Part One: Description and Analysis of the Business Situation
A.
Introduction
The business that is being proposed before you today is a Juice Stop franchise.
Juice Stop specializes in tasty and healthful smoothies. A smoothie is
a frozen, blended beverage that contains yogurt or sherbet ice, and juice.
You can also add certain minerals and elements to your smoothie. People
surveyed in the Denver metropolitan area like the convenience and great
taste of Juice Stop. There is a large demand for more locations where
people can get a healthful substitute in a world of deep fried and fatty
products.
This proposed location would have a location for people to enjoy their
smoothie at the store. However, for the on-the-go person there will be
a convenient drive-thru window.
B.
Self Analysis
Many friends and classmates know me as a leader, but I do not see myself
any different than anyone else except in two areas: determination and
will. John Seaman Gams once said, "Real leaders are ordinary people with
extraordinary determinations." Once I have the determination and possess
the will to do something, I'll do it. Honoré de Mirabeau once said, "Nothing
is impossible to the man who can will." With these two gifts, the possibilities
are endless.
I also know what it takes to run a business. Along with my on-going education
in DECA, I am the assistant manager to the Creek Café, a local school
cafeteria that is student owned and operated. I am hopefully going to
be selected to be one of four managers next year. I have seen how a business
needs to be run. I have seen what needs to be done to insure the success
of a business. I also know and fully realize that some of the actions
that may need to be performed are not always the popular decisions. However,
I know that in life the way to get ahead is not always the most scenic
route.
C.
Trading Area Analysis
The proposed location is right on the borderline of Arapahoe and in Douglas
County, Colorado. Douglas County is one of the nation's fastest growing
counties. In the surrounding communities, the estimated population is
902,286 and is on the rise. The surrounding communities have many excellent
schools and thriving economies.
The proposed Juice Stop sight is located next to the Park Meadows shopping
complex as well as many individual stores, which surround the mall. On
an average day, approximately 122,600 cars pass by the mall and its surrounding
businesses. Within a five mile radius, there are three major business
centers employing 150,000 predominantly white-collar workers, many of
them choose to spend their lunch hour trying to find a quick bite to eat
in the general area of the mall.
The competition to Juice Stop in the vicinity of the mall will consist
of many fast food restaurants. They include Blimpie Subs, Burger King,
Chick-fil-A, etc. The restaurants like Blimpie and Burger King are located
about a half mile from the mall and do not get the same amount of traffic
flow. Many of the fast food restaurants which are located closer to the
mall, the more direct competition for Juice Stop, are always full of people
on their lunch break who choose to sit down and eat. Many restaurants
also have drive-thru windows so it will be crucial for Juice Stop to have
one as well. Because it takes a very minimal amount of time to actually
create the beverage, Juice Stop will have an advantage over their competitors
because it can get the customers in and out faster.
Although the targeted market is people ages 18-35, Juice Stop also attracts
many high school and junior high students. 64 percent of Juice Stop's
customers are male, while 36 percent of their customers are female. The
population is a strong middle class community. The median family income
of the surrounding communities is approximately $50,000.
D.
Proposed Organization
The business organization will be a Limited Liability Company, or LLC.
The LLC features all of the benefits of a corporation and the flow-through
tax treatment of income and losses of a partnership. The LLC also has
the simplicity of a sole proprietorship with the limited liability of
a corporation. The LLC also is not subject to numerous technical rules
which apply to a Sub Chapter S company. However, LLCs are not subject
to the self-employment tax on their share of the partnership's profits.
Despite some disadvantages, the LLC is perfect because it combines the
benefits of a sole proprietorship but with limited liability for losses.
In order to get this business off the ground, several steps will need
to be completed:
- Consult
my accountant, and my attorney on financial and legal matters
- Analyze
how much financing will be needed
- Create
a business pro forma as well as projected pro formas for years to come
- Arrange
financing through local banking institution
- Pay
costs to Juice Stop corporate headquarters which will cover franchise
fee, equipment, P.O.S. system and computer, leasehold improvements,
plans and permits, opening inventory, and working capital
- Create
advertising and promotional campaign
-
Hire employees one month before opening
- Train
employees
- Hire full-time manager and one part-time manager
For work force, I as the General Manager of this proposed Juice Stop will, initially, need to hire 7-8 part-time employees and 1 full-time manager and 1 part-time manager. At one time, there will be a minimum of 2 employees every shift. During the busiest hours of the day a maximum of 5 workers and the manager will be on the sight. It is important to note that more workers will be required as this location enters its busiest months. These are primarily the summer months. Therefore, we will require the least amount of employees during the slow winter months.
Part
Two: Proposed Marketing/Promotion
Plan A. Proposed Product/Service
Juice Stop is a fast, healthful, and great tasting alternative to the
cholesterol soaked burger and fries that many consider to be their lunch.
