Introduction to unit eight coursework
In this unit, I have the opportunity to structure a business plan for a business proposal, which I will have the opportunity to create. For this segment of the assignment, I will clarify the main activities of the business, in addition to its aims and objectives. The assignment will also be focusing on the marketing and financial planning of my chosen business, notwithstanding, the operations and financial planning of the proposed business proposal. At the end of it all, I will be evaluating my business and its viability.
However, to start a business I will need a business plan. A business plan is essentially a plan of a business that is to be set up; this is usually a written piece of statement about the business (think of it as a blueprint). This is a useful document to have because; firstly, it outlines the business itself and outlines what the business is essentially about, and secondly, it allows the owner/manager of the business to work towards the success of the business by spotting and avoiding failures.
In general, a business plan will have the following statements; what the business is all about (i.e. the nature of the business), the aims and objectives of the business (What they hope to achieve and expect in the future) and how the individual plans and will o about creating the business. This can be illustrated in a majority of ways however; a financial planning of the first six months or perhaps even a year would be ideal or information about how the investments are to be raised for the business.
A business plan is a very indispensable piece of document to have if someone is considering starting their own business, this is because a business plan outlines/predicts what the business will be like after setting up that gives a clear understanding of how the aims and objective are to be obtained as well as defining them. Furthermore, a business plan will also help to plot any pitfall along the way, i.e. a detailed cash flow of a business's first six months will be able to suggest if the business will have a higher cost when compared with the profit they make, even before the business has started, and this can prevent major loss of profitability. Not only does a business plan outlines and spots major flaws in the business, but many businesses and entrepreneurs use it as a source of motivation; a backdrop to compare their current performance against. Further adding more, a business plan would be beneficial to establish or to re-evaluate the business's competitive position within the market place by conducting a thorough analysis of the competition. This would involve finding out the strengths and weaknesses of the competition and how the business can be taken advantage of.
In conclusion, as mentioned above, a business plan is important for a business because it helps to clarify the vision of the business and decide whether to forge ahead with the idea. Without a business plan, it would be very difficult to convince external investors to invest the business. Not only that, a business plan will also help the business determine their target market that they want to aim their product at, which is always useful to know.
The Business Proposal
For my chosen business proposal, I have decided to create a music label, and have named it P.K. Media. Generally, the term “Record label” is something that is associated with the music industry. A Record label is a brand and a trademark, which is associated with the procedure of marketing and distributing musical recordings and music videos of their signed artists. A record label is also the company that manages the artists/bands and coordinates, manufactures, promotes and distributes their productions i.e. music/videos. Record labels are also responsible for the enforcement of copyright protection on the media that they distribute such as CDs and DVDs, so that their content (such as music), cannot be copied and sold as pirated versions of their work to the customers by other individuals.
The business I intend to propose will primarily focus on the production and the promotion of the music of its artists/bands in the local area, the Midlands. The reason for this is that there is a much lower cost of setting up a music label for the local area as there are less promotional activities which the label would have to finance and carry out, thus reducing the start up cost of the business compared to if it was a nationwide business.
The main services/products that P.K. Media will provide to its consumers and music acts are as follow:
* Music sold using online services such as iTunes and the business website. Some music will be available for free download as a promotional activity.
* Provide live performances by its artists and bands as a secondary service.
o Commissions from artist will be charged on this, depending the amount of tickets sold by the act.
* Offer promotional services for unsigned artist and band acts and charge commission depending on their popularity, music sold, the amount of record deal they receive etc.
o Free promotional services will also be available for unsigned artists on the business's website for uploading their work to display to the internet audiences.
o Manufacturing CDs and DVDs will also be available for artists wishing to use for promotional use, however it is highly likely that there will be a fixed cost for this service.
* Record deals will be available for artists; majority of the aforementioned services will available with this, as the business will undertake the sole responsibility for the promotion, distribution, production and the sales of the artist/band's music signed to P.K. Media.
* Recording facilities and personnel will be available to customers who wish to record their own music that will be mixed by a professional studio engineer. Customers will be charged on an hourly basis or perhaps special offers upon depending upon how much music they wish to record.
Live performance are a good way of raising additional profit other than selling CDs because with live performances, My business can charge commission from the local pubs/bars to supply the live performances with beverages, as a result the pubs and bars will also get some promotion of their products and services which will benefit their businesses as well. Furthermore, the business will also be able to make profit through selling tickets for the live performances. The location of this business will be varied and may not be based in a single location, the reason being that if my business is organising the performances, then it will have to be located at the performances to manage the bands and other aspects of the performance i.e. selling the tickets. However, P.K. Media will need facilities to record the band/artist's music and venues for live performances, for this it will be a necessity to have access to a recording studio and to be able to rent a venue in the local area. Having access to a studio can be done in a number of ways such as renting a recording studio in the local area or purchasing the equipment and setting up the recording studio at home or other location, such as a youth centre or other rented location like flats or houses. The cost of the musical equipment such as; mixing boards, computers, mics, instruments, audio processing hardware and sound proofing the location can add up to a significant amount and as a new business the cost of starting up should be kept at a minimum. Ultimately, a more convenient option would be to rent a recording studio, which is pre-provided with all the equipment needed (as described above). Another issue which may arise would be that if my business had to purchase the musical equipment I would have to purchase the low-end equipment as the high-end (studio quality) equipment can cost thousands and upwards and as a small independent music label there would be limitations for the finance. In addition, the low-end equipment could also reduce the quality of the recording, and as a record label that will not be beneficial for the artists because consumers would not want to purchase bad quality products especially if the product is aimed at entertainment purposes. Imagine listening to one's favourite song with hissing noisiest, crackle and static noises, it would not be pleasant to listen to which is why quality of the audio is a substantial element of a record label.
Reason for choice of business?
The idea of a record label interested me because; with a record label, there is no need to purchase stock; it is a service-based business, which means that a record label does not have to manufacture or purchase anything other than to sign the artist and record CDs. A record label is basically, the intermediate service between audiences/customers and the artist. In essence, while the artist makes the product, the record label simply delivers it to the customers, almost like an intermediary.
Another thing which seemed interesting is that the possibility of a sole ownership of the business. Since a record label is a service-based business, it is not necessary to have partners (as with any other businesses). It can be set-up with a moderately low cost, which mean that there is no need to invite external investors to invest in the business and hold a percentage of shares in the business, leaving room for more creative control over the business.
Personal interest is another factor that may have influenced my choice to pick a record label for a business proposal. Unqualified amateur musician myself, I find that music is the greatest past time for all ages which is why I liked the idea of providing people with good quality of music to listen to which is easily accessible and is at moderately low price.
Overall, I believe that a record label should be a viable business proposal for this assignment because like many businesses it requires marketing strategies, target consumers and a product. A further consideration is that almost everyone listens to music (to some extent) whether it is purchased from store or downloaded from the web and it is because of this that music is considered as one of the major immersed art form, which hints of a profitable market sector.
What are Aims and Objectives?
It is imperative for a business to have a basic requirement and have clear aims and objectives in order to prosper and move forward in their field. Aims and objectives are frequently used together to set/represent a certain achievement which is why they can often be mistaken to having similar meaning, however, they have a significant different to each other.
Aims, to summarise, are essentially a brief statement, which majority of the time are short sentences; for instance, ‘maximise profit' or ‘increase customer growth.' Aims are most commonly use to identify the overall target of a business, states their intentions, and what they hope to achieve in the future of the business.
On a different note, objectives are more complex and ‘to the point' than aims. Objectives, unlike aims, are more detailed and can be longer depending on the objective itself. For example, if a company wanted to increase their market, they could set themselves and objective of ‘increase employee productivity by 20%, within in the next six months.' As you can see, an objective is more complex, and more detailed. Furthermore, the detail in objectives tends to be numerical details such as specific dates, time frame, percentages etc. This is because objectives are a follow-up of aims. An objective is set merely set to accomplish or to achieve an aim. To illustrate, if a business's aim is to ‘maximise profit,' then they may decide to set themselves the objective of ‘increase sales from 15.7% to 20%, within six months period.' By increasing the sales of the business from 15.7% to 20%, a business can ensure that they are retaining their customers and increasing their profit within six months. However, some businesses may decide to have a sub-objective to this which could be something like ‘increase employee productivity by 2% in 30 days', to ensure that the business is getting the most out of their employees. This also proves the fact that individuals who either own the business or are in charge of the business are the ones who normally make aims. They may decide that their business should be making more profit so they pass it down to the managers who would look at it and perhaps add more detail to it, and as aims are passed down from person to person they become more detailed and complex, thus being objectives.
There are a numerous reason as to why a business should set itself aims and objective;, the most obvious one would be that aims and objectives sets a goal for the business and gives some a target to work for, for many businesses this is a good source of motivation. Aims and objectives can also help a business realise their progress because aims and objective provide a backdrop for achievement in which a business can compare their current or previous progress with their aims or objective and calculate what is required to be done in order to meet those targets they have set for themselves. A controversial use of aims and objectives is to use them as a publicity device, in unit one, I had to investigate Tesco as a business and what I found was that Tesco had use their objectives as a publicity device by having economical objectives such as ‘reduce carbon footprints' to gain good publicity from the media and their customers.
Nevertheless, businesses have to be careful how they use or establish their aims and objectives because if they set objectives for their employees which are not applicable or achievable for the business then the business could face some pitfalls. The employees may feel under-pressure/ stressful and could de-motivate them which would evidently lead to a low productivity rate and could in some circumstances affect the business's income.
