New Venture Creation - PetFriends - Example

NEW VENTURE CREATION New Venture Creation The product/service Some business ideas are founded on the hobbies and interests of an entrepreneur (Bragg and Bragg, 2005). The same case applies for this business idea. My love for pets pushed me to think of venturing in the pet business. The company will be a pet sitting and pet care business, with a combination of pet caring and provision of pet products like toys and food. The preferred company name shall be PetFriends. PetFriends will provide pet owners with better solutions of taking care of their pets other than carrying them when travelling or going on vacations, which is often very cumbersome (Kimball, 2004). The services will include Pet sitters, pet boarders and pet grooming (Sandlin and Kimball, 2009). Alternatively, the owners of the pets may choose to bring the pet to an acquired shelter where the pets will be left and taken care of by pet professionals. The business will also sell innovative pet foods and toys to the pets owners. These products will be fashioned in a way that they attract pet owners (Parker, 2006).This business will, therefore, be on an all diverse scope in the pet business. The main aim of this business will be to provide pet care services while pet owners are away for a long time or a short time such as when going to work at pocket-friendly prices. The company will hire professionals who can take care of pets of all different kinds such as dogs, cats, caged animals and birds. The company will, therefore, provide its services to a variety of pet owners. Unique Selling Proposition (USP) The objective of the business will be to establish loyalty with customers who will deal with us in the long-term. Therefore, it will be of the essence to be unique from other related businesses and to provide a reason for customers to prefer the company to the competitors. With the company starting small and from scratch, there will be a more personalised relationship between the customer and us (Zemke and Bell, 2003). This will ensure a more personalised service is provided to the pet owners as compared to the already established big companies. The company will also have an advantage over other similar companies in that it is more diverse (Mueller, 2011) with a variety of services, such as selling pet foods and toys, pet sitting and pet care. Thus, pet owners will be able to get one-stop solutions for pet care. This will, therefore, make the company more attractive to customers (Boone, Kurtz and Qualman, 2011). The company is diverse, in that, it will serve, handle and care for different kinds of pets such as cats, dogs, caged animals and birds. The company will hire well-trained pet sitters and staff for the pet shelter, thus ensuring quality pet caring (Boone, Kurtz and Qualman, 2011). Networking with other pet sitters and pet related industry professionals will enable the company to provide only the desired quality of service to pet owners (Mostafa, 2009). The customers of the company will also be regarded as high value and, therefore, a well-established call centre will be provided, to the customers, to communicate with the pet professionals. With this, they can ask questions regarding pet care and book appointments for the services they need. The company will also be registered with the Pet Sitters International in order to gain the customers’ trust and to increase its market prospects. Carrying pet-sitter liability insurance will also be an essential and beneficial to the company (Moran, 2006). Getting the Product/Service to the Customer Before and after starting the business, the first step will be to make the customers aware of the company’s services (Schiffman, 2013). Before starting the company, people will be made aware of the starting of the company through social media, website adverts, posters on walls and also door-to-door marketing to inform pet keepers of the services of the company. This may be considered an old-fashioned method, but it will create a desire in the minds of the prospective customers (Schiffman, 2013). After the company has already been started, investment in advertisement will be the core. The advertisements will be aired on television, websites, radio and even newspapers. This will trigger the prospective customers to want to try the services and products of the company. The company will also focus on establishing tight bonds with their core customers by learning their language and preferences to be able to deliver services tailored to fit their specifications. This will enhance their satisfaction, thus ensuring repeat sales and provision of services and finally, refer friends to the company; thus enabling the company to build up its client base. Getting the service to the customers will also be made easy by the well-established call center, which the customers can use to communicate with pet professionals in the company concerning the different services that they want. Thus, this will enable the customers to book appointments for the service they require and order the products they need, such as pet food or toys. An efficient delivery system for the products will be