Business Entrepreneurship:Individual Business Plan Guidelines File
Candidates Full Name
Ravens Company is a shoe making organization that has ventured into the field of making shoe creams. The organization has manufactured a different product for the first time, which complements the first product but plans on how to effectively enter the crowded market. The shoe cream is a unique kind as it is assorted with chemicals that protect the leather shoes. Ravens therefore has innovated different colors for the shoe cream to satisfy the market segments. Nonetheless, the pricing of the shoe cream is averagely set to ensure that the different dynamics of the market are set up in an appropriate model to help with the generation of benefits to the entire program. Therefore, this is the business plan of the company that will see the inclusion of the product into the markets and generation of revenue for the different segments of the company. Therefore, the business plan exclusively discusses the different segments of the population and the cost of starting up the project within the organization. Thus, the business plan discusses issues that are exclusive to the development of the shoe cream among the market segments.
Table of Contents
Ravens Company is an organization that is based in the state of Texas. The company manufactures shoes for different segments within the population. As a leading manufacturer of shoes, the organization has decided to venture into the manufacture of other products which would complement the shoes which they manufacture. Notably, Texas and its environs have numerous industries and learning institutions. This means that there are a high number of potential customers to the products of the company who will guarantee a sale with the sufficient marketing projects.
More to the point, the Texas region is a hot area, whereby the shoes are easily worn out. By using the product as a complementary devise to the shoes which are bought by its customers, the organization works to ensure that profitability is attained and so is the creation of value to the customers. When a customer achieves their value for the money, the specific company acquire their interest and in turn rewards it with their loyalty. Therefore, customer loyalty is a strategy that works to make the organizations have the best returns form the customers as they penetrate to the other spheres.
On the other hand, the organization is situated in a region that is suitable for its kind of business. There are different advantages that it has considering a SWIOT analysis of the shoes and products industry. The company has a leading market share within the region and it can use its nice proceeds to ensure that it achieves a greater following from the other segments. Therefore, with the development of a framework to approach the production of new products, the organization is in a greater inclination to market the product and also carry out their activities in a successful manner.
The business plan in this case acts to show the company some of the few areas that they should consider before fully venturing into the production of the goods. The plan has outlines of sections that are important to the generation of revenue for the organization in its activities. Therefore the creation of the business plan comes as an advantage to the company.
What is the size of the market?
The product stands to benefit a greater margin of the Texas populations. The organization has notably set their pricing at an average level that would satisfy the generation of revenue for those who are in the lower income earning families as well as those in the middle level income earning families. Through this pricing, the shoe cream stands to have a large market for their product. The product will sell among an estimated market size of 14.3 Million people. This shows that the organization has to plan for a large market. The products should match the number of people within the market to avoid the creation of an imbalanced demand-supply curve.
What is the growth rate of the industry?
The American shoe industry has a high growth rate that is affected by the creation of new segments each and every time. The shoe section is a similar industry as the shoe cream manufacturers. Therefore, the cream manufacturers have to look into the trends and patterns of the industry to produce suitable products. Over the recent years, the growth rate has staggered at an estimated 9.8% per year. This growth rate shows that the number of products will have to increase as well as the trends within the market.
Is the market at full capacity?
The Texas shoe cream market has not been accounted for at a full capacity. This is due to some of the factors that should be put in consideration before establishing the population of the market. Despite being a populous area, the region is marked by a high number of people who do not put on leather shoes and this affects the number of the market. On the other hand, there are specific people within the society that would not opt of the product, citing the expenses they would incur. A more integral factor for the market not being full is the fact that there are established shoe shiners within the streets, this reduces the chance of every shoe owner within the society having their own cream. Therefore, this translates to the market not being as full as expected.
Where are customers getting the product now?
In the modern market structure, there are various vendors who dal in the product within the market. A great percentage of the vendors come from neighbouring states while others are multinational corporations that have their branches within the state. The companies have contracted their wholesalers and retailers to deal in the product within this region. These companies however do not specialise on the sector alone as they have other clothing accessories to deal in.
Where are the customers?
