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Draft Business Plan – Lollypotz
Why should you plan?
Planning is a weapon against failure. Whilst with Lollypotz you may not need to raise
funding, this business plan can be a tool to assist you in raising funding and planning for
the future.
This document sets out the blueprint for the future for Lollypotz (Territory Name)
SWOT Analysis
The first part of this Business Plan is to carry out the SWOT Analysis. This identifies
Lollypotz’ Strengths, Weaknesses, Opportunities and Threats.
STRENGTHS
Lollypotz’ strengths lie in the quality of product, innovative design, excellent customer
service, price point, customer accessibly (via internet, phone, shopfront) and alliances
with quality suppliers. In addition, the low cost of raw materials, which is approximately
25% of the product cost, provide good cashflow projections for the business.
Purchasing a Franchise at the ground level will provide all new franchisees with the
benefit of the growing business. The franchise sale cost has increased three times
since inception. Projections are that by the end of 2010 Lollypotz Franchises will be
sold for $100,000.00 plus. This provides a good investment opportunity for Franchise
purchasers.
WEAKNESSES
Lollypotz weakness is the inability to provide detailed existing cash forecasts due to the
“newness” of the business/franchise model. Whilst the Canberra Head Office is the
only fully functioning office with over six months’ trade, these figures cannot be relied on
for future franchises. This is the reason for the low price point for the purchase of the
franchise.
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OPPORTUNITIES
Lollypotz is being presented with the following opportunities:a. Attraction to the retail market via television/radio advertising;
b. Attraction to the corporate market through Lollypotz’ commitment to marketing to
Corporate Businesses and Marketing/Event Management Companies.
c. The benefit of a national system where Lollypotz will provide orders derived from
the whole of the Australian network and provide commissions to each Franchise
where orders are derived from.
Lollypotz Pty Limited Head Office, through the sale of franchises, is raising funds to
continue to market the “brand”. Lollypotz Head Office is reinvesting the proceeds of the
sale of franchisees into development of the “brand” through marketing and brand
awareness.
THREATS
Lollypotz threats only come from competitors. Provided Lollypotz continues to
innovate, advertise and promote the business, Lollypotz will be the market leader and
counteract any pressures put forward from competitors.
MARKETING
When considering the marketing plan for any Franchised Territory, the four “Ps” of
Marketing have been considered, they are the Product, Price, Place and Promotion.
PRODUCT
Product to be determined by Lollypotz Head Office and displayed on the Lollypotz
website. Franchises receive an Assembly Manual detailing how the products are
assembled.
PRICE
The product price is determined by Lollypotz Head Office and where possible will
contain a raw material cost of 25% or less.
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PLACE
The place where Lollypotz (Territory Name) will operate from is yet to be determined.
Either from home or a shop in a “strip” shopping location, where trading can be carried
out on a five to six day basis, but not within a mall or seven day per week shopping
environment.
PROMOTION
Lollypotz Head Office will initially promote Franchises throughout Australia through a
commitment to television advertising. In addition, it is suggested that Lollypotz
(Territory Name) promote the business through a mailout via Australia Post.
GOAL SETTING – HOW TO ACHIEVE THESE RESULTS
To be successful, you need to set goals. You need to have vision and you need to
know how you are going to achieve this.
Step 1:
Set your goals – write down what you want to achieve.
Step 2:
When do you want this to happen – prepare a timeline.
Step 3:
Prepare a Cashflow Plan
Step 4:
Believe in yourself
Lollypotz Pty Limited will provide each Franchisee with the product knowledge, the
training, the product and assistance with marketing/advertising and support, but for this
business to succeed, you need to have faith in yourself, your drive and your
commitment. If you are committed to the brand of Lollypotz and are prepared to work
hard, this will be a successful business and you will achieve your results.
THE PLAN
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Definition of the Business
The preparation and sale of chocolate bouquets to be sold as gifts and corporate
centerpieces and client appreciation. Sales to take place via the internet, over the
phone and via shopfronts.
THE BUSINESS DEMOGRAPHICS
Where will your business and your customers be located?
Will your business be home-based, web-based or will it operate from business
premises?
How much space will you need?
In a retail space, between 15 and 40 square metres. From home, within a spare room
or garage.
How will the customers access your business?
Via the internet, phone or via a shopfront.
Will your customers come to you or will you go to them?
Customers will come to you. If working from home, it would be preferable not to have
customers come to you.
Will customers mainly contact you by telephone, via the Internet or in person?
Via Phone, Internet and in person
Have you checked with the local council for permission to carry on a business
in the chosen location?
OPERATIONAL DETAILS
Business Structure
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What business structure will your business use? I.e. will you be a sole trader,
partnership, company or trust? Explain the reason for choosing the structure
you have chosen.?
