Executive Summary
This report studies the business plan
structure of a proposed venture in Halifax, Nova Scotia. The business idea is
in the field of food and catering industry.
The researcher has observed that a
population of young Canadian parents employed in corporate have little time
left to cook lunches for their children at home. This has revealed a need gap
to services wherein nutritious meals can be delivered to children right on
their school campus and parents can be reasonably charged for the same.
The proposed model is to be operated
through a website and a phone (where all transactions will be made in form of
order placement and payment); and a restaurant will be tied up with to
contribute a cooking facility. Thus, the model is one with a low investment and
relatively low risk.
However, the business may be adversely
affected by rising costs and arrival of competition. After analysing all the
pros and cons of the business it has been concluded that the success of a
business is highly probable if it sticks to a well thought out plan and if the
business environment is thoroughly studied.
Introduction
This paper discusses the prospects of
starting a business enterprise operating in Halifax, Nova Scotia. The proposed
business venture is concerned with providing healthy lunches to school children.
Nova Scotia is one of the three maritime
provinces of Canada; agriculture is still a dominant activity in the region and
the organic food trade is well established. This presents an opportunity to
service a growing population of young parents and their school going kids with
farm fresh healthy produce.
The particular business model will benefit
from the trends of busy lifestyles of young Canadians and the growing
popularity of the internet in making day to day purchase decisions. In the
following sections the business plan has been briefly discussed.
Industry Analysis
Some trends in the Canadian lifestyle and
schooling patterns have supported the initiation of a novel venture as this.
Some of such trends are:
Increasing number of people in the proposed
locality is being absorbed by the ‘corporate culture’; which leaves them with
less time for themselves. Mounting pressure of work schedules keeps people
always on the go. This has left young parents with little time to devote to
cooking of meals for their children. Also, a lack of cooking skills further
contributes to the demand for a solution that can provide the children with
home like nutritious meals.
2. Health conscious
Seven out of ten adults surveyed want to
have healthy meals; this is due to rising concerns to prevent against
conditions such as obesity and high cholesterol among others. Consumer
preference for boiled, broiled, grilled food and salads has increased vis-à-vis
fried food and meat. Focus is on tasty and healthy meals. Since adults want
healthy food options for themselves, they surely want the same for their
children too.
3. Promotion by Canadian government
The Canadian government has taken special
interest in ensuring quality meals to the school going children (vis-à-vis
government of the USA). This comes as an encouragement since certain liasoning
with the government departments can be done to fulfil the mutual purpose of
delivering healthy lunches to children.
4. School canteen and cafeterias
In the recent times there has been a surge
in the sales of school cafeterias and canteens. This has pointed a unique
opportunity by making clear the purchasing power of the parents of these young
ones and their need for healthy lunches (which are seldom available in canteens
and cafeterias).
Marketing Plan
A marketing plan is crucial to the success
of a product since, it determines how well the product has been perceived by
its target population and motivates them to make their final purchase decision.
One of the crucial steps in a marketing
plan is Segmenting, Targeting and
Positioning (STP); as this defines the kind of market one operates in and
the objectives to be achieved by the marketing plan. In case of the business
model under study, the segment of the market that will be targeted is young
parents of age 29-42 employed in the corporate sector and having kids between
the ages of 5-13.
The business will position itself as a
provider of nutritious meals, freshly prepared and delivered to the children on
campus.
The 4Ps
of marketing to match with the STP strategy are as follows:
1.
Product- The product to be marketed by
the business is nutritious meals, hygienically prepared and delivered to the
children on their school campus.
2.
Price- the product will be reasonably
priced, within the reach of most working parents. Although parents can choose from
a menu of options, the average cost for a week’s enrolment in the program will
cost between $50-$60.
3.
Promotion- The promotion of the service
is to be done over three phases, pre opening, post opening, and point of sales.
Although a public relations firm will be hired for pre opening marketing, most
point of sales marketing will be the duty of delivery personnel (An annual
budget of 10000$ has been set aside for this purpose). Discussed below are key
marketing strategies to be employed:
a)
Local press and media
The PR agency hired will use its resources
to build publicity and buzz in the local media; using their relations with the
press and utilising their economies in using media such as outdoor bill board
advertising and flyer distribution.
b)
Social Media and Email campaign
Creating viral and buzz marketing campaign
on social media such as facebook and twitter will create an audience for the
business. Also floating email campaigns among the target market will bring the
business and customer group closer. Various promotions can be undertaken from
these platforms.
c)
Coupon
The PR firm can help engage local
businesses and residents by distributing promotional and trial coupons. Also
the business itself can help build loyalty and increase its clientele by distributing
free meal coupons to regulars or encouraging them to give referrals.
4.
