Business Plan: Flower Shop - Assignment Example

Business Plan: Flower Shop Business Idea The idea is to set up an online flower business with its efficient flower delivery service that will cater to all individuals and occasions. Based in the United Kingdom, the service will be aimed at delivering beautiful flowers, flower bouquets, blossoming green plants, and goody baskets throughout the UK using an advanced shopping cart system that will provide a unique online shopping experience to the customers and the consumers, which in this case are the recipients. The service will not only provide quick and fresh flower delivery to its customers but it will also allow customers to choose and create their own flower arrangements for a more customized shopping experience. There will be a highly connected delivery network that will enable flowers to be delivered the right time so that the impact is not lost due to an inefficient delivery. Flowers are a good choice for several occasions including birthdays, mother’s day, and weddings, to name just a few. A key differentiator would be its exclusive floristry that will provide elegant flowers of the best quality. Market Size and Segmentation Perhaps the most convenient and obvious segmentation is the occasion segmentation that will segment the market according to different occasions namely weddings, birthdays, Mother’s day, Christmas, Valentine’s day and other seasonal parties. This division of the market into sub groups will allow greater profits through larger sales by targeting the right set of individuals (Hall, Jones, Raffo, and Anderton 2008, p. 139). Another option is to segment the target markets temporally, meaning, based on the required delivery times. While many occasions require same day delivery, many others do not. For this reason, it will be convenient to divide the market to groups of individuals based on the delivery times for the recipients. In case of time based segmentation, the segmentation variables would include same day delivery, next day delivery, peak seasonal delivery, and other holidays. Main Competitors Philip’s Flower Shops: The florist offers great flower at good prices with international delivery options. Moreover, the customers have the choice of various delivery time options. The flower shop also has a flower catalog that can be requested to order unique flowers for different occasions (Philip’s Flower Shops 2014). Philip’s flower shops operate online and have a specially designed website structure that allows easy ordering of flowers online. It also provides flexible delivery systems for its customers so that recipients receive flowers on the appropriate time. Interflora and Tesco: Since Tesco is a large retailing giant in the UK, Interflora will offer a fierce competition in terms of prices and options. With its huge collection of flowers, low prices, and dense delivery network, Interflora can offer great competition. However, our service could position itself as an efficient deliverer of flowers offering unique and customizable flower arrangements (Interflora 2014). ASDA Flowers: ASDA is another UK retailing giant that has a huge market share. Moreover, the service offers free delivery except Mothering Sundays. The flower quality is great and the shop offers a diverse range of flowers according to different seasons and occasions. Not only this, but the online shop also offers other occasional gifts including chocolates, champagne, vase, and balloons (Asda 2014). Legal Structure The online flower shop will be a Limited Company, which means that the company’s finances will be a separate sphere relative to the business owners’ personal finances. This also implies that there will be double taxation: one the online flower shops as well the owners of the e-Business. Business risk will be a critical consideration or if the setting up on the online flower shop will require high initial capital. During the introductory phase of any business, growth is slow and must require enough initial capital to help sustain the online flower business. Also, being a limited company would mean that there are several legal responsibilities towards the company’s stakeholders. Since the business will be a limited company, this would mean that there is limited liability in case of liquidation. In any case, a sole proprietorship or a partnership may not be a good idea for an online florist business. Human Resource As a florist and online flower business, the main employees would include the florists, online customer service representatives, website operators, order handlers, programmers, packagers, and delivery personnel. Since the online order placement system will be quite automated, this will greatly reduce the expenditure on human resources. Though, the delivery personnel, customer service reps and packagers would play a far central role in the delivery of customer satisfaction. The distribution of the employee wages of some positions are given below: Position Estimated Wage Rate Online customer service reps $25/hour Online order handlers/website operators $1500/month Packagers $25/hour Delivery personnel $30/hour Costs Startup Costs or Expenses: Startup Expenses Legal costs $500 Office supplies and equipments $400 Flower catalog $150 Website $550 Other $500 Total $2100 Startup Assets: Startup Assets Money held in the bank Estimated monthly payroll: $2500 Additional utility expenses: $300 Total monthly spending: = $2800 Other current assets $1000 Fixed assets Land: $36,000 Flower plantations: $24,000 Total assets = $61,000 Total startup requirements $63,800 Fixed and Variable Costs: The fixed costs would include the costs of the fixed assets such as land, flower plantations and so on. On the other hand, variable costs may include the costs of producing flowers, packaging, and delivering