Expanding One Store Operation to Two Store Operation

Introduction and brief description of the venture
Introduction
This business plan delineates a propositioned venture to undertake the expansion of Buster’s from a one-store business operation to a two-store business operation.
Description of the business
Buster’s is a small retailing business situated in the lobby of a large office building that involves the selling of mixed bag items. The products offered by the business includes items necessitated by occupants of the large office building, comprising of snacks, greeting cards, pre-wrapped sandwiches, canned beverages, newspapers, paperback books in addition to small gift items. The store occupies 1,000 square feet of space and its operations run from Monday to Saturday specifically targeting all of the individual walking through the lobby of the office building. At the present moment, Buster’s are the sole retail store providing product items necessitated by individuals on an everyday basis during business hours.
Business Aspirations
The key aspiration of Buster’s is to expand its business operations and have two functioning stores. A new office building is expected to be opening approximately two blocks away from the building presently occupied by the business. Buster’s aspires to expand its business operations to that building. What is more, the long-term objective of the business is to establish a chain of similar retail stores in major buildings situated downtown.
Organization of the business and key Players
Owner
The business has been started and supervised by the owner of the company who has worked as a sole proprietor. The owner has hired two individuals who aid in the everyday undertaking of the business operation.
Company Structure
The capital structure delineates the manner in which a business finances its general operations as well as growth and expansion by utilizing different sources of funds. At the present moment, the business has been fully financed using the personal finances of the owner. In the expansion of the business, the approach taken for financing such growth will be by having funds from friends and family, who will eventually assume an equity role in the business as investors. In total, the friends are family will invest $175,000, which will be converted into 30 percent equity stake of Buster’s.
Management Team
Presently, Buster’s operations are managed by the owner, who supervises the undertakings of the two employees. However, the long-term objective of the business is to expand its business operations into several stores that become a franchise. Taking this into consideration, it is suggested that every retail store will have a store manager who will be liable for facilitating the day to day operations, setting financial projections for the store, obtaining competitive contracts with suppliers and guaranteeing continued profitability of the business.
Employees
Presently, the store has two employees, each of whom spends 30 hours on a weekly basis at the retail store. By expanding and opening a second retail store on the new office building, it is expected that there will be an additional two employees hired for the new store. However, based on the business aspirations of Buster’s and the business projections, it is expected that each store will hire an additional employee to deal with the significantly high demand from the consumers. This is especially during rush hours such as in the morning when several individuals want beverages and newspapers as well as lunch hours to satisfy the high demand of consumers that wish to grab pre-wrapped sandwiches, beverages and other snacks.
Contractors
Financials
Operating Costs
The following are the anticipated expenses of operating the business in a typical month, which amount to the anticipated operating costs of the new business.
Expense $
Payroll 6,000
Marketing / promotion 500
Depreciation 0
Rent 2,200
Utilities 1,000
Other expenses 50
Total monthly expenses 9,750
Investment requirements
The initial funding from investors will make it possible for Buster’s to expand its business operations to a second store and purchase initial inventory. With extensive marketing and outreach to consumers who work within the building and also the individuals that go through the building, we expect to surpass the break-even point at the outset of the second year of this business plan. Buster’s plans to maintain costs to a minimum in that three full-time employees will be charged with running the shop and overseeing the operations.
START-UP FUNDING
Start-up Expenses to Fund
$75,000
Start-up Assets to Fund
$100,000
TOTAL FUNDING REQUIRED
$175,000
Revenue
The key pointers of financial accomplishment are all positive in our plan: increasing revenue, increasing control over cost of sales, and increasing profit margins
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Year Total
Revenue Beverages
14,000
14,500
15,600
17,900
62,000
Revenue Snacks
15,000
15,200
16,400
18,400
65,000
Revenue
Newspapers
13,000
13,000
13,000
14,000
53,000
Revenue Sandwiches
15,000
15,200
16,400
18,400
65,000
Revenue stationary
13,000
14,800
16,800
19,400
64,000
Revenue other items
10,500
11,200
11,300
13,000
46,000
Total Revenue
80,500
83,900
89,500
101,100
355,000
Expenses
Payroll
18,000
18,000
18,000
18,000
72,000
Marketing/Promotion
1,500
1,200
1,200
1,000
4,900
Rent
6,600
6,600
6,600
6,600
25,400
Utilities
3,000
3,200
3,200
3,500
12,900
Other expenses
150
150
150
150
600
Total expenses
29,250
29,150
29,150
29,250
116,800
Net Cash flow
51,250
54,750
60,350
71,850
238,200
Payback point
The payback point will be in the fourth quarter of the financial year.
