NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS Name: Viet Hoang Nguyen Student ID: 701333 Author note NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 1 Table of Contents a. Executive summary ....................................................................................................... 2 b. The proposal.................................................................................................................. 2 c. Competitive edge .......................................................................................................... 3 d. Requirement of physical resource ................................................................................. 3 e. Human resource requirement ........................................................................................ 4 f. Market research ............................................................................................................. 5 g. Marketing plan .............................................................................................................. 5 h. Sales plan ...................................................................................................................... 8 i. Timeline ...................................................................................................................... 10 j. Financial analysis ........................................................................................................ 11 References ............................................................................................................................... 14 NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 2 a. Executive summary Vegetables NZ that produces and sells good quality of groceries and vegetable through online, now are planning to start their business for fresh vegetables juice under the name of Fresh Veggie from January 2018. They already have an established business for producing and delivering the fresh vegetables to various restaurants and customers throughout Hamilton, New Zealand. They are planning to produce juices from fresh vegetables like carrot, cucumber, papaya and spinach. Once the product is well accepted by the customers of Hamilton, Vegetables NZ are planning to sell their product in various other cities of New Zealand (Brinckmann et al., 2015). As the demand for fresh vegetable juice is growing among the old people and health conscious people, it is expected that the new juice will be well accepted by the customers. For the new business the company will require $ 50,000 initially, out of which they will obtain $20,000 through short-term loan and the rest amount will be raised from the investors and the profit from their existing business. The new business is expecting to generate $1.5 billion by the end of 2nd year (Finch, 2016). b. The proposal Initially the company will sell their product at 10% off for the 1st three months as introductory offer, however, after that period they will sell the juices at the regular price. The main objectives of the businesses are • Creating nationwide staff for marketing the product • Establish a strong sales force in New Zealand cities other than Hamilton • Taking appropriate steps to maximize the sales with minimization of cost NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 3 • To achieve the revenue amounting to $1.5 billion till the end of 2nd year of operation (Saunders & Lewis, 2014). However, required amount that is to be raised from the investor is still under process and no confirmation is received yet from them. If at least 70% of the required amount is not received till October 2017, then the company will have to look for the other sources for finance (Blumberg, Cooper & Schindler, 2014). c. Competitive edge Due to the following factors the Vegetables NZ has the competitive edge ober the other companies: • Quality – Their juices will be produced from fresh and nutritious vegetables as quality is their foremost preference (Fleisher & Bensoussan, 2015). • Innovative – They always try to come up with innovative product with nutrition and health value. Industry expertise, quality assurance and innovative products are the crucial factors for their success. • Integrity – Customers generally prefer the quality products. Vegetable NZ’s commitment towards their customers is to provide the product with high standard quality (Spring et al., 2017). d. Requirement of physical resource The basis requirement for the business will be as follows: NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 4 • For factory – electrical power, machines for crushing the vegetables and extracting juices from that • For office – computers, fax machines, telephone, internet access and printers • For warehouse – refrigerators, boxes for preserving vegetables and cartons and fancy bottles for