Sweetex Beverage International Company Limited Business - Assignment Example

Running header: Summary Business plan Student’s name: Instructor’s name: Subject code: Date of submission: Table of Contents Table of Contents 2 Summary business plan 3 Proposed business name 3 The market opportunity identification 3 Product description 4 Identification of the target market 5 Evaluation of the competition 7 Legal form of organisation and government regulations 7 Market strategy 8 Initial capital requirements 9 Funding of the initial capital requirements 9 Financial Projections 11 Management of the venture 12 References; 13 Summary business plan The following is the summary business plan for the establishment of Sweetex Beverage International Company limited. The company’s promoters are John, Janet, White, Marion and Washington. The growing concern over the health safety of most of the products being offered in the beverage industry provides us with an opportunity to provide alternative products which are much safer while creating jobs for ourselves and others. The aim of establishing the business is to create employment for the five shareholders given that we will be completing schooling in the near future. It is hoped that in the long run, the business will to areas outside Sydney and eventually the rest of Australia and even internationally. This will also contribute to more jobs for the many unemployed youths. It is also hoped that the company will eventually be one of the biggest in the entire industry. We aim at becoming the beverage company of choice for young people by offering quality products first in Sydney before expanding to other parts of the world. Proposed business name The new business to be located on 500 Pioneer Street in the Central Sydney is to be called Sweetex Beverage international company limited. The market opportunity identification In the recent past, there has been rising complains on the harmful effects caused by the chemicals found in the juices currently being offered in the market. The beverage industry of Sodas has not been spared either with the Coca-Cola company products for instance being suspected for containing too much sugar that is not natural hence exposing consumers to health risks such as diabetes and cancers. As such, there has been increased departure from consumption of juices that contain chemicals as well as sodas which calls for an alternative. Although some new companies have emerged claiming to provide these alternatives, there has been no other company that has attempted to provide pure fruit juices which combine many fruit juices hence offering a unique taste that is attractive while carrying many health benefits. Furthermore, no company makes herbal juice or juice specially made for diabetic individuals. Therefore there exists a market opportunity that Sweetex beverage seeks to satisfy by offering high quality fruit juices that are free of chemicals and which only contain natural sugars and hence do not pose health threats to any class of consumers. The business has the potential to be profitable since there are very many people who take fruit juices hence sales are likely to be high. Furthermore, all the ingredients are locally available at very low costs while the production process is not so much labor intensive. This will lead to reduction in production costs and since we expect the sales to be high, the profit is also likely to be high. Product description As the name suggests, the company will deal with production and selling of fruit juices to be known as Sweetex beverage. The juice will be made by mixing various kinds of fruit juices to give a unique taste not found in other fruit juices commonly found in the market. Various additives will then be added to produce different brands of Sweetex beverage. Three brands of Sweetex beverage will be manufactured i.e. Sweetex super, Sweetex herbal and Sweetex dietary. Sweetex super will be manufactured mainly for children. Sweetex herbal will be a modification of Sweetex super and will target adults who would want to improve their health since it will contain herbal medicine extracts. On the other hand, Sweetex dietary will be a low sugar brand specially made for people with Diabetes but who would still want to take fruit juice without having any side effects. Identification of the target market Methods used in target market identification a) Market research Market research involves using various techniques such as surveys in collecting, analyzing and, making decision based on the data obtained about the potential consumers. The data obtained will be either quantitative such as the ages of the consumers or qualitative such as their level of education. Another method of market research will include the data that will be obtained from the trade department and the municipal about the market b) Analysis of the level of competition This will involve analyzing the number of competitors in the market and the relative strength of each competitor. This will aid in making a decision on the marketing strategy that will be used by the business. The analysis will also help in identifying their weaknesses and any areas they have neglected and hence take advantage of them. c) Analysis of economic outlook This will involve analyzing the economic ability of the consumers. The analysis will help in pricing our