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The Business Plan

MGT 305 Small Business Management

Emma Stewart

on 19 January 2013

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Transcript of The Business Plan

The Business Plan: Shotel Background Marketing Operations Financial Projections Implementation Timetable Reference List The operations of Shotel will focus on the following key elements: Risks, such as investing money into a new business venture (Schaper, et. al., 2011, p.40) ABLIS. 2013. Home
Australian Business License and Information Service
Available: https://ablis.business.gov.au/pages/home.aspx (accessed 12 January 2013)

Australian Bureau of Statistics. 2011. Australian Industry: 8155.0.
Available: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/8155.02010- 11?OpenDocument (accessed 13 January 2013)

Commonwealth Bank. n.d. Creating an Exit Strategy
2013 Commonwealth Bank of Australia
Available: http://www.commbank.com.au/business/betterbusiness/leaving-a-business/creating-an-exit-strategy.html (accessed 13 January 2013)

Matson, C. 2012. Inbound Marketing: Entice Your Target Market into Your Marketing Funnel [Image]
Australian Businesswomen's Network 2012
Available: http://blog.abn.org.au/grow-your-business/inbound-marketing-target-market (accessed 13 January 2013)

NSW Government. n.d. Policy Types
NSW Government Trade & Investment
Available: http://www.smallbiz.nsw.gov.au/start/legalcompliance/insurance/pages/policytypes.aspx (accessed 12 January 2013)

NSW Government. n.d. Why Manage Risk?
NSW Government Trade & Investment
Available: http://www.smallbiz.nsw.gov.au/start/legalcompliance/riskmanagement/pages/whymanagerisk.aspx (accessed 13 January 2013)

Schaper, M., Volery, T., Weber, P., Lewis, K. 2011. Entrepreneurship and Small Business, 3rd Asia-Pacific ed., John Wiley and Sons Australia Ltd, Milton, QLD

SEEK. 2013. Post a Job Using SEEK Advertiser Centre
SEEK 2012Available: https://advertiser.seek.com.au (accessed 12 January 2013)

Shangri-La Group. n.d. Photos & Videos
2013 Shangri-La International Hotel Management Ltd.
Available: http://www.shangri-la.com/sydney/shangrila/photos-videos/ (accessed 13 January 2013)

Shangri-La Hotel, Sydney. n.d. Facts and Information
Shangri-La Hotels and Resorts
Available: http://www.shangri-la.com/uploadedFiles/Shangri-la_Hotels/Shangri-La_Hotel,_Sydney/SLSN-HotelFactSheet-EN.pdf (accessed 12 January 2013)

smh.com.au. 2013. Home [Image]
2013 Fairfax MediaAvailable: http://www.smh.com.au (accessed 13 January 2013)

THINK: Education. 2012. MGT 305 Study Guide.
Available: www.learning.williamblue.edu.au (accessed 10 January 2013)

William Blue. n.d. Welcome to William Blue [Image]
Think: Colleges Pty Ltd
Available: http://www.williamblue.edu.au (accessed 13 January 2013)

WiseGeek n.d. What is a Call Centre Job? [Image]
2003-2012 Conjecture Corporation
Available: http://www.wisegeek.com/what-is-a-call-center-job.htm (accessed 13 January 2013) Emma Stewart #00044043T
Penelope Abnett #00047654T
Holly Frendo #00046992T
Lecturer: Brent Reihana Legal Structure Shareholders Operating Licenses and Requirements Staffing Requirements Organisational Structure Recruitment Strategies Training Insurance and Security Business Premises Equipment Required Critical Risks and Contingency Plans Exit Strategies Legal Structure Business will operate as a Proprietary Limited Company (Pty Ltd) under the name of 'Shotel Pty Ltd'
Benefits of operating as a Pty Ltd company include: Limited liability
Operating as a seperate legal entitity, separate from its shareholders
Shareholders are not held responsible for business debts
Business will still exist even if something happens to its shareholders (Schaper, et. al., 2011, p.200) Shareholders There will be three main shareholders: Business Founder (51% share)
Two other shareholders (each with a 24.5% share) These Shareholders will be in charge of overseeing, making decisions on, and managing Shotel's operations Operating Licenses and Requirements These are outlined through the Australian Government's Business License and Information Service (ABLIS)
Shotel must obtain and perform the following before opening to the public: Register the business name
An Australian Business Number (ABN)
Tax File Number (TFN) for the company
Registration of a patent to protect all Intellectual Property (IP), including database, customer information base, and Business Model (ABLIS, 2013) Staffing Requirements Staff of Shotel will consist of:

