Business Idea to Assess Its Viabilityâ€Free samples for Students

Question: Business Idea to Assess Its Viability? Answer: Introducation The modern Australian consumer is increasingly becoming health conscious and prefers to consume natural food. However, emergence of dual income families, it is becoming difficult to sustain a healthy diet regime and people have to resort to packed food to fulfill their daily consumption requirements (Cullen, 2016). With increased awareness of food safety issues and health, people are looking for healthier alternatives to replace package meal. It is for this reason that this growing trend of healthy living among Australian provides immense opportunities in this growing sector. Thus, the proposed business plan is to open a cold compressed fresh juice joint named Elixir in Melbourne to carter to the needs of health conscious consumers looking for healthy, organic and natural food and drinks that fit in their busy schedule. The business will not only provide its product through its retail outlet, but also deliver it at their doorstep on the basis of online orders through Mission Statement: Elixirs mission is to provide health juices made from natural and organically grown fruits and vegetables thereby making 100% nutritious drinks without any preservatives, a realistic option for health conscious consumers. Business Goal: The goal is to capture a market base of consumers by advocating the benefits of healthy food consumption and help the target consumers their wellness initiatives by delivering highest quality of organic juices in convenient and accessible form. Business Model Canvas This strategic tool is of critical significance in the current scenario as it enables the managers to focus on developing dynamic business models by considering the most critical components of their business (Osterwalder, 2013). It helps in understanding the reason of existence of a business by outlining its objectives, relationships and concepts (Trimi, and Berbegal-Mirabent, 2012). This model allows developing well-structured, tangible and strategically sustainable lean organisations by focusing on the following: Key Partners: The key partners of Elixir will include the local producers and suppliers of organic fruits and vegetables, banks, and website developers. Key Activities: The key activities of the juice joint will include product development, production, customer service and delivery of the orders. Key Resources: The key resources for the business will include its employee, equipments, delivery vehicles, retail outlet and its website. Value Propositions: It refers to the unique combination of product and services that generate value for the consumer in terms of solution to a certain problem (Osterwalder et al. 2015). Elixirs business proposition for is customers is that of help them achieve their health goals by providing healthy juices without any preservatives made from quality fruits and vegetables and unique flavors. Additionally, the customers will experience exceptional services along with doorstep delivery of juices on demand. Customer Relationships: it is necessary for businesses to develop good relations with its customers. Elixir will develop relations through social media sites and asking for feedbacks to improve its products and seek innovative ideas. Figure 1: Business Model Canvas of Elixir Channels: It refers to the ways through which awareness is created and products are made available to the end consumers. Elixir will use its retail outlet and website to sell its products. Customer Segment: Any business exists for its customers and needs to target its market offering towards accurately defined customer segment to achieve maximum possible benefits. Elixir targets a niche that consists of all health conscious people who prefer to consume natural juice instead of packed ones. Cost Structure: Businesses seek to minimize its costs and as such need to identify all possible avenues of costs. In case of Elixir, the costs will be incurred on attaining the retail outlet along with manufacturing, product development, logistics, marketing and website maintenance. Revenue Structure: Earning revenues are necessary for survival of business organisation so as to keep operating. Elixir will earn revenues from product sales and subscriptions. Marketing Feasibility Another important aspect of establishing a new business is to conduct a feasibility analysis of the market in which it plans to operate. It therefore, needs to assess the industry trends, seasonal variations, competitors, and potential alliances to ensure that the proposed business is profitable and has the ability to sustain itself in the long-run. Further, the market feasibility also covers the marketing plan related to pricing policies, advertising and marketing, which needs to be competitive to attract target customers (Schaper, et al., 2014). Market Analysis Before starting a new business, it is necessary to ensure that the customers are willing to pay for the products or services offered by the business. Thus, market analysis helps in assessing the external market factors that affect the business (Kuratko, 2013). These factors include: Industry Trends: The Australian consumers are becoming health conscious as a result of opening of juice and smoothie