The Financing of the Comfy Den Establishment - Case Study Example

BUSINESS PLAN FOR THE COMFY DEN Table of contents Transmittal letter…………………………………………………………………3 Executive summary……………………………………………………………….5 Australian SMEs…………………………………………………………………..6 Factors that affect the failure or success of SMEs………………………………..7 Leadership and entrepreneurs……………………………………………………. 7 Characteristics of successful entrepreneurs ………………………………7 Janine Allis………………………………………………………………………..7 Opportunities for Comfy Den………………………………………………… ….8 Nature of business…………………………………………………………8 Viability of this business…………………………………………………..8 Legal structure: …………………………………………………...8 Market size……………………………………………………….10 Target market…………………………………………………….10 The nature of the product………………………...………………10 Competitive edge…………………………………..…………….11 Finance…………………………………………….……………..14 Reference List …………………………………………….……………..15 1. Transmittal letter To Mr. Lee. As earlier agreed in the last meeting, you asked for more information on the Australian business environment and the performance of the SMEs here in Australia. The information is provided in this and also herewith is a business plan for the proposal of the financing of the Comfy Den establishment. In addition some information on Janine Allis is also included in this report. This project will involve a bed and breakfast establishment around the Darwin city in the northern territory. The tourist visitation in the area has been low but there has been notable increase in the number of visitors both domestically and internationally wanting to experience the various natural sites, beaches and indigenous culture. This has been due to the government intervention which has seen the visitation at Darwin increase with a rate of 4% on March 2010 as compared to the visitation on March last year, visitor nights increased with 14% and expenditure per visitor improved by 10% (Tourism NT march 2010, Para 12). As a result, this has seen some a (NT 2009, Para 13). According, to the official site of the Northern territory Tourism ministry the population of the tourists in the area is expected to rise (NT 2010, Para 2). As a matter of fact, the Minister McCarthy cited the entry of Tiger Airways service was bound to bring with it an addition 20,000 tourist. This is just an example of how the face of tourism in the northern territory is expected to change tremendously. Indeed, the services of the Comfy Den will come in handy with the expected rise in the tourists’ visits. Another major reason why this venture is bound to be fruitful and bring profitability is the strategy of Aviation Futures 2015 (NT 2010, Para 4). According to the NT (2010, Para 3) government, the main strategy will be to grow the number of airline services in Darwin area. More over, this area holds alot of potential with the rich cultural festivals and events which are held here. The construction of water front precinct has seen the number of the tourists and demand for the holiday and short term accommodation arrangements increase significantly and Comfy will be able to cash on this wave. The Precinct is projected to bring along eleven thousand visitors and with it will also result to seventy six thousand visitor nights and the economic benefit is approximated to be to the tune of $900,000 (CDU 2009, p.11). The presence of the government in the territory continues to bear fruits with resuming of airline services in the area. Another feature which is most likely to attract tourists is the Crocosaurus cove which was opened in 2008 cost a whooping thirty million dollars (CDU 2009, p.9). 2. Executive summary The Comfy Den is bed and breakfast establishment to be located around Darwin city. The Den will have customized rooms with themes as its core product with the actual product being accommodation and a hearty breakfast. The target market shall be the tourists coming into the Darwin to enjoy the indigenous culture, Causarian beach and other natural sceneries and the visitors coming to the Causarian campus a branch of Charles Darwin University. This makes the establishments unique as other bed and breakfast establishments provide standard service with no tailored products for the needs of different clientele. As a matter of fact, the establishments offer an ordinary service and are away from the Casuarina campus, which offers accommodation to the students taking various studies in its premises. Indeed, Charles Darwin University located in Northern territory provides a reliable market for the enterprise. 3. The nature, number and characteristics of Australian SMEs ABS defines a small business to be run by an owner with a work force of between five and nineteen employees. In addition, the bureau further defines a medium sized business to be an enterprise with a work force between 20 and 199 employees. Large businesses on the other hand could be defined as commercial establishments with more than two hundred employees with micro enterprises having less than five employees beside the owner(s). An SME is a business enterprise with a workforce of less than two hundred employees. The SMEs make up more than 90% of commercial establishments in Australia (ABS 2007, Para 2). It is reported that in the year 2007 there were over two million active businesses with an entry rate of seventeen percent being reported between 2006 and 2007(ABS 2007, Para 4).. This compared to the period between 2005 and 2006 where a rate of around 16% was recorded translated to around three hundred and fifty new business. However, at the same time the exit rate for the enterprises during the period between 2005 and 2006 was recorded by ABS to be 14.9% but was reported to have declined in the subsequent period between 2006 and 2007 with the rate of around 14.6 percent(ABS 2007, Para 8).. Indeed this translated to around 300,000 enterprises winding up their business in Australia. The smes continue to be a backbone of Australian economy. Just to illustrate how the smes form the majority of the businesses it was found that around 60% of the businesses in the year 2007, either had a characteristic having sole proprietorship or having a work force of less than twenty employees(ABS 2007, Para 10). It is worth noting that of those smes had employees, around seventy percent had between one and four workers and only around six thousand businesses having more than two hundred workers translating to only 1% of the active businesses in 2007(ABS 2007, Para 7). It thus suffices that the rate of business failure and entry is almost the same with more than have half of the businesses being run by the owner and with no other employees. 