Strategic and short-term planning processes and their importance in management
This report compares two business plans which are Mindshaker and Liquid culture. The report starts by giving a brief summary of each business plan. Mindshaker is an online textbook retailer which enables students and faculty to access books online. Liquid culture is an online clothing retailer. The main strengths on Mindshaker business plan lies on excellent business strategy, product differentiation and a good business description. For Liquid culture, the main strong point lies on business mission, realistic financial plan and comprehensive business information. The main weakness in Mindshaker lies on unrealistic profit and loss, poor competitor analysis and poor financial analysis. For Liquid Culture, the main weakness lies on poor competitor analysis, lack of elaborate marketing strategy and poor staffing. The report has recommended that the business plans should include more information on market characteristics and business schedule. Challenges in coming up with a business plan lie on coming up with appropriate financial analysis and establishing a competitive advantage. A business plan helps in managing the business future and carrying out a good competitor analysis. A business plan is vital before starting any business venture. In conclusion, while the Mindshaker business plan have competency in marketing strategy, Liquid Culture have a clear mission.
Executive summary 2
A brief description 7
Liquid Culture 7
Three strongest components of each plan 8
Excellent marketing strategy 8
Distinct products and services through differentiation 9
Good company description 10
Liquid culture 10
Well laid out mission 10
Realistic financial analysis 10
Comprehensive product information 11
Weak points 11
Unrealistic profits and loss 11
Poor competitor analysis 12
Poor financial analysis 12
Liquid Culture 12
Lack of well defined marketing strategy 12
Lack of comprehensive competitor’s analysis 12
Poor staffing 13
Suggestions on how the business plans could have been improved 13
Challenges faced and how they were overcome 13
Lessons learnt about business planning. 14
Competencies demonstrated 14
Brief description of each of the two business plans
Mindshaker- online textbook retail business.
Liquid Culture-online women outdoor clothing retail store.
The three strongest components of each plan and justification
Excellent business strategy.
Good business description.
Realistic financial plan.
Comprehensive business information.
Identification of the three weakest components of each plan and their justification
Unrealistic profit and loss.
Poor competitor analysis.
Poor financial analysis.
Poor competitor analysis.
Lack of elaborate marketing strategy.
Suggestions on how the business plans could have been improved
List of challenges faced and how they were overcome
A statement of lessons learnt about business planning.
The competencies that were demonstrated and to what extent.
A business plan is a written document that covers the details on business and how it will be carried out. Through a well detailed business plan, one is able to bring a business idea into a reality (Brand, 2001). This is due to fact that writing a business plan enables one to look critically at the business idea and think on how to turn it into a venture. A business plan makes it possible to think of the future and also helps to come up with idea on what to do when the venture succeeds (Capezio, 2000).
The two business plans used in this report have been obtained from two websites which are; http://www.bplans.com and http://www.businessplans.org. The selected business plans are The Mindshaker and Liquid Culture. The report have analyzed two business plans and looked at their weakness and strengths. The report has also looked at the way in which the two business plans can be improved. There are also analysis on the challenges that are faced when coming up with the business plans and how to overcome them. Each of the report has its competency which has been well explained.
A brief description
Mindshaker is a business aimed at helping the graduate students and faculty to access books online. The business is aimed at making ease of access for the learning materials. The current system has not been able to meet the demands for the users. Bookstores are often sold out and poorly organized leading to long queues while the online retailers have not been able to fully provide the solution as they offer materials from multiple sources. The learning materials are many making it hard for the professors to come up with course materials on time. Mindshaker have a way in which the course materials can be easily made. The business has the capability to offer 2.8 million graduate students and their faculty learning aids. The users can search and purchase books via a safe transaction method. The company website will allow the students to view their syllabus and the required course materials. The business is aimed at reducing time wasted in selecting the course materials and avoids duplication of efforts. The business has gained partnership with 20 universities who will share their curricula and hence their books will be listed. The business does not require a lot of startup capital since it has no accrued fixed costs as sales and marketing will be handled using inexpensive ads. The business expects to expand their revenue from $2.2 million to 22.0 million in a span of four years. This shows that the business is expected to be profitable within a short period hence the investors will have substantial gains (Mindshaker, 2014).
The Liquid Culture is an online clothing business that is aimed at eliminating the middle man and selling the clothing direct to the client. The cost saving by the business will be passed to the customers who will pay the goods at reduced costs. The company will start with the best fabric, design and styling. The business owners are well experienced having been on the market for 15 years. Shipping and production will be done by Magic clothing so that the company will not be required to keep or maintain inventory. The company intends to work closely with their partner in their Indonesian based plants (Liquid Culture, 2014).
