Go Ride Ltd By Matthew Reed and Daniel Hall Recipient: Ivo Chakarov and Geoff Leese Abstract This Report details our business idea and how we intend to set up our business. Our company is called Go Ride Ltd and we are a bicycle rental company based in Manchester. With recent closures of bus routes we hope to give people in the Manchester area an alternative mode of transport. This report runs through our idea, our business and financial aims, our target market and our competitors. It also includes financial documents including a Cash Flow Forecast, Profit and Loss account and Break even analysis. 1 Contents Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 12 Page 18 Page 19 Page 29 Page 36 Page 54 Our Business Idea Type Of Business Our Business and Financial Goals Our Unique Selling Proposition and Our Market Our Customers - Customer Profile Our Customers - What they will Value Our Shop, Website, Service, Price and Location Our Competitors Purchasing Bicycles SWOT analysis Marketing Plan The Risks and Opportunities Report Appendices Explanation of individual contribution to the group Terms of Reference The Purpose of this Report is to outline our business idea. It will detail how we are going to set up our business, who we will target our company at and our possible competitors. It will include financial documentation to help us assess our business idea and how successful it could be. The report will also specify the risks and opportunities that will face our business when it is up and running. This is an important report, as it will run through the setup of our new business. 2 Business Plan Our business idea The current state of the economy is affecting the bus services in Manchester city centre. The constant rise of petrol prices has caused bus services to inflate their prices and even close down some bus routes all together. One of these cancelled bus routes is the route from the city centre to the university. It is a well known fact that many students are living on a very small amount of money and so the bus is the ideal way for many of them to travel cheaply and easily. We feel that many students are going to be negatively affected by this service closure and so we are proposing an alternative means of transport. Baring in mind that students do not have a lot of spare cash our idea needed to be low cost. We have come up with the idea of providing bicycles to rent on an hourly/daily basis. In the last few years it has been common knowledge that global warming is on the increase. Bicycles are a clean and cheap mode of transport and we feel this can only enhance our business’ success. The Resources, Expertise and Equipment we need Of course, we will need bicycles. We will be starting with a small number but will be looking to increase our stock as our business progresses. The bicycles will be mountain bikes as we feel that they are both versatile and desirable to our target market. We will also be renting a small warehouse in Manchester to store our stock and to use to front our business. We will need some help running the business so we will be employing some casual labour during our opening hours. In terms of expertise, we have both studied business studies and feel we have the drive and knowledge to make our business succeed. Loan In order to inject more capital into our business, we have approached Barclays Bank for a Loan. They have agreed that we can have a loan equal to the amount we are investing. This will give us a combined capital of £4000. We will also be looking at bringing in shareholders to bring in more capital to inject. The date our business will start We hope to have our business ready to go with all our finances in place by May 31st 2009. 3 Type of Business When deciding on which type of business setup we would have we thought of either a partnership or a public limited company. A partnership seemed like a viable option due to their only being two people in charge of the company. In a partnership their can be between two and twenty partners and we could write up the contract and agree to its terms between ourselves. It is very easy to set up a partnership. We would use our own money to fund the business and the responsibilities would be shared. However there are disadvantages to this kind of business organisation. Firstly, unlimited liability is a major concern. If our business does not succeed, as a partnership, we would be liable for the company’s debts. This could mean loss of our personal assets. Secondly, if one of us gets into debt then the other is liable for that person’s debt. Finally, and quite a big disadvantage, is the lack of potential capital. Capital is needed by every business to be successful and to expand. With a partnership, capital is limited to whatever the two partners can input. With only a start up capital of £2000, and no money from us, capital would be low. As a result of our discussions and the disadvantages of the partnership organisation, we have decided to become a Private Limited Company. Many small, family businesses are Private Limited companies. They are owned between two and fifty shareholders. The benefit of having shareholders is the greater prospect of capital. Being a small business, with limited finance, starting from scratch, capital is vital for us to expand and survive. People