Expansion Plan of a Small Retail Store - Example

of the ID number Business Plan Table of Contents Introduction 4 a. of the business 4 b. Business aspirations 5 2. Organizational structure 5 a. Owners: roles and qualifications 5 b. Company legal structure 6 c. Management team: roles and qualifications 6 d. Employees: roles and qualification 7 e. Contractors/vendors: roles and qualifications 7 3. Financials 8 a. Anticipated operating costs of the new business 8 b. Anticipated investment requirements to launch the new venture 8 c. Anticipated revenue 8 d. Pro-forma cash flow projection for the first year of operation 9 e. Payback period 9 f. Anticipated return on investment 9 4. Marketing and sales 9 a. Summary of a marketing/sales strategy 9  b. Marketing/sales requirements for the business  10 i.Price 10 ii.Product 10 iii.Promotion 10 iv.Place 10 c. Competition 10 5. Operations 11 a. Location of the business 11 b. Business operations 11 6. Legal and Sundry issues 11 7. Major challenges 11 Works cited 13 Name of the Student Name of the Professor Course Number Date 1. Introduction What follows is a business plan encompassing crucial details regarding an expansion plan of a small retail store which is currently stationed under one office building. The owner endeavors to expand the retail business by opening another store two blocks away from the current location under another office building. The owner plans to achieve a twofold objective by setting up another store. First of all the owner wants to spread the risk of this business by opening a store in another location and secondly the owner is making an attempt to capture a wider customer base in order to increase the source of revenue stream and thereafter turn the business into a sustainable one. The business plan is being directed towards various potential investors and venture capitalists who would like to invest in a potentially growing business. The following sections a thorough description of the type of business venture, the organizational structure, elements of finance, marketing/sales strategies, operations and major challenges. a. Description of the business Buster is a small retail business with one store currently operating in the lobby of a large office building. The store occupies 1000 square feet of area and operates under one owner with two employees working thirty hours shifts each week. The products sold within the shop include items that the building occupants mostly need. The product range include snacks, bottled and canned beverages, gift cards, pre wrapped sandwiches, newspapers, magazines, books (paperback) and several small gift items. As of now the shop owner has generated annual revenue between the ranges of $150,000 and $300,000. The owner has planned to establish another store in a different location in the lobby of another office building with the hope of grabbing the attention of a larger customer base. b. Business aspirations The owner aspires to expand his one shop retailing business by opening another store in a commercial area under another office building. The underlying rationale behind such an expansion strategy is to increase the revenue stream thereby creating a sustainable source of profit. The owner also wishes to capture the attention of a wider customer base. This will enable the owner to establish a robust foundation over which the researcher can fulfill his/her ultimate aspiration of setting up a chain of minimum 15 similar retail stores in different commercial places all over the town. This will not only allow the owner to diversify the risks of the business but also enable the individual to expand the portfolio of products that will be sold through the retail outlets. The ultimate objective is to establish a proper organizational structure that will enable the owner to run this business in a systematic manner. 2. Organizational structure This section will provide an in-depth description of the overall organizational structure. What follows is a detailed outline of the roles, responsibilities and qualifications of the owners, management team (to be appointed), employees and contractor or vendors. This section of the business plan will also explain the legal structure of the company thereby rationalizing the owner’s choice of following such structure. a. Owners: roles and qualifications Miss Marsha Jones is the legal owner of the currently operating small retail store under the ABC office building. Miss Jones will also be managing the new store as the store owner which is yet to be opened in the XYZ office building. The individual is currently employing two employees who are working 30 hour shifts every week. The owner will be recruiting six more employees prior to opening the store in the new location. Miss Jones will also be responsible for recruiting one HR managers, one store manager, one accounts manager and one inventory manager. She will be monitoring the procurement of inventories. Raw materials will e procured through a third party procurement manager who will serve the store on a contractual basis. Miss Marsha Jones holds an MBA degree specialization in marketing. The individual has valuable prior work experience as marketing managers of reputable companies. The owner now wishes to put her knowledge into practice by establishing and expanding own business. b. Company legal structure Buster retail store will be run with the help of a sole proprietorship ownership structure. This is precisely because of the fact that it is least expensive form of ownership structure and a business to form. A business run in sole proprietorship structure provides owners with better facilities in terms of enhanced control and uncomplicated taxation policies. Given the fact that it is a start-up business with involvement of less capital it would always be better for Miss Jones to run it on a sole proprietorship basis. Moreover, it will also allow the owner to avoid any form of dilution of ownership unless the company is offered for initial