Business Opportunities for The Angles - Coursework Example

Business Plan –The Angles Business Plan –The Angles Executive Summary The Angles provides high quality architectural services for its customers at premium rates offered in the market. The Angles aims at providing architectural services, logistic support and consultation at lowest prices, at the same time, maintaining its operations efficiently and fulfilling the requirements of the target market. To avoid disruptions in cash flow, the target market would consist of customers who look for innovative and state of the art unique architectural services. The Angles will be operating from the central office initially which will be launched at downtown London. Services will be delivered to customers from the central office and at customers’ preferred location. Staff that will be hired will be trained to meet customers courteously and only those personals will be added to the team who are qualified and licensed architects. The Angles will focus on creating convenience and value for the customers. The advertising strategies will focus on print media as a medium to create awareness and promote offers and discounts to the target market. The target market will comprise of people belonging to the income levels of £ 25,000 per annum. As understood by the management that architectural service is a onetime expense, The Angles will provide its customers with services at premium prices keeping in view the potential of target market. The Angles will be operate by the owner, Alex Ferguson, who is a qualified architect from Leeds and have experience of running businesses. He also has an experience of working in an architectural firm. The management of The Angles will minimize the operating costs by hiring employees according to the need of time. Porter’s Five Forces Analysis In this section, a comprehensive analysis of competitors in the architecture industry of UK, threat of new entrants, threat from buyers, threat from suppliers and threat of substitute products are presented (Hill and Jones 2009). Competitive Environment The Angles would consider two architectural businesses in London as its major competitors. First one is the Designs, located in Central London. This architectural business offers one of the best services to its customer base dispersed all over UK and provides both online and personal visit facility to its customer base. The second major competitor of The Angles is Art Horizon which provides architecture services and consultation. The Art Horizon is specialized in providing architectural solutions to its customers keeping in view the demands of the modern times and the customers are provided with visual projection of their desired designs for the offices and homes. In addition to these two major competitors, there are several small scale architects, which possess potential to become a threat for The Angles in future (Wilkinson 2011). Threat of Substitute The biggest threat to The Angles’ business is from private contractors. These private contractors offer architectural services at lowest rates and bring their own labor, which helps the customers to acquire services at cheaper rates. The Angles can minimize the potential of these private contractors by educating the target audience that the private contractors do not usually apply quality material for building up a good design. Threat from Suppliers Due to the increasing buying power of people in UK, it is estimated that every year, nearly 25000 new homes and 1000 offices and buildings are built. Suppliers of architectural industry do not bargain much on prices with architects due to the availability of high number of business opportunities. These suppliers focus on building long term relationship with architects which suggests that the suppliers would keep their bargaining terms soft. On the other hand, the price of material which is used in delivering architectural services is monitored at government level. In this way, there are no major fluctuations noticed in the prices of this material (UKTI 2010). Threat from Buyers Due to the availability of large number of architects in the market, customers of architectural industry enjoy great bargaining power. It becomes difficult for architects to deal with customers on their terms and the customers are always ready to switch to other architects who are providing same services at lower rates. In this regard, architects do not usually prefer to make deals and win contracts at their desired prices. Customers are always provided with flexible price plan. Threat of New Entrants Due to the flexible barriers to entry in the industry, there is always present a potential threat of new entrants entering into the architectural industry. Therefore; The Angles will have to keep its business position and operational strategies in alignment with the business capacities and operational activities of those who are entering into the industry. Mission Statement The foremost mission of The Angles is to provide its customers with premium quality architectural services at affordable prices, keeping in view the requirements of the customers and the demand of modern designing. It is hereby declared that The Angles will put its best efforts to exceed customers’ expectations. Objectives The Angles has formulated following objectives for the first 2 years: To increase the customer base by 15% each year. Providing architectural services to the customers that exceed their expectations. Enabling The Angles to depend upon its own revenues within 1st year of launching and reaching the break even within the same time period. Success Factors Management of The Angles consider following points as its base for success: To retain customers by providing them quality architectural services. Minimize operating costs and miscellaneous expenses. Provide best possible prices for services as compare to any other architect in the market. Positioning Strategy The Angles will use its service structure to position the brand in the market and to position itself as a provider of best quality and satisfactory architectural services. People who are conscious about the design they chose for their homes and offices would consider The Angles as first choice due to the company’s ability to adapt the environment and modern architecture requirements along with premium quality material and services. As this is evident from market researches that consumers of architectural industry in UK prefer service quality and its attributes along with the structure, The Angles will have to highlight these factors in its marketing activities. Financial Plan In this section of the report, detailed income statement along with the general assumptions made are presented for The Angles. Start-up Requirements £ Copyright Fees 63,200 Start-up Expenses Legal 1,896 Stationery etc. 316 Insurance 1,106 Brochure 1,580 Advertisement 23,700 Website Designing 790 Rent 1,896 Furnishing and Equipment 118,500 Total Start-up Expenses 212,984 Start-up Assets Cash Required 47,400 Start-up Inventory 118,500 Other Current Assets 7,900 Long-term Assets 31,600 Total Assets 205,400 Total Requirements 418,384 Assumptions for Start-up requirements 1. Copyright fees are one off payment. 