income earners and are sure of what product they are looking for and what product they want. There is also a presence of a huge market online for the business. Sift has been able to grow to a large business since its inception with the increased number of stores and shops. They have also been able to grow from strength to strength in terms of earnings and their returns have been amazing. Sift has also been able to grown in terms of the number of Staff and the Space they occupy. Another factor that Sift has grown is the number of royal customers that they have, with the growth of any business, there comes a change in the dynamics of making it work. The marketing strategies previously used can no longer be applied to the business as the business has rapidly changed. There are also new needs and wants in the business such as more capital for the expansion and the growth of the firm. All these factors have to be put into consideration before the business can decide how it plans to expand. The business also needs to come up with new strategies to tackle the ever-increasing problems and learn how to stay afloat. Problems Identified Various problems face the business as at now. The first and major problem that affects the exisistence of sift is the Cash flow problems that are challenging the operations of the business. There have been increased expenses that have surpassed the revenues of the business and this has greatly hampered the expansion plans of the business and has been a factor in terms of how the daily operations of the business are ran. The business as Andre stated wants to become the premier cupcake shop in Bay and with such cash flow problems, securing financing is going to be a major challenge for them. In addition to that, they cannot hire more staff to ensure that the business stays in line with their goals and their aspirations. The other major problem that the firm is faced with is Human Resource management. The firm has had an increase in the number of staff that it has since its inception. Most of the staff is college and high school students who are from the surrounding area, which means that they are employing locals, and giving back into the community. However, with the rapid expansion of the business, it means that there is lack of proper human resource management system whereby the organisation has many spheres, which are not working in coordination to ensure that the result is well met. In addition to that fact, there has been a laxity among the workers where they are not the right people for the job and hence their performance is compromised. Most of the workers also lack the proper skills and qualifications to perform well and this is a major challenge for the organisation. The lack of funds by the organisation also means that they cannot hire the right person for the right job, which makes the organisation to lag behind. The other problem that is facing the organisation is the expansion strategy where the firm needs to expand but it does not have a clear path on how it wants to achieve the goals and the plans it has. The other issue that faces the firm is the absence of mentorship and plans, which will sail the organisation through its goals. The organisations seems to be overwhelmed by the many opportunities it identifies and jumps onto each one of them without a clear plan and consistency which therefore affects how the organisation will function and how the goals will be achieved. This makes the firm overwhelmed by the many goals and shorter objectives it has set for itself and makes it stop focusing on the core business of theirs. Stiff competition is also another factor that has affected the business the most. There are more than 100 shops in the Bay area of California that specialize in the cup cake business and for Sift to be able to compete favourably with these competitors, they have to have a very aggressive campaign which will ensure these goals are achieved. The campaign may include advertising, social media, online presence, serious and more concrete campaigns. The business also needs to diversify the product offering that it has if they want to compete favourably with the other firms. This may include opening up different channels of sales such as mail order, which the business is yet to embrace. The final problem Sift has is the management structure. Sift is a very good business that has been able to maintain profitability as well as employ many people however, they don’t have proper management structures. This is evident with how the human resource is managed. The hiring policies are not concrete. In addition, the decisions are not made in a structured way. The roles of the individuals are not well define which may therefore hamper the business operations and ultimately cause the business to come down. Suggested Options There various solutions or options that the firm can adopt are; come up with a proper management of cash. Jeff acts as the CFO of the company and in that, case he may decide to adopt stringent measures in terms of the way the finances of the firm are managed and used. Ensuring that they are in constant talk with the banks to ensure that they maintain proper and enough cash flow in the business is another thing that the firm can do to ensure the business has proper and enough cash flow. Another measure that can be instituted to ensure that the firm maintains good cash flow in the business would be to ensure that they have several accounts with each for a special purpose. Such as expansion, float money, sales, purchases such accounts will be based on the projections that the business will; have made before embarking on making any plans concerning the business. The other option that the business has is in terms of managing of the human resources. The human resource of a business is very important as it helps the business grow and forms the most important asset of any business organisation. It is the role of any business organisation to identify talent that it needs for the business and ensure that they maintain the same talent for the future of the business. They also have the role of ensuring that the people they identify and recruit for the organisation will ensure that the business maintains and achieves all the goals it has set for itself. The human resources of the company is like the brands of the business and like the old saying goes a happy worker