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Business Essays | Business Plan

1. THE EXECUTIVE SUMMARY

Upbeat Music and Video is an entertainment retailer that specialises in the middleman distribution of audio and visual entertainment products such as CD's and DVD's. Whilst I will sell these products to the surrounding area,

I will also offer a service that is equally helpful, and friendly, which is the businesses unique selling point. So although the price I charge is one set already in the market, the service is included and this is why Upbeat will be successful where other companies, similar have failed. I, Sabrina Baker, am the sole proprietor of this business.

All overheads and running costs that may be associated with this business, I have tried to keep to an absolute minimum. I achieved this by shopping around and finding the best quote, this has allowed me to set prices similar to the local competition, which are Woolworths and WhSmiths. By having set the market price I am able to focus more on the service I am providing, as the quality of goods are the same throughout the market.

With a combined value of approximately £5 billion the entertainment music and video industry is a huge market in the UK. The market shows no sign of slowing down, thus an increase in demand requires the need to meet that demand, before larger multiples such as HMV and Virgin dominate and control the market. My selling point is the service I am providing and believe that in the long run, service will succeed over price, as long as my prices remain at the level set by the market. There is a national and local demand for this type of retail outlet.

This gives me a competitive edge over multiples in the local competitive market, and consequently this business will be an obvious success.

The service will mainly be advertised in local media over the next three years, ranging from morning radio to direct leaflet distribution, as this is the best means to target my market and reach the age range that this service appeals to. Thus these spoken methods are the most effective means of getting my name known across the region, and after I have dominated the region in the next 10 years I am to expand my company throughout the UK. The media will attempt to portray not just what I am offering, but the service they will receive, and will initially entice my customers with free promotional items, to secure their repeat custom and spread word of mouth. In a small town, this is perhaps the most powerful medium.

It is my intention then to expand my company gradually over the next 10 years, before any attempt is made to move into other regions, as I need a strong foundation if I am to compete with the larger companies, which have been established for many years.

With an initial investment of £16,460 to get my business off the ground, 100% of which provided by myself, with any short-term cash-flow problems, to be solved by means of a pre-arranged business overdraft facility, for up to £5,500 payable at 11% interest as a contingency. To begin with custom would not be profitable, but I believe that with the right product mix, that within 5 months of sales, I will begin to see a monthly profit, and after approximately 15 months, any cash flow insolvency's to be gone and my business should begin to grow. (See appendix 1, break-even analysis).Profit levels will increase for the next 3 years, but will gradually slow down by approximately 0.20 times a year until I have reached the national average of approximately 15%, which will take about 7 years to achieve, well within the given time of expansion (see section 6.2 page 14).

I intend to increase the choice of goods I offer after trading for 3 years, giving me time to prepare and analyse what the market is looking for. It is my belief that there is plenty of scope for expansion.

2. THE NATURE OF MY BUSINESS
2.1 Legal Structure
The name that I have chosen to trade under "UpBeat Music and Video" is a privately unincorporated business owned by Sabrina Baker. As the sole proprietor I am not required to register with an official body, but I am financially committed and responsible for every business transaction that takes place. As a consequence I will be self-employed and therefore I am subject to income tax.

2.2 Business Concept
The name is very much in context with the theme of the shop. In other words, the bulk of the products I will offer, will be the latest chart music, the top 40 albums and singles. I will also stock the latest chart Videos and DVD's, until I have established myself and have a flow of capital after which I intend to expand my range. The principle activities will therefore, be to supply the latest Music and Videos, but also offer a wide range of chart breaking albums from previous years.