2. Inventory level is required by The Angles. 3. Other expenses are based on the researcher’s estimations. Start-up Funds £ Start-up Funding Start-up Expenses to Fund 212,984 Start-up Assets to Fund 205,400 Total Funding Required 418,384 Assets Non-cash Assets from Start-up 158,000 Cash Requirements from Start-up 47,400 Additional Cash Raised - Cash Balance on Starting Date 47,400 Total Assets 252,800 Liabilities and Capital Liabilities Current Borrowing - Long-term Liabilities 118,500 Accounts Payable (Outstanding Bills) - Total Liabilities 118,500 Capital Planned Investment 236,684 Total Planned Investment 236,684 Loss at Start-up (Start-up Expenses) (212,984) Total Capital 23,700 Total Capital and Liabilities 142,200 Total Funding 418,384 Assumptions for Start-up Funding 1. Loan is obtained for 5 years at an interest rate of 6% per annum. 2. Capital planned investment is expected to be raised by the investor. Projected Income Statement Year 1 £ Year 2 £ Year 3 £ Sales 541,822 1,067,265 1,171,877 Direct Cost of Sales 276,729 486,906 528,751 Other Production Expenses 0 0 $0 Total Cost of Sales 216,729 426,906 468,751 Gross Margin 325,093 640,359 703,126 Gross Margin % 60.00% 60.00% 60.00% Expenses Payroll 368,620 422,960 430,960 Sales and Marketing and Other Expenses 18,400 18,400 18,400 Depreciation 11,704 11,704 11,704 Leased Equipment Utilities 14,800 14,800 14,800 Insurance 13,600 13,600 13,600 Rent 34,000 34,000 34,000 Payroll Taxes 50,293 58,444 59,644 Other Total Operating Expenses 511,417 573,908 583,108 Profit Before Interest and Taxes (76,324) 176,451 230,018 Interest Expense Taxes Incurred 52,935 69,005 Net Profit (150,944) 123,516 161,013 Net Profit/Sales -27.86% 11.57% 13.74% General Assumptions Year 1 Year 2 Year 3 Plan Month 1 2 3 Current Interest Rate 12.00% 12.00% 12.00% Long-term Interest Rate 10.00% 10.00% 10.00% Tax Rate 30.00% 30.00% 30.00% Other 0 0 0 Revenues Revenues are generated from diversified sources. The owner of The Angles has a warehouse near port which is hired by a local businessman. The rent that this warehouse generates is included in the revenue of The Angles. Besides, consultation fee for suggesting designs, providing architectural services to customers, sales of building material and by sales of work force for building homes and offices. Services Offered Initially, The Angles is going to launch the architecture consultancy business. Services will gradually be expanded to other areas of UK where the business will offer architectural services to the customer base. By the second year of its opening, The Angles has plans to open 2 more showrooms at different locations of London (Baxter 1995). Marketing Mix Marketing mix of a company helps in understand that organization’s pricing, promotional and placement strategies and what products company is offering (Kotler and Armstrong 2010). In the coming lines, a brief understanding of The Angles’s marketing mix in UK will be carried out. Product As already discussed, The Angles will be offering architectural services to its diversified customer base in London initially, and then expand to other areas of the country. In addition to the architecture business, The Angles will take delivery of building material and work force for building office and homes as its secondary concern. Pricing Strategy Considering the target segment of the market discussed in previous sections of this report, The Angles is going to adapt a competitive pricing strategy which would help it to penetrate in the market and establish itself as the provider of premium quality architectural services and consultancy at affordable prices. Placing Strategy The Angles will be opening its first office in downtown London near residential and commercial avenues. From there, it will be easier for the company to approach corporate and domestic clients who are the biggest consumers of architectural services. It will also be easier for The Angles to catch the eyes of the target market by locating its office in downtown London, as this location is the center point where people from all age groups and professions passes by while going to work or home. Promotional Plan Considering the target market of The Angles, i.e. the people earning £ 25,000 yearly, the promotional strategy should be based on targeted advertisements. The promotional strategy should be designed keeping in view the modern architectural trends and requirements that arise from majority of the customers of this industry. What a customer of architectural business requires from the architects is innovativeness in designs and value delivered to them in the form of affordable pricing of the services. The Angles will feature sample designs of homes and offices in its promotional activities and will add comments from the satisfied customers who already have dealt with the company in past. For maximizing the reach of marketing campaign and to enable customers to understand the idea behind the business, The Angles will create advertisements that become more a source of educating customer base rather than promoting offers. As the segmentation of the market clearly suggest that the customers of The Angles would appreciate if premium architectural services are provided to them at their doorstep, The Angles will promote the designs over the web and in its print advertising campaigns so that the customers get an idea of how innovative and modernistic, Angles’ designs are. The marketing campaigns of The Angles will be based on online and print marketing as these mediums of advertising are less costly and have maximum reach. Conclusion The author of this business report has presented facts and figures in details to understand the business conditions and opportunities for The Angles and hopeful that the information provided in this paper will be fruitful for the company to understand the dynamics of the market in which it intends to enter and what opportunities in future will be present to take benefit of. List of References Baxter, M., 1995. Product Design: Practical Methods for the Systematic Development of New Products (Design toolkits). London: Chapman and Hall. Hill, C. and Jones, G., 2009. Strategic Management Theory: An Integrated Approach. NY: Cengage. Kotler, P. and Armstrong, G., 2010. Principles of marketing. New Delhi: Prentice Hall. UKTI, 2010. UK Architecture Creative Industries export guide. [Online] Available at: http://www.google.com.pk/url?sa=t&rct=j&q=architecture%20industry%20in%20uk&source=web&cd=4&ved=0CFgQFjAD&url=http%3A%2F%2Fwww.ukti.gov.uk%2Fdownload%2Ffile%2F128857.html&ei=f9sIT9uhF5GJrAf10OTXDw&usg=AFQjCNF0Ulq39_YgVNObB9PWjdi5u9Ifyg&cad=rja[Accessed 7 January 2012]. Wilkinson, S., 2011. In pictures: Architects reveal Room for London competition entries. [Online] Available at: http://www.architectsjournal.co.uk/news/daily-news/in-pictures-architects-reveal-room-for-london-competition-entries/8609776.article[Accessed 7 January 2012]. Read More