Business Plan For a Proposed Company Key Business

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Executive Summary

Key Business is a proposed company that is to be based in the UK. It is intended to specialize in research, Marketing, and advertising. A series of advertisements and promotions shall be used to market the business throughout the region. The launch of the business is scheduled for January 2011. The founding team comprises 6 partners namely; Alison Lee, Ben Jones, Halima Ali, Zinc Muzae, Onesmus Loki, and Agnes Leo. In relation to their qualifications and experience, each of the partners will assume an assignment so that maximum performance may be achieved.

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The financial forecast for the profits and loss budgets shows that the business will have a static gross margin while the net profit margin is expected to increase for the next three years. The most important factor in improving profit margin is the economies of scale in general and administrative expenses (Your business plan starts here, 1996-2010). A solid market for revenue is expected to have been achieved by the year 2013 which indicates a good trend.

Business Description

Introduction

Key Business is a proposed company that is to be based in the UK. It is intended to specialize in research, Marketing, and advertising. A series of advertisements and promotions shall be used to market the business throughout the region. The business is currently in the implementation stage and its launch is scheduled for January 2011 when it will start operating in the information industry. This is a mature industry but still allows for value innovations for customers.

Competitive advantage

The competitive rivalry is high as the existing local competitors are offering the same services. Risks of related businesses entering the market are high due to low requirements. Despite the competition, we expect the business to enter and thrive well in the industry due to the effective strategies put in place by the management team. The location of the business shall be strategic where customers shall discover it easily. This is shown in detail through the proposed business pictures in appendix 2.

Growth plan

Once the services are well established in the market, the company plans to start an aggressive development plan. The first step involves extending its service line. The process of service range extension will be accomplished by introducing new services in the market to meet customer needs and increase profits. As seasons change, profits will keep growing for Key Business, as there will be good strategies in place to grow the Key Business Market. Additional features will be created to attract new demand and customer relationships would be strengthened to have a solid base for revenue.

The Eliminate-Reduce-Raise-Create Grid

Eliminate
Use of inadequate service
Raise
Availability of fast and efficient deliveries
Reduce
Time required for offering services
Create
Convenience
Ready services
Optional services

The Eliminate-Reduce-Raise-Create Grid

Value Curve – Key Business

Value Curve - Key Business

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Plan of Operation

As a new entrant in the industry, our main objective is to strive to be the best service provider in the region so as to achieve our short term objectives of building a consumer experience. Objectives for the next 3-5 years of operation will be achieved through market penetration, market development, and product development which will help in building a consumer experience by focusing on improved services. At this point of growth, the business is expected to have stabilized. The business objectives below provide the direction to the business:

  • Strive to be the best service provider in the industry and region of operation.
  • Establish a good market and retain customers by increasing loyalty.
  • To Increase the market share among corporate and personnel.

Tactics

Through efficient marketing of the business using advertisements and promotions, the entrance of the business into the market is expected to be smooth. Further strategies will be put in place to ensure customer satisfaction and maintenance of good customer relations. More ideas will be welcome as seasons pass to ensure efficient management.

Strategic issues

In this market, the major external factors that can affect the business are threats of new entrants, and rivalry among competitors. In the 1st year of operation, we expect stiff competition from the existing established and related companies which will gradually reduce due to application of our effective strategies. Gradually, we expect to dominate the market. The major opportunities enjoyed include stable rules, multy-cultural diversity, and political stability that are guides to success and maturity.

Core values

Below are the core values for the company which should be adhered to by staff:

  • To uphold the highest standards of business ethics.
  • To maintain our reputation for reliability and commitment to serve all dearly.
  • To attend to every enquiry responsively and with empathy for efficiency.

These values are very beneficial to the business as they will improve the business’ reputation and attract more customers. Staff will apply the values in the management.

Management Team

Skills and experience

The management team of the company consists of 6 members whose responsibilities will be as indicated in the table below.

STAFF’s NAME EXPERIENCE RESPONSIBILITY
Alison Has skill and knowledge in hardware and software of computer science, -in charge of information technology
-construction and maintenance of the information system
Ben, Halima, and Zinc Marketing experience – to develop effective marketing strategies
Onesmus Has the knowledge on the financial aspects -financial manager
Agnes Has a strong knowledge of the industry, a strong leadership, and 15 years experience in the field -managing director

Advisors

The business shall have 1 lawyer, an accountant and a number of consultants for it to operate most efficiently as shown in the table below.