I also hope to eventually offer an order service, since I will be a small shop with relatively limited space. I believe that an order service will enable me to meet the needs of those customers who can not find the product they are after, this service will be available for CD's, Cassettes, Videos and DVDs. I hope to also have an Internet Page, and eventually deal with orders from the Internet, however, I understand that Internet mail order is that of a universal operation and until I have some experience, I will not act upon that goal. In appendix two I have included some details, about how I intend to develop this idea and gather resources over the next three years. Account cards and loyalty schemes will be introduced in time within my organisation. The nature of account cards will enable my customers to purchase goods on a card and pay them off monthly. This is more a long-term initiative and will need some serious consideration. In terms of loyalty schemes, I know (from experience) that one way to winning customers is through their wallet, I will offer a number of point collecting schemes whereby a certain number of transactions will entitle individuals to money off their goods, so I will incur promotional expenses. On opening my business, there will also be a number of other promotional offers and free gifts. Nothing elaborate but small things with my business name printed on, such as pens and key rings. In addition I will promote the most recent charts, by displaying the information in the shop windows. The charts will be from the Music Week magazine, which is published weekly and is on subscription. The table(1) below summarises my key principle activities into short, medium and long-term goals.
Short/Immediate Term
12-18 month Medium Term
1-3 years Long Term
3 years +

#Chart CD's,
#Chart Videos
#Chart DVDS
#Other non chart popular products
#Promotional Offers and gifts ³ Analysis of the possibility of an ordering service
#Loyalty Incentives and Schemes
#Expanding my product range and use the second floor of my shop (my property has three floors)
#Account Cards
For more detailed information about planning please refer to section 9 page 26 of this plan and appendix 3 for planning timescales.

2.3 The use of Key Personnel
The use of personnel is restricted until I show profit in my business, which according to my estimates will be after approximately 6 months after set up. Between launch in July and end of October I will run the business myself, when workload outweighs my resources I will then employ the use of a worker to meet consumer demands.

3. OBJECTIVES
The below objectives outline the ultimate goals of my business organisation and they also act as a motivator, which in turn will provide the basis for any decision making within my organisation. I have broken my objectives into three categories, and listed them in the table(2) below: (This section corresponds with timing as indicated in the 3rd appendix and also in 9th section on page 26).

or more detailed information about planning please refer to section 9 page 26 of this plan and appendix 3 for planning timescales.

2.3 The use of Key Personnel
The use of personnel is restricted until I show profit in my business, which according to my estimates will be after approximately 6 months after set up. Between launch in July and end of October I will run the business myself, when workload outweighs my resources I will then employ the use of a worker to meet consumer demands.

3. OBJECTIVES
The below objectives outline the ultimate goals of my business organisation and they also act as a motivator, which in turn will provide the basis for any decision making within my organisation. I have broken my objectives into three categories, and listed them in the table(2) below: (This section corresponds with timing as indicated in the 3rd appendix and also in 9th section on page 26).

3.1 Breaking-even
For a small business, breaking even would represent an interest in the product or service that I am providing to the public. As a small business with a genuine interest in expanding I believe that breaking even would indicate more so the possibility of expansion, since breaking even is merely a foundation of generating a profit. This is the reason why I consider this to be a short-term priority. Hopefully if my figures are correct I should be breaking even by the end of the first 6 months, (refer to appendix 1 or Section 6.2 on page 14 of this report). However, if by the end of the first year I am not at break even stage, I will review my options, (I have a number of contingencies in case this should arise [section 6.3 page 15-16, section 8.5 page 24] and appendix 12). I am intending on employing a financial consultant or an accountant to offer guidance since it's not my area of expertise and I believe that they can offer me sound advice and aid me in analysing my financial situation and on ways to improve it. For this reason I do not believe that analysing my figures using financial ratios is sustainable at this stage, as the figures only represent the most likely scenario and not the actual one. Thus I will perform ratio analysis at the end of each month of trading and in addition will consult my accountant.

3.2 To make a profit
My product objectives and timescales as indicated in the introduction are based around the assumption that I will eventually make a profit. As profit margins increase so do my options. I believe that I will see a gradual increase in the level of custom by the end of the first year, as the town is the centre for many of the surrounding villages and therefore there is a wide catchment area. I consider this to be a short-term objective as meeting this objective would allow me to target the medium term objective of witnessing a gradual increase in turnover, through which my longer-term objective of retaining any profit can also be met (see timescales appendix 3). Profit retention as I have already mention increases my options, which subsequently increases my chances of survival. In short over the time I will develop a separate identity to one the clouds my competitors such as HMV and Virgin, which will contribute towards my business's success.