Business Founder - to carry out administration duties, keep track of finances
Shareholders (2 required) - management duties, creating agreements with hotels, marketing campaigns
Office Managers (2 required) - collecting and updating hotel information, training
Sales/Services Agents (5-8 required) - serve incoming phone calls, respond to email enquiries
Work Experience Interns (1-2 required) - filing, taking incoming phone calls
Contractors (IT Specialist) - develop and monitor Shotel's database and webpage, create and update the phone application, deal with technical issues
Contractors (Accounting Firm) - bookkeeping, keeping track of the cash flow, sales forecasts, profit and loss statements Organisational Structure Recruitment Strategies Recruitment of Shotel's staffing requirements can be done online through job searcher SEEK, as well as advertisements in the Daily Telegraph and Sydney Morning Herald
Emailing and advertising to Universities, TAFEs, as well as hospitality and business colleges Training Shotel's training programs will consist of: Orientation (1 day)
On-the-job training (2-3 days)
Refresher programs on a 6-monthly basis Purpose is to teach employees about how the company functions, exceptional customer service, how to deal with customer enquiries or problems, and to develop knowledge about all the hotels in the Sydney region Insurance and Security Issues The following insurance will be needed to cover Shotel from any potential loss or damages: Insurance against fire
Loss of profits due to natural disasters or power outages
Theft of equipment or money
Equipment damage or breakdowns
Personal accidents, income protection, and sickness
Professional Indemnity - to protect the business from legal action
Director's liability - protection for the Business Founder and Shareholders against legal costs and damages
Public liability (NSW Government, n.d.)
Workers compensation (ABLIS, 2013) Security policies include backing up the database and all computer files on a regular basis, all paperwork and contracts will be locked away, premises will be locked each night to protect theft of equipment or IP (Schaper, et. al., 2011, p.309), Shotel's website will be secured to help keep customer information and credit card details confidential Business Premises Shangri-La Hotel, Sydney, will be approached, to negotiate a subsidised lease for 3 years
Shotel will set up operations in the Hotel's Cambridge I and II rooms, being 70 square metres in size (Shangri-La Hotel, Sydney, n.d.)
Rooms are equipped with office desks, chairs, internet connection, phone line connection, and air conditioning
Premises are easily accessible using public transport, and there are also parking facilities
Target market can still access services without any problems Equipment Phones, phone line connection, headsets
1 computer per employee to use (Apple)
Fax machine, printer, and scanner
Internet access
Email program
Filing cabinets
Office desks and chairs
Office Stationery Risks and Contingency Plans There are risks for both Shotel's customers and the company itself
Risks for the customers include: Paying for information that is not up-to-date
Intangibility of the service
Purchasing a yearly subscription to Shotel, and then finding the business has failed Risks for the business include: Opening a new business venture with no previous experience
Investing money into the business with a high possibility of losing everything (Schaper, et. al., 2011, p.40)
Experiencing equipment failure, damage or losses, theft of IP, personal injury
Being held liable by disgruntled customers
Growing and expanding the business too quickly Develop protocols to update hotel information on at least a weekly basis
Train employees to be as objective as possible in the deliverance of information
Plans aim to ensure quality control, and drive the business to achieve its core goals and objectives (NSW Government, n.d.) Exit Strategies Two exit strategies, to either sell the company or franchise the business for future expansion by new owners and investors
Selling: After approximately 3 years from initial start-up (Commonwealth Bank, n.d.)
Through the Earnings-based method of valuation (Schaper, et. al., 2011, p.115)
Targets include TripAdvisor, Concierge.com, Wotif.com, or Expedia Franchising: If there is increasing demand for Shotel's services after approximately 3 years (Commonwealth Bank, n.d.)
Licenses of IP will be included in purchasing price
After a further 2-3 years as running as franchises, another company may make an aquisition of Shotel Pty Ltd Source: (Shangri-La Group, n.d.) Source: (Matson, 2012) Source: (WiseGeek, n.d.) Source: (SEEK, 2013) Source: (William Blue, n.d.) Source: (smh.com.au, 2013) Basic Assumptions & Information Financial Projections Income generated from:
- Business memberships
- Individual memberships
- Advertising on website
- Smart phone application
- Incoming calls
- Subscriptions Example: Business Memberships Shotel 10 log ins Annual Fee $200 Financing The Business Shotel Shareholder (1) (24.5%) Shareholder (2) (24.5%) Business Founder (51%) "Proof of Concept" Government-backed scheme
program($250,000) Distribution Of Profits Profits in the 1st year are kept in the business
Future: divided into 3 parts
- stakeholders
- business
- bank Analysis Forecast Net Profit Margin = 73.8%
Expected margins to increase in the next 2-3 years
Opportunity to use other ratios to analyse business performance Projecting The Business Forward Reduce Expenses:
Forward purchasing agreements with businesses (e.g. Hotels - Shangri-La, Hilton, Intercontinental)
Agreement to:
- Use office space
- Equipment
- Free advertising for 6 months
- Co-branding
- Some information-data sharing Outsourcing Employees:
Use independent networking companies (e.g. One Shift)
Reduces Shotel's liabilities and employees are contracted Grow Shotel's IP:
Use IP towards other industries (e.g. car rentals, airlines, travel agencies/companies)
State wide, interstate, internationally Leasing Agreements:
- Equipment
- Office space Expenses generated from:
- Rent
- Equipment
- Insurances & licenses
- Advertising
- Accounting fees
- Staff wages
- Utilities
- Travel
- Telephone Based on current market research:
June 2012 - 7.9 million domestic overnight visitors in Sydney's city
20% represents Shotel's target market
Approx. 101, 910 individuals would utilise
this service
(Australian Bureau of Statistics, 2011) Allows us as business owners to measure the health of Shotel
To make better decisions for the business & it's future
