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Business Plan for Pizsho Shop - Coursework Example

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The author of the paper "Business Plan for Pizsho Shop" will begin with the statement that Pizsho, the name of the shop, is the latest player in the food industry. The shop is located in a very comfortable, populous town with a very strong desire for extra dining options…
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Business Plan for Pizsho Shop
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?Business plan Corse Table of Contents Table of Contents Executive summary 3 Mission 4 Vision 4 Objectives 4 Key Performance indicators 5 Competitive advantage 5 Company summary 6 Company ownership 6 Market Analysis Summary 8 Shop location 9 Risk assessment 9 Training 13 Promotion 13 Remuneration and Incentive 13 Summary for Staff Remuneration 14 Market segmentation 14 Target Market Segment Strategy 15 Service Business Analysis 15 Support Service 17 Competitive edge 18 Marketing strategy 18 Sales strategy 19 Sales forecast 19 Milestones 21 Personnel plan 23 Financial plan 24 Break-even analysis 24 Projected Profit and Loss 26 Projected Cash Flow 28 Projected Balance Sheet 30 Reference list 32 Appendix 33 Executive summary Pizsho, name of the shop, is the latest player in the food industry. The shop is located in a very comfortable, populous town with very strong desire for extra dining options. Having been motivated by the anxious and needy families for quality food services, the shop is strategically located in the town to take the privileges of the hungry population, especially the families. In the past few years, there has been a drastic increase in population with new young families and subdivisions moving towards the urban centers. It is therefore Pizsho’s strategy to take advantage of the golden opportunity of first-moving products and find itself as the best pizza provider within the region. The management team has a strong belief that the shop will be the best option in serving the fast growing population with modern, unique and fresh menu as opposed to the other shops nearby. Currently, Pizsho has well established network in the town with approximately 2000 customers visiting the premises daily. It has trained employees with vast experience in hospitality industry and modern equipment. Although it was started recently, it has expanded rapidly. If this trend continues, it is anticipated that the shop will open other branches. Taking the assumptions that there market conditions prevail, the shop will employ more workers, improve the competence skills and offer diverse services. This business plan therefore calls for an interesting, profitable establishment with a future anticipation of growing to serve the needy society. Above all, this business plan gives a clear description of a healthy food industry with well established prospects, looking forward to gaining an international popularity. Mission Pizsho has a mission of creating a pleasant and responsive environment for the esteem customers in a productive and well designed atmosphere that facilitates a good work place for all people. The shop is very sensitive to the taste and the appearance as well as ingredients of pizza. It attempts to satisfy its customers with the best services; both tangible and intangible. It maintains the fact that, “our neighbors are our customers as we are all residents of the market area.” Vision To be the leading food industry that creates and nurture creative, healthy and respectable environment that people can sit, relax and enjoy the best foods in the region. In striving to achieve this, it ensures that the workers are fully compensated and motivated to respect the customers and produce quality pizzas. Pizsho seeks to maintain responsible and fair profit, just enough to maintain the business operations healthy and meet its demands. Objectives The objectives of Pizsho are: i. To maximize profits at any given time. ii. To create a stable market place able to sustain sales and marketing goals and attracting customers iii. To arrive at hospitable monthly sales by the end every financial year with a steady increment by the end of the third financial year iv. To establish a modest relationship among all the distributors and customers. Key Performance indicators The business key to success factors are: i. Marketing: promoting the company, its products as well as delivery channels to the rural community ii. To deliver the customer with value proposition iii. Product consistency and quality iv. Competitive