would buy our shares and own part of the business. The money coming in from selling company equity could be used to expand and stabilise our company. At the end of the year however, these shareholders will want a reward for their investment and we would need to pay out dividends. As a Private Limited company we would have limited liability. This means that if we fail to succeed with our business, the shareholders would only lose the money they put into the business and not their personal assets. This would mean that potential shareholders would be more likely to invest into our business. Finally, the business would be safe from takeovers. This is because our shares would not be up for sale to the general public. A small business like ours would not welcome a takeover because we would lose everything we worked hard for to set up the business. Also the new owner may decide to take the business into another market or change our company values. There are a couple of disadvantages to Private Limited companies. Firstly, although there would be more capital invested, compared to a partnership, Capital is still limited. Public Limited companies can have as many shareholders as they like to input capital, but Private Limited companies can only have a maximum of fifty to invest. Secondly, with the size of the business and the smaller sums of capital injected, it would be hard for us to achieve economies of scale. 4 On balance, we feel it is right to set our business up as a Private Limited company and aim to bring shareholders on board to inject capital into our business. > Business Values Our short-term business goals In the short-term we will be looking at promoting our new business and bringing in our first customers. Although we may not make a good profit in the first few months it is key that we make some sales to cover are initial setup costs. Our short-term financial goals Short term, our financial aims are to spend money promoting our business. We aim to cover the costs of our initial start up and promotional expenses through making sales. Our long-term business goals are: Long-term, our goal is to establish our company and to expand. Our goal is for the business to be stable and we aim to increase our stock levels. With the increase in our stock (bicycles and parts etc) we aim to increase our customer base, maybe promoting our business to other audiences. Our long-term financial goals are: As our business matures we aim to be making a good profit. As we expand, our costs will increase but with the growth we hope to increase our sales numbers. We would like to, by this point, bring on board some more shareholders to finance our growth and expand the company. The unique selling Proposition of our service From our research (see appendix 1) there is only one Bike Rental Company operating in Manchester City centre at this moment in time. This means there won’t be too much competition. It is always good to have some competition because it keeps you on your toes and means that you’re always looking at ways to make your service more appealing. 5 Our service will offer a better deal than this company however by offering promotions to our target market. The company in question has no real offers to entice consumers in. We hope to get consumers attention with good offers. Our service will also be run by students and we feel this will give us an edge as students will use and support our business ran by fellow students. We hope to create a good website to boost our brand image and awareness. We are living in a modern world and technology is vital to a successful business. Our target audience are big users of the internet and will be more likely to use a company with a good quality website. The situation with the bus route closures and the need for cheap alternative transport will give our business a good chance of success. The market we are aiming at are typically very health conscious and so our service will have appeal. > Our market The number of customers available to our business There are 34,458 students at Manchester University and there are a further 34,000 at Manchester Metropolitan University. So theoretically the number of customers available to our business is around 64,000. Obviously the true number of customers will be far less than this figure. We will be based near to Manchester Metropolitan University so we foresee that most of our customers will come from that source. We will therefore focus the majority of our promotion around that university. We will look to expand our promotion as the company expands. Our market is currently undergoing growth Due to media attention regarding global warming, we feel that eco-friendly transport is a growing market. People are becoming more aware of their carbon footprints and are exploring new, environmentally friendly transport. Big companies are spending huge amounts of money on developing expensive eco-friendly motor vehicles but in our market, our target audience do not have the cash to be able to afford such things. Therefore we will be offering a cheap, eco-friendly means of transport, that students can easily afford. 