established; motorbikes will be used to deliver small quantities of products and courier vans for large quantities of products. Therefore, by creating awareness and positioning the services and products of the company to the target market segment, the pet owners be able to find a solution for their pets; thus bringing about customer satisfaction. Market Analysis The company will target the American market. Pet ownership in the U.S. has increased remarkably over the recent years (Morrison, 2012). This makes the pet business idea a very viable business in the American market. Americans are ready and willing to spend a lot of money on their pets; thus resulting in high prices for products and services as well as increasing market share (Morrison, 2012). Pampering of pets has become quite the norm for Americans, with spending by pet owners evolving continuously and moving away from basic pet needs such as grooming and food to advance and greater innovative products and services. The USA Today’s analysis of the 2010 census showed that there were more households with dogs (43 million) than children (38 million) (“Pet Sitting”, 2014). With the company providing higher quality and very innovative products and services, the market will thus be readily available as he consumers will be seeking the company’s products and services. Moreover, research indicates that Americans are willing to spend more on their pets even during hard economic times because they consider the pets as part of their family. A survey by the American Pet Product Association (APPA) showed that Americans spent an estimated $55.7 billion on the pet products and services in 2013 and $47.7 billion in 2010 alone; an increase of 4.8% over 2009 (“Pet Sitting”, 2014). Pet ownership has been seen to increase from 56% of the households to 62% since 1988, an outstanding increase of about 6% representing about 71.4 million homes (“Pet Sitting”, 2014). Interestingly, many Americans do not get satisfaction from only one pet. Statistics indicates about 46% of households own more than one pet (“Pet Sitting”, 2014). Therefore, this implies that there is an extensive increasing market for the company’s products and services. Most of the pets kept are freshwater fish, cats, dogs, birds, reptiles, horses and saltwater fish in order of popularity. With most of the focus put on these pets, the business’s success is promising. Demographically, the market is bound to keep on expanding due to the increase in number of the older population that require pets for companionship. Industry of Operation The business will operate in the pet industry. This is one particular industry that is expected to grow tremendously in the next couple of years as it has continued to grow in the past years (Brown, 2007). Increase in the number of pets owned and the increasing spending per pet by households is an indication that the pet industry will continue to grow. For instance, the annual revenue growth in pet products and services has been projected to be 4.4% through 2016 (Stultz, 2015), an indication of a viable business opportunity to invest. Conversely, the expected economic recovery in the U.S. is an indication of better growth revenues across the industries and especially the pet industry where because of the increasing consumer purchasing power and willingness to spend on their pets. Moreover, the pet industry continues to demonstrate that it is not about to go down anytime soon. Recent surveys by the market research company, WSL shows that 81% of the respondents spend an equal amount of money they used to spend or even more on their pets, even when the tough economic time problems stares right back at them (Stultz, 2015). Even with the cutting down of spending in other sections of the household budgets, pet spending or budget remains intact. The economic recession of the US did not in any way affect the pet industry. Its revenue expansion continued to be positive even in the most difficult crises. Statistics illustrates a Compound Annual Growth Rate (CAGR) of 6.7% from 1994 through 2010, including 4.8% in 2010 (Stultz, 2015). Further, statistics indicates that, even today, the compound annual growth rate continues to increase in the industry. The pet industry, therefore, provides value for one’s money and opportunity for investment (IBISWorld Industry and Market Research, 2006). Competitive Landscape Currently, there is medium competition in the industry with the major contributors to pet industry revenues being two supply retailers, PetSmart and PETCO (Dalton, 2005). Other companies in the industry mainly include small franchises, small chains of pet stores and family-owned stores (Dalton, 2005). Even with the high level of concentration, small operators still find niche markets within their geographical locations. Statistics by IBISWorld shows that the industry will have about 13,556 companies by the end of 2015, even though PETCO and PetSmart are expected to grow tremendously in the five years to 2020 (Dalton, 2005), the proposed business will deal with diverse products and market segments and thus will be to compete favourably in the market. To succeed, however, the business will have