Entrepreneurial Action for Solo Pasta Restaurant - Coursework Example

? Solo Pasta Restaurant Holloway Road N7 Business Plan MN2E03 Entrepreneurial Action 01/16/11 ID: 100045623 Page Number Executive Summary                                                 1 2.  Business Idea concept                                             1 3.  Mission     1 4. Vision     1 5.  Objectives    1 6. SWOT analysis 2 -3 7. Pestle analysis 3-4 8. Marketing analysis 4 9. Competitive analysis 4-5 10. Strategic planning 6-7 11. Management and operation 8 12. Financial analysis and plan 8-10 13. Future Plans 10 14. Funding request 10 15. Exit strategies 10 Executive Summary Solo Pasta Restaurant is a pasta restaurant located on Holloway Road 7N. The business is owned by four partners that contributed equally to fund the business. Our aim is to grow the business seeing profits in the first year and build recognition and awareness of the business. Ultimately we plan to expand into other markets. Competition is mainly from fast food eateries i.e. McDonalds and a new business that will compete directly with us. Business Idea Concept Solo Pasta Restaurant will serve a variety of pasta, sauces, vegetables and meat. Our service will be unique in that the customers can design his pasta bowl with whatever they want on the pasta. It will seat forty (40) patrons and employ four (4) employees. The planned target market would be first students, because of the location and working adults, as these are the two groups of people that eat out the most. Solo Pasta will offer a twenty percent (20%) discount to college students. Solo Pasta will employ skilled workers that can provide for fast friendly service and produce quality foods. In addition to the pasta dishes, Solo Pasta will offer hot drinks and breakfast baguettes. Mission Solo Pasta Restaurant’s mission is to provide quality products with fast friendly service. We will aim to bring in both students and working adults in a friendly and inviting environment. Our products will be of the best quality and only fresh ingredients will be used. Vision The vision for Solo Pasta is to build a clientele and product recognition amongst the local populous. Solo Pasta also plans to grow and open more restaurants around the business districts in London. Objectives Solo Pastas objective is to breakeven or post a profit in the first year of operations. We also want to gain 30% of the targeted markets by the end of the first year of operations. SWOT Analysis Strengths Solo Pasta was first to open at its location and it has already began to develop a loyal clientele. Many of the same customers stop in for coffee or tea and breakfast baguettes day after day, and the same is true of our lunch and dinner clientele. Many of our customers have taken advantage of our promotions of free coffee and twenty percent (20%) student discounts. Financially Solo Pasta is exceeding the breakeven point on a daily basis as of the second month of operation. Furthermore we offer a unique product and service by allow customers to design the contents of their pasta bowls. Solo pasta has above average quality of product and excels in customer service. Additionally our location is a benefit as we are in the heart of north campus and close to the tube on Holloway Road. Weaknesses Solo Pasta utilizes no outside funding. This limits the amount that can be spent on advertising. Solo Pasta has a limited number of seating capacity. Presently, Solo Pasta does not offer a carry out service. Opportunities Solo Pasta could seek out investors to increase the amount of funds available for advertising. Solo Pasta could develop a carry out service to increase number of daily customers they could serve. Solo Pasta could run additional promotions to increase sales. Solo Pasta could advertise on local or collegiate television and radio stations. Threats Solo Pasta face a threat from the new restaurant that just opened. The threats posed by the new restaurant, unlike other eateries on Holloway, serve similar products, focus on the same market niche and offer a similar quality of food and service. Loss of a competitive advantage could reduce Solos Pasta’s daily sells, which would also reduce net sales and net income from operations. Solo Pasta Restaurant’s SWOT Analysis Diagram I Strengths Weaknesses N First to open Limited funding T Established clientele Limited capacity E Unique Product No carry out service R Excellent customer service   N Promotions   A location   L     E Opportunities Threats X Seek additional funding Competition from restaurants T Add new promotional Loss of clientele R Add Advertising on television Loss of net income N and Radio Station Loss of sales A Develop Carry out Service   L     Fig 1 Pestle Analysis Political At Solo Pasta we are aware of the dietary concerns of the government in preventing obesity and healthy eating for all. Solo Pasta will offer whole grain pasta choices and healthy vegetable toppings, as well as meat options. We will offer decaffeinated coffee and teas as well and low fat creamer options. Economic Solo Pasta will provide Employment to local residence. Sociological As a local business will give back to our community, we will support local charities and through them give back to our community to help those less fortunate. We will help initially as a donation collection site and then as we gain income with financial contributions. Technological Solo Pasta will incorporate technology to help us monitor sales and run our business. Technology will also help us incorporate controls into the business to protect assets and eliminate wasteful practices. Legal Solo Pasta will obtain all necessary licenses and operational permits as required by the government. This includes meeting safety and operational standards and practices to insure healthy, safe and quality