pricing with respect to the customer value proposition and project quality v. Management: good delivery time of products, costs control and proper budgets Competitive advantage This will give Pizsho an upper hand over its competitors and generate a better value to the shareholders and the firm. Essentially, the more the competitive advantage, the more complex it is for the market rivals to neutralize that advantage. The shop will have vast sources of competitive advantage. These include: i. Strong research and growth capabilities ii. Distribution or restricted re-selling rights iii. Having superior products and services iv. Minimum cost with high production volume v. Strong market strategy vi. Best management operations and teams Company summary Pizsho is a private shop dealing with the sale of pizza. It offers special menu that does not currently exist in the region. The target groups are the students and young families in the area. Company ownership The stakeholders of the shop will be Mr. and Mrs. Jean Paul and are the owners of the business. The shop will be registered as Limited liability Company. Start up summary The start-up cost will include of renovation of the site, professional fees and other start-up expenses. The owners will directly meet these costs. However, they will supplement by loans from banks, private investors and from friends. The assumptions are as shown in the figure below. Products and Services Pizsho provides the best quality pizza to the local community and town dwellers which at the moment, has limited access to the food shops and restaurants. At the commencement, the shop will provide supper daily from Monday to Saturday. It opens at 5.00 am in the morning and close late at night at 10 pm. Sunday will be closed to allow the workers to relax and worship. However, the shop will be very flexible to accommodate all the customers, even those who come early or arrive late. The foods served are pizzas of various sizes and classes served with different combinations of top-ups. The high quality pizzas will be enlisted in the main menu whereas other types will be made as per customer request. Furthermore, the foods served include soda, breadsticks and other drinks like beer. All these will be included in the main menu. As the customers dine, the shop offers after sale services. Customers with vehicles will have them cleaned as they enjoy themselves. This will help maintain their coming and bring more customers. To facilitate effective services, workers will be assigned various duties. Chefs will be assigned various duties as the customers arrive. There is a general manager who foresees all the operations. Storekeepers will maintain the stock records to ensure smooth flow of operations. In case of any requisition or an order, right protocol should be followed. Market Analysis Summary The main target market is the local people who have great desire for family oriented and comfortable atmosphere for dine-in pizzeria. Nevertheless, the secondary target market is pizza delivery to other industries. The town and its environs have a growing population of middle class people of about 10000 residents. Majority of these residents have families of around five members each. This boom is a result of urban migration of middle class group. According to the City Growth Pan conducted recently, it is anticipated that the population will increase in the next three years. This is because of high opportunities in the urban areas with the stability of the economy. This calls for additional food shops to meet the growing demands. In the past few months, several city residents have been seen roaming around pizzeria shops adjacent to bus stations. This has been inconvenience to many people because of long queues of serving. This is a driving force for more restaurants and food shops in the area. Shop location The shop is located strategically next to central business district with easy access to many people. The shop is very spacious with modern a lot of room for parking and recreation. This will facilitate ease of flow of operations. In addition, the premise was initially designed as a restaurant hence does not require a lot of modifications, apart from renovations. Risk assessment Pizsho is prepared to take risk and venture into the market. At its initial stage, the business will employ very competent workers, experienced in catering and hospitality. Although it is expected the business to pick up and sustain itself, it may not be possible at its inception. After all, the business will put in place strategic plans to assess its risks. The following