6 The demand for our service We are hoping that consumers will see our service as a facility they can use on a regular basis. Whenever they travel around we hope that they will think of us and hire one of our bikes to get to their destination. Our Typical customer profile and their needs Age: 18-25 Sex: Both Income Bracket: Limited (student) A cheap way to travel over short distances Many students do not have an income and most live on their student grants and loans. Therefore they do not have a lot of cash to spend on cars/taxis etc. Also with the bus routes that have closed down, there are no bus routes operating to the city centre and back. A quick and reliable service Young people tend to be impatient and will expect a service that will be quick and reliable. They will not want to hang around waiting for their product or service. This means that we must make sure the way in which our bikes are hired is quick and hassle free. Quality Goods Many young people are very concerned with how they look. They will not want to be seen on an old fashioned, poorly made bicycle for example. We cannot afford top of the range bikes but it’s important that we find bikes that are of a good quality, look good and are cheap. How would our typical customers tend to buy products and services? We feel that most of our sales will be made in cash. Most of our sales will be in the region of £20 or less so we would assume that our customer will use cash rather than credit/debit cards. We will have a chip and pin service in place however so that our customers will not be let down if they don’t have any cash and need a bike. This will mean more expense but it will help our brand image if we give our customers a good, reliable service. Customers will use our service for With the closure of a few major bus routes in the city we hope that our customers will use our service as an alternative to the buses. We feel this will bring in most of our customers but we hope we will bring in other customers for other reasons. 7 These may be customers hiring them for recreational use. But mainly our customers will use our service to get around the city. What they will value most about our service We think that they will value our customer service the most. Many of our customers will be students and we feel they will appreciate that the business was set up and is ran by fellow students. They will also appreciate that our service will offer good quality bikes to hire for very little money. Our store will be easy to get to as it is going to be situated in the city centre and very close to the Manchester Metropolitan University. Finally we think they will appreciate the speed of the service. It will only take a few minutes before they can ride out and have a mode of transport for however long they like. What our customers will value but don’t really get from existing businesses in the area From our research (see appendices) we have found that there is only one other bike hire company in Manchester City Centre. This means that we have competition and therefore need to have something that stands us out as the better company. Bicycle boutique doesn’t have any promotions or special offers. One way in which we can stand out is to offer our customers offers and promotions. Maybe buy 2 days of hire and get the third free or something along those lines. Also Bicycle boutique has not promoted itself as well as it could have done, so our aim is to come into the market with a really good marketing campaign. We hope by doing this we will get good brand awareness and step ahead of our competition. Price is another factor. If we can get our prices lower than that of bicycle boutique and keep the same quality of service then that will be another edge we have over them. Our business will also offer a quick and friendly service focusing on the needs of students. At the moment our competition seems to be aiming its service at day trippers. However our service will be an answer to the more long term issue of student transport. We will be looking at hiring bikes so that students have a more reliable service for their transport needs- an alternative to buses and cars. 8 Our shop Our shop will be situated close to the Manchester Metropolitan University. We feel that this will be the best place to set up our shop as our main customers will be students. The shop will be close to the city centre as well therefore giving us the opportunity to expand our customer base to more markets other than the students. Above is the floor plan we have created for our shop. 9 Our Website The internet is one of the most powerful marketing tools there is now a days. The majority of people in the country have access to it and many use it regularly. Having a good quality website will help promote our company. The website will have our company details, our offers and contact/location details. We will be designing the website ourselves as we have experience from our A Levels. This will also save us money. See appendix NUMBER Buying our service will be a repeat purchase We hope that once a customer has used our service they will see it as a regular answer to their transport needs. Our service is offering an alternative to buses and taxis so we hope that whenever our consumers need to get somewhere they will come to us and hire one of our bikes. The after-sales service they will expect from us Our customers will expect a few things from us after they have hired a bike. They will expect that our shop will be open