food is available to our customers. Environmental Solo Pasta will recycle all waste possible. Incorporate practices and policies that will reduce our carbon footprint, while enlisting up to date technologically advanced appliances that will reduce water usage and control waste of natural resources. We will use locally produces vegetables and meats that are organically produced. We will purchase other items from businesses that are like minded in preserving the environment. Market Analysis Solo Pasta’s unique product will appeal to students and working adults as well as anyone over the age of three (3). Targeted market will be the students of London Metropolitan University, since we are located directly across the street from the campus. North campus has over 16,000 students and foot traffic of 5000 students a day. Other colleges are located nearby and will also produce traffic as many students rely on public transportation; the tube is visible from our location. Holloway Road is a heavily traveled road and with businesses and Emirates Stadium nearby our attractive store front will be highly visible to many potential customers. Competitive Analysis Solo Pasta offers a unique high quality restaurant e environment, which has reduced the competition of existing fast food places such as the local McDonalds. We are facing our biggest threat from the new restaurant that has opened and is competing directly with us for the same clientele. New restaurants strengths are longer hours (open 24 hours daily), similar product quality, and possibly deeper pockets than ours. The new restaurant weaknesses are that they have a limited number of pasta dishes, and they do not allow customers to modify contents of the pasta dishes served. Our competitive advantages are: Established clientele and differentiated product. Specialize in unique presentation of pasta dishes. Each dish is made to the customer’s specific request. Vegetables can be added without meat to appeal to the vegetarian palate. Friendly service that is not a fast food environment. Eating area is attractive and provides a relaxed atmosphere. Maintaining Competitive Advantage Developing Strategic Plan Developing a strategic plan from the results of the SWOT analysis employs developing a SWOT Matrix of strategies. (Beckman 2008: p 5) The matrix which follows plots opportunities and threats on the vertical axis, while placing strengths and weaknesses on the horizontal axis. An explanation of the focus of the resulting strategy follows the matrix. SWOT Matrix Strategies Opportunities S/O Strategies W/O Strategies Threats S/T Strategies W/T Strategies Strengths Weaknesses Fig. 1 (Beckman 2008: p5) Explanations of Strategic focus S/O Strategies – Uses strengths to exploit opportunities S/T Strategies – Uses strengths to avoid threats or to help deal with them W/O Strategies – Highlights weaknesses that need to be overcome in order to take advantage of opportunities W/T Strategies – Highlights weaknesses that must be overcome to defend against threats and areas where the company is most vulnerable. (Beckman 2008: p 5) Other Factor to Consider in Strategic Planning Management is aware that the new restaurant not only may compete directly for our clientele, but have much deeper pockets then we do. For this reason managers need to gain an insight to our competition. According to Weinclaw (2008: pp3-4) Three factors are key in gaining a strategic advantage; low cost products and services, product differentiation and niche marketing. Solo Pasta Restaurant leading with promotions and student pricing has seemed to draw in customers. The quality and sufficient quantity of the service keeps our customers returning. With these practices Solo Pasta is practicing all three of the key factors that Weinclaw discusses. There is a host of information on how develop or design strategic plans for small or medium size businesses. One point to take note of is that strategies for competitive planning are not all that different from one company to the next. Every business person is aware of the fact that lean efficient operations, quality product and customer service, and marketing effectively are key in strategic planning for any company to succeed. Why then would some find their companies a miserable failure? Koopman (2201) in an article ‘Strategic Execution’ explains that strategies, even the worst most likely can be recovered from, but what make the difference in success or failure is execution of the strategic plan. In the 1990’s British Airways and Air France competed for the same clientele. British Airways made money while Air France lost a bundle. The difference was the execution of their strategies. British Airways put in place the processes and culture that supported its core strategies, doing whatever it took to keep its business clients happy. Air France on the other hand somewhere between the strategy and its execution got lost. It is clear from this observation that if a new business doesn’t seek to build a culture and environment that is supportive of its strategic plan it will not develop the needed competitive advantage over its rivals. The elements of culture and environment therefore need to support the key elements of competitive planning: lean costs, differentiated product or services, and marketing. How would managers and owners of a restaurant apply this to their business? Management and Operations The four owners will be the managers of the business. Each owner has a different set of skills that will be employed in the business. Their degrees will help in their ability to manage and run a start-up business. There is also family support in this venture as one or more has families have owned and operated their own businesses. Ana Pursuing business management degree. Background in retail sales Anna Pursuing business management