them. In particular, the salary expenses and the wage rates per hour or month would count as a variable cost. Budget Sales Budget: The sales budget contains the business’ projection and estimation of the sales that are expected to occur. Since the market has been targeted based on several differentiation variables, therefore, the sales budget will be categorized according to the different product categories. Since the online business will be selling various floral arrangements, flower and goody baskets, and plants for different occasions, it will be more germane to project sales for the different seasonal product categories. Flower Shop Sales Budget For the year ending December 30, 2014 Quarter 1 2 3 4 Year Flower sales units 750 500 1000 250 4500 x Price per unit x 30 x 30 x 35 x32 22,500 15,000 35,000 8,000 80,500 Plant sales unit 350 200 500 200 1250 x Price per unit x 25 x 25 x 25 x 20 8,750 5,000 12,500 4,000 30,250 Total Sales 31,250 20,000 47,500 12,000 110,750 Cost Budget: The costs budget would include all the expected costs involved from picking the flowers right up till its final delivery to the recipient. Namely these would include activity cost estimates, processing costs, salary costs, and delivery costs. Any other packaging costs would also be included in the cost budget along with the maintenance cost of running the website such as domain name registration, accessibility to web hosts or server websites, and so on. Production Budget: The production of flower products will be high despite good storage facilities. The quality of any flower product can be kept up for a week after which the freshness of the flowers starts to decline. Thus, production costs would all costs that are associated with producing the flowers, floral arrangements, goody baskets, and wrapping the flowers. Production costs will cover all the expenses that will be involved in producing the ready to send flowers. SWOT Analysis Strengths: Unlike many other online flower businesses, the business will not contract a local florist for getting flowers. Instead, the business will use its own flowers that have been exclusively produced on its own lands with the utmost care and using the best quality plantations. Moreover, the company will provide a wide range of flowers with a good storage facility that will ensure high quality lasting 7 days. The company will guarantee flower freshness and quality. All the handling will be performed with care so that the customers receive only the best quality products delivered. With its highly efficient and connected delivery network, it is possible for the company to send the flowers to any residential or commercial area. Also, the company will also provide free delivery to its customers as it expands. But, the differentiating factor for the consumers will not only be high value also the fact that the business will allow customized flower arrangement through an online software interface so that the delivered flowers are arranged just as shown in the picture online. Weaknesses: Currently, as the business is initiated, it will be difficult to offer free delivery service although the option is under consideration as the business expands. Many customers may not find the idea attractive especially when there are other florists offering free delivery. Since the business will own its own private lands and plantations for producing the flowers, the start up business may involve a high risk. There is a high probability that the initial investment may fail to get high returns or at least enough to enable a breakeven point within the first year. Running the online website will require strong servers especially because of the custom flower arranging software interface. Opportunities: The business has a great opportunity of expanding due to the availability of a favorable online market that has a far greater reach market around the world. The business could productively exploit its international delivery service to attract international customers. There is a great opportunity for benefitting from a large globalized market especially because the business would be owning its own floral plantations and can earn higher profits through sales. The presence of the online collaborative space and social media is an opportunity to engage customers through these channels so as to constructively convert the online engagement into sales. The business could consider adopting effectively marketing and promotional tools to enhance its presence online. Since the business will be set up online, the internet can provide great opportunities for the business so as to progress and advance. Threats: Since the business will be an online one, there is great threat from other competitors especially the larger florist giants who may stimulate a price war. This would mean that the profit margin would reduce by a large amount. Also, starting a business online and employing digital marketing channels may introduce negative electronic word of mouth (e-WOM) that may negatively impact brand image. Thus, the business will not only be susceptible to the threats of an online environment but the business will also receive fierce competition from floral shops that have been introduced by local retail giants in the UK such as Tesco and ASDA. Bibliography ASDA Flowers. (2014). Asda flowers home. [online] Retrieved from: http://www.asda-flowers.co.uk/ [Accessed: 7 Mar 2014]. Hall, D., Jones, R. & Raffo, C. (2008). Business studies. Ormskirk: Causeway. Philips Flower SHops. (2014). 1-800-florals: Americas online florist. [online] Retrieved from: http://www.800florals.com/about/ [Accessed: 7 Mar 2014]. Tesco Fresh Flowers. (2014). Tesco flowers from interflora delivered to your door. [online] Retrieved from: http://www.tescofreshflowers.com/ [Accessed: 7 Mar 2014]. Read More