EMPLOYEES/STAFF
List the people you will need to employ (if any) and the likely cost of these
people.
Tip: Don’t just think in terms of wages – include on-costs such as holiday
loadings, workers compensation and superannuation guarantee levy costs.
Our primary target market(s) is/are:
How much of this market do you think you can capture?
What, if anything, can you offer customers that Competitors don’t?
How will you gain business over them?
How will you rate against your competitors in the following areas?
Price
Service
Quality
Convenience
How will your competitors react to your entry into the market?
Are they likely to start a price war, for example and if they do, can you survive
that?
STATE OF THE MARKET
What is the current state of the market?
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The market is currently attractive as there is little quality competition in this market.
With the innovative nature of the business and the advertising commitment the market
is open to new businesses of this type.
POSITIONING
Where do you see yourselves in the marketplace?
– highest quality and service
– good quality and service
– basic product or service – low cost
Describe the area of the market you feel you will cater to based on product,
price and the level of service you will provide.
Advertising
Indicate which media you will use for advertising and give brief details
of how you will use it:
Head Office continues to provide all forms of advertising, such as television and radio.
Flyers, brochures, hand-outs
Via Direct Marketing through Australia Post.
Direct mail
Via Direct Marketing through Australia Post
Online marketing - Website
Via Google and Bing search engines.
TV
From time to time Lollypotz Head office advertises on television.
Radio
Lollypotz has a jingle for use on radio. Depending on cost and demographics in certain
areas, Lollypotz would like to utilize radio for future advertising.
Trade shows, exhibitions
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Where possible and within budget constraints Lollypotz Head Office will endeavour to
take stands at Trade Shows and Exhibitions marketing the product to Corporate
Businesses and Event Management type businesses.
What percentage of your total turnover will you allocate for advertising and
promotion?
3% of turnover is to be allocated towards Marketing. In addition it is envisaged that
Lollypotz Head Office will “top up” this advertising as opportunities arise and when the
budget allows.
Competitor’s Advertising Analysis
How do your competitors advertise? Note: It is well worth studying their
methods, because it’s likely they have already tried most mediums and have
found out what works by trial and error. This doesn’t necessarily mean you
have to do what they are doing but if you are planning on using a medium
they are not using, chances are they have tried it and it isn’t cost effective.
List the media your competitors are using below:
Local newspapers
Metropolitan newspapers
Magazines
Flyers, brochures, hand-outs
TV
Radio
Other
PRICING
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How much will you need in total to turnover to break even? – see below
EXPENSE ANALYSIS
Lollypotz will be subject to two types of expenses:
START UP EXPENSES and OPERATIONAL EXPENSES
START UP EXPENSES
Legal fees
(including company formation costs etc. if applicable)
Accountant/Financial Adviser fees
Rent or lease fees including any Bonds etc
Licenses or permits
Franchise Fees
Establishment costs
(moving costs, lease guarantees, bond, etc.)
Fittings and fixtures
Office equipment
Insurance
Office supplies and stationery
Miscellaneous expenses
TOTAL START UP EXPENSES =
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$. ......................
$ .......................
OPERATIONAL EXPENSES
These are the expenses you will incur in the normal day-to-day operation of
your business. List below your operational costs on a monthly basis. Note:
some expenses may occur periodically, for instance, your accountant may
only bill you once a year. In this case, estimate that cost and divide it by 12 to
arrive at a monthly cost.
Insurance
Rent or lease of premises
Motor vehicle
Postage/freight costs
Telephone
Bank charges
Travel expenses
Depreciation
Loan (franchise) payments
Legal/accounting/bookkeeping fees
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
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Miscellaneous expenses
Office supplies
Petty cash
Repairs/maintenance
Miscellaneous expenses
$ .......................
$ .......................
$ .......................
$ .......................
$ .......................
TOTAL MONTHLY OPERATIONAL COSTS =
$
CALCULATING BREAK-EVEN
The break-even point is the point in where you neither make
any profit nor incur any losses – you simply break square. In other words your
total revenue is equal to your total fixed and variable expenses.
The break-even analysis is extremely important because it enables you to
calculate what level of sales you need to reach before your business will start
to make a profit.
Firstly, you need to calculate your gross profit margin as a percentage. The
formula used to calculate this is:
selling price
minus cost of goods plus royalties = (40%)–
------------------ -----------= gross profit = 60%
To calculate the gross profit as a percentage you simply divide the selling
price of the goods by the gross profit:
gross profit
--------------- ------------- = %
selling price
Next, to calculate what volume of sales you need to break even, you simply
need to divide your total expenses by your gross profit percentage.
Break-even Volume =
Overhead Expenses
--------------------------- --------- =
Gross Profit %
The amount of sales I/we need to achieve to break even is: $......................................