SMART targets or sometimes called SMART Objectives, are considered to be a sub-division of objectives, SMART targets are a method to ensure that the objectives which are set by a company are actually achievable by the business and the employees; it is a method of measuring the credibility of an objective which has been set. SMART is an acronym that stands for:
Specific - objectives, which are set, need to be specific and state exactly what the business wants to achieve. The reason an objective needs to be specific is because the manager/supervisor and the employee need to know what is expected of them and perhaps the time frame if that is applicable.
Measurable - most often, when objectives are set - they need to be able to measure how much an individuals or a business have progressed towards those targets. Measuring a target is often very crucial towards the success of achieving that target because by measuring a target, businesses can estimate how much work is underway and how much additional effort needs to be exerted in order to achieve certain objectives.
Achievable - when objectives are set, one of the major issues, which a business must realise is that the target is achievable for the business. The business needs to think about; whether they have the required skills, recourses, investments, tools, human recourses etc. If the objectives are unrealistic or not achievable by the business then (as mentioned above) it can affect the productivity of employee and de-motivate them, and low productivity would surely affect the businesses activities and profits.
Realistic or relevant - objectives should also be relevant to the businesses aims. For example, if a business wants to increase market share, it would be irrelevant for them to set the target eliminate competitors products from the market; it would be very unrealistic. An objective needs to be relevant, they need to be something, which the business can take an action upon or have access to.
Timely - normally, when objectives are set, they have a timescale such as ‘increase the growth and the market share of the business by 2010.' Setting timescale within an objective is beneficial as it gives a business a deadline as t when the objective needs to be achieved by, so the business can move onto their other objectives, which needs to be completed towards their aims.
Aims for my business
Just like any other modern businesses, my business needs to have aims and objectives, which it should be able to accomplish. Setting aims and objectives will help determine investors as well as myself the main goals of my business, and along the way, it could also help my business spot the potential target market hic hi should aim my business at in order to achieve some of business's targets.
‘Minimise costs and increase potential profit.' - One of the major aims of my business would be to minimise the costs of the business, which goes into the production of the products (i.e. music albums and singles) and therefore must be kept at a minimum range. The reason behind this is that, if I were to start the business as a sole trader, there would be a limited amount of investments, which I could have access to and since my business is a record label there aren't any need of purchasing any kind of stock or manufacturing materials in the sense of hard labour. As a newly set up business, it would be most advantageous to reduce the cost of the business to reduce the chances of getting into a cash flow problem such as over-budgeting or not having enough sales of the product where the costs would out-weigh the profit. It is because of this issue that leads to many businesses failing within the first year because they run into cash flow problem such as these; however, a good cash flow analysis should be able to determine any issue such as these that may arise. As well as reducing costs, my business also needs to be considering maximising its profits because without profit there will be no business to operate. Maximising profit is a necessity for any business, because it is what influences/motivates their day-to-day operations and their employees, without profit a business would not have the funding to employ employees or rent premises or other necessities. Furthermore, another crucial reason for a good profit for a business is that if a business is backed-up by inventors then the business (Owner) needs to prove to the investors that the business is worthwhile investing in because if the business starts to show a decline in profits then the investors are going to be the first ones who will back-out from the investments because they will not to make a loss themselves. As a summary, if there is no profit, there is no business.
In my business's quest to maximise profit; there could be a number of challenges/issues that could affect my business achieving the aim of ‘Minimise costs and increase potential profit,' and the following explains;
One of the most significant issues that my record label business would have to deal with is the recession, which was caused by the financial crisis during the year 2007 and the year 2009. The financial crisis was the reduction in the availability of loans (credit) and to some extent; tightening of the condition required to obtain a loan from the banks, this evolved into the interest rates being incredibly high. The definite caused behind the credit crisis is highly doubtable, however, one reason might be that UK bought many mortgage debts from the U.S. (this might have been directly or indirectly) therefore when U.S. mortgage default rose, preponderance of the UK banks lost money. Because interest rates rose dramatically, many individuals in the population had to pay more for their loans and mortgages, which meant that individuals and many businesses had less disposable cash to spare and consequently, many businesses found themselves being either bankrupt or making employees redundant to prevent bankruptcy.
The reason why I believe that the recession may affect my business is because many individuals are un-employed, which means that they may be on some sort of limited income (either through council or jobseeker's allowance). Ultimately, this would mean that many individuals would have less disposable income to spend on CDs and DVDs for personal entertainment and if my business is not selling many products, it will be in a high risk of having very high costs that could out-number the total sales of the business. This could put my business in a potential risk of being bankrupt, as you can see from fig.1, it is estimated that the recession will only get worse.
In contrast, the recession may not be disastrously bad for my business. The reason behind this would be that because of the recession more people would be un-employed and have a whole lot of spare time on their hands as less people would be working nine to five shifts, this would mean that individuals would be looking for activities to pass their time. This could mean that people will be more reliant upon entrainment such as the cinemas, movies, theatre, music etc. This could potentially excel my business because more individuals would be interested and looking to escape from reality through the financial crisis, similarly to people who went through the Great Depression in the United States during 1929, which saw the rise of movie sales.
To conclude, the recession is something that is known as an external factor, which no business has a control over. The recession could have a big impact on my business; however this factor could prove to be advantageous for my business as mentioned earlier, there are a lot more people with more spare time on their hands, and as a result they will be looking for something to entertain themselves and if marketing is done correctly for the business, it will prove to be beneficial. As one can see above, regardless of the recession and the credit crisis that started in 2007, the sales of digital music increased dramatically through the years and the digital music industry is more profitable than ever in the US with industry profit of 2.9 Billion dollars, a 15% from 2004 which was only 0.4 billion profit being made.
One of the major issues that my business will have to confront other than the recent financial crisis is the piracy of music through the internet.
In essence, music piracy the violation of copyright infringement (copyright), this means the unauthorised use of materials that is covered by the copyright law. For electronic and audio-visual media, this is normally referred to as piracy.
Piracy is a factor that could have the biggest impact at my business's aim to ‘Minimise costs and increase potential profit.' As one can see in the article opposite, the BPI (British Phonographic Industry) has predicted that music piracy has risen by thirty-six percent, which has cost the UK music industry twenty-six million pounds, which is a tremendous amount of load-sum. Music piracy is a factor which could directly affect my business because if my business released a single which was popular (Music hit) then the probability is that a lot of customers will be reluctant to purchase the single or the album in order to save money and they would perhaps download the product through an illegal download website or through the use of torrents (which is a peer-to-peer download service provided free from the internet). This is the most likely event to occur because as mentioned previously, the recession has left a lot of people un-employed which means that they may have a very low income and have limited amount of disposable cash to spend on entertainment. Because a lot of my business's target consumers will be getting my product (music) through the internet without pay for it, this could result in my business have a major decline in profit because although the products my business offer may be very popular amongst the target consumers but because they are not paying for the goods my business will have no way in which they can financially benefit from. Many of the bi names in the record label business like ‘Universal Music' or the ‘Sony BMG' group do tend to copyright the CDs and DVDs that they manufacture and distribute, however, recent technological development has given an regular computer user to copy content from these copyrighted disks (using free software from the internet) from a single click of a button, and if that individual uploads the content of the disk to the internet then the content of that disk will be exposed to thousands if not millions of users on the internet which is why the modern music industry is suffering from million of pounds and dollars of damage from piracy and it is very unfortunate for my business as there is no method to battle the rising issue of music piracy because if my business's products were copyrighted, many consumers or users will be able to find a way to copy content. In addition, copyrighting thousands of disks would prove to be a very costly task and evidently, this will prevent my business in achieving my aim to ‘Minimise costs and increase potential profit.'
However, not all is tenebrous, my business could still prevail if it turned to a more digitals means to provide the products to the customers, such means could be; having free web player on the business's website to play the hit singles; free selected music downloads of popular songs; and most importantly selling products through the internet. Most of these solutions would eliminate the cost of producing CDs because a lot of teenagers nowadays are using things like their mobile phones, mp3 players and devices such as the iPod for playback of their music. If the popular products of my business (songs) are being provided free from the company's own website, then the business will have more exposure from the public, which, in the end, could work out to be beneficial. As the business's website generates more viewers, the chances are internet companies like Google; YouTube; Amazon etc. who will want to advertise their services on my business's website, which the business could generate some income from as well as gaining public interest and recognition as business.
Music piracy most definitely will affect my business and the corporate aim to ‘Minimise costs and maximise potential profit.' Internet nowadays is available to almost every house, office and schools/college in the country that millions of people have access too, and the internet is too big to have control over. Nevertheless, good marketing and internet advertisement may fill in the lacunae of profit that may be lost due to music piracy.
‘Increase/attain good public relations with the local community and customers.' In my opinion, good public relations with customers should be an imperative aim for abounding businesses. After all, businesses depend on their customers' satisfaction and support by which if they did not have good relationship with customers then it will be highly likely that the business will not be able to retain their customers. This issue could lead to a decline in their profit margins or worse gain an incredible amount of bad publicity or a bad reputation as a whole.
A record label is not a publicly noticeable business because a record label's product is what gains notoriety as publicity rather than a business as coherent whole. This is because customers are mainly attracted to the stars and the music they make rather than the service that provides them the service. This can be beneficial or a drawback, consider which way one looks at it. From my personal perspective, it is a benefit because it means that my business will not be in the public eye and will not attract major interest if my business were have an issue, this could be a number of things like mistakes (which a lot of businesses make) or redundancy of a major band or artist etc. So in order to gain good public relations with the local community and customers will be a very laborious task to conduct.
Nevertheless, with dubious tasks, there are always strategies, and my main strategy to in achieve this aim to ‘Increase/attain good public relations with the local community and customers,' will be to organise youth activities and perhaps cultural events, the next page will explain this.
