Business Plan Catering business

1 Business Plan

2 Table of Contents Summary of Business Idea: ............................................................................................................. 3 Risk in business: ........................................................................................................................... 6 Initial Funding: ............................................................................................................................. 6 Fixed and variable cost: ................................................................................................................... 6 Income Statement: ........................................................................................................................... 8 Cash flow statement: ...................................................................................................................... 10 Breakeven point and margin of Safety: ......................................................................................... 11 Key performance indicator: ........................................................................................................... 12 References: .................................................................................................................................... 14

4 (Trading Economies, 2020). GDP of the UK declined to 2.4% during COVID 19 lockdown in the economy but it has grown by 8.7 in June 2020 that is presenting good scope for the productivity improvement for businesses in the country. In addition to this, the social environment may also be favorable to the company because there are different cultural and religious people are living in the UK and they all make events and celebrate festivals as per their culture. This can support getting orders from customers and increasing sales (Ali, 2020). On the other hand, the cultural differences (Muslim, Hindu, Christian, Sikhism, and others) may cause challenges to the catering business that how to manage the event in different religions because the events may differ in terms of foods, colors, way of celebration and others. The population of the country is growing and the standard of people for living in the country is higher that can also be profitable and supportive for catering businesses in the country. Technology has been growing as very important in the marketing and success of businesses. The UK is known for technology advancement (David, 2020). The catering business will consider the development of advanced technology in the market and will offer online as well as offline marketing platforms so that customers can contact the firm as per their convenience. Strength and weakness of business idea: The uniqueness in offering and way of dealing with customers may enable it to improve the market share. The availability of skilled staff and qualified employees to cater to clients can improve the competency of the firm to enhance the satisfaction of consumers and get a good response from the customers. It will have an alliance with event organizers for getting demand for the catering services and increasing its sales to get higher profitability. However, it would be facing a higher degree of competition in the market that can cause barriers against its successful entry in the market. It may face issues and challenges in accessing the resources for its operation. Lack of market knowledge and lack of significant information may affect the decisions and this may lead to bad effects on the operation and performance. There is a good opportunity for a new business to enter and grow in the catering industry because of the possibility of growth in the demand for catering services. Digitalization is being used in the firm and this may provide it with benefits to connect with potential markets and get orders

5 from customers online. There are many competitors in Birmingham offering catering services such as Birmingham catering company, NutriFresh Catering Company, MyDine Catering Company, and others. They may challenge to Catering Call to get success and get competitive benefits. Target market and size of the market: It will offer its services to households, businesses, schools, job holders and others. There is good potential in the market to meet the purpose of the business and there is a good size of the market. Along with catering services in the parties and events, it will offer tiffin and box meal services to people who live in the area and are busy in their jobs, education and others. Many people come to Birmingham for the purpose of education and job and they need tiffin service. Catering Call will offer higher middle and higher-income people for its services. Strategies: It will offer highly customized and well-designed service packages to consumers. It will offer three-level product or service to the consumers such as core product (catering services in events, festival, parties), basic products (Tiffin, box meal and quality in services), and augmented level (handling customer complaints, customization of the package) and others to improve customer satisfaction. Catering Call is very new in the market and it will use a cost-plus pricing policy or strategy to penetrate the market and to patronize customers in the market. Lower pricing with higher quality in the service would lead to an improvement in the market share from the middle-class families. It would increase the price from the second year as per the demand of the consumers and service added by the customers to their package. It would lead to an increase in sales of the business ( Masterson et al, 2017). It would locate its office at Steward St, Birmingham B18 7AF, United Kingdom. It will offer online service as well. People can see the business, its products, varieties, and uniqueness on the website. The website would be WWW.cateringcalls.com . Interested parties can book the services online and can pay online or can pay cash on hand (Palmer, 2012).

7 Initial Funding: Catering Call has different options for funding such as personal saving, family and friends, venture capital, equity financing, angel investors, bank loan, bank overdraft, debenture and others. Hence, Catering Calls would be using the personal savings of the owner and support from friends to start this business and for raising initial funds. This is a cost-effective method and way of raising the fund ( Brigham , E., and   Daves , 2012). In addition to this, Catering Call can adopt the method of bank loans. It would take loans from the banks at a fixed interest rate. This would avail sufficient funds for the business to operate in the market. I would avail the money with lesser formalities. Fixed and variable cost: The cost may influence the whole business and its operational decision and management. The cost can be categorized as variable cost and fixed cost. Some of the costs are spent once and they give benefit to the businesses in the long run such as building, equipment, land, machinery and others (Weetman, 2013). The rent of the office would be £30000 annually and the cost of developing the website of the company would be £1800. In addition to this, equipment, installation, assets, furniture, and catering tools will give the cost of £650000 and vehicles will be taken on lease basis for £12000 annually. Some costs do not remain stable but they change and vary according to variation in the volume of production and sales of the products or services (Watson and Head, 2013). Some relevant variable cost to the Catering Calls are given below : The variable cost relevant to this business is outlined below: Item Variation Foods Number of food packages, tiffin, boxes Printing cost Number of pages printed Marketing expenses Marketing methods, channels, and others Sales and distribution cost Volume sold, people, attended parties and festivals Labor cost Number of labor and their efficiency