The customer for the products come from different sections of the population. Despite the segmentation of the population in terms of their household incomes, the customers have also been segmented in terms of their orientations. There are three distinct groups of customers who are expected to like the product. The primary group of customers are the school going people. Students have the greatest population and have an assurance of putting on leather shoes to get to their various schools and colleges. These individuals have to look nice in the schools as they also preserve their shoes. To do this, they will have to apply the cream that will in turn act on the better side to promote the sale. The second group of customers is the jobless people who have to look nice in their interviews and do not have enough money to regularly buy shoes. Therefore, they will have an option of purchasing the commodity that will enhance the longevity of their shoes, hence appearing smart as always required. Through the shoe cream, which will be advertised for its life-long shoe protection strategy, there will be a high number of jobless people looking for it. The final group of customers that are expected to deal in the commodity are the employed. The employed group will have to spend on quality products that ensure their desired goals. Thus, when they take a keen look at the commodity, they will derive the value and buy it for themselves and their households.
How many would purchase from you?
The organization has ready market from its established presence in the market. The presence of the company gives it the advantage of carrying out its functions without an interruption from the norm of work. Currently, Ravens Company has an estimated 8.4 Million customers who put on their shoes for different purposes. This shows that the customers will be interested in the creation of coherence and with their already achieved satisfaction, they will opt for the cream. Thus, the cream has an outreach of 8.4 million people in the present moment.
What external factors come to bear?
There are various external factors that the organization has to consider in carrying out the venture. Fundamentally, the company has to seek government compliance in carrying out its function and the generation of legal documents to cover for their operations. Through carrying out these functions, the law enforcement agencies will not have a problem with the organization but let it carry out its business purposes. Nonetheless, the organization has to consider the different trends that the shoe industry is taking. Being a member of the greater industry, they have to consider these factors when carrying out their marketing plans. The consideration of dynamics in the industry would therefore lead the organisation to know whatever projects to roll out at any given moment.
8. What keeps new competition from entering this market? (Barriers to Entry)
There are various factors that keeps the new companies from entering the industry. The new companies have to comply with the government standards and bring up the relevant methods required to establish itself among the population. On the other hand, for a new company, they would have to undergo an intensive marketing program to include themselves within the relevant customer sphere. Nonetheless, dealing in the shoe cream alone without the shoes disposes an organization to the potential of making hefty losses in their actions. Thus, the organizations that seek to get into the market have to make several compliances so as to get the right validation.
What are the options for developing the technology (customer, off the shelf, design yourself, subcontract)?
There are various options for the development of the cream software by the company. Primarily, it will be developed from the customer preferences in the region. On the other hand, the cream will be developed from the inclusion of technology that protects the leather shoes from fast aging and other weather incidences such as storms and extreme sunlight. Through these processes, the design of the shoe cream will have the capability to tackle the different problem that the shoe owners face. Nonetheless, there will be a sub contraction with an already established shoe cream company to produce the products and facilitate their selling within the population. Through these methods, the organization will have an inclination towards the development of a better and fairer priced object for the customers.
2. What are the options for producing the product or service?
For an efficient production of the products, the organization has to carry out a specific model which would facilitate the creation of revenue. Since ravens concentrates on the making of shoes, it does not have the relevant machines to make the cream. Therefore, for the first instance, there will be a system whereby the company can get a subcontractor to carry out the work for them. In the contract there will a stipulated model that the contracted company has to follow and ensure that there are better initiatives which allow for the generation of revenue as required. Therefore, these actions will ensure the ultimate profitability of the organization towards the acquisition of better market share. The two companies will therefore share the profits of the produce or, the subcontractor can choose an option of being paid for their service and expertise.
3. What are the options for Sales and Distribution?
A number of strategies will be used by the organization for the creation of a sales channel. The sales of the organization will be carried out through the use of distributors and retailers in different regions. The utilization of the distributors ensures that the company can access the different channels that they have to create the desired value ad also generate the revenue in an effective way. Therefore, this will call for a partnership with distributors and the retailers to access the market more efficiently.