bars all over the country. The juice and smoothie bar industry has experienced an increase in revenue over the last five years. The industry is currently earning revenue of $393.7 million and is expected to grow at an annualized rate of 10.2% indicating an immense growth potential in the future (IBIS World, 2016). Thus, this industry is expected to outperform the growth in GDP in its growth phase. Seasonal Nature: Since, the juice and smoothie industry is seasonal in nature, it flourished during the summer season while experiences a sluggish period during winters. Elixir being in the same industry is bond to share the same fate and hence it revenues will be affected by the seasonal nature of the business. Moreover, the availability of products at the companys outlet will be affected by the seasonal nature of fruit and vegetable industry. Competitors: The current juice industry in Australia is full of many market players like Berri, Golden Circle, Daily Juice, Coles, Nudie, and Woolworths among others in the packaged juice segment. While these are established players in the Australian juice industry, their customer base has shrunken from 8.6 million in 2010 to less than 7 million by 2014 (Roy Morgan research, 2014). However, with the increase in awareness regarding the side-effects of added preservatives and a move towards healthy eating and drinking habits, many fresh juices bars have also opened in Melbourne. Thus, Elixirs main competitors would include Greene Street Juice Co., Pressed Juices, Nutrition Bar, Fit Inn and Gelateria Primavera (DArcy, 2015). These juice bars can pose major competitive threat to Elixirs business operations. Strategic Alliances: Currently, the business will operate at small scale. Hence, all the activities will be carried out by the entrepreneur and the employees hired. It only alliance is with the suppliers of fresh fruits and vegetables. However, with the expansion of business, the company can join hands with a delivery company to deliver its products throughout the city. SWOT: The basic objective of SWOT analysis is to maximize the utilization of its resources as per the changes in the environment of the firm to attain competitive edge over its competitors by utilizing its strengths, reducing weaknesses, exploiting opportunities and mitigating risks (Wheelen and Hunger, 2012). Elixirs strengths consist of its employees, innovative and health products and the cold compressed technology used for making juices. However, its weakness is that lack of managerial experience, lack of funds and experienced staff. While the rising consumption of healthy and organically produced food and promising industry growth provide good opportunities for the business to grow, increasing competition, changing technology, seasonal nature of business and frequently changing consumer preferences pose threat to its operations. Extended Marketing Mix: This part of market feasibility helps in determining the appropriate marketing mix that will be adopted by the business to promote its products. Product and Price: The company will sell its products in two variants viz. 100ml bottle and 470ml bottle priced between $4 and $8 respectively. Placement: The products would be sold from the Elixir outlet and will be delivered at the customer doorstep in case of online orders made through the website. Promotion: In addition to businesss website, the products will be promoted through social media sites like Twitter and Facebook. Further, sales promotion will be undertaken during the first fifteen days of the commencement of operation at nearby health centers, gyms and community parks. Moreover, the business can also tie-up with gyms/offices and provide discounts or freebies to the customers/employees of those gyms/offices. This will help the business to create product and brand awareness among the target markets. Thus, based on the market feasibility, the business can be considered as a viable venture. Operations and Production Another aspect of feasibility analysis of business is assessing the operational and legal requirements associated with the same. It help in identifying the legal requirements, production technology to be used, and whether the product/service be produced in a cost effective manner (Kuratko, 2016). Thus, operations and production feasibility analysis focuses on the following key aspects of the business: Legal and Licensing Requirements: The foremost step in business plan is to determine the legal requirements associated with it. In context of food business like juice bars, one has to obtain vendor license, health permit, zoning permit and standard business license from the food safety department of Victorian Public Health Authority. As per the food business classification, the proposed business falls under Class 2 (Santacruz, 2016). Service processes and Standards: Furthermore, the business owner has to ensure the quality of food and the service process standards as defined by the licensing authority. For this, the business has to appoint a food safety supervisor to look after the implementation of food safety code in day-to-day processes. The business can either appoint a registered supervisor or train their employees to become one (Santacruz, 2016). Production Process: The business will use cold pressing to produce