4. Factors influencing SMEs’success and failure From an earlier observation it was found from the statistics that the difference in rate of business failure and entry to be very marginal in Australian. According to Schaper and Volery (2007, p.78) most of the smes in Australia fail due to lack of a business plan and requisite formal training in management. However, closing a business doesn’t necessary translate to failure as some business establishments enter into mergers; change the management with some owners selling off the businesses to engage in other activities. One key reason for failure of SMEs business is failure to embrace information technology in the running of the enterprises. In addition, most of these businesses lack proper business plans and thus do not have clear strategy of implementing on the goals and the objectives of the enterprises 5. Leadership / entrepreneurs 5.1 characteristics of successful entrepreneurs An entrepreneur is defined as an individual who natures a business idea develops it and utilizes resources with a purpose of making profit. For instance, in Australia Dick Smith and Gerry Harvey could be described as successful entrepreneurs. In essence, an entrepreneur seizes an opportunity, forms a business entity by use of resources in a business-conducive environment. Successful entrepreneurs possess economist and behavioral characteristics. The entrepreneurs have qualities of risk taking, innovation and possess the ability to effectively use the resources. In addition, they are high achievers, with a high sense of control besides possessing the propensity to take risk. 5.2 Janine Allis According to Boost Juice (2009, Para 1) Janine Allis saw an opportunity in the heath food sector back in Australia when on a trip to America with his husband. Upon returning to Australia she decided to take risk and she raised $250,000 to implement her idea (Boost Juice 2009, Para 3). From her own admission she never looked back and opened the first store for health fast foods and drinks in Adelaide, Australia. The task of establishing this brand was a big one but Janine had a vision of opening several stores with this idea. As matter of fact, with the first store being opened in Adelaide, within a span of six years, one hundred and eighty nine stores had been opened. She initially had to participate in the start of the business and had to do the menial preparation work of preparing the first store. She then developed the business idea into a structured business plan which has since been preserved in Boost Juice history up-to to now. 6. Opportunities for Comfy Den. 6.1 The nature of the business The Darwin area has the potential of more tourists’ visits, outdoor markets with items from the indigenous communities, incredible hiking sites, national parks and walking paths to attract the adventures. The comfy Den which will offer bed and breakfast services will be able to cash on this lucrative market. 6.2 Viability of this business: 6.2.1 Legal structure: The comfy den shall be a small business with six employees and under jurisdiction of the Australian authority. Human resource A manager will be in charge of overseeing the whole operations of the Comfy Den. The manager shall be in charge of coming up and implementing on all business operations. The other staff members shall be used in the day to day activities of the Den which include the desk operations, housekeeping, guest relations, preparing of foods and service and customer relations and promotion of den’s packages. However, the account and other facilitators who might be consulted are classified as contractual arrangements in the cost estimates. The employees shall be required to have extensive knowledge around the Darwin area besides having the necessary qualifications in the hotel operations. Special emphasis will be on the chef who will be required to have excellent culinary skills of preparing the local dishes. Protection In ensuring guests have accident free and leisurely stay at comfy den the management of the hotel will ensure that there are fire and burglar detectors, ensure that the recreational places within the establishment are safe to use, the guest rooms have deposit boxes and fire evacuation plans are in every guest room. Reservation. The basis of the rates is to be on the basis of double occupancy and payments of the services are acceptable on the visa, master card and other major cards. It will also be possible to make online reservations through the comfy den’s website. The hotel shall be open throughout the year and the reservations for the customers shall be made on the ease of the guest. The rates for the first time guests shall be discounted to encourage repeat visits. Trademark The logo of Comfy Den will be a crocodile under the palm tree with a background of a beach area. The crocodile symbolizes the jumping crocodile of Adelaide River with the beach symbolizing the Casuarina beach. 6.2.2 Market size The strategy at Comfy Den shall target the 1% of the 720,000 visitors who visit NT area. In addition due to lack of the accommodation facilities nearby for visitors frequenting Casuarina Campus Comfy Den plans to take 50% of the visitors who visit the campus. 