As one can see in 4 (Next page), an extract from BBC news website, the level of youth crime has increased dramatically over the past decade in the United Kingdom. Teenage knife crime has increased so much that law enforcements had to enforce harsh laws upon teenage delinquents in order to keep crime at a minimum. The articles below states that boys from the age of eleven to eighteen are likely the ones to be carrying knifes, and are the most likely culprits in the rise of such crimes. The article also states that most of these young offenders have been; excluded, dropped out of school or have already had been given time to serve under law custody. So ultimately, these are the age groups which are been targeted by the law to tackle such crimes.
How does this issue help my business to achieve good customer relationship one may wonder? Well to start with, teens that have been expelled, excluded, dropped out etc. from school have nothing to do other than wonder around with friends on the streets and cause trouble to the society and the individuals in the local community. This leads me to believe that, organising local youth music activities and providing creative services such as recording facilities and musical guidance for youths free of charge may be a very beneficial factor not only for my business but also to the local community.
Having to organise such events for young people will be very beneficial to a majority of people - youths, local community and my business. This is because firstly, by providing youths will free services and activities will encourage them to stay off the streets and be passionate and involved in something creative for their time, and secondly, by having lees teens on the streets in the local community will prevent crime and hopefully reduce the crime rate locally, so older generation who may be intimidated by teens will feel much more safer. Personally, I believe that teens only resort to crime as a recreational activity as well as to gain attention to themselves; this is only an opinion of course. However, by giving teens, facilities to be in and express themselves artistically through music may help to make a productive use of their time; also, it could be a place where teens can get attention that they desire from other like friends, other social groups or even the community.
Knife sentencing 'not effective'
A selection of knives found by police
The study found young people were living in "constant fear" of attack
Longer jail terms are not an effective way of persuading teenagers to stop carrying knives, research suggests.
Pentonville Prison governor Nicola Marfleet interviewed 14 to 17-year-olds who had either been excluded from school or were serving time in custody. She found most believed tough sentences were only meant to "scare" them, and they were more likely to be tagged. The Home Office said the government was using a combination of deterrence and education to tackle the problem.
The study found that some boys were carrying knives from the age of 11.
Ms Marfleet concluded that knife-crime prevention work must be targeted at this age group in order to be effective.
She interviewed about 24 boys in focus groups at pupil referral units in Hackney and Haringey, north London, and four boys one-to-one at Feltham Young Offender Institution in west London
Possession of a knife carries a maximum jail term of four years, but most of the teenagers did not believe they would receive such a harsh punishment.
Two of those interviewed said that regardless of the possible penalty, they would not stop carrying a knife because they "needed" one for protection.
Almost all of the teenagers said they could not rely on parents or the police to protect them from their "enemies" - members of rival groups or gangs.
As a conclusion, I believe that organising local events, facilities and activities for teenagers in the local community will be very beneficial to not only to the community but to my business as well, because that way my record label business can gain good publicity as a business who is concerned with the level of criminal youth activity and want to do something about it. It will also help give teens the chance to engage in more artistic activities and social events, which hopefully should keep them off the streets., regardless of this; most teens are artistic individuals who lack the know-how to express themselves as well as having lack of attention. This is why they engage in anti-social behaviour to express and attract attention.
Another way of looking at it would be that many popular UK pop-musicians are teenagers and perhaps, through organising musical events, my business could find some really talented individuals to sign a contract with my record label which could benefit my business as the individuals I may decide to sign to my record label could go on to sell well with audiences, generating good deal of profit for my business.
A good example of this is Jamal Fyffe also know as chipmunk who earned recognition through performing at his youth club in north London by which he gained the attention ‘Always Recoding' who later decided to sign him to their label. Now, Jamaal has gone onto make one of the best selling artist in UK.
Moving on to the final aim for my record label business is ‘To promote new talent in the local area and ensure each project sustains good recognition.' Being a record company, promotion of artists/bands of my business is an essential task. Promotion of artist will not only help to bring in profit from artist but by being a well-recognised record business will attract a larger number of bands and artists to the business.
Nevertheless, there are certain aspects that may conflict with my corporate business aim to promote more artists and bands. These conflicts could be a number of issues such as; lack of financial development; the target market; or perhaps there may be a lack of quality and talent that my business is considering promoting. These are just some of the issues that my business may have to be concerned about in order to achieve the aim ‘To promote new talent in the local area and ensure each project sustains good recognition.'
Financial deprivation, in other words, lack of finance; it is quite usual for a new starting business to have this issue, as many businesses that are in development require a thorough financial planning. The reason finance could affect my aim ‘To promote new talent in the local area and ensure each project sustains good recognition,' purely because musical promotions for bands and artists will require an extensive amount of finance in order for the bands to be recognised. Gaining sufficient finance may itself be an aim itself, however, one of the main aims of my business would be to maximise growth and earn a good reputation as a business.
Lack of finance can deprive my business's activities that could affect the turnover of the business. There are, however, things that could be done to prevent this. Finding good venture capitalists would be one option, which would ensure good investments to fund my business.
On a different note, venture capitalists (better known as private equity finance), are unlike business angles, venture capitalists are individuals who invest a large sum of money in return for equity (i.e. a shared ownership) of the business.
The advantage of this would be that my business would get the sufficient investments it will need to take-off. Therefore, there will be enough investments for my business to conduct the sufficient promotional activities for bands/artists such as organising live events, promotion through manufacturing CDs and perhaps advertising their music on the internet and offering free demo tapes of their products for free download online. Another advantage of a venture capitalist would be that they may already have a wealth of knowledge from previous successes and failure from their past business venture, which is an advantage because perhaps they could “lend” some of their knowledge to my business and help it to be a success.
Nevertheless, the main disadvantage of having investments from a venture capitalist would be that they would require a shared ownership or a percentage of my business. This would be something to consider because that will mean I will not be a sole trader of my business, which I had originally planned. This would also mean that every decision I make for the business (i.e. signing new artists to my label or expanding the business) will have to be thoroughly consulted with the venture capitalists, therefore; it will not only be my decision but the capitalists' as well. Although, it would be possible for me to buy the percentage back from the venture capitalists when the business has become successful, it may prove to be pricier but buying back the percentage of the business will give me the full control of my business.
Lack of talent in the local area may also prevent me in achieving ‘To promote new talent in the local area and ensure each project sustains good recognition.' The reason being; that if a band hasn't got much talent and they sound awful - no matter how much my business promotes them, they are not going to sell much and my business's profit will, in no doubt will decline dramatically, if it makes any. Perhaps this is where the skill to recognise ‘A Hit song/Artists' comes into the equation.
Recognising a hit single or a musical act will be the critical element of my business because as explained above, it will affect my business's profit depending on the popularity of the bands and popularity will depend on the amount of talent that they have. A solution to this would be that if my business were having issues finding a talented act(s) in the local community (West Midlands) then it would be logical to search for bands and artists outside of the West Midlands. This will give my business more choices in evaluating, accessing and choosing the right bands for my business that would prove to be profitable.
Objectives for my business
Comparably to aims, a business such as mine needs to have a set of consolidated target that are S.M.A.R.T (specific, measurable, achievable, realistic and timely), these are recognised as objectives. Objectives, specifically speaking help a business to achieve an aim, on the long run and for this reason solely, objectives need to me S.M.A.R.T because a business needs to be able to measure how work has been exerted and how much more is needed to achieve an aim. Here are a set of objectives that I believe are necessary for my record label business.
‘Acquire a website for business within 6 months of business set-up.' This is an indispensable target for my business, in my opinion of course. Having business website is important for any business for that matter because information is quick, free and most of the time is satisfactory to an individual's needs. Internet has become incredibly popular over the years and many businesses do tend offer their products and services through internet, where customers can select the product and pay for them online using a credit or debit card. Internet has become an advantage to both businesses and consumers the main ones being; businesses have a lower cost as they do not have to pay the cost of running a shops to display their products and consumers do not have to travel to a great distance to purchase products, instead with a single click, the product is shipped out to them.
For my business, it is imperative to have a website because that will be the main source where I will be selling majority of my products and services, as well as advertising them. If customers do not know, what my business does and what product it offers, then they will not be able to purchase from my business and ultimately my business will not make profit, which is needed to be a successful business.
However, this objective needs to be obtained in a certain period, “within 6 months” to be exact. The reason for this is that, within six months of a fully operation business, my business will need to be able to gather clients and sell music to customers. Furthermore, this objective will help my business to achieve its aim to ‘Minimise costs and increase potential profit,' because of the low cost involved in distribution and marketing of products. To put it in other words, my business will not have to pay for the cost of a store location, certain bills like gas and electricity for the store, the staff to run the store, and perhaps the cost of manufacturing CDs on a large scale, as many individuals prefer the MP3 formats for their personal music players. However, a facility for artist to record their music will be obligatory, as there are certain aspects of the quality of the recorded music that will need to be controlled.
Another aim of my business that is closely related to this particular objective is the aim to ‘To promote new talent in the local area and ensure each project sustains good recognition.' The website that I plan to create for my business could have a specific area (or “Forums,” the correct appellation) where anyone can sign up and discuss any aspect of music, such as genres, music around the world, and even certain production techniques, almost like an internet community. Moreover, I also plan to provide service for unknown artist to promulgate their work on the website free of cost. This is almost like acts as a free promotion for artists and bands within UK and perhaps other countries. There could also be a premier service for artists if they wish to sell their work, though the premiere service will charge them a certain amount of the sales they make from my business's website. Again, this will assist my business to achieve the aim to ‘Increase potential profit.'
