Retail Store Expansion Programme - Essay Example

BUSINESS PLAN FOR “BUSTER’S” Retail store expansion programme WRITTEN AND SUBMITTED BY MARSH JONES Proprietor, BUSTER’s 31.07.2008 TABLE OF CONTENTS Description page Number Executive Summary………………………………………………………………………………3 I. Introduction…………………………………………………………………………….4 II. Business Environment- An Industry Overview………………………….4 III. The Business Profile……………………………………………………………………….5 Objective……………………………………………………………………………………………..6 Mission………………………………………………………………………………………………….6 Key to Success…………………………………………………………………………………..6 IV. Organization of the Business…………………………………………………………6 1. Business Description…………………………………………………………………….6 2. Owner (promoter)………………………………………………………………………….7 3. Company Legal Structure…………………………………………………………….7 4. Management team –roles and responsibility……………………………7 5. Employees- Roles and Responsibilities……………………………………..8 6. Vendors/Suppliers…………………………………………………………………………9 V. Financials………………………………………………………………………………………………10 1. Financial Analysis…………………………………………………………………………..10 2. Cost of the project for expansion programme……………………….10 3. Funding……………………………………………………………………………………………10 4. Projected profit and Loss Account……………………………………………11 5. Projected balance Sheet…………………………………………………………… 12 6. Projected Cash Flow…………………………………………………………………… 13 VI. Market …………………………………………………………………………………………………14-15 1. Market Potential 2. Sales Strategy 3. Products 4. Pricing 5. Promotional strategy 6. Location 7. Competition 7. Challenges for Retailers References/References………………………………………………………………………….16 Projected cash flow (Month Wise……………………………CHART No.1………………..17-18 Executive Summary Marshal Jones, the owner and principal manager of “Buster’s” runs a small retail business in the lobby of a large office building. The store occupies 1000 square feet of space. The shop sells a variety of mixed bag of items including snacks, pre-wrapped sandwiches, bottled/canned beverages, greeting cards, newspapers, paperback books and small gift items in his retail outlet. He earns attractive revenue of $1, 50,000-$3, 00,000 year. Marsh Jones has managed retail stores for years successfully. His experience prompted him to plan for expansion of business in the form of shifting his business to a new office building in a down town office building. He considered today’s emerging potential for retail business and the customer orientation towards buying a product after seeing, touching and try them. The firm has found potential huge for its product to sell. The main advantage is the down town city location that could fetch good customers for its product Buster initially has an objective to expand its business operations by starting one more new store after duly considering the cost of expansion, available labour, customers etc and to own a chain of 10-15 stores in downtown office building. It is planned to increase the sales by minimum 15 percent against the present sales of $1, 50,000 to $3, 00,000 and revenue by 20-25 percent. He has a plan of delivery of products at home points after three years of its operation in the new location to boost the sales and build the client base further. The expansion programme requires the new investment amounting to $20200. He is investing only $3000 out of his savings and rest of the investment is mobilized in the form of bank (long and short term credit), sundry creditors and finance creditors. The new store needs more inventories, computer, printer, Fax, and a Phone to make it more efficient and profitable. Jones employs two workers considering their professional outlook in managing retail stores, their qualification and their attitude for adjusting to the changing environment. Though there are big retail shops offering varied products in the location, but there is no threat for customers visiting Busters. There are few such small retail stores offering similar products in the vicinity posing competition. But he did not consider it seriously as competition since there is growth of retail business at a rapid pace. However this competition can be managed adapting to value based customer service and ensuring customer delight. Jone’s vast experience in doing this business is an added strength to surpass all such threats from the competitors. The market survey made by Marsh Jones revealed the fact that in USA, there is a feasibility to start a new store, since the market for the product he sells is growing. Bottled/canned beverages include drinking water, milk, soft drinks, tea, coffee and cocoa, and alcoholic beverages are moving fast in the market. The firm by virtue of its locating in a prime place got publicity. However the Buster practices some of the key strategy for publicity also. He has considered some of the important issues like customer convenience, vehicle parking, growing area and residential location when locating a retail business. I. Introduction This business plan describes a proposed venture to expand Buster’s from a one-store to two- store operation. He is planning to expand his business considering the substantial potential existing for retail business in the present day