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ADVISOR’s NAME EXPERIENCE RESPONSIBILITY
Larry -a qualified lawyer
-masters in Law a
-4 years work experience
Business’ lawyer
Aggrey -degree in Accounting Business’ accountant
Kerry -managing Director of UWT finance Company Companies’ mentor and consultant

Management systems

The use of important software shall be employed to ensure competence levels are high in terms of technological advantages. Special rules guiding conduct shall be used to ensure all staff members provide competent services.

Industry Analysis

Key Business will operate and compete in the media information industry. Currently in the United Kingdom, the media industry is already well developed. There are many companies and firms which offer a wide range of services such as online flight bookings, online bill payments, to fast internet services. Though a mature industry, it allows for value innovations for customers and therefore give new market entrants a platform for bouncing forward.

Competitor Analysis

SWOT and critical success factors

SWOT analysis is used to plan a business strategies. Evaluation of Key Business in terms of Strength, Weakness, opportunities and threats is as shown below:

Strength

Solid financial resources
Good HR systems
Good customer service
Solid reputation

Weaknesses

Role culture
Retention of responsibilities

Opportunities

Political stability
Multi-cultural diversity
Stable rules

Threats

High competition
Short period negative outlook

This analysis confirms the direction of strategic intents but we must be aware of the threats and work to reduce the weaknesses to be able to achieve our objectives.

Market research

We, as Key Business Company, will compete within the information industry (a mature industry), but allows room for value innovation for customers. The market is a highly competitive one as customers have many options in making their consumer decisions. For ease of operation we shall try to provide improved services to clients and these shall be attained by strictly following our business strategies. The chart below shows what Key business shall put into consideration so as to effectively compete in the industry and maintain its position.

What Key business shall put into consideration so as to effectively compete in the industry and maintain its position

Marketing Plan

Distribution channels

During start-up, the business will strive to establish a stable market that will generate reasonable income to support growth. Customers will be reached through various channels as time lapses but initially, television and promotions will be used. In the 1st year of operation, we expect to have fully entered and stabilized in the local market which will be achieved through provision of quality and affordable services. In 3-5 years, the business is expected to enter new markets in the neighboring countries.

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Strategic alliances

After attainment of stability, business alliances shall be considered as a way of maximizing profits and increasing the company’s popularity. This will involve merging with other related businesses thus attracting more customers and profits to the firm.

E-commerce and technology

Most of the marketing will be done through the internet as this is more efficient and readily accessible. Through a well advertised website, the company is expected to reach many potential customers (Intelligent Life on the Web, 2000-2009). Ordering of services will be advanced and customers will be able to place orders online from our 24/7 fast internet services. This means that the business will be very efficient in meeting customer needs.

Tactical promotion plan

A top objective is that Key Business becomes successful and promotion is one of the ways to achieve this. Promotion boosts the sale of a product or service and the main methods that shall be employed will include launching of advertising campaigns, increased PR activity, temporary price reductions, and telemarketing. This will help the business greatly since it is a new business in an already established market.

Marketing budget

Initially, management will need $1 million for the organization, of which each partner will contribute $80,000 in total and the rest will come from a financial institution. This is the initial capital that is needed in the 1st year of operation and the table below gives a summary of how the capital will be used. The budget is calculated in dollars as shown in the table with marketing taking the lead in allocation.

Production process $.250,000
Marketing budget $.550,000
R&D and other expenses $.200,000

Credibility and risk reduction

Efficient plans will be put in place to ensure risks are minimized greatly, and credibility of the business is increased which will increase the business’ reputation.

Financial Plan

Financial Plan

Initially, management will need $1 million for the organization, of which each partner will contribute $80,000 in total and the rest will come from a financial institution. This is the total capital needed to establish the business as shown in the budget. Due to the low starting capital, entering the market will be smooth especially with the financial assistance from the available financial institutions.

Assumptions

The assumptions (most important), listed below are very important and have a strong influence on the financial plan.

  • An assumption that there is small pace in the economical growth.
  • An assumption that there will be no unseen changes technologically meaning that there shall be zero risk of offered products or services being outdated.
  • An assumption that the organization has enough finance and access to equity capital. This will ensure that our financial plan is effectively taken care of.

Projected Profit and Loss

The projected profit and loss shows that the organization expects to maintain gross margin but increase net profit margin during the next three years. The most important factor in improving the profit margin is the economies of scale in our general and administrative expenses. The profit and loss table shows the annual numbers but detailed monthly projections for 2011 are as shown in the appendices.