products and deciding on the specific niche in which to sell our products. The company’s financial ability will also be analyzed vis-à-vis that of the competitors in order to decide the marketing strategies to undertake and the niche to be covered by our products. d) Age The age of the consumer greatly determines their taste for particular products. An analysis of their ages will therefore help in determining what age groups will form our target market. f) Geography This involves choosing a specific geographical location within which the business will operate. Methods of identifying target market Geography This method has been chosen owing to the fact that the business is new and hence it might not be able to cover the entire country initially. This is because of financial constraints and the fact that only few people are aware that the products exist. Income Various groups of consumers have different levels of income and hence their ability to purchase our products also differs. We would therefore want to target consumers who have high incomes or financial ability to purchase our products. Age This criterion has been chosen since different age groups have different tastes and preferences. We therefore aim at selecting an age group which is more likely to have taste for our products to be our target market. The target market Geography Our business activities will mainly be based in the entire Sydney business district. This is because it is the parent district for the company. This will imply fewer costs in terms of transport to the market and also the marketing effort will be concentrated in one area and hence more effective bearing in mind the financial constraints. Income We will mainly target school and college students since although they work when they are not in school, they do not have any financial responsibilities unlike their parents. Therefore, this group might have extra money to buy products such as Sweetex beverage. Age The business will mainly target young people as a market for its products. Generally, young people like testing new tastes since they are innovative in nature and hence they form the best target market for a new product such as ours. Evaluation of the competition As the company name suggests, we intend to operate in the beverages and soft drinks industry. This is a very competitive industry that calls for concrete strategies to help us deal with the competition and hence be able to attain a considerable market share. However, the beverage industry in the market we will be operating in has witnessed rapid growth in the last decade hence offering us a good investment opportunity. In the market we intend to operate, there are about ten major companies dealing with similar products that we will be competing with. The companies are well established with advanced technology. Introducing our products into the market is therefore likely to meet with stiff competition. However, the uniqueness of our products and the complexity of the kind of marketing strategies we intend to employ give us the confidence that we will gain a substantial market share within a very short time. Legal form of organisation and government regulations Sweetex Beverage International will be a privately company comprising of five shareholders. We found this form of ownership appropriate due to the substantial amount of start up capital requirement. The shareholders will provide much of the capital needed while the rest will be sourced elsewhere. The business will also have a limited liability and the ownership is not likely to be diluted since each shareholder will contribute a fixed amount of capital. Furthermore, the company will be able to attract quality management from the five shareholders some of whom will also double as the directors. This form of business ownership was also found appropriate since it doesn’t have many legal requirements. We will be required to obtain a trading license from the department of commerce before we can start operations. On its registration, the company’s only legal obligation will be to pay corporations’ tax to the Government. However, other obligations may include payment of principal plus interest on any money borrowed from outsiders. The business will have a limited legal liability based on the number of shares held by the members. Market strategy our marketing strategy is based on the marketing mix identified below and is aimed at bringing value to our customers while maximizing our potential in the market and hence ensure that we obtain a considerable market share within no time. a) Positioning We intend to position ourselves as a leading beverage company that focuses exclusively on the young. As such, our products will mainly be found in most retail shops within the city as well as schools and institutions of higher learning. In other words, we will endeavor to ensure that wherever young people are found, there is Sweetex beverages found also. b) Pricing Due to the superiority of our product quality, we intend to adopt a premium pricing strategy. This will be instrumental in making the customers believe in the value that our product offers and hence promptly adopt it. As such, our beverages will be packed in 500ml and 1 liter packaging that we sell at an average price of $7.0 per liter. c) Distribution strategy We will initially focus on ensuring our