during the day as we specify in our agreement so that they can return their hired bike. This means that we or a member of staff need to be at the shop during the specified hours. Customers will also expect that the bikes they are hiring are in good condition so when a bike is returned by a customer it is essential for us to check the bike over and clean it if it is dirty. Price Our main competitors (bicycle Boutique) currently charge £8 for half a day and £15 for a full day (see appendix 1). To be competitive we need to price our service similarly. However we also need to bear in mind our profits so it can’t be too low. After some discussion and looking at our questionnaire results (see appendix 10) we have come up with the following. Our half day rate will be £7.50 and our full day rate will be £14. These prices are competitive with bicycle boutique and they also will give us enough of a profit to be successful. 10 The Location Are shop will be situated a couple of minutes from Manchester Metropolitan University. This is so that we can be close to our target market and give them easy access to our service. Since the closure of the bus service from the university to the city centre we feel that students will be looking for an alternative mode of transport to get around the city. The advantage of this location is that our target market can access our service with ease. As we are not actually on the university campus we can still appeal to other markets as well. But we will be focusing on the student market. See appendix 11 for details on how we chose the area. 11 Purchasing Bicycles After researching on the internet and enquiring in a local bicycle shop every option we had was an expensive one, giving us a problem when aiming to reach a profit as soon as possible. Our business plan was to utilise the cheapest good quality bikes we could find and rent them for a competitive price. After gathering much information we decided that the best idea would be to buy our stock from the mass retailer ‘Toys R Us’ Above is the male version of the bicycle we would be purchasing at £79.99 each. To begin with we would purchase 8of these bikes. Although this seems like a low amount we feel that it would be adequate amounts to kick start our business in its first year. £79.99 x 8 = £639.92 £639.92 would be the price of 8 of the bikes intended for our male customers. 12 We would also purchase 8 bicycles for our women customers which would give us a total of 16 bikes. £79.99 x 8 = £639.92 £639.92 would be the price of 8 of the bikes intended for our male customers. Accumulating the 16 bikes will cost the partnership £639.92+£639.92= £1279.84 £1279.84 Within the first year of GO RIDE we would focus on drumming up demand for our bikes and would start to buy more bicycles as profits and demand rises. 13 As helmets are a legal requirement we will provide our customers with a standard sized helmet which can be adjusted to fit the head, we have found that the cycle store offers the best quality helmets which would provide the customers with a good level of safety while riding. We would require one helmet per bike so in total would require 16 helmets which we could order from this website (as shown above) £7.34 *16= £117.44 Again another requirement for bicycles is Lights which would aid in visibility which is dependent on weather conditions and time of day. We have chosen to go for LED lights which at first are more expensive than normal lights, however hoping to future proof outgoings we realise that LED’s batteries last longer. The purchase of these types of lights will help in cutting costs and also aid in our environmental duty, stopping us from using and throwing away more batteries than necessary. £5.81*16=£92.96 14 Again the front lights are crucial for the safety of our customers. £5.58*16=£89.28 Total expenditures £1279.84 £117.44 £92.96 £89.28 £1579.52 With most of our original budget being spent on the equipment we would expect a deposit to be placed down when the equipment is rented out. As well as the stock we would initially buy we would look to expand the range of Bicycles we would rent out. Another way of expanding the original business idea would be to sell or rent out further bicycle accessories, however we would have to do so when the business is in clear profit and it makes business sense to do so. 15 Competitors At this point in time there is one bike hire company operating in Manchester city centre. We need to compare our business with theirs. There are companies selling bikes that we should also look at. Our Business Evans Cycles Bicycle Boutique Product/Service Bicycles to hire Price £7.50 for half a day, £14 for a full day “The UK’s largest quality cycle retailer”. This company sells quality bicycles. Top of the range bicycles from £136.99 to £7,094.99 Availability Limited availability Bicycles to hire, new and 2nd hand bikes for sale, servicing, spares and repairs 1/2 day = £8 single, £16 tandem. Full day = £15 single, £30 tandem Limited availability Reputation N/A (We have not started our business yet so consumers are unaware of our business) Delivery We will have a website but will be selling via our shop in Manchester Option of buying instore or online with home delivery. Location Close to Manchester Metropolitan University 20% off for students. 