contest. Even after massive promotion of Internet and information technology, many manufacturers will find it difficult to sell their product directly to the customers. The very immensity of cyberspace will still make it very difficult for consumers to purchase every product directly through Internet. Today the consumers are orient towards buying a product after seeing, touching and try them. Thus still the scope exist for small scale retailing and the businessmen think of expanding the retail outlets to exploit the potential. And Buster’s runs a small retailing business in the lobby of a large office building. The store occupies 1000 square feet of space. Buster’s spends fifty hours a week at the store. He hired two employees each spends thirty hours a week at the store. The shop offers variety of mixed bag of items including snacks, pre-wrapped sandwitches, bottled/canned beverages, greeting cards, newspapers, paperback books and small gift items in his retail outlet. He earns attractive revenue of $1, 50,000-$3, 00,000 year. The space of the existing business is small and Buster is not happy with its merchandising. Regardless of the nature of business, there should be an adequate space for making business since it helps in expansion of business also. He wants to make it more attractive to improve his sales and to build clientele base. In the mean time Buster considers the continued importance for retail business amidst the e-business. He has planned to expand his retail business operations. Jones knew that deciding where to set up shop is a crucial business decision. “One of the most dangerous times in the life of a small retail business is when the owner must relocate because the business is growing and the existing facility is no longer adequate. This is a nice problem to have, but choosing the wrong new location can kill the growing business. Retail locations must have high visibility and easy accessibility to succeed. There are many criteria to consider when choosing a new location. Too often, business owners make assumptions about the new location without taking time to do the necessary research to evaluate the decision.”1 The owner Marsha Jones has managed retail shops before and coming from a business family. His background, education and skill have already made his shop very successful. Therefore it is decided to expand business to the new office building that will open two blocks away from the building he now occupy. The new location is chosen considering the density of population, customer convenience, and customer parking also. Ultimately Jones hope to expand Buster’s, so that it becomes a chain of 10-15 stores situated in downtown office building in the process of growing. Downtown office building that refers to a citys core, usually in a geographical, commercial, and community. This will help the customers to find store easily in their locations, besides the advantage exist in the form of reduction in advertisement costs. II. Business Environment- An Industry Overview The retail business is growing at a rapid pace in USA and other countries where per capita earning is substantial. According to the National Retail Federation, 1 in 5 American workers are employed in the retail industry.  The Department of Labor estimates that since 1990, 700,000 new jobs have been created in the retail sector.  Thats 13% of all new jobs in the United States.   At present, more jobs are provided in retailing than the entire U.S. manufacturing sector  In US there is growth of number of households and nuclear family is substantial. There is also a change in the American Household formation: the Boomerang effect-so called, where the children kept home are coming back to join their parents. It is estimated that by 2010, 40 percent of children will return to live with their parents after they have previously left home. The market for restaurant sandwiches subs and wraps are very strong in USA and other neighboring countries. Especially the Sandwich market has grown rapidly and continuously from 2001-2008 and still growing at a rapid pace. We can expect abundant potential for sandwich in the days ahead. Bottled/canned beverages include drinking water, milk, soft drinks, tea, coffee and cocoa, and alcoholic beverages are moving fast in the market. The tourists prefer bottled or canned beverages. From the day the different economies adapted to global economic policy of Liberalization, Privitisation and globalisation (L.P.G), the bottled beverages industry has seen the substantial improvement from 1990s and its growth now is at a maximum rate. Especially the bottled water consumption in U S has surpassed that of milk, coffee and Beer as reported by Beverage Marketing Corporation, U S. There is also a shift in population in developing countries also towards the bottled water in the angle of health precautions. Now a days people are worried about the quality of water available supplied by the Municipality. Therefore Despite the publicity surrounding obesity in the United States, the general consensus across the food and beverage industry is that the country is in the midst of a renewed interest in healthfulness. Perhaps nowhere is this more evident than in the juice, tea and water category. 