product is found in retail shops and learning institutions within Sydney before venturing in to other areas as our business gains momentum. d) Promotional strategy This will mainly be based on targeted advertisements that will appeal to the customers' sense of value. We will also embark on serious marketing campaigns in various schools and universities by sponsoring sporting activities in a bid to portray Sweetex as a product of the young. These marketing campaigns will have the aim of increasing awareness of our taste hence enhancing our market share. Initial capital requirements Owing to lack of adequate financing, we have tried to limit the amount of initial capital required to start operations. This is the sole reason why we will first operate in Sydney alone. The following are our initial capital requirements; Sweetex Beverage International Company Limited Initial capital requirements Purchase of machinery 55,000 Rent of premises 18000 Staff salaries 50,000 Training and development 7,000 Supplies 12,000 Running costs 15,000 Total costs 157,000 Funding of the initial capital requirements each of the five shareholders is expected to contribute $20,000 while the rest of the funding is to come from other sources including issuance of debentures, loan from bank and municipal funding as explained below; Sweetex Beverage International limited Source of finance for the initial capital requirements Share holders funds $100,000 Municipal funding $30,000 Loan from bank $50,000 Issuance of debentures $20,000 Total expected funding $200,000 Time table for establishing Sweetex Beverage International Company limited The following is the timetable that shows the critical milestones to be met by specific time periods; Milestone Start by date End by date cost Responsibility Department Incorporation 1/5/2013 31/7/2013 - Directors Management Set up of communication infrastructure 1/5/2013 31/7/2013 - shareholders management Operations agreement 1/5/2013 31/7/2013 - Shareholders management Hire staff 1/6/2013 1/8/2013 - Directors Management Secure funding 15/4/2013 30/6/2013 - Shareholders Management Business set up 1/7/2013 31/8/2013 - Shareholders Management Launch 1/9/2013 1/9/2013 - Directors Management Financial Projections In coming up with the projections below, we assumed that the company will be able to obtain the total funding from the various sources outlined above. We also assumed that the company will be able to make the sales revenues to generate the stated amounts of income. This if achieved will set Sweetex Beverage International in the right track. Sweetex Beverage International Company limited Cash flow statement For the six months ending 31st December 2013. Net income $120,000 Taxes payable (23,000) Other operating activities (30,000) Net cash flow from operating activities 67,000 Cash flow from investing activities Capital expenditures (170,000) Other cash flows from investing activities (10,000) Net cash flow from investing activities (180,000) Cash flow from financing activities Sale of stock 100,000 Debt acquired 100,000 Other cash flow from financing activities (40,000) Net cash flow from financing activities 160,000 Net cash flows (cash and cash equivalents) 47,000 Sweetex Beverage International Company limited Profit and loss forecast For the six months ending 31st Dec 2013 Forecasted sales $280,000 Forecasted cot of sales 100,000 Forecasted gross profit 180,000 Forecasted expenses 60,000 Forecasted net income 120,000 Forecasted taxation 23,000 Forecasted profit after taxation 97,000 Break even point Break even point in units (BEP) = TFC/ (SUP-VCUP) Total fixed costs (TFC) are estimated to be $120000. Selling price per unit is expected to be $ 7 while variable cost per unit is expected to be $ 4. Therefore, the break even point is expected to be at 75000/ (7-4) = 25000 units. Assuming that 40000 units will be sold during the six moths, this will be towards the end of the fourth month. It is believed that the company will break even at this date as we anticipate the sales to be high and the costs to remain as anticipated. Management of the venture John who is our managing director has over three years experience in business management as he has been the operations director for their family business since the year 2010. He is also graduating with an accounting degree in addition to having completed a business administration diploma. White who is a co-director has been working for a marketing agency for the last two years and hence he will also be responsible for the company’s direct marketing campaign and other sales related issues. We intend to hire Mr. Gregory who is going to be our production manager. He holds a bachelors degree in industrial chemistry in addition to having worked for Pepsi Company. As such, he is expected to be a vital asset in the company’s operations. The other staff members’ qualifications will be outlined in the final business plan. References; Jabez, B2005, Introduction to business management, London, Rutledge. Lynne, O2007, Documenting your future: Writing a funds winning business plan, American Journal of Dietetic Association, vol. 19, no. 2, pp. 19-26. Finch, B2006, How to write a Business plan, Philadelphia, Kogan. Pinson, L2004, Anatomy of a business plan, Dearborn Trade, Chicago. Townsley, M2003, Establishing a small business, Ohio, Thompson. Read More