Shotel has projected forecast for the business's:
- Cash Flow
- Sales Mix
- Profit & Loss Statement
- Owner's Personal Expenses, Assets and Liabilities Remaining capital go towards maintenance, equipment, updating technology, contingency plans
Future high profits = the possibility to expand Shotel to other industries
(e.g. car rentals or airlines) Mission Statement Shotel is a central hotel information directory that is all about convenience in providing the information that customers want, when they want it
Our mission is to become an essential step in the Sydney hotel booking process, with an aim to dramatically simplify the trial in finding the right hotel for everyone
We seek to be the answer to every conceivable question customers could have about every hotel in Sydney Business Goals Creating a firm customer base as well as building enduring and significant relationships amongst them
To produce high revenue levels through a large portion of sales within the first two years of business and to make a profit by doing so
To develop an impressive reputation and record customer feedback
To have an up to date database that is maintained constantly and accurate Market Research: The first stage in the market research process occurred when powers of observation were used to identify the market gap
Next market research was performed to determine our target Markets Primary Target Audience: Males and females aged 18-65
Study or work and live within Australia or wish to travel to Australia
They are technologically savvy, are thorough researchers but have heavy time constraints
Enjoy having as much information as possible when comparing accommodations Secondary Target Audience: Small and large businesses within Australia who frequently book accommodation
Travel agencies and other accommodation booking services will be able to purchase membership packages in order to shorten their research process Market Analysis As online research has in recent years become a staple component within the accommodation booking process it is apparent that this current environment is ideal for starting Shotel
As Sydney has a very large CBD and no extreme weather conditions seasonality is not a big concern with this business venture
There are people holidaying in Australia and visiting for business purposes all year round
Even if the summer months are more popular, people are still booking or looking to book holidays in the winter Competitor Analysis Official Hotel website:
It is direct from the source and can make direct bookings
It does not offer comparisons
And is not particularly time saving Third-party websites:
Provides customers with rates – often discounted and some information on rooms
Provides no information on the rest of the hotel and cannot answer questions Concierge.com:
Caters globally and also gives information on surrounding activities such as restaurants
Only provides information on 11 Sydney hotels and hardly any detail Travel agencies:
Can do all the calling and collecting for you
Could be biased due to affiliations with certain hotels TripAdvisor:
Allows for users to post their own reviews and provides brief information on hotels worldwide
It lacks detail and the posts are not objective – could be hotel staff SWOT Analysis Strengths Weaknesses Opportunities Threats In todays busy society many do not have the time to do their own research
There is a definate gap in the market
It would meet the technology driven needs of society
It provides a unique service compared to competitors An inability to match competitors in price (can't be for free)
Having more costs than competitors - more staff
Is not yet global
Inability to do direct bookings To enter the overseas market
To use the business model for another purpose i.e. car reviews
To add new features i.e. virtual tours The threat of new entrants
Having the business model copied by competitors
Competitors lowering prices Marketing Plan Service Strategies: Marketers need to think of their products on three levels: the core product, the actual product and the augmented product.
For Shotel they are as following:
The core product: A central hotel information directory
The actual product: smart phone compatibility, comparative abilities, automated match results, brand name – Shotel and tolled call number
The Augmented product: The 5 star rating system, business membership packs and advanced search settings Placement/Distribution: Shotel is implementing the the Channel One/Direct Marketing Channel
Within this channel there are no intermediary levels, only the manufacturer selling directly to the consumer
This is the case of Shotel which will be providing its service direct to the customer
For this reason there is no network of independent organisations involved in making Shotel’s services available to its users Promotion: Shotel will only use three communication elements which will be:
- Advertising through the use of Google ads
- Public relations through the use of Facebook
- Public relations through sending out media releases

These are all targeted forms of communication designed to carry messaging. The messaging will be based on 3 underlying objectives:
1. To gain attention
2. To hold interest
3. To obtain a response

The messaging will be executed in both informative and testimonial styles Pricing Policy The price/quality strategy for Shotel works under monopolistic competition
This due to their being various sellers in the market Shotel seeks to enter, who all offer different product variations and it is because of these variations that different pricing is acceptable
Shotel utilizes Value Based pricing as its service is priced off the value it holds for the customer not on how much it costs to create
This is due to the fact that once completed the database will not cost much to maintain
An allowance adjustment strategy will also be employed through providing discount pricing on membership packages Evaluation of Marketing 3 months into the businesses operations the first analysis will be performed. This will involve:
Using Google analytic's to measure increases in website traffic
Using Facebook analytic's to measure page visits, comments and ‘likes’ as well as new followers
Compiling a survey that will be attached to the online order form that inquires as to how customers found out about the service
Once an analysis has been compiled another will be done 3 months later.
This will determine if there have been any significant developments in the results and will indicate if a change in strategy is required.
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