2 In 1991, the average American household gave 5.8 percent of its total spending to gifts, a 0.3 percent increase from 1988. Households headed by 45- to 54-year-olds are the biggest gift-givers. These consumers spend an average of $1,450 on gifts, which is 62 percent more than the average household. In addition, married couples without children are the most generous gift-givers. These households spend 48 percent more than average on gifts. Households with incomes of over $65,000 spent 135 percent more than average on gifts, while they also account for 58 percent of the glassware gift market and 62 percent of the plant and flower gift market. By the year 2000, it is estimated that households headed by 35- to 54-year-olds will account for 63 percent of the gift market. 3 The thrust of knowledge has brought enormous demand for books and newspapers. The celebration festivals and adding different new festivals increased the demand for gift items. III.The Business Profile The Buster’s offers variety of mixed bag of items including snacks, pre-wrapped sandwiches, bottled/canned beverages, greeting cards, newspapers, paperback books and small gift items in his retail outlet. All the products the outlet sells are vastly used by today’s generation, specially the youths. Therefore Buster saw a good turnover in the retail business in spite of its location in a less spaced lobby. The whole globe is enjoying the boom in retailing. The change in the attitude of the people, the living standards and customer expectation for a unique or a quality product brought a see change in the format of retailing. People though look at Internet buying but vastly turning towards retail shops for their requirement. The travelers are the important constituents for retail business. Objectives Buster’s is planning to initially expand its business operations by starting one more new store after duly considering the cost of expansion, available labour, customers etc. Buster has an objective of becoming the chain of 10-15 stores in downtown office building. It is planned to increase the sales by minimum 50 percent against the present sales of $1, 50,000 to $3, 00,000 and revenue by 25 percent. Mission Buster’s sell mixed bag of items like beverages, gifts, sandwich, books, and newspapers of high quality to the customers to increase customer satisfaction and delightment. The company guarantees 100 percent satisfaction and values friendly service. The purpose is to stay long in the business with the continuous and steady expansion with adhering to quality and values. Key to success: Key to success of Buster is 1. Product quality 2. Good customer service 3. Access to manufacturers and distribution channels 4. Cost effectiveness and cost efficiency 5. Attainment of store expansion goals 6. Management of cash flows 7. Immediate adoption to the changes in the retail operation environment. 8. Effective utilization space and merchandising 9. Management of stock in the store and adopting to EOQ in inventory management IV. Organization of the Business: 1. Business Description A Buster’s is a sole proprietorship firm. Marsh Jones is responsible for arranging his own source of finance for his business. The tiny shop on the lobby offers customers a array of mixed bag of items including snacks, pre-wrapped sandwiches, bottled/canned beverages, greeting cards, newspapers, paperback books and small gift items in his retail outlet. The sandwich, gift items etc have high appeal to the customers. The current store employed two workers, each of whom works for 30 hours a week. The owner spends fifty hours a week at the store. Buster’s plans are to expand the business by shifting the business to a new and spacious building. The firm will continue to operate as a sole proprietorship firm only and offers the same products sold in the existing retail outlet. The products are bought wholesale or procuring directly from the manufacturers according to the convenience. Marsh Jones is creative and constantly looking for new ideas/innovations to ensure that customers visit year-round. 2. Owner (Promoter): Marsh Jones is the owner and principal manager of Buster’s. He is coming from an entrepreneur family. He runs his exiting business for the last 5 years. He is a graduate in Commerce and has the work experience in retailing for 3 years before establishing his own business. He has abundant skill in running the business. He made a profit in the small business he had in the Lobby since the day of inception. He has thorough knowledge on the products he deals with. He is expertise in merchandising the product in the store that looks more attractive and easy for the customer to choose the product. He can give good leadership to the firm. The role of the owner is to manage the complete operation of the firm. He has to mobilise the funds from different sources for the smooth run of the business. He has to initiate efforts for publicity and advertisement to expand it operations He formulates the Merchandise Budget for the business consisting the following. Determining the planned sales for the month Determining planned stock for the month Determining planned retail reduction for the month Determining planned Economic Order Quantity stock for the month Determining planned purchases at retail for the month Determining planned initial mark up for the month Determining planned gross margin for the month. 