steps will be used: a. Identifying the hazards b. Deciding who/what may be a victim and how c. Risk evaluation and deciding on precautions d. Recording the outcome and implementing them e. Reviewing the assessment and updating where need be. Procurement and management of firm resources Pizsho has put in place managers that control the flow of resources. The procurement manager, for instance, ensures the purchase of firm’s requirements. He is entitled to all the purchases and is answerable to the general manager. The manager ensures proper utilization of resources without any wastage. Staffing Manager Qualifications a. Holder of bachelor degree in human resource management/ business administration b. Computer literate c. Good communication skills d. Have at least three years of experience in a busy organization e. Hospitable and welcoming Duties and responsibilities a. Managing all the affairs of the business b. Assign other staff duties c. Approve legal requirement for the business Human resource manager Qualifications Hold bachelor degree in human resource management Computer literate Diploma in business administration will be added advantage Duties Assist the manager in managing the business Approve employees for promotion, demotions or recruitment Procurement officer Qualifications Hold bachelor in purchasing and supply Computer literate Have good communication skills Five years experience in the same field Duties Procure all the business materials, equipment and goods Keep procurement records Chefs Qualifications a. Hold at least diploma in food and catering b. Have a certificate of public health c. Have experience in hospitality industry Duties a. Prepare food b. Serving of customers Security officers Qualifications a. Have a certificate of good conduct b. Hold at least a certificate in criminology/public administration/security services from a recognize institution Duties a. Provide security to the business premises Recruitment and Promotion of Personnel Recruitment This refers to the efforts made by the enterprise in attracting and finally engaging the workforce in the specific assignment. In the conceptual stage, the business will consider applicants as a source of recruitment. These will comprise of people who will personally come to work for the reliable job opportunities and others who will approach the proprietor through letters or cell phone Reasons for recruitment will be To find and employ best qualified persons for every job To retain the most promising of those hired To offer promising opportunities for lifetime working learners To improve the program and facilitates for personnel growth on the job The initial recruitment will be considered and it will include permanent workers, present casual or retired employees. These sources will be preferred because of the following reasons a. Morale of the employees can be improve b. Cost of selection can be minimized c. It can be used as a technique of motivation d. Suitability of internal candidate can be judged better than external candidate Training The owner of the proposed business has the obligation of training the staff for effective execution of services and meeting the business goals. Apart from the initial experience of the workers, they will be briefed on the ethics of the business and how to handle the business resources. Promotion Workers will receive promotions basing on: a. Academic qualifications b. Professional excellence c. Loyalty and honesty d. Character and personality e. Individual workforce Remuneration and Incentive This is payment of services rendered. This will come in the form of salaries and wages and associated allowance such as house, medical. The owner of the proposed business intends to adopt a competitive pay system so as to avoid a situation where its staff will be poached by existing and upcoming competitors. Employees will be rewarded or remunerated depending on individual performance. If professionalism in the job will improve performance, then higher pay will be applied. An individual’s ability to deliver will determine the remuneration package. If the business performs averagely higher than other poultry firms in the industry, then the pay will increase. Economic trends and the cost of living will determine the salaries and benefits paid to the workers. Summary for Staff Remuneration Employee No. Of employees Monthly salary (?) House allowance (?) Med. Allowance (?) Total (?) General manager 1 1500 3000 250 4750 HRM 1 700 2500 150 3350 Procurement officer 1 900 2500 150 3550 Security officer 1 500 2000 150 2650 chefs 6 2400 9000 600 12000 Total 