to employ a series of strategies (Bell, 2015). These will include attractive product presentation and differentiation, which are appealing, to customers, to encourage purchases; striking promotions and displays at the pet structure (Zemke and Bell, 2003). Qualified staff with knowledge of the pet industry will also be employed to help customers and also contribute highly to the boost in sales (Schoemer, 2010). Strategic location is another strategy the business will pursue. The business will be located in a high traffic area and highly visible to improve business operations and sales (Schoemer, 2010). Product and service diversification is another imperative strategy the business will use. Offering a wide range of products in price, quantity and type will enable the company enjoy the economies of scale (Schoemer, 2010). In order to ensure that customers the business wins customer trust to build loyalty, the company will ensure it provides quality of products and services to the customers. The company will be expected to benefit from the continued growth of the pet industry (Williams Duea, 2008) showed by the increased revenues and increasing growth of profits, which expected to grow to 8.1% by revenue in 2015. The business is expected to expand with time especially the section that will sell pet products and toys, in order to benefit from the higher profit margins associated with bulk quantity discounts. Pet companies compete in terms of price, product variety, customer service, brand awareness, variety of pet services and store location. The proposed business will be expected to fit into the industry perfectly and probably beat most if not all the other companies based on the quality customer service it intends to offer, affordable prices and its ability to be diverse in terms of products and services. With time, the company is expected to grow and benefit from economies of scale such as the PetSmart and PETCO, which enjoys discounts from bulk purchases. Entry into the industry may make some investors shy away from investing in this industry but due to this proposed company’s mode of entry, it will be able to take advantage of niche markets available and expand later due to its quality strategies. These strategies will enable the company to win the customers based on location, quality of products and services and the variety of services offered (Goodman, 2009). Furthermore, given that players in the industry are medium businesses, the barriers to entry are expected to be minimal. Financial Implications The starting up capital of the business will be very high (Williams Duea, 2008). Much of the startup capital will be sourced from personal savings and member’s contributions. The expected gains and profits generated from the business after operations will be capitalized back into the business for expansion and diversification into other niche markets and products. The pet industry reflects a low level of capital intensity excluding start-up capital. It has also been characterised by a steady level of capital intensity over the past five years. The cost of labour is the only relatively high cost compared to other industries. However investing heavily in quality labour will ensure quality services and products are provided to the customers that are the primary focus of the business. Therefore, all the costs such as the start-up costs, technology and system costs, innovation and all other operation cost associated with this business are expected to generate high returns compared to the cost; thus, boosting the profitability of the business (Williams Duea, 2008). Results and Conclusions This business venture will, therefore, be a very worthwhile investment. It will take advantage of all the available niche markets and, therefore, expand very quickly. Its focus on customer satisfaction and provision of quality services will ensure long-term survival and growth in the industry. Its provision of a variety of products will expand its customer prospects and expand its market. This business will also benefit from the large ready market since Americans continue to increase their number of pets and spend more on their pets. It may be argued that there is too much competition in the industry but with proper penetration strategies into the industry coupled with advantages availability of different market niches in the industry, the business can undoubtedly grow tremendously. With these benefits, why would anyone not want to start up such a business? Bibliography Bell, J., 2015. Do less better. New York City: Palgrave Macmillan. Boone, L., Kurtz, D. and Qualman, E., 2011. Contemporary business. Hoboken, NJ: Wiley Custom Learning Solutions. Bragg, A. and Bragg, M., 2005. Developing new business ideas. Harlow, England: Financial Times /Prentice Hall. Brown, M., 2007. Arthurs pet business. New York: Little Brown & Co. Dalton, C., 2005. A passion for pets: An interview with Philip L. Francis, Chairperson and CEO of PETsMART, Inc. Business Horizons, 48(6), pp.469-475. Goodman, J., 2009. Strategic customer service. New York: AMACOM. IBISWorld Industry and Market Research, 2006. 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