To Build or Buy a Small Business
402 Small Business Professor, Ricardo Toye| To Build or Buy | Week 4 Assignment 1| Cornelius Gaskins 1/22/2013 | Craft a brief (1-2 pages) strategy for a business concept that would directly compete with the small business you selected. Explain the rationale for the strategy in detail. “It Bakes Good,” with a delicious flavor that is sure to please. Watching customer’s satisfaction is the goal. Developing a Bakery as a counter business with a competitive strategy to navigate through barriers set up by existing Bakeries is the plan at hand. The initial bakery is deals with astries, breads, croissants and coffee, teas and other beverages.
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This new business strategy involves a similar menu with other cooked foods served at breakfast, lunch and dinner from soups, salads, potato dishes, sea foods and beef dishes. The floor plan will include a rail like leader to guide the people through the food ordering line. The pickup counter will be positioned away from the ordering line to give customers quick access to sitting if they have not already chosen their seating. The food menu will sit on the wall above the ordering counter in big letters easy to read among picturesque background to add a serene touch of comfort while the customers enjoy their meals. The beverage counter will be located in an area away from eating customers yet close by to allow access to water, coffee and other drinks. The location of the business will be in the inner city in a high density area, well lighted, with street parking and clean sidewalks. The building exterior will be freshly painted with freshly installed windows allowing both customers on the inside to see out and people passing by the clear view of seeing within. Large colorful neon lights will advertise the business at night and day.
The Bakery will operate as a Partnership. Three Partners will initially start the business although others may join at a later time. It is projected that the initial investment of the partners will be enough to start and operate the business for at least six months while additional investment capital can be sought after and obtained. This plan is looking to find a niche in the current business district to both serve eat and go customers while providing doggie bags for the same and catering to those customers who want to take their purchases home. I will be open to the possibility of selling ingredients for those ustomers who may be interested. The rationale behind this new business is to appeal to the customer base having cooked food on the menu that is freshly cooked served on china and eaten with silverware. The aim is to provide an at home environment with a touch of fast food convenience. Determine if it would make more sense to open the new business you describe or to purchase the existing business you selected. Explain your reasoning. The option of buying the existing business has the appeal of adding the menu additions and the dinning room modifications to this business.
Would the temporary modifications lose money for the new owners while the remodeling is done or could regular operations continue? Would the business changing from the existing business to a Partnership have an impact on the bottom line? Or would it be necessary to change the current form of ownership? Could buying the existing business be converted to the new dinning floor plan while still meeting any fire codes for customer access to safety in the invent of a fire? Considering that both businesses would exist in similarly constructed structures it is believed that the first requirement ould be met. The usage of the current customers has an appeal since the current business operations has been consistent on the profit where the purchasing of inventory and the cash register receipts have indicated. The lack of similar Bakery businesses in the general area continue to be a plus for the location and buying the existing Bakery would limit competition for awhile. Considering remodeling cost, purchase price as opposed to starting a new business cost buying the existing business appears to be a better financial bargain. For the existing usiness the baking and dishwashing equipment are in satisfactory working order. The purchasing a grill to prepare food has a reasonable cost and the food prep area is already in place. The dinning area will require the purchase of tables and chairs that would have to be bolted to the floor during remodeling. Comparing the requirements for initiating a new business as opposed to buying an existing business, the buying of the existing business has the better appeal based on how the later is up and running. While the new business has some hurdles may exist as far as the condition of the uilding foundation, plumbing, electrical systems and the roofing condition and whether the business is responsible for repairs or the building owner. It is important to note that the existing business could have problems that cannot be seen but has to be investigated to be discovered. Problems such as ill-will between the suppliers and a customer as well with other neighboring businesses. “Jump starting the cash flow will have better potential due to existing operational elements such as customers, inventory and equipment already in place. ” (http://www. sba. gov/content/buying-existing-business)
Discuss the most appropriate form of ownership for your new business (assuming your current financial situation). Considering the new business Partnership as the form of ownership and considering the current form of ownership used buy the owner of the existing business, both really has nothing to do with what form one owner prefers over what form another owner prefers. Each form has both advantages and disadvantages. The most noticeable concern over owner a business is liability responsibility, what can be taken from the owners to cover liabilities and cannot which taxes hould be a major concern. “You report and pay taxes on a partnership like you would in a sole proprietorship; you and your partner pay income taxes on individual shares of the profits, but no tax is paid on the partnership. You report your share of the profit earned during the tax period that ends within the year being reported (by December 31or June 30). This is done whether or not profits are actually distributed. The rate of tax is the same as for the individual, and the income is reported on an individual 1040 form (Schedule E). A partnership return has to be filed with the IRS for nformation purposes only (Form 1065). You and your partner are personally liable, including personal assets, for debts and judgments. Creditors can collect from either you or your partner — even if you did not necessarily contract the debt. ” (CIS/0939/pdf) “Sole proprietorships and partnerships are easy to set up — you don’t have to file any special forms or pay any fees to start your business. Plus, you don’t have to follow any special operating rules. LLCs and corporations, on the other hand, are almost always more expensive to create and more difficult to maintain.