6.2.3 Target market According to ABS together with the population of Palmerston the Darwin city has a population of 125,000 people (Darwin 2009, para6). The market niche will be curved with special emphasis to the visitors coming to the Casuarina Campus, the tourist frequenting the Casuarina beach and the surroundings. With 720,000 visits being reported in 2009, Comfy Den is expected to have more than 60% representing new visitors for coming for holidays, 20% for local tourists and 10% representing the visitors coming into Casaurina Campus. 6.2.4 Nature of product. The core product will be the customized rooms. The den will offer services to the tourists visiting the Darwin city looking for cheap accommodation at Casuarina beach and near the Casuarina campus of Charles Darwin University. The den is to allow the guests to enjoy the services and hospitality absent from the local hotels and inns at affordable rates. Indeed, the Comfy den will uphold high hospitality standards while providing a unique ambience with high quality in all services including food preparation, sanitation, housekeeping and safety. Accommodation The Comfy den will be located 5km from the Casuarina Campus and a walking distance to the Casuarina beach and Casuarina shopping centre. The themes of the individual rooms of the Comfy Den shall display the uniqueness of the culture of indigenous communities around the Darwin area. The very reason for the Comfy den is to create an unforgettable experience that will not only create long-lasting memories in the minds of the guests but the experience will make them not to want to leave. Breakfast menu (actual product) The breakfast shall be served in the in the rooms or the dining area. Hot oatmeal served with cinnamon, raisins or apples. Ham and eggs Burritos served in flour tortilla Blueberry and apple cinnamon cakes Ham and French toasts. The first two choices are made available to the guests in the Comfy den and they are than left to choose on the other one option. Other special dishes could be arranged with the management. 6.2.5 Competitive edge The comfy den will be known for its unique selling proposition which will be the room themes. The furniture will be customized to the different themes of the rooms. In addition, the rooms shall have specially made shower heads, very thick towels and bathrobes. There shall consist of three breakfast areas that include the room area the dining area and more so the porch area. The suite room shall also have special features such as Jacuzzi with other extra features being a fire place, room temperature controls which will be individualized in each room. In combining both the internal and eternal features in ensuring the comfort of our guests, the exterior of the house shall have the trappings of an added porch, picnic tables, BBQ, and lawn landscaping and outdoor furnishings. Scenery of the Casurina beach will complete the picture. With this customized service including rooms with individual themes with the service tailored towards the needs of the guests coming to the natural attractions, the beach, the Darwin city and the Charles Darwin University, Comfy Den will standard out from the standard service which is offered by the other competitors. This was made possible after a stringent Research and development activity with a strong identity and outstanding quality being established by the Comfy den in the restaurant fraternity around the Darwin area. Room Bed (AU$) Bath internet Fireplace rate comfy 55 Jacuzzi with shower available 40 Feathers Darwin 78 Jacuzzi with shower Available 50 Eden 60 shower Not available 48 Bremer 70 Jacuzzi with shower available 60 Special activities There shall also be special activities which shall include 1) Organized trips on the Casuarina campus 2) Packages will be available for guests holding private parties 3) Relevant information will be relayed with the ‘things to do’. 4) Guided tours to Ching wah temple and local shopping centers. 5) Crocodile jumps in Adelaide River. 6) The cultural festivals 6.2.6 The promotion of the initial budget shall involve printing of pamphlets to be distributed and placing of advertisements in the local radio stations. A website shall also be unveiled to and affiliate advertisements of local travel companies shall be targeted. 6.2.7 Finance Start up costs. Insurance and other services $100,000 Land and construction $400,000 Marketing $20,000 Beginning inventory $100,000 Supplies and equipment $200,000 Licenses and permits $10,000 Total $830,000 Monthly expenses Pay roll $100,000 Sales and marketing and other miscellaneous expenses $50,000 Mortgage payment $10,000 Equipment and other goods $5,000 Utilities $200,000 Insurance $100,000 Total expenses projected &365,000 Reference List Schaper & Volery 2007, Entrepreneurship and Small Business Management. pp12- 482 ABS, 2009. Darwin area http://www.cdu.edu.au/campuses/casuarina/area.html NT, Tourism (2010) Darwin welcomes return of Tiger Airways. http://www.tourismpnt.com.au/latestnews/vw/1/itemid/115.aspx?skinsrc=%5bg% 5dskins%2fcorporatev2%2fcorporate_content_news_article Boost Juice, 2009. Boost Juice Bars - About_Boost-History http://www.boostjuicebars.com/about-boost-about-history.html Tourism, NT 2010. Northern Territory Australia: Year Ending March 2010 http://www. tourismnt.com.au/Portals/3/docs/research/Quick_Stats_YE%20Mar% 2010. Pdf Tourism, NT 2009 Regional Tourism Profile: Darwin,www.tourismnt.com.au/nt/system/ Galleries/ download/NTTC_Research/Darwin_YE_Dec06-08.pdf CDU, (2009). Population and Tourism Studies Group School for Social and Policy Research Charles Darwin University Northern Territory 0909. www.cdu.edu.au/population population@cdu.edu.au. Pp. 1-20 Australian Bureau of Statistics (2007). 2006 Census Community Profile Series - Darwin City: Basic Community Profile, Catalogue No. 2001.0www.abs.gov.au/ Websitedbs/ D3310114.nsf/home/Census+data, Read More