Return on Investment
The investors of the company will not be paid back in cash but will rather be given a 30 percent equity stake of the business. It is expected that the business will start paying out dividends in the second year of operation.
Marketing / Sales
Summary of marketing/sales strategy
The sales strategy of the company is to retail five different product groups. These comprise of beverages, snacks, newspapers, sandwiches, stationary, and other items such as chargers. It includes increasing awareness in the marketplace of the products retailed by Buster’s through increased marketing initiatives. Buster’s also plans to exceed its quota simply by selling a greater number of product items in the second store as compared to the initial store.
Marketing/ Sales requirements for the business
Price of goods/services
Price encompasses the actual amount that is anticipated to be paid by the consumer for a product or service. Buster’s uses value-based pricing. This is where the determination of the price rendered to the consumers is done on the basis of the consumers’ perception of value that is provided by such products and services in relation to what is being offered by the rivals in the market. This is to ensure that the target market are not impelled to go to Starbucks or other coffee shops to get beverages and not impelled to visit food trucks to get sandwiches and snacks. Furthermore, the prices set by the business make it possible to generate a return on the investment made (Dogra, 2010).
Product
Product takes into account anything that can be offered to the end user to satisfy a need or want. This encompasses both tangible goods as well as intangible services and involves a decision regarding the number of alternatives, sizes, packaging, color, logo, as well as brand name. Buster’s has a wide range of product offering for consumers including snacks, pre-wrapped sandwiches, bottled/canned beverages, greeting cards, newspapers, paperback books, and small gift items that the building’s tenants might find attractive. Product positioning is another key aspect that is taken into consideration by Buster’s. Specifically, the business positions its products in a manner that facilitates every product group to retail better. In particular, each group of products is positioned in a way that facilitates a visual point of sale and highlights the products being sold and communicates extra information to the consumer. This ensures maximum sales for the business because consumers can easily perceive the products being retailed and cannot overlook the shop to go to other outlets.
Promotion
Promotion refers to all of the actions undertaken to make the product or service renowned and preferred amongst the users. Buster’s employs different forms of promotion to facilitate the success of its business operations. One of the promotional approaches used by the business is sales promotion. This refers to increasing the value rendered by the product or services by offering an additional incentive to buy a product. For instance, Buster’s offers consumers a packaged offer of sandwiches and beverages that are considerably cheaper than the individual products. In addition, this includes in-store demonstrations and displays. In addition, the business offers price incentives such as buy-two-get-one-free as sales promotion methods. Secondly, Buster’s employs direct selling which is a kind of advertising directly aimed at target consumers. In this case, the business targets individuals within their offices in the building such as clipping coupons and incentivizing them to visit the store. Furthermore, there is personal selling where the employees of the business conduct face-to-face communication with the buyers.
Place
Place takes into account the point of sale. It is a demonstration of the strategy of an organization regarding how and in what way it desires its products and services to be made accessible to the consumers in order to attain profitability. In the case of Buster’s, the strategy that has been espoused is to place a retail store at the lobby section of every major office building in the downtown area. This is a fundamental determining factor for success of the retail chain. Specifically, Buster’s seeks to cater to their target market with retail stores that are strategically situated.
Competition
At the present moment, competition in this specific retail area is comparatively low as the Buster’s retail store is distinctively linked to the entire building as a whole. Food carts and small shops will be our biggest threat in this market. Therefore, product differentiation and standards will have to be carried out in order to attain a competitive edge and restrict harm to the image and value of the Buster’s shop. With other items such as newspapers, magazines, and generic stationary, we expected to face significant competition from retail vendors nearby such as CopyCat. The key to the purchasing decision of the consumer is the image that the brand conveys to its audience. In this regard, the signage and the interior of the store, the appearance and demeanor of the employees, in addition to the kind of products being retailed will all underpin this image.
Operations
The operations of the store are situated at the lobby section of the major office building. These locations are prime for the business for the reason that they are strategically situated to appeal to the target market. Taking into consideration that the main targeted consumers are the individuals working within the building, the location of Buster’s stores make it possible to ensure that there is ease in product accessibility and reach. Not only are the consumers able to purchase products whilst on their breaks, but it is also possible to have quick deliveries to their offices owing to the fact that it is in the similar building. At the present moment, Buster’s endeavors to open a second store within a major building that is opening nearby. The store will be positioned in the same manner within the premises of the building. Furthermore, Buster’s seeks to open a chain of retail stores in the downtown region in the major office stores thereby capitalizing in the busy lives of the individuals working and operating in the area.