juice. Cold-press technology uses hydraulic press to extract juice from fresh fruits and vegetables. As the process does not use any kind of heating while extraction, the natural minerals and nutrients are retained in the juice thereby making it the most fresh and healthy substitute for packaged juices available in the market (Report Linker, 2016). Equipments Required: The business will need to purchase commercial cold press juicer, food processor, sink, prep table and refrigerator to operate at a small scale (Wettlaufer, 2016). Insurance and Security Issues: The business needs to insure the equipments, premise, vehicle and the employees as per the requirements of the business. Getting the employee insurance is the part of Workplace Health and Safety obligations which further helps in employee retention, reduce injury cost, etc. (Australian Government, 2017). Management: The business will be managed by the owner who will hire a team of 4 employees (2 kitchen staff and 2 delivery staff) through interview to carry out the business. The manager (who is also the owner) will look after the financial, procurement and marketing aspect of the business initially while the kitchen staff will handle the production process and the delivery staff will be responsible for doorstep delivery of the orders. Thus, in order to manage the business, the manager needs to have large set of skills in all management areas along with critical thinking abilities and leadership skills. Professional Adviser: Along with the core team, the manager can seek advice from professional accountant and will need to hire a food safety supervisor as per the legal requirement. Organisational Structure: As the business will operate at small scale, its organisational structure would be simple where all the employees work under the supervision of the manager. Figure 2: Organisational Structure Financial Feasibility Starting a new business requires finance for funding its capital as well as daily requirements. Further, identifying the revenues and overall costs associated with the business is also necessary to ensure that the new venture is a profitable one. Thus, financial feasibility analysis is undertaken to assess the revenues, costs, prices, payback period of investment, projected revenues and other financial figures to determine the project viability (Allen, 2015). Projected Costs: The business will require a total start-up capital of $115,000 of which $90,550 would be invested in the one-time costs related to the leasing of shop, purchasing capital equipments, inventory, start-up supplies, leasehold improvements, installations, licenses, website development and advertising. The remaining $21,457 will be used to fund the operating activities of the business during the first month of its operations. Additionally, $2,800 will be kept aside as safety amount to be used in case of contingencies (Appendix 1 and 2). Projected Revenues: The business is expected to sell 10 470 ml bottles and 20 100 ml bottles in a day. Thus, this leads to monthly revenue of $57,600 for the business. Thus, the business will breakeven within the first few months of its operations. The revenue forecast for Elixir for the next three years is shown in Appendix 3. It can be assessed that the business will generate revenue amounting to $691,200 in the first year of its operations and the profit margin for the year will be 28.82%. Thus, the venture is seamlessly profitable as compared to the investments made. (Appendix 3) Sources of Finance: The capital structure of the business will be a mix of owners capital and long-term loan from the bank. Taking the bank loan will allow the entrepreneur to arrange for funds quickly and take the advantage of the growing of juice and smoothie bar industry (Porter and Norton, 2012). The owner will take a long of $80,000 from the bank payable over the period of 5 years at the rate of 5.2%. The remaining amount of $40,000 would be funded by the owner. Thus, two-third of the start-up capital will be leveraged. Implementation Timetable Once a business plan is completed, it is necessary to prepare an implementation timetable to guide in the timely implementation of all the steps required to start operation. Implementation timetable is significant for entrepreneur because the lenders time the advances made at each step of the business plan. Furthermore, timely implementation of planned steps also prevents cost overruns and wastage of resources. Thus, implementation timetable provides a timescale for attainment of different steps in business plan and also provides a guide regarding how the new business would be setup (Community Futures, 2014). The implementation timetable for setting up Elixir is given as follows: Steps June July August September Permits and Licensing Renting Shop Making Website Hiring Staff Purchasing Equipments Purchasing Stock Commence Operations Thus, commencing the new business would require a period of 3months and 1 week. References Allen, K. 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Available at: https://www.goodnature.com/blog/cold-pressed-juice-bar-kitchen-layout-and-equipment-list/ (Accessed: 16th May 2017). Wheelen, T. and Hunger, J. (2012). Strategic Management and Business Policy towards global sustainability, 13th edn. USA: Pearson Education.