10 6000 19000 1300 26300 Market segmentation The city dwellers and the neighboring communities are among the market segmentation. However, only the outskirts residents are among the delivery, since the delivery diameter is seven kilometers from the central business district of the town. Approximately 60% of the target population lives within the radius of 3 km. Year 1 Year 2 Year 3 Potential Customers Growth Dine-In or Take-Out 8% 14,860 15,840 16,878 Delivery 8% 5,000 6,340 6,827 Total 8.00% 19,860 22,180 23,705 Target Market Segment Strategy Within the central business district, there are no pizzas. However, in one of the nearby shops, it sells pizza but not as the main food on the menu. Interesting, the few places that sell pizza are pubs and taverns, which are not favorable for families. Factually, no shop in the town has ventured into the home-delivery service. Service Business Analysis Some of the family oriented shops in the town are Mid-town restaurant, Luxury restaurant and Modern club. Mid-town restaurant offers wraps, sandwiches and salads. All these have no direct competition of establishment of pizza. The diner is served till late midnight daily. However, they serve lunch with limited sandwich. The Modern club serves beef and pizza buffet only twice in a week at an estimate price of ?20 per pizza. Most of the other food shops are not favorable for family activities, although they sell pizza. Buying patterns and competition Pizza competition is almost negligible in the town. Even though there are a number of shops that offer the products, essentially, there is limited completion. Pizsho is not expecting to enter into any competition with its opponents. Strategy and implementation Pizsho’s strategy is entirely based on providing the best customer value proposition within the niche market. Currently, there are a thousand and one families with continuous demand of dining facilities. The shop therefore strives to provide the town and its outskirts the best choice of food options. License and Permits The owner of the business will seek license from various local authorities for smooth business operation. The following legal requirements will be required at the start of the business DESCRIPTION COST (?) i. Certificate by ministry Health 100 ii. Ministry of local government 180 iii. Trade license 720 TOTAL 1000 Support Service The proprietor will require other support services such as banking services, legal services, and audit and insurance services Banking services The proprietor intends to open an account with the Family Bank The Legal services The proprietor intends to appoint a lawyer who will be expected to give legal advice. His contacts will be Experts & CO. Advocates Ltd. Insurance services British Insurance Company will be preferred as an insurance company to insure the premises against theft, fire and nevertheless, the workers will be insures under medical insurance for the sake of their health. Competitive edge The competitive edge is to market the pizzas in a pleasant, family oriented and non-smoky atmosphere able to satisfy all the customers. Furthermore, the location of Pizsho is very suitable and convenient for most customers. Most of the city dwellers board their vehicles near the premises. This is a direct coincidence of the highly moving food that most people take. Its location will attract many customers to take the golden opportunity. Marketing strategy To attract many customers, Pizsho will employ different techniques. These include advertising and promotions. Advertising and Promotions Postures will be placed in all strategic positions within the town where most people can see. Apart from the postures, the business will prepare business brochures which will be distributed in all accessible points. These will have the picture of the premises, foods and services offered and the direction to the site. Nevertheless, customers who may not access the postures and brochures will be reached by media. Radio and newspapers will be used to reach as many people as possible. Advertising will be done constantly in order to update the esteem customers of the available services as well as coming events. As if this is not enough, Pizsho will organize family-oriented indoor game activities like baseball, cricket bowling among others to entertain its customers. At some occasions, Pizsho will organize for competition where all the esteem customers come together to participate. The winners may be rewarded as the name of the business is marketed. Sales strategy There has been a lot of demand for pizzas in the town, with the call for