Complete first draft and action plan
Needed to readjust action plan because I was unable to meet datesChoose which business I will set up19/09/08NotesAt first I was going to have a gym as a business but decided against it because most business like that fail in the first year. Had to go on internet for further research..
Start and finish Introduction25//09/08WikipediaThe GuardianTeachers notesDesign a questionnaire which gives an analysis on the market31/09/08ComputerWord process questionnaire, ask someone to proof read and improveand distribute them .5/10/08Printer ComputerPhotocopierIn order to make sure that people receivedthe questionnaire I distributed them myselfGet target market to fill in questionnaire21/10/08Analyse data from market research22/10/08Write a letter to request interview23/10/08Unfortunately I could not get an interview from someone from TescoCarry out competitor scanYell .com 23/10/08Review and conclude market researchResults from questionnaireI found that I had made miscalculations when I was creating the graphs that showed some of the questions. I realised that it affected my results and I had to go back and alter my results.Evaluate sufficiencyOf survey.
26/10/08Write up methodsof promotion my business can use mention legal constraints28/10/09Teachers notesClass notesText bookResearch suitable methods of promotion31/10/08YellYellow pagesInternetDecide what promotional methods my business will use5/11/08Finalise coursework e.g. bibliography27/11/08Make sure coursework is ready for the deadline12/02/08IntroductionThe business I will set up will be an African restaurant on the Quayside in Newcastle. The name of my restaurant will be Mawuya Restaurant. “Mawuya is a Shona which means welcome, a symbol of African hospitality.
I intend to open my business in June 2010.Why I chose this business and locationI decided to set up a restaurant business because I have worked in restaurants before and I have a passion for food. I have decided to situate my restaurant in Newcastle because Newcastle is capital of the north east where I live and recently has had one of the fastest growing tourism industries in the world. In the last five years it grown to be culturally diverse city and according to the BBC Newcastle has one of fastest growing metropolitan areas and is clearly a city which is completing the transition from being a major mining city to a largely an administrative and cultural centre with two universities – Newcastle and Northumbria. I could have chosen to set up my business in a larger city such as London however the rental costs in there can be up to 3 times more the rent in Newcastle.
In addition in a city like London there is much more competition. However in emerging cities like Newcastle there is a gap in the market and the chances of the business surviving are likely to be higher. Although there are many restaurants in Newcastle which will be competing with mine there are very few African restaurants and none located in the town centre. In order for this business to succeed many aspects of marketing will be involved.Who will own, control and manage the business?I have decided to operate as a sole trader because it allows me to have total control of the business costs and profits.
I was tempted to start it as a partnership as this would help the business in terms of capital but I prefer to control the whole of my business and gain all the profits (and losses). In order to make a correct decision about ownership I had to analyse the pros and cons of both. The main advantage of a partnership is that you work together with someone hence you start out with a more capital to invest in the business than when you are alone. This can be a huge advantage if you consider one of the external factors of the business which is the economy. It is well known that there is a credit crunch right now and it would probably not be the best time for me to borrow money of the banks if I can get it at all. I will also be involved in the general management of the business and I think my previous experience as a restaurant manager will be useful.
The advantage of being a sole trader is that I would command the business alone without the interference of anyone and the profits I make are for myself and no one else and there much less complicated paper work however if the business does fail of which 90% of businesses do in the first year I am fully responsible . Both of these choices have unlimited liability which means if they fail I lose everything including my own personal property. Other alternative forms of business such as PLC and LTDs have limited liability which means liability is limited to the extent of the capital invested but my business is not big enough for this yet.After considering the alternatives this leaves me with the option of a partnership and a sole trader and as I prefer to make my own decisions and I’m going to be a Sole trader.Aims and objectives of the businessThe first aim of my business like any will be survival.
Hopefully my business will survive and I will make some profit in the long run. This will not be easy as the set up cost of such a business tend to be high. I do not have sufficient capital to set it up with my own funds therefore I will have to borrow the money. However I have to be very careful with this because if I borrow too much money I stand the risk of running up too much debt and becoming bankrupt. I hope that after a few years I will expand my business and market share and benefit from economies of scale.
But before I achieve this I must be financially secure.Target MarketIn my business I aim to target the ever growing student population and young professionals of Newcastle. In order to find out what the customer’s want I did a market survey (see market research section). I have done a decided to target this market in particular because after distributing my 100 questionnaires, I found out that 62% of the respondents were keen on trying out new foods but did not particularly want to pay a high price. Ideally when my business expands I would like to turn into a PLC because I can have greater borrowing power and have limited liability.
The Marketing ConceptIn order to effectively launch my business I must develop a good marketing strategy. Marketing is the process of getting the product to the customer in the right form at the right price using the right distribution channels. It is based on the marketing mix or the four Ps. SOURCE REFRENCE I used www.guardian.co.
uk to research on the 4 PsProduct – A tangible product or service that you offer the customer/ market depending on what the market needs and wants e.g. for an IT firm the product can be a computer, or IT consulting services.Price – The price the customer will pay for the product or service. Its dependent on several things e.g.
purchasing power, competition, material costs, product identity and the customer’s perceived value of the product.Promotion – It’s the way I advertise and communicate with the market.Place – Represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet.