3 for 2 on full day rentals. Close to Manchester city centre. Other stores nationwide Special offers UK wide company. Have hundreds of bikes to choose from. They have stores and websites. They have a nation wide reputation of quality service and products. Ken Foster’s Cycle Logic Sells bicycles Prices start around the £200 mark. Good number of bikes in stock Small company doesn’t spend a lot on promotion. Brand awareness is low Good reputation. Not very widely known though-small family business. They have a website, Home delivery but not a very available as advanced one, their well as sales main focus is selling made from over the phone and their shop in in person. Manchester. 5 minutes from Manchester Manchester city centre Ride2work (see None appendix 2) - they have introduced a scheme that means people can get up to 50% off new bikes if they buy through their companies. This is to encourage healthy Have a 25% sale on bicycles at the moment. 16 After-sales service Bikes are checked and cleaned living. It is backed by a government scheme called the green transport plan. They offer bike servicing. They offer bike servicing Have received a good review regarding their after service – “They have good after sales service as well, offering a service on your new bike after the first 2 months to make sure it's still at it's best” (from Google maps see appendix 3) Strengths The company is run by students and the businesses main target market is students. Promotes fitness. No real direct competitors at this point in the area. Good business theory knowledge. Their website has been voted within the top 10 of sports and fitness websites in 2006 & 2007. Ride2work scheme. Huge range of bikes for sale. Has a large distribution centre. Offer a wide range Good friendly of services-hire, buy, service. Good servicing etc. stock levels. Located in city centre. They seem to be going down the day trip roadoffering packed lunches and cycle route maps. Weaknesses Not a lot of capital at this moment in time. Little experience. Have lost their personal/friendly service due to their size Poor website. Limited availability. Poor brand awareness. Unique selling proposition Special offers for target market. Nationwide company with a huge range of bicycles. At this point- the only bike hire company in Manchester Small family business. Have not promoted their business very well. No real unique selling pointjust a normal small, family run bike shop 17 Promotion/sales 20% off for students. 3 for 2 on full day rentals. 20% of servicing. Regular sales and ride2work savings. No sales or promotions 25% sale on at the moment Swot Analysis Swot analysis is a good way to assess the position that a business is in. We have assessed our business and produced this SWOT analysis. It covers our strengths and weaknesses and the opportunities and threats that face our company. From our business plan we have been able to assess our strengths and weaknesses. The opportunities and threats sections will be covered in more detail in the risks and opportunities report. STRENGTHS Cycling is a good form of exercise and many people like to keep fit Only one real competitor in the area Two big international universities with thousands of young people to target our business at Our company is run by students and aimed at students Bus routes in the area have been lost Good shop in a good location for only £200 a month OPPORTUNITIES The internet will be a good way to promote Local cycling events and charity events will boost our reputation Manchester has some nice countryside that we can use to bring customers in Possibility to bring in investors to expand our company WEAKNESSES We don’t have a lot of capital to inject into our business to start with Our one competitor is established with a lot of experience in the market It is the first time we have run a business Our prices have to be low because our target market have a low income THREATS One established competitor Buses/taxis are another way for people to get around Loss of staff due to illness could cause problems 18 Marketing Plan The Market Due to the recession the amount of money people have to spend is very limited. Taking this into account we have figured that this particular factor may act as a positive as our business could offer a cheap alternative to travelling around Manchester. Our business will focus on giving students cheap alternatives to public transport, parking and driving. Another driving force that will be of benefit to our business is the growing concern over global warming, we would aim to raise peoples awareness of the issue and in urge them to start using bicycles on a regular basis and perhaps take part in charity cycle events using our bikes to participate. Our intended audience will primarily be young university students; however we would look to keeping our audience as wide as possible and hope to attract people of any ages and any socio economic groups to rent our bikes. The group of people we are primarily aiming our marketing plan at usually spend on average around £15 per week on transport. We would have to compete with public transport prices in order to make our business a success. Initial Research To kick start our idea for the business we thought it would be a good idea to gain professional opinion and advice. We