4. What resources are required for development and are they available to you
To make the material, the organization requires the pertinent chemicals and achiness that would impact positively in the creation of the product. The machines which are supposed to be used in the creation of the product and the relevant workforce are not available for the company. That is why there is a sub contraction to help with the manufacture of the product.
5. What are the laws and regulation relating to the business?
There are various regulations that will be used in the formulation of the new product. The product will be formed in an efficient way that will tackle the problems within the dry and hot areas. Therefore, there will be an intellectual regulation for the product. No other organization will be allowed to include the formula of the cream in their manufacturing schedule. This is a contingency to shield the product from imitations and competitions from other malicious companies. On the other hand, the product will have to adhere to the environment regulations that require eco-friendly establishments. Therefore, the chemicals which will be used in the process will have to ensure minimal impacts on the environment in general. Nonetheless these actions will positively influence the compliance of the organization to the government regulations.
6. Has the research discovered any moral or ethical issues that you are uncomfortable with?
In the development of the project, the research does not find any moral issues with the product. The production of the commodity is therefore certified by the cultural considerations and professional ethics that need following.
7. What technological changes are changing or emerging that may affect the business?
The shoe cream business might be affected greatly by the need of consumer to have greatly full filling products. The customers deserve to have their satisfaction guaranteed, as they need creams that will help their shoes withstand harsh climatic conditions and elongates the life of their shoes. This impacts positively on the development of the product as the factors will propel its acceptance within the customer populations.
Human Resource feasibility
What technical and management experience is required?
In the management of the project, there are various skills that are integral. The technical skills which are required is that of effective communication. The officers who will be in charge of the project will have to communicate with one another to ensure that the progress of the project is successful. On the other hand, when the organization hires managers for the same role, they have to come up with objectives which would ensure the strategic inclusion of the process within the company objectives. Nonetheless the managers must also have great interpersonal skills to manage their relation with the sub-contractors ad come up with the best way of running the organization.
Who are the owners and what are their roles?
There are different owners to the project established by the organization. The owners have different roles which work to facilitate the successful completion of the process and generation of a quality product in the company. Primarily, the company is the biggest shareholder in the project and works to ensure that that the relevant resources are well included. The organization will provide monetary and non-monetary assistance to the subcontractor in the event of the manufacturing process. On the other hand, the managers are also owners of the project and they have to come up with differ ways to ensure that the entire cycle is successful. The mangers will coordinate between the two companies and work towards the successful production of the shoe cream. On the other hand, the expert in charge of the project will have partial patent rights to the commodity and ensue that the right steps are made towards the creation of a good product for the society.
3. What is the ownership structure?
The product is owned in a partnership structure. The expert and the company own the product in different ratios. The expert owns the intellectual bit of the product while the company owns the process that has been used. Notably, the company finances the actions of producing the product. Thus the two entities own the product in a defined ratio of 70% for the company and 30% for the expert.
4. What are the manpower requirements?
To find the right employees, the organization will carry out relevant advertisements to those who have expertise in working in a similar sector. Through this the employees will be included in the general process of running the organizational functions. On the other hand, the employees will be provided for a pay which is slightly above average encourage their services. Motivation tot eh employees will take place in the form of generating specific periods when they can indulge in team work and also go for sensitization seminars on the industry. This process will ensure that the employees are trained while they are working for the organization.
5. What is the company’s growth strategy?
The organization will implement different strategies to ensure that quality is well enhanced throughout the product creation. The quality department of the two organizations will come together to test the product at each phase and ensure that it meets their agreed projections. Through the development of this framework to test the product at each phase, the organization will ensure a change is made when there are errors. The change process will be managed collectively and in a strategic manner that drives the benefits for the organization. Thus, the change drivers of the organization will ensure profitability in the long run and create maximum value for the commodities. There will be an exclusive department for the product within the organization, which employees have to report to and adhere to its considerations given the uniqueness of its function.
1 What are the projected Revenues from the sale of your product or service?
The organization conducted a market research to establish the amount that they would accrue from selling the product. Since one of their commodities has a high selling arte within the community, the saw it wise to look within their customer base, those who would like their commodity. The research was also conducted among the non-customers to see if they were interested in the product. The research established that an estimated 8 Million customers had an interest in the product and were comfortable with the pricing that was set for it.