means that there is a happy customer which is important. The human resource management should ensure that there is proper remuneration of the worker as well that the needs and the wants of the workers such as a good work place environment are well taken care of. In terms of the human resource management at Sift, what needs to be improved is the clear definition of the roles of the employee, clear hiring system as well as employee appraisal, which will see better management of the talent available and in all instances ensure that there are the right people for the right jobs in the firm. Sift also needs to plan ahead of its time and realise that the business is rapidly expanding and for that, matter they need to have strategic, tactical long-term as well as short term plans to ensure that the business succeeds and achieves all the goals that they have set for themselves. The plans will help the business stay on the right course. The plans are also important, as they will act as a mantra towards the achievement of the goals of the business. They will help the management of the business to stay up front and act as a light towards the success of all the goals of the firm. The planning will also help the business to forecast about the future by being able to see and plan on what can be achieved within a given span of time. Forecasting is important as it helps the business stay afloat even in turbulent times and also helps the business know if it is still on the right channel and course of the business which is a very important factor for any firm. Marketing of the firm has been successful and they have made significant gains, which could not be achieved under normal circumstances. In addition, they have embraced all tools that are used to market businesses currently. However, there are still more options that can n be exploited and the business needs to weigh such opportunities and in that effect exploit them for their own personal gain. These may include mail order and use of sites such as amazon.com and this could largely improve and increase sales of the firm and thereby boost the cash flow, which has been under for long period. The other challenge was in the management where the firm needs to have a clear definition of roles. This will help make it easily governable and easy to manage. The employees should know their roles and have managers at each department with a given number of employees. Each of the branches should be autonomous but have a centralized a management system which Andrea can from time to time use to monitor the performance of each of the branches. The management structure should also be elaborate and with constant updates on how each is doing, sales targets that each should meet as well as clear definition of the managers of the firm. There are also problems emanating from lack of skills by the managerial figures, which should be tackled by employing only the competent staff. One thing which has been instrumental in bringing the realization of profits on the part of the company is that there has been significant reinvestments undertaken by the company for the purpose of increasing the operation. This is also achieved through establishing of a favourable niche for the company’s operations. Company Financial Analysis The activities which the business has embarked on seem to be working positively for the business. This is something which is well highlighted by the forecasted financial statements from the year 2011 to 2013. The net income for the business is forecasted to rise in the coming years. For example, in the year 2011 it is at $ 155,820. By the end of the financial year 2013, this is forecasted to be at $214,954. What these figures point out is that the industry of operation significantly favors the company. The figures highlighted in this case are set to be achieved in the event that the company maintains the current locations which it has. If there is the possibility of expanding and having an online presence, the figures will rise even further. For example, if this was to be done, the forecasted income that will result only from this expansion is set at $1,304,666. In as much as profits were coming into the business, it is still expected that the costs which come in will be controlled for the purpose of ensuring that the benefits realized outweigh the associated costs of operation. When looking at the business using the 9 cell matrix, the one thing which is realized is that there are certain elements in the business which are more profitable than others. In the below illustration, it is pointed out that rapid expansion in retail stores will bring significant profit to the firm. Success Factors There has been key success in the firm. This are clearly indicated by the rapid expansion that the firm has undertaken. Other factors that tell of the success of the firm are in the number of employees it has as well as the number of customers who visit the place. In addition, there has been a lot of encouraging and positive feedback whereby happy consumers leave messages and give positive feedback about the organisation’s goals and achievement. The other success story is that of the firm being used widely as a model on how small and medium business enterprises are rapidly changing and growing. This is a true testimony that in deed Sift is a success. The other factor has been the recent diversification of the product offering which means that the business is able to give the consumer a wide array of products, which they can happily enjoy. Business Strategy The strategy of the business up to this point has been somewhat a success despite the many challenges that the business has face din its formative years. It also means that there has been a lot of combined effort and hard work towards making the business what it is today which is a true testimony of passion and ideas becoming a success. Works Cited Hawkins, Del I., Del I. Hawkins, Roger J. Best, Roger J. Best, Kenneth A. Coney, and Kenneth A. Coney. Consumer behavior: building marketing strategy. 9th ed. Boston: McGraw-Hill Irwin, 2004. Print. Harley Krohmer, Kuester, Sabine & Homburg, Christian. Marketing Management - A Contemporary Perspective (1st ed.), London. 2009 Wilson, R. M. S., and Colin Gilligan.Strategic marketing management planning, implementation and control. 3rd ed. Amsterdam: Elsevier/Butterworth-Heinemann, 2005. Print Read More