Projected Balance Sheet

The table shows the annual balance sheet results, with a healthy projected increase in net worth as indicated. More clarifications can be obtained from the appendix.

Projected Cash Flow

The cash flow is the most important element for illustrating the cash projections for the next 12 months of business’ operations. The cash flow table gives the annual results, which are less significant. The key to our business plan is the monthly cash flow table, in the appendices.

Break-even Analysis

Our break-even analysis is based on our cost and price structure expected as at the 1st year. The business growth shall occur in a way such that the number of workers will vary directly to the fixed costs of the business.

Conclusion

From the projections of our financial position in the financial plan, we are glad that the business idea is going to be a success. This may be especially right if we follow our objectives and uphold the core values which we are solidly backing. We are therefore very glad and ready to go into the business in the allocated period.

Appendix 1

Initial budgeting of the organization Table

Production process $.250,000
Marketing budget $.550,000
R&D and other expenses $.200,000

Profit and Loss Table

Pro Forma Profit and Loss
2011 2012 2013
Sales $936,000 $1,357,200 $1,967,940
Cost of Goods $143,051 $305,468 $564,060
Rent $16,250 $17,062 $17,915
Payroll (Inclusive of all depts. $250,000 $250,000 $250,000
Freight $96,000 $105,000 $114,000
Advertising $200,000 $250,000 $300,000
Sales Commissions $61,975 $118,530 $231,120
Office/ Admin expenses $53,100 $65,000 $85,000
Payroll tax $75,000 $75,000 $75,000
Utilities $20,000 $28,000 $37,000
Total expenses $915,376 $1,214,060 $1,674,095
Gross Profit $20,624 $140,140 $290,845
Less interest exp $3,000 $3,000 $3,000
Net Profit $17,624 $140,140 $290,845
Profit % 2% 11% 15%

Projected Balance Sheet Table

Pro Forma Balance Sheet
2011 2012 2013
Cash $125,867 $289,019 $738,774
Accounts Receivable $60,844 $116,367 $226,901
Inventory $6,541 $10,338 $19,090
Other Current Assets $431 $431 $431
Total Current Assets $193,683 $416,154 $985,195
Long-term Assets $35,577 $85,577 $185,577
Accumulated Depreciation $25,247 $26,497 $28,060
Total Long-term Assets $10,330 $59,080 $157,518
Total Assets $204,013 $475,234 $1,142,713
Current Liabilities 2011 2012 2013
Accounts Payable $28,330 $59,669 $117,606
Total Liabilities $46,705 $78,045 $135,981
Paid-in Capital $76,960 $76,960 $76,960
Retained Earnings $3,686 $80,348 $320,229
Earnings $76,662 $239,882 $609,542
Total Capital $157,308 $397,189 $1,006,732
Total Liabilities and Capital $204,013 $475,234 $1,142,713
Net Worth $157,308 $397,189 $1,006,732

Cash Flow Table

Pro Forma Cash Flow
2011 2012 2013
Cash Sales $413,168 $790,200 $1,540,800
Cash from Receivables $682,964 $1,129,777 $2,200,665
Subtotal Cash from Operations $1,096,132 $1,919,977 $3,741,465
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $20,000 $0 $0
New Other Liabilities (interest-free) $24,966 $0 $0
Expenditures 2011 2012 2013
Cash Spending $71,142 $149,843 $295,334
Payment of Accounts Payable $870,262 $1,556,983 $2,896,377
Subtotal Spent on Operations $941,404 $1,706,826 $3,191,710
Purchase Long-term Assets $0 $50,000 $100,000
Dividends $0 $0 $0
Subtotal Cash Spent $1,015,857 $1,756,826 $3,291,710
Net Cash Flow $125,242 $163,152 $449,755
Cash Balance $125,867 $289,019 $738,774

Break-even Analysis Table

Break-even Analysis:
Monthly Units Break-even 520
Monthly Revenue Break-even $29,019
Assumptions:
Average Per-Unit Revenue $55.78
Average Per-Unit Variable Cost $7.73
Estimated Monthly Fixed Cost $25,000

Appendix 2

Pictures of the proposed Business premises for Key Business

External view of premise and location in busy streets

External view of premise and location in busy streets

Proposed Board room appearance

Proposed Board room appearance

Interior view of the Premises

Interior view of the Premises

References

Intelligent Life on the Web, 2000-2009. E-marketing Strategies. Web.

Your business plan starts here, 1996-2010. Online Booking Business Plan. Web.

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