Legal and sundry issues
There are a number of legal and sundry issues that need to be taken into consideration. To begin with, it is imperative to note that the long-term objective of the business is to create a franchise with the brand name “Buster’s”. From a legal standpoint, it is necessary to make certain that the business name is not already being used by another business. The main way in which this legal issue will be handled is by conducting a name search with the suitable state agency, which is more often than not the office of the Secretary of State. In the event that the selected name is not already being utilized, the business can reserve it using the same office for a period of time. The second legal aspect is the business license. As a business, in expanding to open an additional store, it is necessary to attain a range of licenses and permits. These will comprise of the business license and the tax registration. An additional legal issue is non-disclosure agreements. Taking into consideration that the business setup will be self-financed and that the business will enter into contracts with suppliers, it is imperative to take into account confidentiality and non-disclosure agreements. Bearing in mind that these external entities will have accessibility to business information that Buster’s may want to keep private, the solution is therefore to have such suppliers to sign such agreements. Imperatively, the more confidential data and information the business plan comprises, the more significant these agreements are. Zoning is an additional legal issue that Buster’s has to take into consideration. When choosing the location for the business operations downtown, Buster’s will need to make certain that it is appropriately zoned for the kind of business it plans to operate. It is wrong to make the supposition that if the business is of the similar kind as the one that is presently there, the zoning is suitable. This is owing to the fact that zoning may have transformed while the other business was operating and that business may have been provided an exception that may not necessarily be rendered to Buster’s (Fields, 2018).
Major challenges
Growing and expanding businesses experience a variety of challenges. As businesses expand their operations, various problems and prospects demand various solutions. Buster’s is no exception and there are different challenges that the business may experience while expending from a one-store operation to a two-store operation.
Keeping Up With the Market
Business conditions incessantly change and therefore businesses ought to conduct market research in an incessant manner also. Otherwise, the business runs the risk of undertaking business decisions on the basis of invalid and outmoded information, which can give rise to business failure. It is imperative for the business to note that the more it experience success, the more rivals notice and respond to their actions. Furthermore, loyal consumers can rapidly find alternative businesses that provide better deals. With products aging, sales growth and profit margins become negligible. Therefore, it is imperative for the business to comprehend where the products are within their life spans in order to figure out how to maximize general profitability. In the same manner, it is necessary to make an investment in invention so as to create a sequence of new profitable products to the market. Another challenge for the business is a change in consumer preferences. Consumer needs quickly change and lack of keeping up with such changes can hamper a business. Therefore, the business will create an extensive picture of what consumers want, the manner in which they behave and the most ideal market approaches.
Cash flow and Financial Management
Appropriate cash flow is significant for any business. For an expanding business, in the sense that cash constraints can be the major factor restricting growth. During a period of expansion, owners are necessitated to spend money. However, this notion can rapidly get out of control and leave the business in a compromising position. In order to deal with this challenge, Buster’s will manage its cash in a careful manner during this period. The business will conduct favorable negotiations with respect to payments terms with its different vendors and partners as well (Kitanneh, 2016). Proper stock control and efficacious supplier management has a tendency to become progressively more significant as businesses expand. It is key to not that holdings of obsolete stock may come to be a major challenge that necessitates periodic cleaning up. Taking this into consideration, Buster’s will work in tandem with suppliers in order to diminish delivery cycles or opt to switch to suppliers and systems that have the capacity to cope with just-in-time delivery. Most of all, planning ahead is imperative to facilitate financial requirements and attain proper financing. Another challenge and key decision for Buster’s in the future will be whether the business ought to bring in outside business investors that can provide the equity necessitated to reinforce further expansion in the long-term.
Adaptation and Embracing Change
Change is another major challenge that Buster’s will face as a business. Notably, contentment can be a significant threat to an expanding and growing business. Making the supposition that there will be continuous success simply for the reason that there has been success in preceding times is imprudent for Buster’s. Taking this into consideration, Buster’s will have to embrace changes that will facilitate its growth and expansion. Some of these changes comprise of changing to suppliers who have the capacity to grow with the business and meet their new priorities. This is because as the business expands, incessant quality and reliability will be imperative compared to providing cheap product offerings. There is also the aspect of training and developing employees to ensure that they are effective and guarantee customer satisfaction (Kim and Mauborgne, 2014).
References
Dogra, B. (2010). Rural marketing. Tata McGraw-Hill Education.
Fields, R. (2018). Legal Issues to Consider When Starting Your Business. All Law. Retrieved 9 September, 2018 from: http://www.alllaw.com/articles/legal/article15.asp
Kim, W. C., & Mauborgne, R. A. (2014). Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Harvard business review Press.
Kitanneh, F. (2016). 6 Growth Challenges Your Business Will Face (And How to Overcome Them). Inc. Retrieved 9 September, 2018 from: https://www.inc.com/firas-kittaneh/6-growth-challenges-your-business-will-face-and-how-to-overcome-them.html