chose to visit a bicycle business located in Heywood, a small town just outside of Manchester. The owner made it clear that special offers would be the way to attract new customers, deals such as three for two deals and half price off after renting once. These techniques are used to bring customers back to the shop more than once, gaining a regular cliental We asked questions such as “what insurance would be needed for a company like ours” He answered that we may not need to have full insurance for users as simply getting them to sign a disclaimer would be an appropriate cause of action to prevent spiralling costs. In terms of finding good quality bikes for the right price the owner advised us of a website which listed all the bicycle suppliers and in price order. As well as visiting a local bike shop we also conducted a survey where we asked various students (our intended customers) to fill out a questionnaire that we had created so we can see what answers a small group of people would give. There answers would indicate what we would need to do to gear the business towards there needs. 19 Above is an example of a questionnaire we had filled in. More are scanned in at appendix 14. (Refer to appendix 14) We gave 20 students/ people aged 18-24 the questionnaire. 60% of them lived close enough to consider cycling to university/work on a daily basis. The people who lived further than 4 miles away tended to say they wouldn’t consider cycling to university/work as it is too far. 20 Competition analysis As Manchester is one of biggest and most populated areas in the United Kingdom there are many forms of competition which range from public transport, car leases and other bicycle rental shops. These competitors can be classified as different types of competitors, for example other bicycle rental shops would be our direct competitors whereas public transport and other forms of transport rental could be regarded as our indirect competitors. There are currently over 40 bicycle shops which offer rental and/or purchasing of bicycles. Competitors Direct competitors At this point in time there is one bike hire company operating in Manchester city centre. We need to compare our business with theirs. There are companies that are selling bikes that we should also look at. Our Business Evans Cycles Bicycle Boutique Product/Service Bicycles to hire Price £7.50 for half a day, £14 for a full day “The UK’s largest quality cycle retailer”. This company sells quality bicycles. Top of the range bicycles from £136.99 to £7,094.99 (refer to appendix 15) Availability Limited availability Bicycles to hire, new and 2nd hand bikes for sale, servicing, spares and repairs 1/2 day = £8 single, £16 tandem. Full day = £15 single, £30 tandem (refer to appendix 1) Limited availability Reputation N/A (We have not started our business yet so consumers are unaware of our business) We will have a website but will be selling via our shop in Manchester Delivery Location Close to Manchester UK wide company. Have hundreds of bikes to choose from. They have stores and websites. They have a nation wide reputation of quality service and products. Option of buying instore or online with home delivery. Small company doesn’t spend a lot on promotion. Brand awareness is low They have a website, but not a very advanced one, their main focus is selling over the phone and in person. (refer to appendix 1) Close to Manchester 5 minutes from city centre. Other stores Manchester city Ken Foster’s Cycle Logic Sells bicycles Prices start around the £200 mark. Good number of bikes in stock Good reputation. Not very widely known thoughsmall family business. Home delivery available as well as sales made from their shop in Manchester. Manchester 21 Special offers After-sales service Metropolitan University 20% off for students. 3 for 2 on full day rentals. Bikes are checked and cleaned nationwide centre Ride2work (see appendix) - they have introduced a scheme that means people can get up to 50% off new bikes if they buy through their companies. This is to encourage healthy living. It is backed by a government scheme called the green transport plan. They offer bike servicing. None Have a 25% sale on bicycles at the moment. They offer bike servicing Have received a good review regarding their after service – “They have good after sales service as well, offering a service on your new bike after the first 2 months to make sure it's still at it's best” (from Google maps see appendix) Strengths The company is run by students and the businesses main target market is students. Promotes fitness. No real direct competitors at this point in the area. Good business theory knowledge. Their website has been voted within the top 10 of sports and fitness websites in 2006 & 2007. Ride2work scheme. Huge range of bikes for sale. Has a large distribution centre. Offer a wide range of services-hire, buy, servicing etc. Located in city centre. They seem to be going down the day trip roadoffering packed lunches and cycle route maps. Good friendly service. Good stock levels. 22 Weaknesses Not a lot of Have lost their capital at this personal/friendly moment in time. service due to their size Little experience. Poor website. Limited availability. Poor brand awareness. Unique selling proposition Special offers for target market. Nationwide company with a huge range of bicycles. At this point- the only bike hire company in Manchester Promotion/sales 20% off for students. 