packing the juices e. Human resource requirement Requirement of staffs: To fulfil the target and running the business smoothly, the following personnel will be required: • 4 to 5 young and energetic professional, aged between 25 and 40 for looking after the promotion and marketing of the product. Their salary will be $20,000 per month per person. • 20 to 25 full-time employees aged between 30 and 45 to handling the sales at various levels for the salary package of $14,000 per person per month. • 50 to 60 part-time labours in the factory that will be responsible for crushing the vegetables and extracting juice. Their monthly wages will be $5,000 per labour • 1 to 2 full-time people who have good knowledge of accounts, for handling the accounts and payments related issues for the consolidated payment of $ 28,000 per month NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 5 • 2 full-time people in the ware house for handling the receipt and despatch of raw materials and finished products. The monthly wages for them will be $4,000 approximately per person. Requirement of financial resources: The financial resources is the availability of money to be spend in the form of cash to meet the daily requirements of the business and to operate the business effectively and efficiently to achieve success. Initially, Vegetables NZ will require $ 50,000 for start-up, out of which they will obtain $20,000 through short-term loan and the rest amount will be raised from the investors and the profit from their existing business. f. Market research Vegetables NZ has already organised a market research for identifying the target customers for their juice through surveys, interviews and analysis of past trends. It has been identified that the major customers are expected to be from the age group of 50 to 75 and the young health conscious people from the age group of 20 to 35. As the concern for good health is rapidly increasing among the people, the demand for fresh vegetable juices is also going up. Therefore, Fresh Veggies are expected to have a great access in the market and are expected to earn good revenue till the end of the 2nd year of operation (Clark et al., 2016). g. Marketing plan • Marketing objectives: Within 5 years of the business they want to the leader in producing and marketing the juice. To achieve this, they are dedicated to maintain the freshness of the vegetables, maintain proper hygiene while crushing and extracting juices from vegetables. NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 6 • Targeting strategy and target market profile: The target market for Fresh Veggie will be as follows: Primary market – From the primary market the customers will be mainly as follows: ➢ Kids aged more than 5 years of age (prefer carrot juice and papaya juice) ➢ Health conscious teenagers aged between 14 and 19 as they love experimenting with new products ➢ Youth aged between 25 and 35 as they love trying new products and have more purchasing power ➢ Senior citizens aged more than 55 years of age as they suffer from various health issues and prefer to intake something fresh and healthy ➢ Housewives (Baker, 2014). Secondary market – Generally the customers from secondary market will be as follows: ➢ Railways, airports and local bus stops ➢ Recreational places ➢ Theatres, movies, amusement parks, malls, hotels and restaurants ➢ Colleges and schools • Positioning strategy – The strategy of Fresh veggie is focussing on the market sector that has natural and healthy food stores for serving the health conscious young people and old aged people. They are planning sell their product at 10% off as initial NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 7 introductory offer for the 1st three months. Additionally, they will sponsor a local NGO as a movement towards social responsibilities. • Marketing mix - Figure 1: Marketing mix (Source: Festa et al., 2016) Product: Fresh Veggie is 100% natural and will be produced by using fresh vegetables that are grown organically. The product will be marketed by Vegetables NZ. As there are no preservatives in the juice, it is highly recommendable for the kids as well as old aged people. Moreover, the short expiry period for the juice will always provide the customers with fresh juices (Wirtz & Lovelock, 2016). NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 8 Place: The vegetables like carrots, papaya, spinach and cucumber will be mostly obtained from the organic firm of Vegetable NZ and if the demand exceeds their budget and the raw material from their own firm is not sufficient to meet the demand of the product, and then the vegetables will be purchased from the local market. They have a plan to expand their business after one year of operation in the other cities of New Zealand apart from Hamilton (Khan, 2014). Price: As the beginner, the