Nevertheless, there are going to be hurdles that may prevent me in achieving this objective. One of the preliminary issues that will arise with this website idea of mine would be competitors. There are already well-established websites such as myspace.com and soundclick.com that enable artists to showcase their work on their website, though one of the issue I notices in such sites is that there are limitation as to how many songs a member can upload on their account (around 5-6 max). I would imagine that this would be a bit limiting to some artists, only being able to upload a few of their work. However, these competitors do not have a premiere service that I anticipate for my website; all their services are free of charge, this will certainly put my business in a stressful position as there will be fierce marketing needed to be done in order to gain attention.
Lack of skills will also be of an issue to accomplish this objective. Since I do not have the expertise to create a professional working corporate website by myself, I will have to hire a professional to do it for me, and of course, that will cost money. The issue will arise if I am not able to raise sufficient funds for my business because I will not be able carry out the take needed such as hiring a web designer or a studio engineer, to make the business functional, not very profitable if a business does not function well. This will certainly hold me back in achieving maximum profit for my business.
To summarise the aforementioned, having a fully functional website for my business will be a huge accomplishment for my business, as my business will be able to attract a wider range of customers, not just the ones in the local area that I plan to aim my business.
I believe that this objective follows the S.MA.R.T code. It is specific because it addresses a specific objective to be achieved, which is to construct a fully functional website for my business.
It is measurable because it can be determined how much progress the webpage has made in sense of development and functionality, though the web designer will be in charge to determine whether the web page has made any substantial progress.
Furthermore, this aim is achievable, although it may prove to be a difficult task to find a good web designer and to employ him/her as well as to gain the investment needed to employ such personnel. To be fair, any individual can have his or her own website these days, though the website that are available are not up to the professional standards for my business that is why I need assistance of a web designer.
With that being mentioned, this objective can also be realistically achievable for my business, with good organisational skills and a decent web designer.
Finally, this objective can also be timely meaning that it has a certain period in which this objective has to be achieved by, though perhaps a single web designer may have issues creating a complex web page that I desire for my business, however this issue can be overcome by employing additional web designers on a zero hour paying method.
Achieving this aim is a critical part of my business because online is where most of my business activities and sales are going to be conducted and not being able to achieve this objective can have negative repercussions on my business in the long run. Moreover, like other issues, it can create cash flow problems and even low profit.
‘Offer extensive range of services and products at low prices to ensure; at least 25% profit is made; and to ensure the survival of the business in the next two years of setting up a fully operational business.' To be frank, this objective is essentially to survive as a business for two years after setting up and during that time make at least 25% profit from the products and services that my business offers to customers and artists. This may prove to be an arduous task, especially in this time of economical crisis, where there may be a shortage of customers that proving low income for the business.
To make it easier to explain I will split the objective into three different parts and describe how it serves a vital element in my new business.
The first part of this objective is ‘Offer extensive range of services.' The whole idea is that the more services and products a business has to offer to its customers the wider range of people that business will attract. At the moment, my business does not offer that many services to its customers, this will mean that there are going to be less people that t my business will appeal to and will want to use my products and services, ultimately meaning that my business will have low profit. This is the reason why I have decided to set this goal for my business, to provide an extensive range of products and services at a low price that will help me attract more customers for my business and increase profit, this will also help me achieve my aim to ‘Minimise costs and increase potential profit.' Perhaps, when my business is fully functional and is making an amplitude of profit, I may decide to offer my customers other products/services such as electronic goods, specifically speaking, music making equipment (computers, hardware and software) though this will require stock and a copious amount of profit. This may also be considered to be breaking into a different market sector, potentially risky.
The second part of the objective is to make at least 25% of profit on the products and services my business will offer. For instance, if it takes me £600 to manufacture CDs for artist, then I need to make 25% of as profit, which will be £750. Making profit is a definite way of ensuring that my business stays functional and that there are less negative impacts on my cash flow. To some extent, this will help to make profit for my business but not help me to achieve my aim ‘Minimise costs and increase potential profit,' because though my business will be making profit it will be a steadily sustained profit not an “Increased profit.” In order to have an increased profit, I will have to increase the prices that my business charges customers for its products, thus risking losing customers to competitors. My business's prime focus at this point should be to break into the market and achieve a good following of customers once that is accomplished; my business could focus on increasing profit and market share.
This also links with the next part of the objective, which is to ‘Ensure the survival of the business in the next two years of setting up.' This is critical because my business has to survive and prevent from going bankrupt. This links with the previous part of the objective (make 25% profit) because if my business is not making profit then it will not be able to pay for costs such as running the premises, paying the cost of distribution, marketing and other various costs, if my business cannot do this then it will go bankrupt. One of the preliminary tasks I need to do to prevent this is to have a descriptive/comprehensive business plan for my business, most businesses fail with months due to not having a sufficient business plan. A business plan will be a blueprint of the business as mentioned before helping to spot financial difficulties. Above all else, however, having good prices to attract customers and to have an abundant amount of loyal customers following is perhaps the key to any business's survival because that will ensure that the business makes sufficient profit.
To sum up, it is obligatory for my business to achieve this objective because if it fails to achieve this objective then it could mean the end of my business, as literally the objective is to survive as a business. This will mean all the investments invested in my business will lost, notwithstanding, that if my business is a sole trader business and I have borrowed a lot of money from banks and other sources such as business angels or venture capitalists, then my personal assets will be at risk of being seized to repay the loans.
‘Acquire a recording studio and an office in Birmingham, within a month of acquiring commensurable investments needed to start the business.' In order to carry out corporate operations, if any at all, my business needs a premise to conduct activity, to show professionalism to clients/customers, and not to mention — providing a safe place to conduct business. If the place in which I conduct business is not health and safety regulated then there can be serious repercussions, for instance; a customer could trip over some wires that are on the floor un-covered and were to be injured then that could file for compensation costing my business a valuable customer and a lawsuit.
After gaining the sufficient investments for my business, the prime focus should be to acquire a premise because without a premise, my business will not be able to provide recording facilities to customers and artists. Without this, there will be hardly any profit for my business, as majority of my business's activities will require a recording studio.
A recording studio is a mandatory requirement for my business, though whether the recording studio should be purchased, rented or bought on lease for a certain time is highly likely to be reliant upon the investment I am able to gain for this business and the credibility of the business proposal. A recording studio is essential to my business's needs because without a recording studio, my clients will have no place to record their music, notwithmentioning, the equipment required such computers, hardware and the software to record sound, though many studios for sale already provide equipment. If I am not able to provide recording facilities to clients, then there simply is not any business because all of the P.K. Media's activities are dependent on offering customers to record music as well as artist that are signed with P.K. Media, which my business will sell onto the market to make profit from. Without this simple asset (a recording studio), none of these process will be able to be conducted.
An office will also be relevant as there should be a place to speak with clients and to hold meeting with certain individuals that need to be dealt with. An office will be necessary to hold meetings with customers wishing to use recording facilities and also hold meetings with artists. An office is needed to create a sense of “professionalism” and to give a good impression to others as a business, after all a good first impression is always propitious.
It would be desirable to have these two facilities (an office and a recording studio) on the same site, this will make the process of holding meetings with customers and then showing them the facilities will be more easier and will be less time constraint. Additionally, onsite parking should be available (or desirable), as it will make it easier for customers who are visiting the studio.
However, the location of the recording studio and the office will also play a key role in whether the business is a success. In this objective, the city of choice where the business should be located in Birmingham, though a specific location has not been set. Birmingham is the central city for the West Midlands therefore, that is where most of the customers are going to be located as it is one of the major cities in UK. This could potentially be advantageous to my new business, as being located in a major city will have the potential to attract a wider range of customers thus helping me to achieve the aim to ‘Minimise costs and increase potential profit,' because a wider range of customers will mean more sales and an increased profit.
To summarise the objective part of this business plan, objective as can be determined, are an essential element if a business wants to achieve their aims. Objectives need to be specific (most of the time) to ensure that the business is working towards a set target and objective help to determine a business how much work needs to be done in order to achieve their aim.
For my business, objectives are as equally vital as it is a new business and the objectives need to be set from a critical point-of-view.
Legal Structure of P.K Media
As a business, there is a wide range of legal structures available to operate the business. Howbeit, I have decided to have sole proprietorship as my business's legal structure as I have been able to gather the capital needed for my business through, banks loans, and loans from friends, they do not require a partnership in the business though interest repayments will be required to repay the loans I borrow from them.
More often than not, a sole proprietorship or most commonly known as ‘sole trader' is a legal business entity where a single person runs the business and is responsible for every aspect of the business.
Minority of people believe that sole proprietorship is the easiest way to operate a business because as with other legal business structures, there is no fee to pay to ‘Companies House' to register the business. This can be an advantage for me, as I want to keep the start-up cost of my business at minimum helping me to achieve ‘Minimise costs and increase potential profit.' Furthermore, registering my record label business with ‘Companies House' (a place where businesses have to register in order to operate with a certain legal structure) would require my business to publish annual accounts such cost and profit made by the business. This could be a major disadvantage because people the public can pay a small fee to ‘Companies House' and have access to my business's account for a particular year. This issue could prove to be a predicament in near future for my business because if I were to try to get investments to expand my business, then investors will be able to access my business's accounts, and if my business was not making a lot of profit then perhaps the investors may decide not to invest in my business.
One of the most common advantages of owning a sole proprietorship business is that all the profit that the business produces will go straight to the owner of the business; there will be no need to divide the profit as it is obligatory with partnership companies other than paying the staff's wages. To me this seems the biggest advantage of all, one of the reasons I have chosen this particular legal structure.
In addition, another benefit concatenates sole proprietorship, which is decision making. As a sole trader, I will be the one making all the decisions such as what music bands to sign, how many staff to employ, where to locate the business. This advantage does not exist with business partnership and businesses with stakeholders because with these particular businesses, owner(s) will not have an individual decision but rather a group decision, and sometimes there can be personal conflict with such businesses that can have a big impact on the business. It is because of this that decision—making will be a fast process by being a sole trader because I will not have to for other business partners of my business to approve of where the business is heading or what decisions to make.