3 for 2 on full day rentals. 20% of servicing. Regular sales and ride2work savings. No sales or promotions Small family business. Have not promoted their business very well. No real unique selling pointjust a normal small, family run bike shop 25% sale on at the moment Bicycle boutique acts as a massive threat to our business, the way to compete with this type of competitor is to gain more publicity and undercut their prices. Despite being placed nearby a university the actual shop is tucked away in a backstreet and is not easy to find if people are not familiar with the area whereas ours is located centrally and in clear view which gives us an advantage from that perspective. Indirect competitors Our indirect competitors are any other travel service that is on offer, for example the magic bus service that runs through central Manchester or the first bus service which runs nationwide. Our idea would be to attract students who use the bus to have a cheaper form of travel for and a cheap way of keeping fit. Our Business Bicycles to hire First buses Provides a regular bus service (transport) Price £7.50 for half a day, £14 for a full day Availability Limited availability Reputation N/A (We have 70p per journey for students. Average of £2.50 per journey for non students UK wide company. Have many buses which travel to various locations around Manchester Reputation of Product/Service Magic Buses Provides a regular bus service (transport) direct to universities 80p per journey for students Not as regular as first buses but travel direct to universities. (refer to appendix 5) Usually on time but 23 Location Special offers After-sales service Strengths not started our business yet so consumers are unaware of our business) Close to Manchester Metropolitan University (See appendix 2) 20% off for students. 3 for 2 on full day rentals. Bikes are checked and cleaned The company is run by students and the businesses main target market is students. Promotes fitness. No real direct competitors at this point in the area. Good business theory knowledge. providing a nation wide always full and often service but is often has to drive past ladled as unreliable. people waiting for the bus. (small buses) Operates in and around Operates centrally Manchester city centre. and direct to universities £90 pound monthly pass which allows travel using any first bus service (refer to appendix 6) N/A. None N/A Large company and has Bus service many services available specifically for for people of all ages students attending Manchester university and takes them right outside the main building. Convenient for students Weaknesses Not a lot of Famous for Unreliable capital at this service which is often moment in time. late. Little experience. Limited service in comparison to first bus service. Unique selling proposition Special offers for target market. Offers direct service to university Nationwide company 24 Promotion/sales 20% off for students. 3 for 2 on full day rentals. Price Plan of competitors Our direct competitors vary in prices; many of them sell bikes rather than rent bikes out. The cost of buying a bike can range from £150 to £2000 Per bicycle (refer to appendix 15). (These prices are correct after research undertaken on the 1 ST APRIL 09.) Bicycle Boutique is the only company local to our business that rents out bicycles ranging from £8 to £30 per bike; this includes tandem bikes. All the competitors of ‘Go Ride’ offer competitive prices with a very good standard of bicycles for sale. Go ride’s marketing strategy involves offering mainly students a friendly service run by fellow students with reasonable pricing located centrally in Manchester, making the service convenient for the needs. Our rental company will offer competitive prices which will be cheaper than our main competitor. The quality of our bicycles will not be compromised by the cheaper price. Market share Within the first year of business Go Ride will focus on breaking even however the long term goals of the business is to access as much of the market share as possible which would result in substantial profits. The aim of our business is to maximise all opportunities to create a profit. In terms of the national bike rental market we will only be looking at securing a few percent of the market. However in the Manchester area we hope to obtain a third of the bike rental market by two years. Why Manchester? Manchester was an obvious choice for our business not just because it is one of the commercial cities in the UK but because of the masses of opportunities to expand our profits and exceed any expected market share we first thought was achievable. There is a massive student population within central Manchester, with two universities less than 4 miles apart where we will base our business. With the city of Manchester council looking to cut down on pollution levels and prevent increasing congestion, there are many new cycle routes being built. As well as the new routes opening up, our business would benefit from a possible low interest funding from the council. 