8 Material cost Number of units Income Statement: Income statement for Catering Call   Mo nth- 1 Mo nth- 2 Mo nth- 3 Mo nth- 4 Mo nth- 5 Mo nth- 6 Mo nth- 7 Mo nth- 8 Mo nth- 9 Mon th- 10 Mon th- 11 Mon th- 12 Total Net Revenues (Sales) $ 100 000 120 000 144 000 172 800 207 360 248 832 298 598 358 318 429 982 5159 78 6191 74 7430 08 3958 050.2 2 Cost of sales 300 00 360 00 432 00 518 40 622 08 746 49.6 895 79.5 107 495 128 995 1547 93 1857 52 2229 03 1187 415.0 7 Gross profit 700 00 840 00 100 800 120 960 145 152 174 182 209 019 250 823 300 987 3611 85 4334 22 5201 06 2770 635.1 6 Operating Expenses                         0 Selling, general and administr ative expenses 400 0 440 0 484 0 532 4 585 6.4 644 2.04 708 6.24 779 4.87 857 4.36 9431 .79 1037 5 1141 2.5 8553 7.135 1 Rent 250 0 250 0 250 0 250 0 250 0 250 0 250 0 250 0 250 0 2500 2500 2500 3000 0 Insurance 250 250 250 250 250 250 250 250 250 250 250 250 3000 Telephon e and Internet 500 500 500 500 500 500 500 500 500 500 500 500 6000 Office supplies 300 300 300 300 300 300 300 300 300 300 300 300 3600 Bank charges 80 80 80 80 80 80 80 80 80 80 80 80 960 Deprecia tion 100 0 100 0 100 0 100 0 100 0 100 0 100 0 100 0 100 0 1000 1000 1000 1200 0 Vehicle rent 100 0 100 0 100 0 100 0 100 0 100 0 100 0 100 0 100 0 1000 1000 1000 1200 0 Salary and 200 00 200 00 200 00 200 00 200 00 200 00 200 00 200 00 200 00 2000 0 2000 0 2000 0 2400 00

10 Purchase of machinery, tools, and equipment -650000 Other purchases -20000 Proceeds from sale of the equipment 80000 Net cash flow from investment activities -590000     Cash flow from Financing Activities   Long-term loans 500000 Principal reduction in loans 150000 Net cash flow from financing activities 350000     Increase in cash 535637 Cash and cash equivalents at the beginning of the year       Cash and cash equivalents at the end of the year 535637 Breakeven point and margin of Safety: BEP: BEP in units = Fixed cost /(selling price – variable cost) Hence, the gross profit margin of the business is 0.7 or (7%) The fixed cost is £693800 The selling price is £100 per plate The estimated cost per unit in the business would be £70 Hence, BEP maybe = £693800/(£100-£70) = 23126.66 or 23127 units

11 BEP in value: BEP units of sales * sales price Hence, 23127*100 = 2312700 The margin of Safety: Current sales of the business-breakeven point / current sales Hence, 3958050.22-2312700/3958050 = 41.56% Key performance indicator: Catering Call will consider the sales revenue, profit, cash inflow, cash outflow, liquidity ratio, inventory turnover ratio, asset turnover, cost of the business, and other measures for evaluating the performance after a financial year. It would enable the firm to measure the efficiency and effectiveness in strategies of the company to raise income and sales (Warren et al., 2011). It would further analyze the non-financial performance in terms of employee satisfaction, the satisfaction of the consumers, relationship with clients or customers and others. The analysis of these measures would enable it to find the issues in client relationships and would help Catering Call to improve strategies for improving the relationship with consumers ( Robinson, 2020) .

13 References: Ali, A. (2020) PESTLE analysis of UK . [Online] Available at: https://www.marketingtutor.net/pestle-analysis-of-uk/ (Accessed: 03 Sep 2020). Brigham , E., and   Daves, P. (2012) Intermediate Financial Management . USA: Cengage Learning. David (2020) PESTLE analysis of UK . [Online] Available at: https://howandwhat.net/pestel- analysis-uk/ (Accessed: 03 Sep 2020). Hollensen, S. (2015).  Marketing management: A relationship approach . AU: Pearson Education. IBIS World (2020) Catering Services in the UK - Market Research Report . [Online] Available at: https://www.ibisworld.com/united-kingdom/market-research-reports/catering-services- industry/#:~:text=Catering%20Services%20in%20the%20UK%20industry%20outlook %20(2020%2D2025)&text=Furthermore%2C%20a%20forecast%20rise%20in,reach %20approximately%20%C2%A3X.X%20billion. (Accessed: 03 Sep 2020). Masterson, R., Phillips, N. and Pickton, D. (2017). Marketing: An Introduction. USA: SAGE. Palmer, A. (2012). Introduction to marketing: theory and practice. UK: Oxford University Press Robinson, T. R. (2020)   International financial statement analysis . USA: John Wiley & Sons. Trading Economics (2020) UK Unemployment Rate . [Online] Available at: https://tradingeconomics.com/united-kingdom/unemployment-rate (Accessed: 03 Sep 2020). Warren, C., Reeve, J., and Duchac, J. (2011) Financial & Managerial Accounting . USA: Cengage Learning Watson, D. and Head, A. (2013) Corporate Finance Principles and Practice, 6th edition . AU: Pearson Education Weetman, P. (2013) Financial and Management Accounting, An Introduction, 6th edition . AU: Pearson Education