The main aim of the business is to provide the consumers with clothing that will be able to energise their outdoor activity. The key to success for the company is having a website that is accessible, strong advertising campaing, great vendor relationship and having excellent staff. The company will be processing the order and paying online. The requested order will be sent to Magic clothing company who will make the shipping arrangements. The main cost for the company start-up lies in design and marketing. The company have a capital of $260,000 in form of investments and a short term loan of $200,000. The company products are women outdoor clothing in any active use. The focus will be on the seasonal demand. The business aims to market their products through traditional advertising medium such as the woman fitness magazines. The company will eliminate the middle man through use of ads hence lowering the consumer clothing budget (Liquid Culture, 2014).
Three strongest components of each plan
Excellent marketing strategy
The company has a well defined marketing strategy. Through the company partnership with the universities, it will be easy to sell their services to them and also market more easily. The company is keen on building brand equity that will help in making it easy for consumers to associate with them. The company will also be tailoring their marketing efforts depending on the school. The tools for marketing being used by the company are campus representatives, part time regional sales representatives, advertising, personal letters, opinion leaders, direct mail flyers and trade shows. Form the marketing strategy; it is evident that the company will be able to reach the target market easily. The company utilizes a lot of tools which makes it possible to influence the clients easily (Mindshaker, 2014).
Distinct products and services through differentiation
The company has ventured into online retailing with a good differentiation plan. The business has looked at the fact that most of the students purchase their books from college bookstores. The main problem with the purchases made on the college bookstores is high prices and being taken advantage of by the colleges. The existing businesses dealing with online sales of books during the business plan drafting had not reached for critical mass. The existing business has not been able to offer books to college faculty. The market is also very fragmented. Unlike the bookstores, the students will not have to queue. The students will also be offered extra services such as the course information provided by the schools. The company website is also able to provide other services such as magazines and computer software. Other competitors in online bookselling do not offer value added services like the Mindshaker. The big online retailers on books are not able to offer personalized services, ease of use, sharing of ideas and innovative materials. The company has thus applied differentiation technique that has made them unique in the market (Mindshaker, 2014).
Good company description
The business plan describes the business in a way that makes it possible to fully understand it. The business plan begins by introducing the internet and explains e commerce. There is explanation on the growth of e commerce and its value. The business plan then focuses on the textbook market in the U.S. the plan explains the sales generated on the textbooks which makes it possible to understand the venture idea. The business plan looks at the way in which the student buys books currently and their drawbacks. There is extensive use of statistics which shows that the writer has carried out adequate research on the business venture. A good business plan should be able to give intensive research on the field of business and explain the opportunity. This business plan has been able to present required research on online textbook sales and the existing opportunity (Mindshaker, 2014).
Well laid out mission
A good business plan should be able to show the business mission. The liquid culture business plan have a well laid out mission which is to present the consumers with designs, styling and clot6hes which will be able to make the outdoor activity energizing. The business wants to make sure that irrespective of the outdoor activity, they are able to provide the best clothing which will make the users feel wonderful (Liquid Culture, 2014).
Realistic financial analysis
The company financial plan for the business is comprehensive. The plan has looked at the areas which will require a lot of startup capital and analyzed them. The design and marketing are perceived to be the areas where the startup capital will be high. The financial plan looks at the available revenue for the business and its sources. From the company financial analysis, it’s evident that total funding is higher than the total required capital and liabilities. Having a comprehensive financial plan is needed for the business to have a clear plan on the start up. Financial plan enables the business to determine what amount of capital they need and where to get it (Liquid Culture, 2014).
Comprehensive product information
The business plan has been able to give their products summary in a clear manner. The online store will deal with women outdoor clothing. The products are based on the seasonal demand for the women outdoor wear. The plan elaborates on the type of outdoor wear that they will be offering. The list of the items is; fleece outwears, raingear, synthetic clothing for outdoor wear, hats, shirts, shorts and pants. Having an elaborate list of items that the business will be offering enables the plan to be clear and easy to understand (Liquid Culture, 2014).
Unrealistic profits and loss
Mindshaker have projected the revenue to increase from $2.2 million to 22.0 million in a period of four years. This increase is unrealistic as the business is on start up. The business has downplayed the expenses such as advertising among others. The increase in revenue is based on good relationships with the professors only (Mindshaker, 2014).
Poor competitor analysis
The business plan does not fully analyze the competitors. Online book retailing is highly competitive with many players some who have established themselves internationally. The competitor analysis does not look deeply into what are the competitive advantages of other players in the industry and how to counter them (Mindshaker, 2014).
Poor financial analysis
The business plan does not analyze their finances well. Most of the company financial estimates are unrealistic hence unachievable. The operating expenses are expected to remain level during a four year period which is highly unlikely. For example, the business may increase their sales representatives which may lead to higher expenses (Mindshaker, 2014).