Conversely, being the sole owner of the business will have certain disadvantages that will affect the business. One of the most predominant drawback is that a sole trader has unlimited liability. What this means is that as a sole trader I will be personally responsible for any debts that the business runs into, this means that my personal assets can be seized to repay the demands if my business fails to repay the loans or any other financial borrowings that have been carried out.
As mentioned previously, a sole trader will be inclined to make all the decisions; this however can be a drawback as well as an advantage. With a partnership or a business with board of directors, the owner can discuss certain decisions with partners and stakeholders, which means that the partners of the business will be able to offer recommendations on the issue based on their own experiences but with a sole trader, the owner has to make decisions on their own.
Another similar issue would be the fact that there will be no one to cover for the business if the owner were to get ill or had an injury that would result in having to take time off work. Although critical illness insurance is available, it does not start to pay until after one month, this can be an issue as there will be no one to cover for me in that one-month period and my business may end up losing profit for that month. It is unlikely that the insurance received will be at the level of the business's profit, which again is a drawback.
Considering the foregoing, I still believe that a sole proprietorship is the best legal structure for my record label business. The reason is that if I decide to raise capital for my business through business angels or by selling shares then the business angle(s) or the shareholders will have a certain percentage in my business and will be able to intervene in my business decisions, which I do not want. Although it is probable, that raising capital for a sole trader business will be a very difficult task, and indeed will require a very strong business plan in order to convince investors.
As a starting business, a sole trader will be the easiest legal structure for me as there are no formal paper work to fill or to apply for other than the income tax and national insurance liabilities on an annual basis, which seems logical. Having less accounts and formalities to fill in will mean that I will have less work to undertake, this will mean that I will be able to focus more on what direction to take the business. Being a sole trader will also mean that my business will be much closer to the customers' needs, as an example, my business could focus on the type of music people prefer that they cannot purchase from stores—this will mean that my business will provide a better customer service, which hopefully lead to more customer and more profits.
Introduction to marketing
Marketing is an essential and critical element of a business's success. In technical terms, marketing is a process where the business communicates to its targeted consumers, informing them of the products or the services that a business is offering through advertisement and promotion. It is vital for a business to gain customers because without customers a business would not be able to make any profit. Marketing helps a business be recognised. Marketing will also help a business understand their potential customers as well as the competition. Moreover, good marketing can help retain existing customers in addition to gaining new ones, marketing can also potentially help a business to increase their market share and achieve their goals.
Tesco would be a good example for this as one can see from the extract above. Tesco offer discount vouchers and new promotional schemes to existing customers with a club card and other promotional schemes such as “10p of every litre, when shopping more than £50” this will not only help Tesco keep their current customer satisfied but in addition, also attract new customers who are looking for a cheap bargain. The fact that Tesco has decided to offer this promotion in a time where petrol pricing are soaring can also be considered a marketing strategy because other petrol station's prices in the country are very high and people would consider shopping at Tesco, believing that they will be able to save money on their petrol as well as get good priced groceries. However, this sort of marketing can lead to a price war with competitors as one can perhaps see in the extract on the other page. As a result, businesses are expected to lower their prices to compete with their competitors and their prices drop so low to the point where they are not making any profit whatsoever. On the contrary to aforementioned, marketing is a very beneficial activity building a company's brand name, because Tesco advertise for their products and services so often, customers have gotten to recognise them as a brand name which has to some extent help their growth as a business.
Indeed, if a business wants to market their products, they have to know what their target consumers want and this is where market research comes into place. Market research, as a summary, is researching what it is that the consumers want, need or desire. It is fundamental for a business to carry out market research simply because if a business is offering a product or service which not many customers' desire or need, then it is highly unlikely that the business will make any profit and could face bankruptcy. Market research will also help a business to find out how people react to their product, for example if a food company such as Cadbury is developing a new product then they usually hand out free samples for people to try out and get feedback in places like Asda, Tesco etc. This method helps them identify if their target consumers will like their new product and most significantly identify whether their new product will sell. Market research helps to minimise risks, because by asking the customers what they think of the product helps determine what will sell, it shapes the way a product/services is designed and helps to concentrate the focus primarily on the customer's demands. Not only that, market research will also help spot opportunities and any gaps that there may be in a market. If a business discovers a gap in the market, they can use it to their advantage to attract other customers and because there is a gap, it is highly unlikely that a business will have many competitors to compete against.
Types of research
There is primarily two distinctive type of research available for a business to carry out, which are as follows:
Primary research - this type of research is most beneficial for majority of businesses. Primary research is essentially research which is carried out by the business themselves; this can be in a number of ways such as; asking questionnaires from the public, surveys, observing customers shopping habits, consumer panels, test marketing and competitor scans. Carrying out primary research will help a business address issues, which are specific for their needs because primary research, such as questionnaires, are designed to collect information that the business want. Not only primary research enables a business to focus on specific issues, it also enables them to have more control over the information that is collected, this way a business can have control on how many responses they want, the location where the research needs to be carried out and how long the research needs to be carried out. Furthermore, because a business has to collect primary research by them, it is not compulsory for them to share it with others (competitors) thus the information being hidden, to some extent this gives the business the advantage of having additional information, which their competitors may not.
On the contrary, to above mentioned, there is the disadvantage of primary research, which is the cost of actually carrying out primary research. Even though primary research has the advantage of precise information it also has the disadvantage of the cost that is involved in employing additional employees and equipment to carry out the research, it is also very time consuming considering that the research is carried out on a number of people from the public it is more time consuming than secondary research. Finally, many primary research opportunities can turn out to be not feasible. This can be due to a number of things; it could be that the information that a business want may be too personal or not within the reach of the targeted market. Many research projects can turn out to be too big to big carried out which could quite costly for a new business and can only be carried out by bigger businesses and could be based on unrealistic expenses or unrealistic methods to collect the data.
Secondary research - secondary research is by far the most common method in collecting information on the target market by a business. Fundamentally, secondary research is collecting information that has already been collected by someone else. This usually involves collecting third-party information from sources such as reports, company websites, magazine articles, competitors and other various sources.
Because secondary research is already gathered information, it has its benefits and drawbacks similar to primary research. One of the major advantages of collecting secondary research is the ease of access, majority of people have access to the internet, which makes it ever so easy to go online (Google) and collect information from the web, or perhaps pay a small fee and access data on various companies' financial data from Company's house. It is very time convenient as well unlike primary research, which requires a lot of manual labour and thorough planning/investigation of the research activities. Secondary research can also help indentify/clarify aims of research, for instance if secondary research were to be done prior to primary research it could help a business identify what it is that the business should focus on for their research i.e. competitors. In addition, it could also help clarify any difficulties that may occur in conducting primary research, such as identifying particular areas where there may be a lot of individuals who are unwilling to cooperate or it may be that the data show a biased information source.
Despite secondary research being easily available, it has its drawbacks one of which if the lack of quality. Primary research collected by others may be controlled or have a slightly different purpose and for this reason important marketing decisions should not be based on secondary research. Equally important is that secondary research may not be specific to the researcher's needs, it may be that a researcher is looking for data on how a certain group reacts to a product and after purchasing of expensive reports, they may find that the data is on a different product which may not be very useful at all. Another issue with secondary research is that the data collected by a company may be well out of date and as businesses go, shopping trends tend to change quite often and the out of date data that a company has may still not be applicable to the existing market or the consumer.
After considering which type of research a business wants to conduct, they have to focus on the methodology of capturing the data. The available methodologies are either qualitative or quantitative. The use of each method is heavily dependent on the objective, however; it is most favourable when the two types of methods are combined because it will give a vast array of data.
Qualitative - Summing up, qualitative data provides an understanding of how or why things are, it is primarily based on the research candidate's opinion. For instance if I were to go out in the High Street and start to ask people about what they thought the last episode of East Enders, the data I receive back would be qualitative because it is based on what people think. Unlike quantitative data, there are no fixed answers it's more of a discussion based researching method. This type of method is most useful for exploring in-depth issues. In other words, if a business like Sainsbury's wants to conduct a questionnaire on their customers on what they think of Sainsbury's service, they would mainly be looking at what the customers actually think of their services. They would be asking questions such as “What do you think of our customer assistance?” and when the customers reply saying “It's not the best” the individual who is conducting the questionnaire could ask “What would you like to be done about the issue?” and this way Sainsbury's would get more of an in-depth insight of what their customers actually think about their services rather than collecting information on how many customers thought they has good service or bad customer service.
However this technique may prove to be quite difficult carry out because most people are unwilling to cooperate or may answer untruthfully to the question to avoid being rude, which will eventually lead to biased data. Another issue, which may arise, is actually hiring the personnel to conduct the research. Most qualitative research involves face-to-face or one-to-one interviewing technique; the most common form of this is questionnaires. The issue would be finding someone to conduct the research and to pay them, most individuals would be reluctant to stand in the cold/rain and be ignored by the public.
Quantitative - Quantitative research on the other hand quite the opposite to qualitative research. Where qualitative research involves view and opinions, quantitative research involves facts and numerical data and requires a significant measurement of the market. To demonstrate this idea I'll use Sainsbury as an example, if Sainsbury's wants to conduct a survey on what their customers think of their customer services Sainsbury's could ask their customers to rate their customer services from say one to five. So rather than conducting a thorough analysis of why customers may dislike their customer services, quantitative research will give them a set idea of how many customers dislike their customer services.