3. Company Legal Structure: A buster is a sole proprietorship firm. Marsh Jones is the owner and principal manager of Buster’s. The license is obtained from the Municipality and State to run the business. The firm has adhered to the federal Laws on ethical and legal constraints. In addition to federal laws many state and municipality have passed legislation regulating retail activities. He offers socially acceptable products like snacks, pre-wrapped sandwiches, bottled/canned beverages, greeting cards, newspapers, paperback books and small gift items in his retail outlet. 4. Management Team- roles and responsibility: Marsh Jone is the owner and principal manager of Buster forms the management. He is responsible for investing his funds and borrowing loan from banks and other sources. The other roles and responsibility of the management is as under. Managing the entire store operation Provide excellent customer service Maintaining the stock orders. Control inventory. Merchandising. Coordinate and receive vendor deliveries. Supervise other in-store team members..  Accounting responsibilities include balance cash. HR related tasks such as create work schedule for store team members, train other in-store team members, coach and develop them. 5. Employees- Roles and Responsibilities. Marsh Jones followed the careful hiring practices to accomplish the sensitiveness of expansion period. He recruits two employees for the proposed store. He prefers the employees having an experience in managing the retail outlets and attending customers effectively. The desirable qualification for employees would be graduation in business management, basic skills of computers, excellent communication skill, customer service, and organizational skill.  Employee position involves a multitude of tasks. The employees would conduct store operations including merchandising and orderly stock maintenance. Marsh Jones is very sensitive to the client’s requirement and wishes. His major objective of the business is making customer delighted. He sells snacks and refreshment items; understanding of orderly stock level at store is a big problem. In the business of this nature, it is big challenge to decide how much to stock and how much to order. Marsh Jones, the owner and the talented entrepreneur has a long-range plan of employing several solutions for orderly stock maintenance problems such as Simulation techniques, optimisation, Trail and Error method, and heuristics models. The employees would be trained to handle several solutions in managing the stock position in retail outlet. The environment in the Busters is flexible and family type atmosphere that denotes strong interpersonal relationship. 6. Vendors/Suppliers Retailer’s who is not a part of contractual system or corporate channel will probably participate in several marketing channels, because they will need to acquire merchandise from many suppliers. Predictably, these marketing channels will either be conventional or administered. If retailers want to improve their performance in these channels, they must understand the principal concept of interorganisational management. In this case, it involves a retailer managing its relation with wholesalers and manufacturers. He maintains cooperation and cordiality with the most retail channels. He strongly agrees with the fact that retailers and suppliers must develop a partnership if they want to deal with each other on a long term and continuing basis. He follows the best practices of channel management. His experience reveals that he maintains mutual trust, two way communication and solidarity Howard’s is one of the largest gift wholesale companies in the world. He occasionally buys the gift items from them also. Their products are top-of-the-line. They are ready to give Jones a $10,000 line of credit after he has been in business for nine months. But Marsh Jones thinks of using this privilege after establishing a chain of stores in the Down Town city. The other items are procured from the local wholesalers with a month’s credit on purchases. Vendors had a contract with the firm to supply the fresh sandwich on daily basis. V. Financials Buster’s start up investment will be approximately $20200 only, which includes both long-term and short-term investment. It requires minimum amount of fixed and long term assets but needs more of current assets since the turnover ratio is very high. This investment will be funded by own investment of Marsh Jones, bank borrowings (secured/unsecured) and by finance/sundry creditors. Following are certain general considerations in designing the firm’s financial planning. 