25 The area in which we will be based is populated primarily by young professionals and students which will be our target audience. Our central position would also allow us to tap into the tourism market which is thriving as the city is home to the Arndale shopping centre and massive bicycle events which take place every year. Events such as Manchester – Blackpool, Manchester to Liverpool and other similar events will be huge catalysts in the success of our business. Promotional plan For any business to be successful a promotional plan will have to be in place to allow word to spread about the businesses services. Initially we plan to spread the word about our business by posting leaflets at the university and to the university dorms and at the fresher fair for the university. To focus on the relationship we have with our intended customers we will set up a stall at the university fresher fair attracting people to our product with free energy drinks given to people who are interested. We would also offer a chance to sign up to a charity cycle to Blackpool using our bikes at a discount price. This would be a good way of attracting our first lot of business and wouldn’t end up costing a huge amount of money. Other than this initial drive for publicity we would also take part in advertising to raise the profile for our business. Advertising Our advertising will aim to inform the potential customers of the service we provide. It will also inform the people that the business aims to ensure the best in customer service, the cheapest prices and good quality bikes. In order to maximise the market penetration we would advertise in local free newspapers and online websites which would ensure that a large number of local people would hear about our business. Rather than waste money on large scale advertising the company would be better focusing on free advertising on websites such as Facebook and twitter. Main advertising features Cheaper than competitors Run by students for the students A range of bicycles available to rent 26 Costs of marketing Below are some details regarding the prices of various promotional activities we have looked in to. We hope to use some of these to create some brand awareness. Newspaper advertisement- Manchester Met Daily paper (given away free all across Manchester) Cost £200 for half a page Duration: One day Leaflets A3 Glossy paper 300 copies 70p each Printed low quality leaflets 500 copies 10p each Internet advertising Facebook (creating an account for the business informing other users of events and special offers) £0 Continues publication Internet advertising goriderental.com £20 per two years Publicity One way to raise the profile of the business without spending any money is to entice as many students as possible to take part in various charity events; this would get the business a good reputation and most probably get the business mentioned in bicycle magazines or publications for no cost. The website Websites are now a crucial part of any business. We intend to make a simple but attractive website which is user friendly. Having a user friendly website will help attract potential new customers and potentially increase our market size. Making a 27 website look professional like we intend to, would show that we are a forward thinking company with the customer in mind at all times. Websites not only allow anyone in the world to find the information about the business but they are online 24/7 unless there are technical difficulties. Our website will be primarily an easy access term of reference with all our contact details available online as well as tariffs and biking events which are taking place. Picture of Manchester MET University Easy access links to crucial data to drum up busines s Using publisher we designed a draft for the homepage of our business GoRide The website we would set up could be called goriderental.com this webpage would cost a two yearly fee of £19.98 but offers us an easy to remember name for our website domain. Conclusion Despite the tough market conditions the UK is currently suffering our business model is based around people saving money and getting fit for a low price. We feel that with our business model we could go forward and generate a profitable company. Our business would be based in Manchester located not far from the universities Manchester Met and Manchester University; this ideal position would allow us to be in full reach of our intended, young, consumer. 28 Our initial research included visiting other bicycle companies and seeing what they had to offer. We also developed a questionnaire to help us gauge a small group of our target audience. The group we asked came back with results which gave us the confidence our business could be a success if marketed and publicised in the right way. One problem we would have in creating a new business would be competing with existing already established businesses like Evans cycles and bicycle boutique. To establish ourselves against the competition we will have to use all the publicity and advertising tools we can afford for example the use of Facebook.com and local newspapers. Using these marketing tools we would hope to gain a third of the market within the first two years of operation. If this number was achieved our business would be deemed profitable and a success. For a full map of the Manchester area and its cycle lanes see (appendix 16) 29