pricing strategy of the company is to launch the products at lower than the average price to generate high demand in the marketplace and will create a market for competing with the competitors. The product will be marketed under the penetration strategy with low price and high quality. Moreover, all the juices will be sold at 10% discount for the 1st three months (Festa et al., 2016) Promotion: As the business will be in the introductory phase, the objective of Vegetable NZ will be to generate the brand awareness among the people through advertisement in the local newspaper, television channel, radio stations and hoardings (Barrett & Weinstein, 2015). h. Sales plan • Sales strategy – The strategy for selling the product is to create customer loyalty in the marketplace in the initial phase. Vegetable NZ will increase their sales force to target the new market. • Sales forecast: The sales in the 1st month will not be so impressive as it will be the initial month and a considerable amount of profit will be sacrificed for allowing the discounts to the customers. Sales in the month of April and November will also be reduced as those months will be off season for the vegetables an dfresh vegetables NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 9 will not be available. The sales forecast of Fresh veggie are shown below through the table and chart: Sales forecast for the year 2018 Sales Amount January $ 5,000.00 February $ 12,000.00 March $ 19,000.00 April $ 17,000.00 May $ 21,000.00 June $ 29,000.00 July $ 26,000.00 August $ 35,000.00 September $ 31,000.00 October $ 28,000.00 November $ 24,000.00 December $ 27,000.00 Table 1: Sales forecast (Source: Created by author) NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 10 Figure 2: Sales forecast graph (Source: Created by author) i. Timeline Gantt chart Strategy/Time 1-2 month 2-4 month 4-7 month 7 - 1 0 month 1 0 - 1 2 month Promotional strategy Pricing strategy Analysis of profit Implementing the changes Final report Figure 3: Gantt chart (Source: Created by author) Amount US$40,000.00 US$30,000.00 Amount US$20,000.00 US$10,000.00 US$- January April July October NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 11 j. Financial analysis Pricing for the product will be set as follows Type of juice Quantity Price Carrot 500 ml $ 11 Carrot 1 litre $ 20 Cucumber 500 ml $ 12 Cucumber 1 litre $22 Papaya 500 ml $ 9 Papaya 1 litre $ 15 Spinach 250 ml $ 13 Spinach 500 ml $25 Table 2: Product pricing (Source: Created by author) Projected profit and loss Particulars Amount Revenue sales $ 274,000.00 Less cost of Goods sold $ 102,000.00 Gross profit $ 172,000.00 Expenses Insurance expenses $ 4,000.00 Electricity charges $ 2,500.00 Salaries and wages $ 32,000.00 NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 12 Interest expenses $ 2,000.00 Rent expenses $ 60,000.00 Total expenses $ 100,500.00 Net profit before tax $ 71,500.00 Less: Tax @ 30% $ 21,450.00 Profit after tax/Net profit $ 50,050.00 Table 3: Projected profit and loss (Source: Created by author) Break-even analysis Units Total revenue Variable cost Contributio n Fixed cost Total cost Net income 0 £ - £ - £ - £ 12,000.00 £ 12,000.00 -£ 12,000.00 50 £ 500.00 £ 500.00 £ - £ 12,000.00 £ 12,500.00 -£ 12,000.00 100 £ 1,000.00 £ 1,000.00 £ - £ 12,000.00 £ 13,000.00 -£ 12,000.00 150 £ 1,500.00 £ 1,500.00 £ - £ 12,000.00 £ 13,500.00 -£ 12,000.00 200 £ 2,000.00 £ 2,000.00 £ - £ 12,000.00 £ 14,000.00 -£ 12,000.00 250 £ 2,500.00 £ 2,500.00 £ - £ 12,000.00 £ 14,500.00 -£ 12,000.00 300 £ 3,000.00 £ 3,000.00 £ - £ 12,000.00 £ 15,000.00 -£ 12,000.00 350 £ 3,500.00 £ 3,500.00 £ - £ 12,000.00 £ 15,500.00 -£ 12,000.00 400 £ 4,000.00 £ 4,000.00 £ - £ 12,000.00 £ 16,000.00 -£ 12,000.00 450 £ 22,500.00 £ 4,500.00 £ 18,000.00 £ 12,000.00 £ 16,500.00 £ 6,000.00 500 £ 25,000.00 £ 5,000.00 £ 20,000.00 £ 12,000.00 £ 17,000.00 £ 8,000.00 550 £ 27,500.00 £ 5,500.00 £ 22,000.00 £ 12,000.00 £ 17,500.00 £ 10,000.00 600 £ 30,000.00 £ 6,000.00 £ 24,000.00 £ 12,000.00 £ 18,000.00 £ 12,000.00 NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 13 650 £ 32,500.00 £ 6,500.00 £ 26,000.00 £ 12,000.00 £ 18,500.00 £ 14,000.00 700 £ 35,000.00 £ 7,000.00 £ 28,000.00 £ 12,000.00 £ 19,000.00 £ 16,000.00 Table 4: Break-even analysis (Source: Created by author) Figure 4: Break-even analysis (Source: Created by author) From the above graph it can be seen that the break-even unit is 425 units, at which the total cost will be equal to the total revenue, or in other words, the net profit will be zero. £19,000.00 £16,000.00 £12,000.00 £14,250.00 £8,000.00 £9,500.00 £4,000.0 Fi0 xed cost Total cost £N-et income £4,750.00 -£4,000.00 -£8,000.00 £- -£12,000.00 0 100 200 300 400 500 600 700 NEW ENTERPRISE DEVELOPMENT AND SMALL BUSINESS 14 References: Baker, M. 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