1. Loans from friends @ 6% 2. Cash Credit from banks @ 12% Per Annum 3. Loan from bank against second mortgage of house @ 10% Per Annum 4. Assets economic value is only for four years 5. Mortgage loan against property is to in repaid in 3 years term 6. Expected sales Ist year- $375000, II year $ 430000 and IIIrd year $495000 7. There is 25 percent hike in rent every year. 8. The overheads also increase at 15-20 percent per annum 9. Tax rate is 20 % for first year and for the remaining years it is 30-35% 10. There is increased expenditure for merchandising from the second year 11. Increase in employee salary by 10% every year.. Following aspects are attended in the financial aspects of the proposed firm 1. Preparation of Cost of the project for expansion programme 2. Proposed Profit and Loss Account for three years 3. Proposed Balance for three years 4. Proposed Cash Flow Statement for three years 5. Monthly cash flow statement for one year i.e. first year of its operation 1. Financial Analysis 1. The total budget for the expansion programme is $20200 2. The deployment of funds is from three sources i.e. own investment, Borrowing from friends and Borrowing from Bank. 3. There is a steady growth of sales every year i.e. First year $ 375000, Second year $430000 and third year $495000 4. There is also a steady increase in net profits i.e. First year $45744, Second year $51284 and third year $57273 5. The pay back period is very short as the investment made on long term assets is less. Therefore the total repayment may be repaid out of one years net earnings 6. The Average Rate of Return is positive. 2. Cost of the project for expansion programme The firms anticipated Investment is $20200 as mentioned below. A. Investment (Long Term Assets) IBM Computer $800 Jet Printer $500 Credit Card Reader $150 Sony Fax Machine $400 Computer peripheral $150 Total Long Term Assets $2000 B. Start up expenses Rent Advance $2000 Insurance $1200 Legal $300 Consultant $300 Others (Baskets, Floor stands, show cases, wrapping desks etc.) $800 Total start up expenses $4600 C. Start up assets needed Cash balance on starting day $6000 Start up inventory $3200 Other current Assets $4400 Total start up Expenses $13600 Total Requirement $20200 3. Funding (source of funds) A. Own investment out of Savings $ 3000 $3000 B. Other investments Loan from friends $3000 Secured Loan from bank $10000 Cash Credit from banks $2000 Suppliers Credit $2200 $17200 Total Funds $20200 4. Projected Profit and Loss Account The firm expects a profit of $45744 in year One, $51284 in year Two and $57273 in year Three of operation. The anticipated operating cost of the new business is $36500 in year one, $40920 in year Two, and $49582 in year Three. Table: Profit and Loss Account YEARS I year II year IIIYear A. 1. REVENUE Sales $ 375000 $ 430000 $495000 Closing Stock $3800 $7800 $11200 Other income $5000 $500 $700 Total sales Income $383800 $438300 $506900 2. Cost of sales Opening stock $3200 $3800 $7800 Plus purchases $281250 $323450 $371900 Total cost of sales $284450 $327250 $379700 Gross Profit (A1-A2) - $99350 $111050 $127200 B. EXPENDITURE Salaries $19200 $21120 $23232 Occupancy-Rent @$600 Per Month $7200 $9000 $11250 Insurance $1200 $1200 $1600 Utilities $3000 $1000 $5000 Depreciation $500 $500 $500 Municipal Taxes $400 $700 $1000 Discount Sales $2000 $3000 $1000 Promotion $1000 $1500 $2000 Telephone and Fax $1000 $1500 $2000 Others $1000 $1400 $2000 Total Operating Expenses $36500 $40920 $49582 A-B Net Profit $62850 $70130 $77618 ( - ) Interest on Loan $1420 $1420 $1420 ( - ) Tax Bracket @ 20% $12286 $14026 $15525 ( - ) Repayment of Loan $3400 $3400 $3400 NET PROFIT $45744 $51284 $57273 5. Projected Balance Sheet The projected Balance shows the upward growth in respect of net cash in all the years. There is a steady increase in the current assets and also liabilities every year. The proportion of current assets are better than the current liabilities, hence the current ratio is highly favorable. Table: Projected Balance Sheet ASSETS YEAR I II III Current Assets Cash $59344 $114628 $176101 Closing stock $3800 $7800 $11200 Other current Assets $0 $0 $0 Sub total Current Assets $63144 $122428 $187301 Long term Assets Investments $2000 $2000 $2000 Long Term Assets $2000 $1500 $1000 (Computer, Fax, Card reader, printer) Accumulated Depreciation $500 $1000 $1500 Total Long term Assets $4500 $4500 $4500 Total Assets $67644 $126928 $191801 LIABILITIES AND CAPITAL Current Liabilities Finance creditors (Short term Borrowings) $3000 $3000 $3000 Borrowing from Bank $2000 $2000 $2000 (Short term Borrowings) Suppliers Credit $2200 $3200 $5000 Other Current Liabilities $1700 $12100 $21300 Sub total of Current Liabilities $8900 $20300 $31300 Long Term Liabilities Paid In Capital $3000 $3000 $3000 Secured Loans from Bank $10000 $6600 $3200 Retained earnings $45744 $97028 $154301 Sub total of Long Term Liabilities $58744 $106628 $160501 Total Liability $67644 $126928 $191801 6. Projected Cash Flow Table: Cash Flow YEARS I II III A. Cash Received (Sources of Funds) 1. Cash from operations Cash Sales $375000 $430000 $495000 Cash from receivables $0 $0 $0 Other sources $5000 $500 $700 Sub