public offering. Alongside that sole proprietorship will also Miss Jones to have great control over every aspect of the business (Carter, “Definition of Sole Proprietorship and the Advantages & Disadvantages”). The individual will also be able to allocate the company’s income in any manner that is deemed to be appropriate without any restriction whatsoever. In addition, Miss Jones will not be required to separate her personal funds from the business funds thereby making it easier for accounting managers to keep track of the cash outflows and inflows without any hassle. The responsibilities of making any business decision will solely rest on the shoulders of Miss Jones thereby giving the owner complete flexibility to introduce and subsequently implement any innovative idea. c. Management team: roles and qualifications The management team will mainly comprise of an accounting manager, a human resource manager, one store manager and an inventory manager. The human resource manager will have to have an MBA degree in HR and prior work experience of one to two years. The individual will be responsible for overseeing the official procedures related to the recruitment, salary disbursement and other benefits of all subordinate employees and managers. The accounts manager will be responsible for drafting the financial statements of the company (includes the balance sheet, income statement and the cash flow statement). The primary role of the account manager will be to outline the outflow and inflow of funds from and to the company accounts thereby highlighting the net cash flow in a particular month. This will enable the owner to comprehend the requirement of funds in the following months. The responsibility of the store manager will be to manage all the six subordinate employees who will be placed in the newly developed store. The store manager will have to ensure the fact that each and every business codes are being adhered to by the employees. The individual will also be responsible for seeing through that each and every organizational strategy is being executed without any fail. The store manager has to apply a team leadership style thereby laying equal emphasis on productivity and welfare of the employees (B. Bass and R. Bass 103-108; Bass 130). It will be the store manager’s duty to report the proceeds of everyday related to company accounts and stocks/inventory to the account manager and the inventory manager respectively. The inventory manager will be responsible for keeping track of the inventories that are stocked up in the warehouse. The individual will be responsible for communicating the demand of any particular product to Miss Jones in order for her to be able to get the products procured on time and get them displayed on store shelves. d. Employees: roles and qualification The six employees who will be appointed for the new store will serve as a direct contact point for the customers. They will have to ensure that customers have a satisfactory buying experience from the retail stores. The employees will have to demonstrate good communication and customer relationship management skills. They have to be well equipped in order to address any customer queries with immediate effect. The employees will have to ensure that store is kept well oriented with goods and products stacked in the right places. They will have to serve as ushers directing people towards the section that will fulfill their need. The employees will also be accountable for sustaining cleanliness of the shop. They will be deporting directly to the store manager regarding the need to replenish the stock of a particular product. The employees will also have to be well aware of the expiry dates of each and every product in order for them to be able to discard them from the retail outlet and dispose of them properly. The employees will have to demonstrate effective store management skills. e. Contractors/vendors: roles and qualifications The contractors/vendors will be primarily responsible for supply chain management for Buster retail. The supply chain managers will look after the procurement of the required goods. Miss Jones has made it extremely specific that the supply chain partners need to a follow lean supply chain management principles in order to sure that goods are procured at the right quantity, at the right place and at the right time. In that way Miss Jones will be able to prevent any form of wastage of resources. Procurement of goods will be done on a weekly basis and it will be the primary duty of the supply chain partners to ensure that the procured goods are of the highest quality. 3. Financials a. Anticipated operating costs of the new business The anticipated operating cost of the new business in a particular month has been explained in a categorical manner as follows: Property rent + first month security deposit = $10,300 Employee salary = $10,800 Utilities security deposit (only first month) = $300 Construction and modification costs = $ 8,150 Miscellaneous operating expenses = $1,540 IT expenses (first month) = $6,150 IT maintenance (subsequent months) = $1,200 Marketing costs (first month) = $8,800 Public relations (first month) = $1,500 Operating costs for the first month is anticipated to be somewhere close to $47,540. In the subsequent months the operating cost is expected to be near about $21,140. b. Anticipated investment requirements to launch the new venture The anticipated investment requirements for the new venture are expected to be near about $120,000. This includes investments behind furnishing facilities, inventory purchases, investments behind construction and modification and payroll for the first six months. c. Anticipated revenue Miss Marsha Jones expects to earn revenue of $250,000 in the first year and anticipates the revenue to increase to near about $350,000 in the subsequent years. d. Pro-forma cash flow projection for the first year of operation *all values are denominated in USD e. Payback period According