more restaurants and food shops. If Pizsho starts immediately, the sales are expected to increase steadily for the first five months of inception. With continuous advertising and promotions, sales will stabilize and increase in customers. This will open doors for other opportunities that promote high sales volumes. For the subsequent years, the firm will continue to advertise, more so, to families and the local communities who use pizzas more frequently. Sales forecast Pizsho’s sales forecast takes an assumption of a modest change in costs per annum so as to accommodate the new entry strategy into the market. The business expects an increase in sales with proportional increase in its developments. This is only an assumption of growth forecast since the product is still new to most people. Furthermore, the business is not projecting any commendable change within the product line nor significant proportion between various lines. Basing on the fact that there is no competition of pizzas in the region, the business anticipates a sale of approximately 1250 pizzas per week and 180 per day. Additionally, pizzas will be accompanied by other orders like drinks, snags and breadsticks. The estimated prices are: i. Pizza:  ?15 ii. Breadsticks:  ?5 iii. Beer:  ?5/pint iv. Drinks:  ?3 refillable The projected sales forecast per year is shown in the graph below. Sales Forecast (?)   Year 1 Year 2 Year 3 Sales   Pizza 133,900 143,808 153,875 Breadsticks 18,667 19,973 21,371 Beer 37,333 39,947 42,743 Drinks 50,773 54,327 58,130 Total Sales 240,673 258,055 276,119 Direct Cost of Sales Year 1 Year 2 Year 3 Pizza 42,848 44,990 47,240 Breadsticks 3,733 3,920 4,116 Beer 7,467 7,840 8,232 Drinks 2,539 2,666 2,799 Subtotal Direct Cost of Sales 56,587 59,416 62,387 Milestones The table below shows the important milestones, managers in charge, dates as well as budgets for each. This will help in putting more emphasis on planning and implementation. Milestones Milestone Start Date End Date Budget (?) Department Business Plan 8/1/2014 31/1/2014   Management Secure Start-up Funding 1/2/2014 1/3/2014   Management Site Selection 8/1/2014 1/2/2014   Operations Architect Designs/Redesign 15/2/2014 1/4/2014 300 Operations Technology Design 15/3/2014 1/4/2014 3,000 Technical Personnel Plan 1/3/2014 15/3/2014   Management Accounting Plan 1/3/2014 31/3/2014 200 Management Renovation 1/4/2014 15/5/2014 5,800 Operations Equipment Installation 5/1/2014 15/5/2014 1,000 Operations Marketing Plans 4/3/2014 30/4/2014 1,500 Marketing Grand Opening 1/5/2014 15/5/2014 500 Marketing Totals     12300   Personnel plan The table (below) for personnel table assumes that employees’ level needs increases at the rate of 7% per annum. The staff will work in two shifts per week. The first team will work for three consecutive days before breaking for an off and the other group will take over. Workers will be assigned various duties; some cleaning and others kitchen chores. This will go on routinely from Monday to Saturday. The kitchen lead positions will work part-time, earning ? 8/hr. They will work as shift leaders while others work in serving. They earn ? 5/hr. the group that will act as kitchen lead should be above 18 years because they serve alcohol and beer. Other part-time workers include the dish washer, waiters and delivery staff. They work up to approximately 35 hours per week. This group will be paid ? 3/hr. Personnel Plan   Year 1 Year 2 Year 3 Kitchen Leads 27,060 29,494 31,951 Kitchen/Wait 38,444 40,902 43,278 Dishwasher 14,600 17,380 19,190 Owner 9,600 9,760 9,940 Delivery 13,670 15,380 17,199 Total Payroll 103,374 112,916 121,558 Financial plan The picture of financial projections is quite interesting. At initial stage, the business will invest most on own asset and reluctant to take loans. Nevertheless, the business will apply for loans from various financial institutions. Assumptions a. The financial plan will entirely depend on some assumptions, a few of which are listed below. b. There will be a fairly high growth of pizza economy in town, provided that there is no competition in the region. c. There is insignificant effect on technology changes which may render the business and its products and services obsolete. d. The available equity capital will sustain and finance all the business activities comfortably as shown in the table: General Assumptions Year 1 Year 2 Year 3 Plan Month 1 2 3 Current Interest Rate 7.0% 7.0% 7.0% Long-term Interest Rate 6.0% 6.0% 6.0% Tax Rate 20.00% 20.00% 20.00% Others None Break-even analysis The beak-even analysis is majorly based on the ‘burn-rate’ costs incurred in maintaining the business and running costs. The most essential insight is the fact that sales are stable enough to run above the break-even point. Projected Profit and Loss The business expects a commendable profit during the first year of its inception, with huge gains at the subsequent years. Projected Cash Flow The table below shows projected cash flow for the first year Sales Forecast     Jan Feb Mar May Jun Jul Aug Sep Oct Nov Dec Sales                         Pizza 0% 7,230 12,702 11,260 11,460 11,360 11,880 11,140 11,380 11,840 12,500 11,741 Breadsticks 0% 1,120 1,555 1,651 1,599 1,578 1,662 1,650 1,622 1,607 1,667 1,717 Beer 0% 2,400 3,600 3,170 3,133 3,150 3,223 3,105 3,293 3,223 2,963 3,203 Drinks 0% 2,750 4,770 4,416 4,329 4,384 4,465 4,216 4,465 4,397 3,989 4,397 Total Sales   13,500 22,627 20,497 20,521 20,472 21,230 20,111 20,760 21,067 21,119 21,058 Direct Cost of Sales                         Pizza 32% 2,324 4,032 3,571 3,667 3,699 3,786 3,581 3,621 3,720 3,875 3,825 Breadsticks 20% 300 353 311 318 305 338 312 318 333 303 353 Beer 20% 420 720 630 657 660 647 630 667 646 597 677 Drinks 5% 136 238 211 216 214 223 211 223 220 199 220 Subtotal Direct Cost of Sales   3,180 5,343 4,723 4,858 4,878 4,994 4,734 4,829 4,919 4,974 5,075 Projected cash flow for second and third year   Year 2 Year 3 Cash Received     Cash from Operations     Cash Sales 258,055 276,120 Subtotal Cash from Operations 258,055 276,120 Additional Cash Received     Sales Tax, VAT, HST/GST Received 0 0 New Current Borrowing 0 0 New Other Liabilities (interest-free) 0 0 New Long-term Liabilities 0 0 Sales of Other Current Assets 0 0 Sales of Long-term Assets 0 0 New Investment Received 0 0 Subtotal Cash Received 258,055 276,120 Expenditures Year 2 Year 3 Expenditures from Operations     Cash Spending 112,206 117,576 Bill Payments 124,835 125,753 Subtotal Spent on Operations 237,041 243,329 Additional Cash Spent     Sales Tax, VAT, HST/GST Paid Out 0 0 Principal Repayment of Current Borrowing 0 0 Other Liabilities Principal Repayment 0 0 Long-term Liabilities Principal Repayment 10,000 9,000 Purchase Other Current Assets 0 0 Purchase Long-term Assets 0 0 Dividends 0 0 Subtotal Cash Spent 247,041 252,329 Net Cash Flow 11,014 23,791 Cash Balance 18,844 28,608 Projected Balance Sheet Pro Forma Balance Sheet   Year 1 Year 2 Year 3 Assets       Current Assets       Cash 40,000 58,886 98,698 Inventory 1,720 1,836 1,806 Other Current Assets 5,350 5,350 5,350 Total Current Assets 47,070 66,072 105,854 Long-term Assets       Long-term Assets 25,300 25,300 25,300 Accumulated Depreciation 2,240 3,978 5,328 Total Long-term Assets 23,060 21,322 19,972 Total Assets 70,130 87,394 125,826 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities       Accounts Payable 9,267 9,454 9,967 Current Borrowing 0 0 0 Other Current Liabilities 0 0 0 Subtotal Current Liabilities 9,267 9,454 9,967 Long-term Liabilities 19,000 9,000 0 Total Liabilities 28,267 18,454 9,967 Paid-in Capital 46,000 46,000 46,000 Retained Earnings -25,850 -2,367 2,795 Earnings 23,483 30,278 36,739 Total Capital 43,633 73,911 85,534 Total Liabilities and Capital 71,900 92,365 95,501 Net Worth 40,000 40,000 40,000 Reference list Finch, B., 2013. How to Write a Business Plan. Sydney: Cambridge University. Fiore, F., 2007. Business Plan. Write a Business Plan in No Time, 1, pp.231-49. McKeever, M., 2012. How to Write a Business Plan. New York: Sage. Pinson, L., 2008. How to Prepare a Business Plan. Chicago: Cambridge. Rhonda, A., 2003. The Successful Business Plan. NY: Cengage. Rogoff, E.G., 2010. Bankable Business Plans. Expert Solutions to Everyday Life, pp.34-67. Stutely, R., 2012. The Definitive Business Plan. London: Macmillan. Appendix Pro Forma Profit and Loss   Year 1 Year 2 Year 3 Sales 242,673 269,056 287,123 Direct Cost of Sales 56,587 60,416 62,387 Other Costs of Goods 0 0 0 Total Cost of Sales 56,587 60,416 62,387 Gross Margin 186,086 208,640 224,736 Gross Margin % 76.68% 77.55% 78.27% Expenses       Payroll 107,730 113,016 118,576 Sales and Marketing and Other Expenses 7,356 7,356 7,356 Depreciation 2,023 1,986 1,692 Rent 14,430 14,430 14,430 Utilities 7,440 7,440 7,440 Insurance 4,400 4,700 5,100 Payroll Taxes 8,134 8,646 9,007 Maintenance 200 55 55 Other 0 0 0 Total Operating Expenses 151,713 157,629 163,656 Profit Before Interest and Taxes 34,373 51,011 61,080 EBITDA 35,676 47,791 56,367 Interest Expense 1,167 727 621 Taxes Incurred 10,004 13,976 16,745 Net Profit 23,202 36,308 43,714 Net Profit/Sales 9.56% 13.49% 15.22% Read More
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