degree. Some retail experience, bookkeeping experience Khalid Pursuing a business degree Has experience in retail industry, customer service, working in family owned business Medine Pursuing a business degree. Has customer service experience in family owned business. Has bookkeeping experience. The building is being rented was a restaurant and has all the refrigeration, cooking, dish washing and serving utensils in place. It also is equipped with the table and chairs to seat forty patrons. The four will have to purchase dishes and silverware for the customers to use. This will be enough to serve twice the number of seated patrons, by purchasing from a resale shop that specializes in used restaurant equipment they will keep their costs down. Financial Analysis and Future projection Solo Pasta is a joint venture between four friends. The initial funding for this restaurant would from the partners savings in the amount of thirty thousand pounds (?30,000). Each of the owners would be equal partners as each is contributing seventy five hundred pounds (?7500). Operating Cost for the first three months is projected at ninety one hundred fifty eight pounds (?9158) per month. The initial funding will over the cost of operation while the restaurant is building a clientele. The breakeven point was determined to be three hundred and five pounds (?305) per day. That equates to serving one hundred and four (104) portions of pasta. This doesn’t include the drinks or breakfast baguettes that will also be served. Financial Statements Solo Pasta Restaurante opened October 1, 2010 and had a profit in the third month of operations. With the next quarter being during a peek time for students to be on campus we expect to see this trend grow. By looking at the current performance against the project performance for the first year, management can develop an idea as to whether this will continue to be a growing business and plan accordingly for the future. The opening Balance sheet for Solo Restaurant is relative simple. Since owners are supplying the start-up cash there is no liabilities, further more building and kitchen equipment are being leased together. This will reduce initial expenses and help establish a cash flow before it is necessary to replace kitchen equipment and cooking and serving equipment. The following are the balance sheet, cash flow projections and income statements projected for Solo Pasta through the first three years of operation. Solo Pasta Opening Balance Sheet October 1, 2010 Assets Liabilities and Owners Equity Cash ?30,000 Equity ?30,000 Total Assets ?30,000 Total Liabilities & Owners Equity ?30,000 The Cash Flow is based on actual performance of Solo Restaurant the first three months in operations. Quarters two through four are projected, as are the yearly figures for years one through three. Please note all numbers are in pounds. Cash Flow Statement Oct-10 Nov-10 Dec-10 Q2 Q3 Q4 YR1 YR2 YR3 Opening Balance 30000 27615 26241 26383 31677 41888 30000 57998 128625 Cash from Sales 7285 9106 11837 44296 53155 63786 189465 250000 275000 Cost of Goods Sold 3240 4050 5265 19712 23654 28386 84307 110000 129250 Net Sales 4045 5056 6572 24584 29501 35400 105158 140000 145750 Cash Oct. 31 34045 32671 32813 50967 61178 77288 135158 197998 274375 Wages and Salaries 4680 4680 4680 14040 14040 14040 56160 57000 58895 Operating Expenses 1750 1750 1750 5250 5250 5250 21000 24150 27773 net increase/decrease -2385 -1374 142 5294 10211 16110 27998 58850 59082 Ending Balance 27615 26241 26383 31677 41888 57998 57998 116848 187707 The projected income statement for the first year through the third year of operation assumes a modest increase of sales. Between year one and year two a 30% increase due to the fact that clientele is aware of our presence, future years would be a 10% to 20% increase. Also some of the same students will be returning and provide valuable word of mouth advertisement for our business. Please note all numbers are in pounds. Income Statement Q1 Q2 Q3 Q4 YR1 YR2 YR3 Sales 28228 44296 53155 63786 189465 250000 275000 Less Cost of Goods Sold 12555 19712 23654 28386 84307 110000 129250 Net income 15673 24584 29501 35400 105158 140000 145750 Less Operating Expenses 19290 19290 19290 19290 77160 81150 86668 Net loss/profit (3617) 5294 10211 16110 27998 58850 59082 Future plans Maintain a competitive advantage over the competition by continued development of a business culture that will value individual employees, customer satisfaction and business growth into other markets. This will be achieved by focusing on developing a culture that is supportive in implanting any changes in our operation that is needed to continue to be a leader in the restaurant business. We will continue to research and design our products to the satisfaction of our customers. Funding Request Solo Pasta would like to borrow additional funding of ?10,000 for the benefit of developing and advertising and marketing budget. Exit plan Solo Pasta plans to make a public offering on the stock exchange in the future. References Beckham, H 2008, 'Competitive Strategy', Competitive Strategy -- Research Starters Business p. 1 Great Neck Publishing Research Starters - Business, EBSCOhost, viewed 11 January 2011. 'Competitive intelligence 101' 2009, Westchester County Business Journal, 48, 21, p. S19, MasterFILE Premier, EBSCOhost, viewed 11 January 2011. Doessenbach, T 2009, 'SURVIVING TOUGH TIMES: DEFINING WHAT SHOULD BE', Wood & Wood Products, 114, 3, p. 22, MasterFILE Premier, EBSCOhost, viewed 11 January 2011. Matthews, C, & Scott, S 1995, 'Uncertainty and Planning in Small and Entrepreneurial Firms: An Empirical Assessment’, Journal of Small Business Management, 33, 4, pp. 34-52, Research Starters - Business, EBSCOhost, viewed 11 January 2011. 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