to the pro-forma cash flow projection for the first year, Miss Marsha Jones will generate a net cash flow of $80,870 in the first year. If the owner is able to replicate the same performance in the second year, then it will take another half a year for her to get the payback for the investment. The payback period for the investment is anticipated to be near about 1.5 years. f. Anticipated return on investment Anticipated return on investment after completion of the second year of the retail store can be determined from the following formula: ROI = (Profits from investment – cost of investment) ÷ cost of investment (Deb 55-67) ROI = ($186,940 - $120,000) ÷ $120,000 = 55.78% 4. Marketing and sales a. Summary of a marketing/sales strategy As far as marketing/sales are concerned, the owner will be designing and distributing flyers to each and every tenants residing in the office building. Coupons will also be distributed to the tenants in order to capture the attention of the employees working in the offices all over the building. The coupon will have discount offers as well as point redemption facilities which can be availed upon producing the coupons in the store. Miss Marsha Jones has also planned for arranging an inauguration program with a guest count of 50. As a promotion strategy foods and drinks from the shops will be served to the guests. This will enable the owner to encourage word of mount promotion.  b. Marketing/sales requirements for the business  i. Price Competitive pricing strategy will be followed where products will be priced in a lower to medium range keeping in mind the purchasing power of the employees and the managers (Baum, Crosby and MacGregor 36-49). Discounts and coupon point redemption facilities will be offered. ii. Product Products will be placed in the store shelves after a careful evaluation of the target market. The owner needs to have a meticulous understanding of the preferences and tastes of target customers. Miss Marsha Jones will diversify the line of products in order to increase the revenue stream. iii. Promotion As mentioned above, pamphlets and flyers will be distributed to various offices housed in the office building. Discount coupons and point redemption offers will be emailed to the tenants. An inauguration program will be organized in order to promote the quality of foods and other products available in the store. The retail business will also be promoted with the help of social media   iv. Place The owner will have to enhance its physical presence by opening more stores in commercial buildings. c. Competition It is expected that Miss Marsha Jones will face steep competition from the retail stores which are already based within and outside the office building. This is precisely the reason why a competitive pricing strategy has to be followed and discounts have to be offered frequently in order to capture the attention of a wider customer base. 5. Operations a. Location of the business As of now the store is located in the lobby XYZ building which houses nearly 25 tenants all of which are businesses. The owner (Miss Marsha Jones) is planning to open another store in XYZ building which houses nearly 40 tenants out of which 30 are businesses whereas the other 10 are residential. Expansion of the retail store in this building will provide an opportunity for the owner to increase the customer base and create a sustainable source of profit. b. Business operations The store will operate from Monday till Saturday and will be kept close on Sunday as majority of the offices in the building are closed on Sundays. The store operating time will be between 9:30 AM up until 8:30 PM (Monday till Friday) and 10:00 AM to 7:00 Am (Saturday) thereby providing ample scope for employees to fulfill their requirements between the aforementioned working hours. No goods will be produced within the store as each and every saleable product will be procured from a third party. The service hours of the customer service desk will be the same as the operating hours of the store. 6. Legal and Sundry issues Legal issues involve paying off all the liabilities as well as adhering to the commercial laws while running the business. The liabilities that involve taxes, interests to be paid on debts and accounts payable will be calculated by accounts manager. The reports will then be produced to the owner following which funds will be disbursed appropriately to make sure that liabilities are paid off on time. Miss Marsha Jones will be seeking the help of an external legal executive in order to look into various legal issues during the course of the store’s operational lifecycle. 7. Major challenges One of the biggest challenges to be faced by the owner is the constantly rising rate of inflation. This will make it extremely difficult for Miss Jones to replenish inventory at a lower price. Moreover, the rise in interest rate will also make it difficult for the owner to avail loans from banks as it will increase the interest expense thereby depleting the company’s margin of profit. Works cited Bass, Bernard M. "Does the transactional–transformational leadership paradigm transcend organizational and national boundaries?" American psychologist 52.2 (1997): 130. Bass, Bernard M. and Ruth Bass. The Bass handbook of leadership: Theory, research, and managerial applications. New York: Simon and Schuster, 2009. Print. Baum, Andrew, Neil Crosby, and Bryan MacGregor. "Price formation, mispricing and investment analysis in the property market: A response to “A note on ‘The initial yield revealed: explicit valuations and the future of property investment’”." Journal of Property Valuation and investment 14.1 (1996): 36-49. Print. Carter, Christopher. “Definition of Sole Proprietorship and the Advantages & Disadvantages.” Small Business Chron. Hearst Newspapers, LLC, 2014. Web. 30 December 2014. Deb, Rajat K. "Transmission investment valuations: Weighing project benefits." The Electricity Journal 17.2 (2004): 55-67. Print. Read More