The benefit of using quantitative research is that it is based on hard facts and numbers which can be scientifically justified where as qualitative research cannot as it is based on opinions. Another advantage of quantitative data is that it is replicable meaning that it can be replicated by another researcher, this is again due to the fact that quantitative research is based on statistics and can be carried out almost anywhere where as qualitative research is about individuals opinions and people's opinions may vary from location to location thus effecting the overall data. Similarly if the data is collected on a larger scale the statistics can be reduced to a single page bar/pie charts where as qualitative data would involve going through each collected data.
The drawback would be that quantitative can have a very narrow and unrealistic information which only captures a small proportion of the original needs of the business. An example would be that if a shoe company has data on the shoe sizes of different people in the population however they do not have the information on what type of shoes they wear or who are their main competitors, this could be very important information would could affect the operations of the business.
Research plan for my business
As already mentioned, my chosen business proposal is of a music record label and in order me to market the business well I will need to carry out extensive market research which will involve some of the research types aforementioned on previous pages. I will be aiming to achieve a diverse variety of data which will help my business to understand its market and the target consumers.
To start my market research off, I will begin to collect some secondary data on the type of music that is popular amongst my targeted market consumers. This will help me to structure my research because it will identify the most popular genre of music amongst certain age groups and perhaps from there forward it could help me identify the main competitors. The reason I chose to start my research with collecting secondary data source is because it is easy to get access to, it's more time convenient and there are various sources which can provide secondary data such as the internet, books, magazines, published reports or perhaps even competitor's financial data. Secondary data will help me identify what particular sector I should be focusing on (i.e. age groups) and it can potentially help identify if there are any gaps in the market, which I could use to make profit. It will also help me identify the spending habits of the people in the target market, which is crucial element to understand for my business.
From there on, I will design a questionnaire which will be carried out amongst people aged sixteen to nineteen (likely to be at Dudley College) on the type of music they listened and the means they have access to music. It is vital to collect primary data as majority of secondary data that will be collected would either be not viable or simple not be applicable to my businesses needs which would be to find out the musical interest of my target market. The primary research will help me find out where my target consumers are willing to purchasing the goods from, secondary research can be used as a guide for this but it may be out of date and there have been changes to how consumers purchase media over the past few years, a few years ago it was not possible to purchase songs from a mobile phone but since the introduction of the iPhone it has been a popular trend and people owning a iPhone mainly purchase from sources such as apple's iTunes. However, most importantly primary research will help me determine whether individuals will be willing to purchase my product, which is another vital element for my business.
Qualitative and Quantitative data
It is not crucial to collect a specific type of research however my business is about people's opinions, their like and dislikes in music so the majority of my data will have to be qualitative however it is beneficial to have some quantitative data to compare my finding and use to calculate the statistics. Qualitative data will help my business recognise the popular genre of music and if my other services would be profitable with the youth culture and quantitative data could help identify whether a particular music genre is popular with a certain gender or group.
Questionnaire on my business
1. What is you gender?
2. What is your age range?
3. What is your current occupation?
Full time employment
Part time employment
Student at school/college
4. Which genre of music do you prefer?
Hip Hop/ Rap
Drum and Bass
If other Please specify
5. Do you purchase music?
6. What means of purchase do you use?
7. How often do you purchase music in a week?
8. How much would you normally spend on music?
If other Please specify
9. What is the method of the playback of your music?
If other Please specify
10. How often do you attend live music performances in a week?
11. Is there a particular artist/band that you listen to?
12. Are there any record companies in particular, that you listen to?
If other Please specify
13. Do you listen to whatever is popular?
Introduction to Market Planning
This section mainly focuses on the market research that I have gathered concerning my business, it will include an analysis on the primary research that I have gathered as well as the secondary research.
Analysing research is an imperative element of a business's success because it establishes whether a business's idea will be a successful profit maker or whether it will be a failure. For my business, I have decided to collect and analyse secondary research before conducting primary research. The reason being that secondary research may help my business spot any gaps in the market or a certain pattern and then I could use that secondary research to design my primary research, which will help me collect specific information, which I need for my particular business.
Objective of Market Research
When carrying out market research, as a business, I need to consider what the hop to achieve from the market re search
Analysis of Secondary Research
This section will focus on the secondary research, which I have gathered and evaluate possible factors, which could have an impact on my business. The main difference between the analysis of primary research and the analysis of secondary research is that the data which has been gathered hasn't been collected by me, it's been collected by other individuals or organisations perhaps for a different purpose, however, he data will still be relevant to my business's needs.
As well as having easy access, secondary research is normally free or very little of cost and can easily be gathered through; books, magazines, internet, company's house, journals, company reports etc. Secondary research can also help to shape the overall research project, which a business may want to carry out. For instance, the business I have chosen is particularly aimed at teenagers and perhaps individuals in their twenties and upwards and if for some reason, the secondary research I have gathered suggests that the age group I have aimed business at is not suitable e.g. they're not into a particular genre or have a low purchasing rate, then the chances are that I am going to have to re-think my business proposal and perhaps try to conduct more in-depth research as to why there are low sales among teenagers or how the target market will react to my product.
More often than not, businesses carry out secondary research before they carry out primary research because businesses can benefit from the secondary research, and then carry out primary research to fill in the research they acquire by carrying out primary research.
As one can see above, the bar chart displays the age groups of people in the population of the UK ranging from twelve year old to seventy-four year olds. The chart also shows which age groups have the highest sales of music albums and singles, since my business is involved with the marketing and the production of music; I believe it would be very beneficial to have a brief understanding of the different musical interests of variety of age groups.
The chart (which is an extract from national statistics web page) shows different range of individuals from twelve-years old to seventy-four years old in the UK. Individuals aged over fifty may be difficult to focus or to market for because for once, there are considerable fewer individuals over fifty years of age who purchase music compared with the amount of individuals between the age of twelve to forty-nine, as one can see on the chart above which displays this information.
Furthermore, the graph above shows that the target group I have decided to aim business at (which is teens and adults between twenty and thirty) is the appropriate choice to aim my business at, because it is clearly noticeable that individuals who are in their teens and twenties are the highest purchasers of music both singles and albums which suggests that my record label will benefit most out of these two ranges of age groups. Another reason for which I have decided to focus on the first two age groups is because teens and adults in their twenties are mainly the ones who attend live performances and music gigs, this is because majority of the individuals in these age groups are students whether it'd be: at school; at college, or at university, and it is because of this that they have more time and disposable cash to spend.
comscore1Another, yet, foremost reason why I chose to focus my business on these particular age groups is because teens and young adults are considered the particular ages who like to socialise amongst friends, families and social peer groups and it is this I wish to use for my business's advantage. As one can see opposite, I have gathered a chart, which shows the popularity of most well recognised social networking websites on the internet at present time. Nevertheless, no matter how irrelevant the chart opposite may seem to my business, it has a great amount of significance, because the chart opposite proves the point those individuals fifteen to twenty-four and twenty-five to thirty four are the highest age groups who access/use those social websites to socialise. This does not only prove my point but also reinforces the whole concept.
On a very different note, I could also use the data on the chart above to market some of my business. Since majority of the target market of my business are using those particular websites (As can be seen above), this gives my business a good idea where I can find my target market on the internet. Moreover, perhaps use that to advertise and to reach out to the market by advertising live performances/gigs or even artist on the social networking websites to promote my business's activities, but however, that is a marketing strategy not research.
Having looked at the music sales graph on page seventeen and the social networking sites' chart above, I believe that I may be on the right track as to picking the target market for my business. However, it is not very beneficial to make a decision based upon primary research because firstly, the music sales graph is well out of date (Conducted in 2002) but secondly it could have been conducted in a totally different country or cotenant even, so it would be right to judge a target market purely based on secondary research. Nevertheless, secondary research has given me some idea as to whom I want to aim my business at and whether my business will be on the right track for that decision.
Fig.4 above is an extract, which I took from the Nomis webpage of my local area (West Midlands/Dudley). As one can see above, fig.4 shows the statistics for the employment and unemployment of West Midlands which is compared with the rest of England. The data is structured by separating the males and females, which makes it easier to spot which one of the particular group has the highest statistics although separating by age and giving educational statistics would have been much more useful for my business but this works out nicely as well.
Evidently, the more people who are working in the population, the better because that would mean that people are earning money by which they have more disposable income to spare on personal entertainment, such as music. However, people who work from nine am to 5 pm do not necessarily have the time to browse online and purchase music; this is something that teenagers are most likely to be doing.
From the graph one can see that there are more males in employment then females, 75.4% of males in west midlands are employed where as only 66.7% of females in the West Midlands are employed.
This suggests that there more females unemployed then males; therefore in accordance, females are the likely one who have extra time on their hands, which will make them the likely ones to purchase music from my business. However, being unemployed may mean that they may not have the disposable cash available to spend on music.
The chart above (which I extracted from uk.toluna.com) is representative of the popularity of specific music genres in the UK, as one can see the genres represented are; Hard Rock; Dance; Rap; Disco; Glam Rock; Ska; Reggae; Blues; Country; and Hip Hop (Rhythm and Soul).
Knowing which music genre is most popular amongst individual in modern times, is the most critical element of this entire business plan. The reason is that; if my business gets the popular music market wrong (which the entire business is dependent on) then it is highly likely that the business will fail miserably within a short period from the launch of the business. The nature of my business (which is record label) is reliant upon the popular music of today's generations (teenagers), therefore, if my business were to misinterpret the popular music genre then that would mean my business would be offering either genres that are un-profitable, or genres that are un-popular; either way the business will make a steep decline in the profit margins, this could potentially bankrupt the business. This is why music genre needs contemplated decisions.