To form an LLC or corporation, you must file a document with the state and pay a fee, which ranges from about $40 to $800, depending on the state where you form your business. In addition, owners of corporations and LLCs must elect officers (usually, a president, vice president, and secretary) to run the company. They also have to keep records of important business decisions and follow other formalities. If you’re starting your business on a shoestring, it might make the sense to form the simplest type Of business — a sole proprietorship (for one-owner businesses) or a partnership (for businesses with more than one owner). One note has to be included regarding the Partnership which is the dissolution procedure following the quitting or death of a Partner. Following the attempted sale of the quitting partners share of the business or attempted sale to the current partners who may or may not be able to afford the price, the initial Partnership business has to be dissolved and a new Partnership established with the exclusion of the previous partner that left the partnership. Thus both buying an existing business as well as forming the rigt form of ownership both present issues that has to be considered by the new owners.
Considering the Partnership dissolution aspect a Partnership still can be entered into with each original pertners with ca n agreement on how any quitting partners share is dispursed. Outline a business plan for your business. Visit http://www. sba. gov for tools and templates. The initial feasibility test for the business seems to have passed certain test through the current numbers produce by the existing Bakery. The location is good, customer interest in the product is proven while competition for Bakery goods comes from large retailer in limited quantities unlike he freshly baked items or freshly cooked menu dishes. It is estimated the initial investment cost less the estimated earnings would yield between a 7 to 9 percent return. Each member of the partnership has a hand in the formulating of the business plan. The initial outline of the business plan will include the following elements: Simple business plan outline Executive Summary: The Bakery is designed to provide customers with freshly baked goods while also giving them the opportunity to have a sit-down meal or just grab a cup of coffee with a pastry.
Having conducted a feasibility study on the success potential of this business in the location chosen it was found that potential customers enjoyed the products sold by the previous bakery and enjoy the option of lounging while eating a restaurant style meal. The objective is to provide customers with a competitive products located their homes. To earn a 7 to 9 percent return on the initial investment during the first year. The mission of the Bakery is to provide customers with freshly baked goods that they enjoy eating minus the plastic wrapped brands sold in the big box retail outlets. Company Description:
The store location is neatly situated in a business district catering to a wide range of business on a busy thorough fare moments from the residential area in every direction from the Bakery. This location is already familiar to most of the customers from the previously owned bakery. The operation of the Bakery is from 6am to 10pm. Orders can be called in on the phone or placed on the internet site at www. It Bakes Good. net The store policy for payment of gods is cash and credit card only. Product or Service: The main products of this Bakery are freshly baked pastries, croissants, donuts, breads and cakes.
On the menu freshly prepared menu foods includes sea food dishes, soups, sandwiches, Beef , chicken and pork dishes. The main benefits customers receive from the store is freshly baked goods, the option to place orders ahead of time by phone or on the internet or within the store. Market Analysis: The location has proven to be profitable for the previous bakery. Its customer base remained loyal to returning to purchase goods as well as using the bakery to prepare special occasion dishes for birthday parties, anniversaries, and other customer defined events.
Strategy and Implementation: Be specific. Include management responsibilities with dates and budgets. Make sure you can track results. Web Plan Summary: For e-commerce, include discussion of website, development costs, operations, sales and marketing strategies. Management Team: Describe the organization and the key management team members. Financial Analysis: Make sure to include at the very least your projected Profit and Loss and Cash Flow tables. Strategy and Implementation Summary SWOT Analysis Strengths Weaknesses Opportunities Threats
Competitive Edge Marketing Strategy Sales Strategy Sales Forecast Management Summary Personal Plan Financial Plan Important Assumptions Breakeven Analysis Projected Profit and Loss Projected Cash Flow Projected Balance Sheet Business Ratios Considering this is just an outline a few of the elements were addressed to give an idea of what the plan entails. Of course there are the remaining elements that have to be explained. (http://www. cals. uidaho. edu/edcomm/pdf/CIS/CIS0939. pdf) http://www. sba. gov/content/buying-existing-business