total of cash from operations $380000 $430500 $495700 2. Other Sources Share capital (Promoters Investment $3000 $0 $0 Depreciation $500 $500 $500 Bank borrowings for Working Capital $2000 $2000 $2000 Secured medium liability $10000 $0 $0 Unsecured liability (loans from friends $3000 $3000 $3000 Sub total of other sources $18500 $5500 $5500 Total of A (Total Sources of $398500 $436000 $501200 Funds- In Flow) B. Expenditures (COST) Capital Expenditure of the project $2000 $0 $0 Cost of Sales $280650 $319450 $368500 Preliminary Expenses $4600 $0 $0 Interest on loans $1420 $1420 $1420 Interest on working capital Interest on Unsecured Loan (Loans from friends) Long-term liability principal repayment $3400 $3400 $3400 Repayment of short-term liability $ 0 $2000 $2000 Sales Tax, VAT, Etc, paid out $12286 $14026 $15525 Rent $7200 $9000 $11250 Payroll $19200 $21120 $23232 Others $8400 $10300 $14600 Total of B –Expenditures $339156 $380716 $439927 Opening Balance of cash in hand $0 $59544 $114828 and Bank Net Surplus/Deficit $59344 $55284 $61273 Closing Balance of Cash in Hand and Bank $59344 $114 828 $176901 VI. Market Strategy 1. Market Potential Market and anlysing market potential plays a vital role in deciding as to start a new business or to expand the existing business. The success of the entrepreneur depends on the knowledge of the entrepreneur about market, customers, changing trends, consumer behavior, their likes and dislikes. Whereas the Buster’s is an established firm and Jones is an experienced businessman, has developed a marketing plan for expansion. While making a plan he has made a discrete survey on the potential for the product he sells. As per the survey he found out that 1. Sandwich shop market continues to grow, due principally to the major operators of branded chains continually opening new outlets. For Example in UK the leading operators of branded sandwich shops have gained market share over recent years, but still are estimated to account for only around 5% to 10% of the total number of outlets principally selling sandwiches and other bread-based snacks in the UK.4. Thus the retail stores still enjoys the substantial market share. 2. Wherever you go these days, if there are humans in the vicinity, you’ll find bottled water. To say that bottled water is big business is to understate its growth projectory and global reach. In fact, 45 billion gallons were purchased and consumed in 2005. The market for bottled water has expanded 57 percent between 1999 and 2004 with a combined annual growth rate of 9.4 percent. 5 The United States leads the pack in total consumption, representing 17 percent of the global use in 2004. Mexico, China, Brazil and Italy are numbers 2, 3, 4 and 5 in the world. By comparison, the U.S. per capita annual consumption is 23.9 gallon and China’s is 2.4 gallons per capita. 6 3. As per the survey the general tendency in US is that American House holds spend 5.8 percent of its total spending on Gift items. The households of higher income group spend lavishly on gifts. The gift industry is also growing, as the household headed by 45 to 54 years old is the biggest gift purchasers. 4. There are no retail stores sell Books, newspapers and magazines in the vicinity. The Book market is growing now in leafs and bounds The firm found potential for its product to sell. The main advantage is the Downtown city location that could fetch good customers for its product. 2. Sales Strategy Buster’s Prime business location is a big strategy to win the customers. This will be a great advantage to build the client base. This will be very easy for new clients to try Business Centre for the first time. The credit will be expanded for the customer has decent history. 3. Products: The Buster’s offers variety of mixed bag of items including snacks, pre-wrapped sandwiches, bottled/canned beverages, greeting cards, newspapers, paperback books and small gift items in his retail outlet. The product will be secured from the wholesalers and manufacturing locations. Buster’s focuses more on high quality products to win the customer and stay long in the business. 4. Pricing The firm sets standard prices for their products considering the consumer elasticity of demand. The price penetration is also followed in some products as a promotional measure to sell more and to acquire market share. In some genuine cases and bulk sales, the cash discounts will be allowed to attract and retain the customers. The price exhibit the quality product is available at reasonable prices 5. Promotional Strategy: The firm by virtue of its locating in a prime location got publicity. However the Buster practices some of the key strategy for publicity. 1. Advertisement in newspapers in the initial days. Advertising campaign is lean and focused 2. Discount sales to genuine and high valued customers 3. Offering introductory prices when shifting to new premises 4. Attractive product display. 