Breakaway Bicycle Company - Past Performance and Future Prospects - Essay Example

BBC Case Analysis Executive Summary Breakaway Bicycle Company (BBC) is a firm that builds bicycle frames. The company was started in 1999 by Mike Giro, and has since then designed top-of-the-range frames for professionals and enthusiasts alike. The demand for custom made bicycle frames has risen over the years and the company has stepped in to provide professional and fun riders with these frames. During the Atlanta Olympics in 1996, mountain bike racing made it debut as an event in the Olympics. From this time, people started getting more interested in bike racing as a medal event. With this increasing demand by the day, there is need for Breakaway to keep up with these by expanding production. The company is seeking to meet these demands by looking for financial options so that they can expand their business. The following discussion specifically focuses on the company in reference to its past performance as well as future prospects. In addition, the discourse focuses on cycling which has progressively gained prominence as a sporting activity. Analysis The company has been in existence since 1990 and has since then recorded success after another because of the lucrative and blossoming market. The bike frames that the company makes have been popular not only with professionals but also with other cycling enthusiasts. Mr. Giro, the founder of the company, has nurtured the company from its formative stage to the successful firm it is today. He started the company by crafting bicycle frames from a workshop behind his house and then later on moved to a larger shop. Mr. Giro is an experienced designer who has a specialization in this field for more than 20 years now. He started working with bicycle frames in his teenage years before eventually forming the Breakaway Bicycle Company. The company has several employees now, who work to ensure perfection of the customized bike frames. After Mr. Giro formed BBC, he obtained contracts that gave him the chance to design frames for highly professional teams in U.S. This exposure was a major boost to the success of the company because demand for Breakaway products kept on increasing. By 1992, two years after the company started business, BBC had hired professional frame-builders to help sustain the quality output of the company. According to their business expansion plans, BBC has proposed to borrow $200,000 from our bank. According to the financial and growth records of the company, our bank is considering granting them the loan request. In addition to making high sales, this company has been recording successful returns. BBC has gained a lot of exposure in the market by working with professional firms and cyclers as well as advertising its services in bicycle magazines. These advertisement campaigns have managed to reach to cycling enthusiasts and, consequently, boosted the success of the company. The strengths of the company are pretty notable. The company has an undisputed reputation in the market for its top of the range customized bicycle frames. They have an outstanding advantage with their innovative approach which they have used to conquer the market thus far. With innovation, the company has managed to cut a niche and stay ahead of competition. In reference to the company’s size, it can exercise a lot of flexibility in the business and, therefore, it is well in a position to adapt to changes in the market. Interestingly, competitors cannot afford this type of flexibility because most of them are pretty large companies. BBC is, therefore, able to make quick company decisions and consequent implementations.We are also going to give the loan that BBC has requested because the company has almost limitless opportunities that they can seize if they are financially empowered. The company has an established consumer base among the racing circuits in Europe. Professionals who have used BBC products give impressive reports with the view that these products are way more innovative than those from other companies. With the loan that they are seeking, BBC has the potential to make expansive developments that will surely be profitable. In addition to these, survey projections show that the demand for custom-made bicycle frames is set to increase by a rate of almost 20% a year. This is probably so during and after the Olympics. There is also increased interest in bicycle riding in view of sporting activities as well as a pass-time activity. BBC, therefore, has the opportunity to expand their business by making huge sales of custom made frames to professionals and fun-riders alike. The current financial records from the bank show that they have made sizable profits from their business, and with the amount of opportunities available, these can only get higher. Currently the have recorded company profits to the tune of $178,868. This is an impressive margin that can be very well sustained and improved on if they are granted the loan that they are seeking. They also have company revenue projections of about $1.3 million. According to all these factors, the company can expand their market base. BBC did well in outlining their business plan because it shows a neat analysis of their business enterprise while at the same time incorporating all aspects of business planning. Their plan has outlined how the company has identified opportunities over their competitors. BBC has outlines their plan in a way that gives an investor or a lender confidence that an investment in the company will be rewarding. There is also an outline which shows how they plan to invest the funds, if granted. The breakdown shows clearly that BBC is a visionary company seeking to capture a vibrant market with innovative ideas. Records show that the company uses innovation to catch professionals’ eyes with customized bicycle frames that have become popular in bicycle racing events such as the Olympics. The outlined weaknesses in the business can be fixed by increased funding that would ensure that the company expands so that it can compete well with other bigger companies. Breakaway Bicycle Company has the opportunity and potential to expand their business of designing custom made bicycle frames all over the European market and beyond. Work Cited Start, Run & Grow a Successful Small Business. Riverwoods, Ill: CCH Inc, 2002. Print. Read More