Lack of well defined marketing strategy
The company aims to carry out their marketing campaign using the traditional media such as magazines and ads. Use of traditional marketing mediums may not work well due to fact that they have been overtaken by modern methods. There is poor marketing plan for the business as they only rely on advertising (Liquid Culture, 2014).
Lack of comprehensive competitor’s analysis
The business plan does not analyze the business in the same field appropriately. Poor competitor analysis may put the business in risk of undermining the competitors. The online clothing store business is competitive with many global online clothing stores. There is a need to look at all the competitors and come up with a comprehensive analysis (Liquid Culture, 2014).
The business plan does not have a good plan on staffing. The number of employees are not well defined which is vital in coming up with statistics on the salary. There is a need to look at all the employee including those who will be carrying out delivery and sales representatives in order to have a comprehensive salary analysis (Liquid Culture, 2014).
Suggestions on how the business plans could have been improved
Both business plans needs to look keenly into the market characteristics. They should be able to describe the market in such a way that readers are able to understand it well. This is through giving the information on size, location and the history. The information in this part should give the competitor analysis and the expected profitability. Though the business plans have tried to give the information, they have not been able to comprehensively give the market characteristics. There is also need to give more information on the operations on both business plans. The schedules should be given whether part time or fulltime. The business plans should also be able to give the holidays being observed and the extended operating hours in a year the business may have (Pickton & Broderick, 2001).
Challenges faced and how they were overcome
During the production of the report, the two main challenges faced were lack of prior knowledge in the field of business being analyzed and having to understand new terminologies. The business ideas in the plans were new hence there was limited knowledge on their operations. To overcome the challenges, adequate research was needed on the business venture. I carried out research on both business ideas presented and also for any terminology that was new.
Lessons learnt about business planning.
During production of this report, several lessons were learnt on business planning. The lessons learnt were;
Importance of financial analysis in business plan
When writing a business plan, financial analysis forms a very vital requirement. The financial plan gives insight on the amount of the capital available and the need to borrow if it is inadequate.
Need of comprehensive competitor analysis
Competitor analysis is very important when making a business plan. Through competitor analysis, a business is able to determine the marketing strategy and the competitive advantage it has. The business plans success is determined by the way it handles competition in its market.
Importance of market characteristics analysis in business plan
Making appropriate market characteristics analysis is a lesson that I learnt as I analyzed the two business plans. Market characteristics give information on the market size, location and history. This helps in determining the ability of business venture being profitable.
Why a business plan is vital before starting a business venture
The information given by the business plans show how vital they are before one starts a business. Without a business plan, chances of failure are high. Entering a business venture without appropriate information increases the risk (Skrt & Antončič, 2004).
How to write a successful business plan
Another lesson learnt is how to write a successful business plan. The analysis of the business plans gave insight on the requirements and weakness to avoid when coming up with a business plan.
The competency demonstrated by the writer in Mindshaker business plan is the ability to analyze the market appropriately. The writer has come up with a business plan with the best marketing strategy and identifies all the avenues that will enable it to reach the potential customers. In Liquid store, the writer has been able to follow an excellent business plan format. The business plan has an outstanding structure addressing all areas needed.
Business plan involves organizing thoughts into a profitable venture. Business planning look at what one intends to do with the business and how it will be done. By writing down a business plan, one is able to bring the idea into a reality. Business plan enables the writer to think deeply about the idea and how to turn it into a business. Through analyzing the two busyness plans, it has been possible to see their strong areas and weaknesses. Market characteristics are very important in a business plan. The market characteristics give the information on size, location and the history. There is also need to have a well defined business schedule in the plan. Mindshaker business plan have a well illustrated marketing strategy while the main competency of the Liquid store lies on its outstanding business vision. By using the recommendations given, both business plans can be improved. Despite their weakness, both business plans are capable of being used to start a good business venture.
Brand, C. M. (2001). Planning law. London: Cavendish.
Capezio, P. (2000), Powerful planning skills: Envisioning the future and making it happen. Franklin Lakes, N.J: Career Press.
Dooris, M. J., Kelley, J. M., & Trainer, J. F. (2004), Successful strategic planning. San Francisco: Jossey-Bass.
Liquid Culture. (2014). ‘Liquid Culture’. Retrieved (23August 2014) from ‘Bplans’, http://www.bplans.com/clothing_ecommerce_site_business_plan/executive_summary_fc php
Mindshaker. (2014), ‘mindshaker’. Retrieved (23August 2014), from ‘Center for Business Planning’, http://www.businessplans.org/Mind/Mind01.html
Pickton, D. & Broderick, A. (2001). Integrated Marketing Communications, Pearson Education Ltd, Harlow, England.
Skrt, B., & Antončič, B. (2004), Strategic planning and small firm growth: An empirical examination. Managing global transitions, 2(2).p.13