5. Opening specials promoted through hand-bills and flyers 6. Community bulletin boards (free) 6. Location Buster’s new store is situated in a downtown office building. The new office building will open two blocks away from the building. The new location experiences the high volume of traffic. The area is densely populated. The location is situated in the midst of residential plots and the big corporate offices. There are schools and colleges surrounding, which adds to the customer base. This new location has given Jones a new look for his business potential 7. Competition The business is located in a prime business center it will help to build the clientele base and to target the customers. The firm’s positive relationship developed in the location provided an opportunity to stay in the business for a long. Though there are big retail shops in the location, but there is no threat for customers visiting Buster’s. There are few such retail stores in the vicinity posing competition. But this can be managed adopting to value based customer service and ensuring customer delight. Jone’s vast experience in doing this business is an added strength to surpass all such threats from the competitors. 8. Challenges for Retailers: There is a boom for retailing now a day that get attracted major retail chains. They are providing more of varied products and services to customers. In the mean time their promotional policy is attractive because of their large operations. Sometimes they resort to price penetration to move the sales. This situation would force small firm like ours to lower the prices in the short-term. The existing competition and the nature of today’s market may not help to make business margin for small stores. However the small stores can sustain in the long run if they adapt to changes that takes place in industry. BIBLIOGRAPHY 1. Connie Edwards, Connie Edwards, “. Evaluating Potential Locations for Your Retail Business”. University of Georgia Small Business Development Center. Link www.sbdc.uga.edu. 2. Ramirez, Julie Cook, -“ Boosting the benefits: health-minded consumers are seeking more bottled juices, teas and..” - Publication: Dairy Field, (Wednesday, August 1 2007) 3. Business Plan for Artificial Flowers Import, Executive Summary, http://www.morebusiness.com/artificial-flowers-business-plan. 4. Coffee &Sandwich Shops Market assessment 2007. Market Research Reports, Key note Publication Ltd, Oct 2007, pages: 122, Link. Research and Markets.com 5. Beverage Marketing Corporation Web site. “Bottled Water 2004: U.S. and International Developments and Statistics”. Available at http://www.beveragemarketing.com/news.3e.htm 6. The World Fact Book. Available at: http://www.cia.gov/cia/publications/factbook/geos/ch.html. REFERENCES Web Sites 1. Business Plan for Artificial Flowers Import, Executive Summary http://www.morebusiness.com/artificial-flowers-business-plan 2. www. Small BusinessNotes.com One year Projected Cash Flow- For the first year of Inception-Buster’s MONTHS I II III IV V VI VII VIII IX X XI XII A. Cash Received (Sources of Funds) 1. Cash from operations Cash Sales $31000 $32500 $31800 $30500 $32500 $32300 $33000 $31100 $29800 $29700 $32500 $28300 Cash from receivables $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other sources $430 $400 $410 $435 $425 $430 $410 $410 $420 $410 $420 $400 Sub total of cash from operations $31430 $32900 $32210 $30935 $32925 $32730 $33410 $31510 $30220 $30110 $32920 $28700 2. Other Sources Share capital (Promoters Investment) $3000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Depreciation $500 Bank borrowings for Working Capital $2000 $0 $0 $0 $0 $0 $0 $ 0 $0 $0 $0 $0 Secured medium liability $10000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Unsecured liability (loans from friends) $3000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sub total of other sources $18000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total of A (Total Sources of $49430 $32900 $32210 $30935 $32925 $32730 $33410 $31510 $30220 $30110 $32920 $29200 Funds- In Flow) B. Expenditures (COST) Cost of sales $23500 $23800 $24000 $22000 $23000 $23400 $ 22700 $23100 $22300 $23000 $23000 $26850 Capital Expenditure of the project $2000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Preliminary Expenses $4600 Interest on term loans $355 $355 $355 $355 Long-term liability principal repayment $850 $850 $850 $850 Repayment of short-term liability $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sales Tax, VAT, Etc, paid out $1015 $1065 $1042 $999 $1065 $1058 $1081 $1019 $976 $973 $1065 $928 Rent $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 Payroll $1600 $1600 $1600 $1600 $1600 $1600 $1600 $1600 $1600 $1600 $1600 $1600 Others $800 $700 $750 $680 $700 $700 $640 $650 $640 $700 $700 $740 Total of B –Expenditures $34115 $27765 $29197 $25879 $26965 $28563 $26621 $26969 $27321 $26873 $26965 $31923 MONTHS I II III IV V VI VII VIII IX X XI XII Opening Balance of cash in hand $0 $15315 $20450 $23463 $28519 $34479 $38646 $45435 $49976 $52875 $56112 $62067 and Bank Net Surplus/Deficit $15315 $5135 $3013 $5056 $5960 $4167 $6789 $4541 $2899 $3237 $5955 -$2723 Closing Balance of Cash in Hand and Bank $15315 $20450 $23463 $28519 $34479 $38646 $45435 $49976 $52875 $56112 $62067 $59344 Read More