Moving along, the chart one sees above is an open internet public pole where people were asked for their age, gender and their favourite music genres. As one can see from the chart, the music genre that is most voted for above all else is dance music [53%] followed by hard and glam rock [Approx 26%]. This essentially shows that my “Hunch” of dance and electronic music being popular in the UK is plausible and reinforces the idea. In addition, genres like rap and Reggae music [20%] also show likeness from individuals, which can be something to consider.
Nevertheless, knowing dance music is the most popular; it will be highly beneficial having the knowledge of which particular style of dance music is particular as there are many sub-genres of dance/electronic music for example; Techno; Trance; Electro; House etc. Perhaps this will help me shape my primary research (i.e. questionnaire) to focus on this particular issue and find out, which particular style of Dance music people like listening to.
Analysis of Primary Research
To conduct primary research for my business, I decided to design and conduct a questionnaire (as shown in pages 22-24) focusing on the interest and purchase of music.
From my questionnaire, I found that many different people over a range of age are interested in different genre and focusing on a particular group of individuals is going to be a laborious task. Nevertheless, the data I recollected showed certain patterns of interests, hinting of a potential market. Many questions listed on the questionnaire (that I designed for the purpose of this business) are quantitative; nonetheless, some questions were qualitative. The issue with qualitative data is that, it is reliant of peoples' opinions and it is because of this that making strategic judgements becomes a difficult task because; different people have different opinions of which; some can contradict in the data that has been collected.
To be more convenient, I will analyse a few questions from the questionnaire then discuss the; findings of conducting the questionnaire; and why the questions are relevant to my business proposal. I will also consider the potential customers, competitors and location for my business, and of course, this will directly be constituent to the findings of the questionnaire.
As to as business, potential customers are the most important elements to consider in a business plan before starting the business. The reason is that if there is not a sufficient amount of potential customers or perchance there is not a sufficient market for the particular business, then the chances of that business succeeding and proceeding onto year two profitably are very slim. If there are not enough customers to buy the product or service that the business is offering then the costs of that business will out-weigh the profit they make, inevitably the business will face bankruptcy.
The pie chart above is representative of the question ‘Which genre of music do you prefer?' As shown above, I have put my finding into a pie chart to illustrate this.
As expected, thirty percent of the individuals asked, said they like ‘electro/Dance' music, this is a big segment of the chart as one can see above. However, there are other music genre that also showed likeness, these were; Drum and Bass (20%); Pop (15%); Rock (10%); Hip Hop (10%); and Garage (10%). Other genres such as Indie or Metal did not show any likeness from the collected result so I will not be focusing on those, but focus on genres that showed particular popularity.
The two genres that showed extensive likeness were ‘Electro/Dance' and ‘Drum and bass' music. Nevertheless, according to Wikipedia, drum and bass is a subgenre of Dance music along with styles like House, Trance, and Electro etc. so for the sake of simplicity I will merge the two together under the heading of ‘Dance music' this will make it much simpler. On the other hand, my research has lead me to the conclusion that majority of teenager like to listen to Dance music, and having established that the chances are that there is already a market that pre-exist for this sector (because they are already listening to it). This only means that there is going to be some competition whether locally or nationally, nonetheless having another look at the questionnaire results lead me to believe that the method customers use to purchase their music is more important then what is sort of music they purchase.
This perchance is the most important question of all in order to spot potential customers, which ‘Do you purchase music?' The reason for this question is that there is a lot of commotion from the music industry about the piracy of music due to illegal downloads or sales, and as a result, the sales are running low that are costing the industry millions. Above is a pie chart to show the results of my findings, I like to think that the findings are precise and viable enough to be analysed because of the anonymity of the questionnaire.
As one can see above, eight people out of twenty people surveyed said they do not pay for music (the big red chunk), that is almost forty percent, no wonder why the music industry is always complaining!
I think this is where the main issue for my business lies, I think I may not have enough sales of my product and that majority of my customers are going to be downloading it from the internet. Copyright CDs could be one option that can be consider to protect the content of the CDs, albeit the viability of copyright CDs is questionable because the internet is filled with free software programs that can supposedly break these copyright fragmentations from CDs which then can be copied and passed on or uploaded to the internet.
Though providing the produced songs through my business's website could be one option. If the songs offered by free download then there would be no need for individuals to resort to piracy. However, there will be no profit from providing free songs from the website, providing free songs from the business's webpage could be used as a promotional activity, perhaps provide a few songs or songs that are the most popular. By doing this the website will earn some level of recognition among the target market and as a starting business I think it is imperative to have a some level of recognition because if customers doesn't know a business exist then the customers will not know about the service or the product that the business provides.
Furthermore, if the business website has enough web traffic then my business's website could be used to advertise for internet companies such as ‘Google' or ‘Amazon', which will pay to advertise on the websites who have a lot of web traffic. This could be an alternative way to earn money from produced music. It make could be another way of making additional income that will help the business take-off.
Nonetheless, a positive side to this issue is that twelve people out of twenty are still paying for their music (survey results on previous page), that is sixty percent and if one were to interpolate this data to a larger scale of people then the business may have a chance of making some profit, because there would definitely be people who will purchase music.
Perhaps the remarkable find from my primary research is this. The question ‘What means of purchase do you use?' was intended to find out what method of purchase were the questioned individuals were using to purchase their music, because this would help my business determine which method would be the most popular to offer the products through. To my knowledge, there are two main categories for means of purchase, which are, purchase through internet, and purchase through high street stores like ‘HMV, and these were the options given in the questionnaire as well.
As can be seen from the pie chart above, sixteen individuals out of twenty said that they purchase music through the internet; that is eighty percent of the individuals questioned for my business's questionnaire. Seems like the time of CD players has long gone, which is why only four people said they purchase music from shops.
The findings could be due to a number of reason; for once the questionnaire were carried out in a college among youths and the basic fact that youths spend more time on computers. Other reason could be that individuals like to purchase music that is not available anywhere else except store or they have a different means to listen to such as vinyl, a favourite choice utilized by DJs to play songs.
Ultimately, these findings show that majority of music sales are conducted through the internet; however, the issue arises whether there are certain websites that are a popular place to purchase music or software such as iTunes. Though from the next question on the questionnaire, a plethora of individuals answered that they use an iPod or some sort of an MP3 playback device (as shown below).
Notwithstanding the fact that a large number of individuals as mentioned on the previous pages do not pay for their music, they simply download music illegally from the internet. Keeping that in mind, I believe would be best to offer few songs of the featured artist free of download on the company's website; this could be songs that are receiving a lot of popularity. Likewise this can be used as a promotional device to promote the artist's/band's album, which then could be bought through the same website and other online stores.
The primary research I carried out was substantially designed to find individual's interest and purchasing habits of music, therefore it was unable to help my business to determine a particular set of competitor that my business would have to compete with.
Before determining the competitors for my business, it would be judicious to distinguish the types of market structures that exist. Here are the basic market forms that exist at present:
Perfect completion - perfect competition, in essence, is a market where there are a lot of small companies dominating the market and a lot of customers who are offered products at a similar or the same prices. The advantage of being in this market segment would be that there will be an infinite number of customers who will be willing to purchase products at a similar or lower prices than the customers. In addition, perfect competition markets the products are homogeneous, they are very similar to the competitor's products, and this is why the customer following may not be very loyal for a particular business because the customers will go for the cheapest products regardless of the business.
Oligopoly - in an oligopoly market, many small businesses dominate the market (more than 40% of the market share), and there are very few bigger named business. In an oligopoly market, competition is fierce, as there are only a few businesses that can offer a particular goods or service, i.e. solicitors, accountants etc.
Monopoly - this is where there is where only one business exists that can provide a specific product or service and no other, like Microsoft with their windows program. This is probably the best market to be in because there will not be any competitors to compete with and it is because of this that businesses, which are in a monopoly market, tend to have very high prices for their products. This is where the brand names and such are put into use.
Monopsony - is a market state where the demand for a service or product comes from only one source and there are many sellers, similar to monopoly where there is one seller and a lot of buyer but the other way around where there are a lot of sellers but only one buyer. The most common disadvantage of being in a Monopsony market is that the cost of the goods is reduced near enough the price to the cost it took to produce them, so ultimately the business is not making much profit.
Introduction to Market Planning
Market research and market planning are two very precarious and momentous elements of a business structure. As mentioned previously, marketing research is what helps a business determine whether their product or services will sell i.e. is there a sufficient demand for it in the market.
Market planning on the other hand, however, is a different matter. Market planning is the process of arbitrating a structured plan of how the business contemplates of providing their goods and services to the customers in a way that satisfies and fulfils the customers' requirements. Marketing, essentially, is identifying the customers' needs and devising a strategic plan (Marketing plan) in which explains how the customer is to be alerted of the product release or even persuaded to purchase the product. A business needs to alert potential customers because if the customers do not know what the business is offering then the customers will not know what products are available. If the customers do not know what the business does then it is highly likely that the business will make no or very little sales, which is why market planning is imperative to a business's success.
Likewise, in order to achieve this, there are certain elements that need to collude and plan thoroughly in order to have the maximum impact on customers. Such elements are widely recognised as the ‘Four P's.' The four P's are as described by ‘netmba.com/marketing/mix' to be “The four P's are the parameters that the marketing manager controls, subject to internal and external constraints of the marketing environment. The goal is to make decisions that centre the four P's on the customers in the target market in order to create perceived value and generate a positive response.”
Product is the first element of the marketing mix because the business will have to decide on what it is that they want to offer to their customers, this can be physical goods or services.
There are multitude decisions that a business will have to make before offering a product, such decisions could be:
Name: does the product have a name that needs to be to copyright protected or trademarked. A good example of this is the iPod that is a product of ‘Apple.'
Functionality: what does the product do? This is one question that every business cogitates when developing a new product. The product needs to be something that people want or something that makes their life easier such as a car or a microwave.