In order to know the need of my market I must carry out a market research. Market research is important in helping me determine if my business has potential at all.Objectives of the Market ResearchThe Purpose of market research for my business will be:1. To find out and understand about the market e.g. gap in the market.
2. What product and services would they want? What price would they want to pay?3. What promotion channels would reach them?4. Market demographics e.g. income level, age group.
5. Size of the market (who is my market ,how big is it)?6. Who are my competitors?Advantages of Market ResearchThe advantage of market research is that I will be aware of what the market wants and this will be an advantage.They are two methods of research.1.
Primary research – which is information which is directly collected from the field e.g. interviewing someone who owns a corner shop or restaurant..2. Secondary research this is analysing collected data and is usually obtained within the office e.
g. internet books etc. (SOURCE REFERENCE : I used Sue Alpin’s textbook to gather information on Primary and Secondary Research).I am choosing primary research for my business. I will use a questionnaire to collect the data as this enables me to obtain quantitative data so that I can make a valid analysis.Disadvantages of not doing Market ResearchThe disadvantage of not doing market research is that I would be going into the market blind and unaware of what people want hence I could provide a brilliant service but if no one wants it is useless and insignificant to my business.
According to Gregory Tumas business who go into the market without research are 80% more likely to fail than those who do. SOURCE REFERENCE I used www.sundaytimes.co.uk to research on the importance of market researchQUESTIONAIRE1.
Market Demographics: Who is the potential customer?MMM1.1. Age: 15 -20 21-40 41- 60 over 601.2. Sex: Male Female Other1.3.
Occupation: Unemployed Student Young Professional1. 4. Income pa:(ï¿½000) Below 10 11 -20 21 – 30 over 301.5. 1.4 Race: White Black Asian Other2 Market Need: What do they want?MMM2.
1. Have you ever been to an African Restaurant? Yes No2.1.1. If Yes: Did you like the food? Yes No2.
1.2. If No: Would you be willing to sample one? Yes No Maybe2.2. How often do you eat out a month?Once Twice Three times Four times Five times or more3: Pricing: What price are they willing to pay?MMM2.
4 How much are you willing to spend on a meal at a restaurant?Below ï¿½5 ï¿½ 6-10 ï¿½ 10-15 ï¿½16-20 over ï¿½204. Place: Where?MMM4.1. What type of restaurant do you prefer to dine at ?Fast food restaurant a- lar -carte restaurant4.2 Where do you prefer dine?In the city centre In quieter outskirtsImplications of the ResultsThe two questionnaire results above are there because I consider them to be two of the most important results in my questionnaire because they tell me how much I should budget.By looking at the age of the target market I am able to see how I can design the restaurant and what kind of ambiance I can create and whether it suits the people for example if the majority of my customers were young children I would probably try and make the restaurant colourful, bright and busy and would probably have to have things like toy animals and clowns to amuse the kids.
However since the questionnaire suggests that 70% of my customers are aged between 20 and thirty this completely changes the way I approach everything from the design of the restaurant to the menu ( I will go into deeper analysis in the marketing plan)By knowing how much people are willing to spend per person this is crucial as this allows me to work out roughly how much money. I am making per day. I can also be able to calculate my breakeven point breakeven point = fixed costs divided by price minus variable costs. However I was very disappointed by the lack of feedback and I have to question how valid my results are. I had distributed about 200 questionnaires hoping that at least half of them would be filed in (OPINION) but in fact less than 40 questionnaires were sent back to me which made me question how reliable my results were OPINION).
Importance of the Marketing PlanBefore finally setting up my business I have to come up with marketing plan so that I have an exact idea on how to launch my business and how it is going to be setup. In such a hyper competitive market it is difficult for a new business to penetrate the market. I believe that in order to penetrate this market I must use the marketing mix carefully and a combination of product price promotion and place if used correctly will help establish my business in a competitive environment.The ProductMy restaurant will offer up market African cuisine. Initially it will serve a limited range of African a la r carte dishes, for the professional market, a wide variety of African buffet dishes for the students population as well as the option of a takeaway meal. Some popular African drinks will be sold as well.
After about a year I will reassess to see which division is bringing the most profit and my drop say the take-away service if its not making money. The food will be complemented by an equally up market African dï¿½cor and the staff will also wear informs that have an African design. I plan to hire expert African dï¿½cor specialists to assist with the dï¿½cor of the restaurant as well as specialist African chefs who will help with the design of the menu. This should give the restaurant a unique authentic African theme. The increase in the African population in the last five years has resulted in an increase in the supply of African products and a reduction in prices so I won’t struggle to find the right ingredients for my dishes although I may struggle to get fresh products.Pricing StrategiesFirst of all I must get the supply and demand correct if I order too much and there is no one to eat it I am losing money and vice versa if I order too little not many people are going to queue for a meal.