Juice Stop offers its customers a wide variety of fruit smoothies and
juices. A number of healthful additives can be added to any smoothie.
Two additives are included with any order. To add an extra element of
convenience, Juice Stop also has, besides a fast and speedy service line,
an express drive-thru window.
B. Proposed Pricing Policies
The average price of a Juice Stop smoothie is approximately $3.50. Customers
get two added nutrients or "points" in this cost. They may, however, wish
to add extra nutrients and supplements to their order. The extra nutrients
are $0.35 each and extra supplements vary from $0.95 to $1.25. There will
be no price increase for busy or slow times.
C.
Personal Promotion
There will be a grand opening for this Juice Stop. For this, newly hired
employees will be handing out samples of the tasty smoothies and a coupon
for 10 percent off any smoothie. This will be a great opportunity for
the employees to utilize their new customer service skills. In addition
to the grand opening, employees will be at local high and junior high
school events handing out coupons. In addition to handing out coupons
to get the customers in the store, frequent customers can take advantage
of the Juice Stop Journey card. Each time the customer purchases a smoothie,
they can accumulate points towards a free Juice Stop product. The customer
has to purchase five smoothies before they can receive their free beverage.
D.
Non-Personal Promotion
It has been stated that "a business that does not advertise is like winking
in the dark, you know what you are doing, but no one else does." Developing
an effective promotional and advertising mix is critical to the success
of any business.
Advertising on radio or newspapers has not proven to be beneficial to
other locations due to tremendous wasted circulation. Therefore, we have
listed the following methods of advertising.
Juice Stop has a great advantage over some of its competitors in that
a high percentage of customers visiting other existing locations have
heard of Juice Stop by word of mouth. To be precise, 68 percent of surveyed
customers heard about Juice Stop by word of mouth. Although this is a
good advantage, it will not be the major focus of the non-personal promotion.
The location will have a lighted sign, which will attract many customers.
In the same survey as above, 19 percent of the surveyed customers learned
about Juice Stop through the signage. We will also have banners that we
will use at events and to attract customers during promotions. In addition,
we will have a 12 foot, lighted inflatable balloon of the Juice Stop logo
created which we can inflate at events and outside the store. As stated
before, there are many cars that pass by this location so this would be
an effective way to get their business.
Hopefully to get some positive publicity, we will create press releases
on certain promotions, customer service, or Juice Stop's commitment to
giving back to the community.
Also as stated earlier, there are many businesses that surround the proposed
location. This location will have a fax line where businesses may fax
in their orders and will be ready for pick up. We will offer free delivery
to any business if their order consists of 25 smoothies or more. In the
delivery, we will also give the business a menu and coupons for future
orders.
This proposed Juice Stop will also be committed to giving back to the
community. We will give local youth sports teams free durable water bottles
with our logo on the side. If a child brings in this water bottle to the
store, they will receive a 20 percent discount on their order and a additional
10 percent discount on any order placed by a parent in the same visit.
This offer will only be good when the sport is in season.
We will sell our healthful and great tasting smoothies to local schools.
The location will sell the smoothies to the schools at a discounted price.
We will also give each school a banner with the Juice Stop logo on it
to hang and coupons for the students to bring in with their parents or
by themselves. Some select schools in the area will also have Juice Stop
available at certain school sporting events. Delivery to any school or
their events will be free of charge. There will be a special agreement
with that school's district and the Juice Stop where for each smoothie
sold at the event, the school will receive $1.00 of that sale.
E. Place
My channel of distribution is fairly simple. For Colorado, Juice Stop
has set up a select distributor called Mongo Distribution. Mongo receives
supplies manufactured specifically for Juice Stop. This distributor is
only for Juice Stop and delivers supplies to the locations on a bi-weekly
basis. Many of the supplies distributed by Mongo are not available anywhere
else. The sherbets, yogurt and fruit arrive to the store frozen. The juice
is not shipped frozen but the concern of shelf life is not a problem.
It costs, on average, between $1.10 to $1.20 to make the smoothie. It
is sold on average for $3.50. For nutrients and minerals their whole sale
cost is, on average, $0.10 and is sold from $0.35 to $0.95.
Click here for Proposed Financial Plan
A.
Personal Internal Capital
I have $75,000 in personal
savings and an additional $25,000 from my parents. For their generous
contribution, they will be a silent partner in this business. In addition
to their silent partner status, they will also receive a no payment equity
position of 25 percent. With the combination of my parents' generous contribution
and my own capital, I will have $100,000 for initial working capital.
B.
External Capital
It is my intention to secure financing from Colorado National Bank. I
am looking to borrow $75,000. I will obtain this loan based on the agreed
interest rate of 9.5 percent, which is one over prime.
C.
Repayment Plan
The bank will receive $975.70 with a principal interest of 9.5 percent
each month for 10 years. It is my hope that the bank will accept this
proposal for myself and my parents have long banking histories at Colorado
National and have outstanding credit ratings.