Quality: quality is another issue that helps a business sell their product because customers do not want to purchase products that will fall apart or turn out faulty the next day, customers want ‘Value for their money.' Customers generally want products that are: cheap, reliable, and meets their demands.
Safety: Safety is another issue that a business needs to consider before releasing their product unto the market. The product that a business is planning to sell needs to be safe for the consumers to use. Health and safety regulations is something that every business needs to follow because if a business releases a product that can cause potential harm to customers then there is a very good chance that the business will face a lawsuit, which will harm their image leading to a decline in customers and perhaps profits.
Pricing is another strategy in the marketing mix that a business needs to consider because if the pricing is too high for a product then the customers will find a business that sells the product at a better price. However, if the price is too low then some customers may be weary of the quality of the product due to it being cheap. Therefore, to tackle such issues, businesses follow certain pricing strategies when releasing new product, such pricing strategies are listed below.
Penetration pricing: in penetration pricing, the price charged for goods is artificially low in order to gain market share. When the desired market share has been achieved, the business will then increase their pricing. This is a good strategy for products that are fairly new to the market because when a product is cheap customers will be willing to try the product. On the other hand, if the product is very expensive, many people will be reluctant to purchase the product considering there is a global economical crisis going on, this number of people will be abundant.
Competition-based pricing: essentially, this is where a business bases their products' pricing depending on their competitors pricing for similar products. Traditionally, businesses will add or subtract a certain amount to their products price depending on the pricing of the competitors. The main disadvantage of this is that this method can lead to a price war where businesses keep decreasing their prices to the point where they are making no profit at all.
Cost-plus pricing: this is perhaps the most easiest form of pricing available. In cost-based pricing method, a business basically, calculates how much it cost them to make that product and adds a certain percentage to the product's selling price, this is known as the profit. According to ‘Wikipedia.org' the formula ‘Price = cost of production + Margin of Profit' is used to determine the profit for the product by the business.
‘Skimming' Princes: skimming or creaming is a pricing strategy where products are sold at a high price, sacrificing high sales to gain a much higher profit. The recent release of the ‘Apple iPhone' is a good example of this as when the iPhone first came out it was at a higher price, because it was something new and the price decreases as the product gets older in order to gain sufficient market share.
Psychological Pricing: this is perhaps the most common pricing that many individuals would be familiar of; the process of psychological pricing is aimed to have a positive psychological impact on the customer. For instance, selling a box of tissue at £2.99 or £2.95 rather than £3, this makes the customer think that the product is cheaper.
These are just a few examples of the most common pricing strategies extensively used by business today, the listed ones are that predominantly stand out and the ones, which I believe, will be appropriate for my business.
Distribution (Place) Decisions
When a business knows the product and its pricing, the next thing that they need to consider is how the business will get the product to the customers. Distribution is another significant factor among the marketing mix because the product that a business is offering needs to be easily accessible by the customers, if the product is not easily accessible for the customers then the chances are the business will not be making a lot of profit due to low sales, because a very few number of customers will be access the product.
Transportation: transportation is the process of getting the product from the factory where it's assembled/made to a place of distribution i.e. a shop. A business will need to consider how they are going to transport their products to store in order to display and sell their item. However, many business are now operating on the internet which saves them the cost of displaying their products in stores.
Warehousing: is essentially, where the stock is kept until is storedbefore it is displayed in store and sold to customers..
Market Coverage: is the decision of how much market the product will cover, or how much market sector the product will be available.
1. Inclusive distribution is the process of offering specific products to specific set groups or certain market sectors.
2. Selective distribution is similar to Inclusive distribution but no specific groups set.
3. An exclusive distribution is known to be where products are available for everyone.
Promotion is also recognised as market marketing communication. This is a process where communication of the product is made to customers to generate a positive response. In other words, the customers need to know what the business does and what products they are offering and the price of the product.
One of the preliminary decisions that need to be thought through by a business before considering means of promotion is the budget. Budgeting is a substantial factor in marketing before a business needs to know how much they can spend on promotion. If the business goes overboard with the promotion then it could affect their incomes and have a negative impact of their cash flow that could lead into financial difficulties.
Furthermore, a business also needs to consider the means of advertising, for instance whether the business wants to advertise their product on television, magazines, radio, billboards etc. Means of advertising is closely linked with the type of customers a business wants to attract to their products.
The Marketing Mix As a summary, the marketing mix is a vital element in the market planning process. The four P's are merely sub-elements in the marketing mix though they have a major impact on how successful a business's marketing turn out to be.
As the diagram opposite illustrates opposite, the four P's are all intertwined that makes the market planning an intricate process to carry out. The marketing mix is also used to achieve aims and objectives by businesses for instance, if a business plans to expand their profit then they may decide to promote their product more or even go through the whole development stage and come up with a new product to market.
Marketing is a necessary integral part of my record label business because it is what helps my business raise customer awareness; it will help my business a chance to offer my products to customers in addition to receiving positive customer attitude. A record label is heavily dependent on marketing to ensure good sales because of the saturated market the business is situated in; this means a fierce completion with competition to attract customers. In the next few following page I will examine the marketing strategies for my business (the four P's) in addition with some internal and external factors that will prevent my business in achieving the goals that I have set for my business.
Pricing decisions for ‘P.K. Media'
Personally, I think that pricing is what determines whether a business makes a lot of profit, breaks even or makes a loss. As described in previous, there are prolific pricing strategies available for a newly starting business such as mine to use, however, these pricing strategies may not be applicable for my business purposes , in-fact, certain pricing strategies may not be applicable for my business in order to achieve aims and objectives.
Penetration pricing is a potential option for my business's products, though one of the major issues with penetration pricing is that if my record label business offers cheap promotional services artists, then the likely cause would be that a lot of artist would want the service that my business is offering. The main issue with penetration pricing is that it has to be very low in order to attract a decent amount of customers and with very low prices, it would affect the amount of profit that my business would make. Notwithstanding the fact that I will not be able to achieve my business aim to ‘Minimise costs and increase potential profit,' because my business will not be making a lot of profit by using penetration pricing as a pricing strategies for products.
However, another option would be to use penetration-pricing method as a tool to ‘Penetrate' the market. Once my business has enough customers, I could simply raise the prices. While this may seem beneficial, another issue with penetration pricing is that once a product is offered at a cheap price and then the business decides to raise the price, the customers will be very fond of this and most likely to go to the competitors for a better deal. In other words, it will be very difficult as a business to raise the pricing for my products and services without a decline of customers and again preventing me from achieving my business aim.
Conversely, cost-plus pricing could also be an option. Cost-plus pricing is essentially, adding a certain amount to the cost it took to make the product, for my business it would be such things as the cost of manufacturing CDs, cost of promoting artist, cost of running the premises, not to mention the cost of my time. Cost-plus pricing is perhaps the most simplest and yet effective pricing method available for businesses today. It would be a simple yet effective option for my business, as I will only need to add a certain amount to the cost of my products and services, however due to the saturated market, the customers will go to anyone who is offering a better deal. When talking about music artist, many of them are jobless and perhaps will not be able to afford my services. Whereas customers such as music enthusiasts, as mentioned before, there are a plethora of people who listen to music, it is just the case of offering better products then the competitor's.
A critical viewpoint of this issue from my perspective is that if artists are not able to come forth and purchase my services to advertise their music and if there are not many good artists to advertise then my business will not make a tremendous amount of profit, which is a big issue. Another issue would be that the competitors may be offering similar products to customers and music artist at a much lower price, which may have a negative impact on my business as there will be fewer customers for my business.
fifteen is representative of a question from my questionnaire; it displays the replies that I received for the question “How often do you purchase music in a week?” the pie chart shows how often, the target market for my business, purchases similar products to what my business will offer.
As one can see, there are a capacious number of individuals, who purchase music around 11-20 times and 16-20 times throughout a week.
Introduction to Operational Plan
This section of the business plan (as you one can tell by the heading); will cover operational planning for my record label business. It will consider elements of operations that are vitally imperative to my business and how operation could affect my business in addition to the resources I will need in order to carry out those operations to make my business a success. This section will include key components such as, physical resources, human resources and financial requirement of my business.
Operation planning, in general sense, is a structured strategic plan that defines how a business will operate in practice to implement their actions and monitoring plan. Hence, a business will need to consider the following issues; what the business's capacity needs are (i.e. stock, warehouse etc.); how the business plan to engage their activities either internally or externally (what equipment or special machinery will be used, if needed, to provide customers with the products); and how the business will deal with risks if they were to arise, and finally the business will ensure the sustainability of the business's success.
When a business considers developing an operational plan, they need to consider that an operational plan does not exist as a single plan, but it is rather integrated into key components as part of an overall plan. The key component of a structured operational plan needs to include an analysis or discussion of the following described below.
Identifying the key physical resources that a business needs is a critical element of operational planning - a very comprehensive list of resources needs to be enlisted, including the costs of such resources acquired. However, the list can vary from the nature of the business as well as the cost that comes with the lists of resources needed.
One of the most common, yet the most substantial and expensive resource a business needs is premises; this can take a preponderant percentage of the business's investments. By the term ‘Premises,' it just mean where the business will be located, this could be like a shop, warehouse, office, factory, or it could be a mixture. A premise is imperative for a business because a premise is what helps the business operate functionally at which most of the operations needed, are to be carried out.
Equipment is another major physical resource that a business needs in order to state a fully functional operations plan. In order to carry out day-to-day business activities, a business needs to have the correct equipment to carry out the appropriate business activities. Equipment for a business can be a number of things such as; specialist equipment like forklifts; computers for offices; and vehicles needed to deliver or to transport goods, i.e. stock.