There are a number of alternative pricing strategies I have considered before choosing the penetration strategy. I looked at cost +10% and it looked like it would not attract many people to go eat at a new restaurant. I also looked at skimming but I considered that I was not an established brand and could not demand high prices and expect to attract people. I eventually settled on a penetration pricing strategy as this would suit well my target customers who are mainly students and young professionals because of the price. This would mean that I would probably make a loss in my business for the first few months but hopefully as my business popularity grows the revenue will increase.
SOURCE REFERENCE : I used Mr. Clarke’s notes to help me understand pricing strategiesPromotion StrategiesI also had to consider promotion what kind of advertising I was going to use. I intend to advertise using above the line promotion strategy along with persuasive advertising. Since I regard advertising highly it will account for large proportion of my expenditure budget. According to Jane Maloney of the Sunday Times dated 8 January 2009, businesses who do not advertise are 80% more likely to end up out of business compared to those who have advertised their business. The same study found out that advertising through the radio and regional papers was not only cheaper but more effective than television.
However the same article said that below the line promotion strategy was increasingly popular and effective. I may also have to consider this type of promotion as well. I would use the radio because it’s cheaper and more effective and I would also use leaflets.I will also advertise my restaurant on the metro trains this is more expensive than stage coach however more students get on the Metro and they are my target market. I also have to be careful when advertising to consider Legal constraintsPlaceThe restaurant will be located at the Quayside in Newcastle.
It’s an area that is frequented by students and young professionals looking for a good time. It is well serviced by roads and rail networks.The Business EnvironmentIn coming up with decisions on the 4 P’s of marketing outlined above, I had to analyse the business environment to make sure that may decisions can be compatible with the environment. I looked at the external environment mainly the economic social technological and political to identify opportunities and threats. I also looked at the internal environment to get an understanding of my business strengths and weaknesses so that I could take advantage of the business strength and address the relevant business weaknesses.The External Environment – Opportunities and ThreatsCompetitorsNewcastle is a vibrant upcoming city.
There is a lot of regeneration taking place. The town centre is having a massive facelift. This regeneration has created new opportunities and attracted investments in new restaurants as well. Competition has therefore increased in the last few years. I however have identified a gap in the market, the lack of a trendy African restaurant. There are a few African restaurants dotted here and there in Newcastle but they tend to be dirty and located in the deprived areas characterized by high crime rates.
If I can offer a unique product to the right customer at the right price and place I should be able to survive the competition which is likely to intensify as the threats associated with the credit crunch hit hard.EconomicSadly the economy has fallen into recession which means customers have lower incomes as some of them will be layed off. Banks are unwilling to lend money fortunately my loan had been approved. A lot of businesses may also go under including some of my suppliers. I should try and boost sales by offering discounts and specials in order to attract more customers. I will have to continuously monitor the economic environment and see whether my business proposal will still be a viable idea in the next 12 months.
SocialThe regeneration of the economy since the 2000 has resulted in higher employment levels, and the development of a strong professional middle class which is my target market. Crime has also fallen and more people are willing to work instead of being in benefit boosting labour supply. The increase in migrants has also resulted in cultural diversity and open mindedness which helps when introducing foreign concepts like an African restaurant. However the north east is still generally conservative when compared to cities in the south and once in a while there are threats from extremist parties.TechnologicalThe rapid technological developments especially in the internet services create vast opportunities for marketing directly to customers at a cheap cost.
However online competition is also getting very intense hence I have to regularly review my promotion strategies.LegalThe restaurant industry is highly regulated by law due to the high risk of food poisoning. I have to familiarize myself with many aspects of the law so that I operate legally. My business has to be registered formally to comply with the Companies Act. I have to set up and run my business in accordance with The Health and Safety Act which protects clients and employees.The Trade descriptions Act makes it illegal for businesses to make false statements on the goods they sell.
The Green tax environmental law says that from 2009 all businesses will be taxed on the waste and pollution the produce so I have to ensure that we don’t produce too much waste.ConstraintsI thought by locating my businesses in an affluent area such as the Quayside I would not have any vandalism or pollution problems but it in fact it also an area where students come to have parties hence I experienced a substantial amount of vandalism. I also experienced a lot of taxation from the government because of the pollution my restaurant produced. As a result my business I decided to put a maximum limit on my customer’s alcohol consumption. Others people suggested I stop selling alcohol but I could not do this as it contributed around 60% of my revenueSUGGESTIONSAn upcoming business man by the name of Kenneth Rojas SUGGESTED that in order to improve my business popularity I should start a website on the internet so I could showcase my service to a wider audience however the Constraint in this was the set-up cost of this but it was just in my budget limitationThe Internal Environment – Strengths and WeaknessesThe ManagementI will be the owner manager of the business and my 5 years experience as a restaurant manager in a 5* Hotel in Africa will be a very good assert.
I however need further training on running a restaurant in the UK and understanding the legal issues.The CapitalI have raised half of my business capital and borrowed the other half. My cash flow forecasts show that I should be able to meet my loan repayments. In the long run I intend to turn the company into a PLC and raise more capital as I open more branches.