Place- The business is to be based
online; so all business transactions are going to take place either on the
company’s website or on the phone. Keeping virtual spaces appealing to the
target market is the key here.
However, the delivery
personnel will interact directly with the consumers of the service hence, care
should be taken to appoint someone who is comfortable in interacting with
children and moreover children should find him/her approachable.
Operational Plan
The operational plan will cover the
following:
1. Facility
Since business will be transacted from the
web or over the phone, the place of operation is not very critical. However,
the management may find it expensive to produce the food at own facility hence
it will be critical to tie up with a restaurant which can produce such meals at
the economies of scale it already incurs. Care should be taken while selecting
such a facility with regards to its hygiene and capacity to produce output to
match the demand.
2. Hours of operation
The business will operate from 6.00 am in
the morning until 4.00 pm in the evening; this is to facilitate receiving the
orders and to prepare them in time. All order will be taken between 6am to 9.30
am. Thereafter meals will be cooked by 1pm and all deliveries will be made by
3.30 pm. After doing general accounting and stock taking for the day, daily
operations of the business will conclude by 4 pm.
3. Employee Training
Employees will be regularly trained in
their field of operation with regular briefing in cross operational fields to
build understanding of the various business function should the need arise of
their filling additional or different roles. Also the chef would brief phone
operators and counsellors regularly to build an understanding of the meals
served.
4. Systems control
Weekly inventory count and daily food count
will be a necessary check to minimise wastage and monitor finances and stores.
Food production will be mostly in house (in the facility of the restaurant) excepting
for a few items like bakery which can be purchased from reliable local vendors
to minimise on cost and save time.
5. Delivery Personnel
One of the major components of the business
is delivery personnel. Initially one person can be hired for the purpose. Such
a candidate can be required to use his own vehicle in order to reduce capital
investment in purchase of a vehicle. The fuel costs will be reimbursed on the
basis of distance plied upon (as tracked by the GPS on the vehicle).
Financial Plan
The business requires two levels of
funding; first being seed capital and the second being growth capital. Seed
capital will encompass all start up and daily funding needs and growth capital
is the extra funds needed to expand the current facility or to open a new one
once the model is successful. Financial needs can be detailed under the
following heads:
1. Start up cost
This will be the initial cost to bring the
business into existence. This will typically include, cost of setting up website,
a small office facility, hiring a phone operator, an office assistant, a
delivery personnel and some security deposit with the associate restaurant. We
have set out $50,000 for the initial capital expense and 15000$ for initial
promotional expense.
2. Marketing
As already briefed the management will
undertake an active marketing program across various media (including hiring a
public relations firm for this purpose). A total of 10000$ annually has been
set aside for marketing. However, such expenditure may be modified according to
needs.
3. Operational
Daily operational expenses such as employee
wages, maintenance, inventory, fuel costs and taxes are aimed to be met from
the revenue generated from sales. However, for the first six months, deficits
if any, will be met from the initial start up capital brought forward.
Fund sourcing
Seed capital will be sourced from the
owners’ contribution from their private sources. Once the business grabs a
foothold in the market (assumed period for establishing clientele being six
months from start) all daily/operational expenditure will be met from revenue.
Growth funds needed for expanding may be
met through bank loans or venture capitalists; choice being made according to
circumstances at that time.
Risk Assessment
While we have already discussed the ‘pros’
of the business, it does good to observe the ‘cons’ as well in order to gauge
the extent of damage that can happen in case circumstances take an adverse
course.
1. Competition
Once the business is successful it is quite
possible that competitors may arrive on the scene to benefit from an
established opportunity. Imperative will be to stay ahead of the competition by
continually innovating and following an aggressive marketing strategy to
capture the interest of the target market and ensure consumer loyalty.
2. Model failure
It is also very probable that the model can
fail altogether, since the growing financial freedom of the Canadian population
may enable them to work for lesser hours and concentrate on family as well; or
employ cooks/domestic help at home to fill the purpose of home cooked meals. Also,
government policies regarding meals served in school canteens, cafeterias or
from businesses like the ones proposed here can also adversely affect the
financial health of operations.
3. Costs
With a business with very high revenues and
marginal profits, costs play a pivotal role in determining the success or
failure of the enterprise. It is of importance to do real time costing,
budgeting and setting up contingency or back up funds to sustain in times of
adverse costs from the ones projected initially.
4. Exit Plan
Since relatively no significant fixed
capital investment will be made, the business can be quitted by annulment of
tie up with the restaurant (clearing off dues, if any) and getting the website
offline. All losses (if any) will be realisable from the capital investment of
the promoters in such a case.
Conclusion
The above sections have provided a brief
outline of the critical points that need to be analysed before embarking on
execution of any business idea.
It has been established that strictly
following a well thought out plan and thoroughly analysing the market are keys
to success in any industry.