The selling price of the product is at $5 for each piece of the cream. This price is friendly to people from both the middle income households and those from the low level income earning families. Therefore, the projected revenue from the product would be the number of potential customers and the market price of the commodity. This would translate to:
8 Million * $5 = $40 Million
2. What are the financial dynamics and opportunities?
The organization decided to place the pricing of the product at the fair price of $5 which would enable the establishment of better platforms of tackling the problems that arise within the society. With the stipulated budget of the commodities, the organisation is assured of having a penetration in the market. Therefore, the price per unit for the product will be $5.
How much investment is required?
The start-up expense that the organization has to incur in the course of establishing the product is at an estimated $200, 000. This cosy would cover for all the expenses that are needed by the company. The company will however not spend on the equipment’s required for the process. The expenses will be collectively incurred by their subcontractor group. These expenses are at valued at $500,000. The research of the project will cost the organization $100,000 to develop the weather resistant components of the cream while hiring the experts will cost the organization $300,000 and obtaining legal considerations will cost the company $150, 000.
What are the financial risks?
The payback for the organization will come when it has achieved the cist it used in its operation to produce the commodity. The overall cost of production for the commodity is estimated at $950,000. The cost will be covered when the company sells 190, 000 units of the product. The costs will be covered in the first month when the company will make it sales. Thus, the costs incurred will be payable to the organization in the first month. The project relies on the opportunity for the company to provide quality goods to the society.
5. What are the possible sources of financing?
The organization will finance the operations from its stakeholders and interested sponsors of the project.
6. General Financial Numbers that would indicate attractiveness of Venture
The investment has a payback phase of one month and the potential of ensuring that there is a gross profit of 30% of the production costs. Therefore, the company should venture in the project to help acquire a greater chance of expansion within the community.
Dollinger, M. J. (2008). Entrepreneurship: Strategies and resources. Marsh Publications.
Gumpert, D. E. (2003). Burn your business plan!: what investors really want from entrepreneurs. Lauson Publishing Co.
Szenberg, M., Lombardi, J. W., & Lee, E. Y. (2014). Welfare effects of trade restrictions: A case study of the US footwear industry. Academic Press.
Freeman, R. B., & Kleiner, M. M. (2005). The last American shoe manufacturers: Decreasing productivity and increasing profits in the shift from piece rates to continuous flow production. Industrial Relations: A Journal of Economy and Society, 44(2), 307-330.
Start-up Expenditures and Expenses Worksheet
Item Total Cost Cash Required
Land __________ __________ 150,000
Capital Equipment __________ __________350,000
Computer __________ __________ 230,000
Beginning Inventory __________ __________ 700,000
Start up Supplies __________ __________ 320,000
Licenses and Permits __________ __________ 150,000
Leasehold Improvements __________ __________ 50,000
Utility hookups & Installation __________ __________ 15,000
Advertising (Preopening) __________ __________ 120,000
Insurance __________ __________ 1,000,000
Other __________ __________ 10,000
Total Estimated One-Time Cash Requirements __________ __________3,095,000
Start-up Operating Expenses
Estimate No. of Months Total Cash
Item Monthly Expense X Before Break even = Required
Owners Salary __________ __________ __________30,000
Employee’s salary, wages, benefits __________ __________ __________ 23,000
Rent __________ __________ __________ 12,000
Promotion expenses __________ __________ __________ 76,000
Supplies and postage __________ __________ __________82,000
Vehicle Expenses __________ __________ __________17,000
Telephone __________ __________ __________ 10,000
Travel __________ __________ __________10,000
Interest __________ __________ __________2,000
Maintenance __________ __________ __________25,000
Other __________ __________ __________
Total Cash Required to Cover Operating Expenses _________ 297,000
Plus: Total One-Time Cash Requirements (Previous Table) __________3,095,000
Add 10% Safety Factor __________338,200
Total Cash Required for Start-up _________3,730,200