3.3 To offer quality goods to customers and exemplary customer service
The music industry is a growing market and as a repercussion, it is also highly competitive. Although I will not be directly competing with large household names such as HMV and Virgin, their locality is different to mine (section 4.6, page7), however, I will be compared with them initially and there is no way that I will be able to compete on the basis of price. As a small business, however, I can offer a more friendly and quality service that large companies simply can not offer their customers. This is one of the advantages that I will have when trading, as I will be closer to my customers and I will be able to ask directly what they would like to see. If there is a large enough demand for a certain product I will implement it and my customers will see the changes. This is why this is ultimately a short-term goal, but is also represented to be medium and long-term, as customers expectations grow with time (appendix 3). In addition, as companies grow they distant themselves from their customers, this is a long-term because of this fact, as I do not intend on turning into another company like HMV or Virgin. My business will over time offer more products and services and I hope to exceed my customers' expectations. I will ensure that the products and methods I employ are the most cost effective and that my business is at its most productive. In short this aim merely ensures that my customers needs are always going to be placed in front. I plan to maintain the same level of standard to my customers, through my staff, as manager and work performance and development will enable to me to ensure that my staff are 100% committed to their job.

3.4 Meeting time scales
This is a very important part of my principles. Timescales are a broad area and my activities will need to evolve around the most basic of these. Including:
³ Deliveries and orders
³ Wages and salaries
³ Payments and receipts
In order to ensure that I meet this objective I have looked at several different suppliers and distributors through the process of vendor rating, I have identified the need for several different distributors and suppliers of CD's, Cassettes, Videos and DVD's. As my range of products' increases, I will need to increase the number of different suppliers, as each of the products' have different suppliers for different artists. I have a copy of the Music Week directory (which is the music industry's yellow pages) which will enable me to obtain particular products, which is very relevant for when I offer my ordering service. Wages are the other important timescale, as I have a number of responsibilities towards the Inland Revenue and towards National Insurance contributions, which have to be paid at certain times of the year, on top of standard wages to my employees.

3.5 Summary

3.6 Mission Statement
Not only do we offer highly competitive products to our customers at competitive market prices. We provide our customers with a service and distinguish ourselves from others in the same industry, by operating from our customers' point of view.

4. MARKET PLAN
4.1 Overview
Like many other things the UK ranks 3rd in the worlds music market ranking. Retail value increases yearly and last year the industry in the UK alone was worth over £5bn(source MBI) and there are few signs of it slowing down. Even during the first half of last year, when the outlook for the UK music industry seemed bleak as issues such as retail consolidation, rights protection online, and one issue above all, pricing, dominated the headlines. They arose due to supermarkets pushing chart price downward, specialist retailers having to rely on imports, and increased album sales were downsized due to a fall in turnover. But consumers are continuing to buy more music and videos (DVD's), due to more leisure time and reduced prices, which means that the industry is still growing. The following statistics are from the BPI (British Phonographic Industry) and were accurate as of September 2000. I can keep up-to-date with all the trends and information in the market, from 3 quarterly documents published by BPI which I can order or download off their website (www.bpi.co.uk) by simply filling in the application form. The three relevant documents, include "Music Buyers Survey", "Sales by type" and "Market Information". There are also a number of other relevant publications available from the British Record Companies Trade Association, including:

Each of these documents provide valuable information on all areas relating to my business, showing trends, news and events that have occurred in the Entertainment Market. The following considers these trends individually by product type.

4.2 Audio
Last year Album Sales were up by 8%, and sales value in the total market has risen ahead of inflation. However, single Sales are down by 15% and Cassette sales fall once again. According to other figures Vinyls/LP's are still increasing in popularity. This is illustrated in the following table(3).

These statistics support my objectives of eventually offering Vinyl's and LP's. I will also stock fewer cassettes than CD's although, cassettes are still a popular form of portable music, especially in terms of my target market. Despite the reduction in the number of Singles bought, I still see it as an essential part of my product range, as it represents a major part of the industry, therefore, I expect I still sell singles, but the proportion of them to Albums will be far fewer. Over the first 3 years I will address the issue of selling Vinyl's with my customers in order to establish if there is a local demand, if so, I will introduce them into my shop.

4.3 DVDS
DVD Video player and disc sales in Europe and US have exceeded the level of CD audio sales in its first year according to latest figures from Disctronics. The following table(4) illustrates this fact more clearly.