AJB business plan – LACAS Burki Team A
Mission statement:
AJB is a start-up dedicated to bringing new, lighter and higher quality bycicles to the kids of country
X. For too long they have made do with heavy, clunky and poorly designed bikes which threatened
not only the safety of our precious children, but the market reputation of country X. The
entrepreneurs behind the venture, jessie and Aiden, decided that enough was enough. Lighter,
higher quality bicycles would be made available for country X’s upcoming generations, and they
would be the ones to do it. Hence, the business AJB came into fruition.
SWOT analysis:
Strengths: AJB is a relatively small business meaning that they will easily and quickly be able to adapt
to changes in the business environment. Their reliance on e-commerce will mean that prices can be
changed quickly in accordance to the market’s and close contact can be maintained with consumers
easily. In addition to this, AJB has a very strong USP (Unique selling point) in the form of lightweight
bicycles built with superior materials. The fact that AJB has some very skilled labour employed puts
them one step ahead over businesses that hire cheap, unskilled labour as it means more efficient
production and a better end result.
Weaknesses: Being a newly established business, AJB has run into some very temporary roadblocks.
One of these roadblocks include the fact that (as shown on the given income statement) their losses
are to increase from $1000 to $2750 in the following year. In addition to this, their reliance on
expensive, unskilled labour means that their expenses remain relatively high so their net profit is
virtually non-existent.
Opportunities: Now, AJB has a lot of unused storage space and redundant current assets. Many may
consider this a weakness, but it presents an opportunity for AJB to pull itself out of the cash flow
slump its currently experiencing. This will be elaborated more on the solutions aspect which we will
be discussing about later on. Another piece of potential is that AJB’s prolonged existence on online
markets means that it has a very large marketplace available to it that isn’t limited to any physical
boundaries within country X. That means that any small amount of efficient, free advertising has the
potential to boost their online sales and reputation greatly, putting them far ahead of any other
bicycle manufacturer in country X.
Threats: The threats to AJB come not from competition within the market, but from the state of the
economy itself. Country X is going through a recession and expenses are estimated to increase by
15% next year. Due to this, the demand for luxury goods such as high quality bicycles is likely to fall.
Solutions to AJB’s problems:
1. Unused storage space will be rented out to other businesses or consumers within
the area. This will provide a source of temporary income for AJB which will assist
them in rectifying their current shortage of working capital.
2. The 2 workers currently employed by AJB will be made redundant. This will help save
AJB a lot of money over the long term and will mean they will cut the future
projected losses by more than half.
3. To make up for the lack of skilled labour, the 2 owners of the business will personally
undergo training and begin manufacturing these bycicles on their own.
4. Social media marketing will be cheap and quick – good for a small business with little
finance such as AJB. Discount schemes will also be put up online to attract customers
quick and establish a solid brand name online.
5. The redundant current assets (unsold bycicles) will be given as a hire purchase or
lease to consumers and businesses within the area at cheap prices. This will ensure
AJB still gets to withhold these for further sale in the future and will also act as a
second source of income for the rectification of their cash flow problem.
6. Crowdfund so that the non-current liability of AJB (with the owner’s house as
collateral) gets paid off and AJB can convert into a limited company. This will allow
them to sell shares as well as become more stable in the future.
Future prospects and how they need to be fuelled with a bank loan
As mentioned in the case study, the economy of Country X is facing a recession. As with any
natural recession, the value of country X’s currency will naturally go down. Now, as many of
the businesses and people in country X might see this as an incredibly large roadblock, AJB
sees this as an opportunity to be availed right now. As Country X’s currency devalues, all of
its exports will instantly become cheaper (basic economics).
As AJB holds the USP (Unique selling point) in not only Country X’s market, but also many
other undeveloped markets around the world, exporting these bicycles in external countries
would be the decision that puts AJB miles ahead over any other business in Country X at the
time.
To do this, AJB would need several things. One would be the provision of analysing the
country, laws and regulations, logistics and customer perspective of the new country. To do
this, AJB will need to hire a specialised agency specialising in information. AJB will also need
to hire a distributor in country Y (external market which we are exporting to) in order to
make sure the bicycles reach the children they are intended for. The first year of this
enterprise is expected to be no more than $20,000 dollars, with about $9,000 allocated to
the specialised agency needed to gather the required information, $8000 to the distributor
$3000 for informational advertising on social media. This will all be done in 4 to 5 months,
just 2 months after
Why its in the Bank’s best interests to give AJB a bank loan.
AJB is a small business, but a very capable one. It’s a ripe and healthy seed planted in the
wrong soil. If this ripe and healthy seed was planted in the right soil (a stronger economy),
then there is no doubt it will grow into a strong and well-established business. There has
been no other type of business like it nationwide.
Due to the fact that AJB is such a relatively small business located online, it doesn’t have
much collateral. Therefore, AJB proposes that when AJB converts into a private limited
company (after having payed off its non-current liabilities), the bank take $10,000 dollars of
shares in AJB as an ‘initial deposit’. If the $20,000 isnt paid back within 2 years of AJB’s new
venture, AJB will sign off the remaining of it’s shares equal to the monetary value of the loan
as well as interest. If AJB does succeed and pays back the loan, the bank will still hold 5% of
the shares in AJB and will be a permanent shareholder of AJB’s profits for its existence to
come.
Conclusion – SMART
AJB has now given the reasons why it would be in the interest of both the bank and the
business to give this loan. Now, we’d like to end off this business plan by explaining why out
objectives, solutions and plans are SMART (Specific, measurable, achievable, relevant,
timely).
Specific – We have given individual reasons which resolve each of the current issues in AJB
at this point in time. In addition to this, we haven’t used vague words like ‘loans’, but
described where these loans will come from and the monetary value of them.
Measurable – These are realistic and have been tried and tested with real businesses, such
as crowdfunding and exporting to countries with stronger currencies (Chinese businesses as
an example). We have also given realistic deadlines on when we plan to carry out our goals.
Achievable – These solutions are achievable for a small business (crowdfunding, renting out
redundant assets). In addition to this, nothing has been stated on this business plan without
a specific explanation behind it, reinforcing the idea of achievability and being realistic.
Relevant – All of the solutions and plans we have presented above align with, and directly
impact the goals and future trajectory of the business. Nothing has been stated here that
isn’t in line with the mission statement of AJB or its goods.
Timely – All of the goals on this list will be achieved in 2 years or less, ensuring the bank
obtains its finance back as quick as possible.