Myles Neal – business coursework 2006 1
1 Myles Neal Business Coursework Business Plan
MYLES NEAL [052201]
UNIT 8
BUSINESS PLANNING Myles Neal – business coursework 2006 2 Contents The business Aims and objectives Location Owners Type of ownership Key Personnel
Marketing Plan Market research (Secondary research on the industry) Primary research (i.e. potential customers/questionnaires) Observational research (i.e. competition) Marketing mix Sales forecasts
An operations plan human resources Physical resources Requirements for the business
Financial plan Budgets Forecasts
Evaluation Evaluation of business plan Viability of the business Risk assessment Myles Neal – business coursework 2006 3
Introduction: After some market research which included questionnaires and my own personal opinion I eventually decided that there was a very positive gap in the market for an internet café. The internet café would be located in Loughborough. This would be for some of the following reasons; firstly Loughborough has a population roughly of 50,000 and thus it would be able to meet the amount of customers that would be required to make the business a success and profitable. Furthermore another benefit of the location is the lack of competition that is located in the area I intend to locate. This would mean that people would be very attracted to the thought of something new and a service that isn’t located elsewhere
Customers The target customers for LIC [Loughborough Internet Café] can be divided into two groups. The first group is familiar with the Internet and desires a progressive and inviting atmosphere where they can get out of their offices or bedrooms and enjoy a great cup of coffee. The second group is not familiar with the Internet, yet, and is just waiting for the right opportunity to enter the online community. LIC’s target market falls anywhere between the ages of 18 and 80. This extremely wide range of ages is due to the fact that both coffee and the Internet appeal to a variety of people. LIC’s unique selling point is the fact that it tends to cater to people who want a guided tour on their first spin around the Internet and to experienced users eager to indulge their passion for computers in a social setting and also being able to have refreshments too. Furthermore, LIC will be a great asset for people who have email at work but not at home, and if they are not at work and need to access it if it is of urgency and also for people just shopping who want to check their email messages in a friendly atmosphere. These professionals will either use LIC’s PCs, or connect there laptops to the provide internet connections [Provision will be made on the laptop’s connecting so that the network will not be at risk from hackers or viruses or people trying to abuse the facilities] Printing, photocopying and fax facilities will also be available LIC’s target market covers a wide range of ages: from members of generation E who grew up surrounded by computers, to the older generation who have come to the realization that people today cannot afford to ignore computers.
Aims: The aim of the internet café within the first year is to Gain a good reputation Provide a good service of internet Myles Neal – business coursework 2006 4 SMART OBJECTIVES
My specific, measurable, achievable, realistic and time specific objectives are the following; To achieve a footfall of 15, 000 people in the first year
Targets sales revenue of £70, 000 in the first year
Break even within the first 6 months
Ownership For the internet café I will be the sole trader. Being a sole trader has many advantages, I believe by being one I am able to give a more personal service to my customers and also if I feel it is necessary to make change within the business very quickly, I am able to do so. Furthermore I will have complete control over the business and its profits and also use any money the business brings in as I would like to without having to justify my reasons to anyone. So overall:
The main advantages of setting up as a sole trader are: Total control of the business by the owner. Cheap and easy to start up – few forms to fill in and to start trading the sole trader does not need to employ any specialist services, other than setting up a bank account and informing the tax offices. Keep all the profit – as the owner, all the profit belongs to the sole trader. Business affairs are private – competitors cannot see what you are earning, so will know less about how the business works and how it succeeds.
The reasons why sole traders are often successful are: Can offer specialist services to customers – e.g. appliance repair specialists. Can be sensitive to the needs of customers – since they are closer to the customer and will react more quickly, because they are the decision makers too. Can cater for the needs of local people – a small business in a local area can build up a following in the community due to trust – if people can see the owner they feel more comfortable than if the owner is in some far off town, not able to hear the views of the local community. Myles Neal – business coursework 2006 5
The main disadvantages of being a sole trader are:
It could be difficult for me difficult to raise finance banks will not lend me large sums of money If I become ill then this could be a problem in the running of the business
Key Personnel The people who run the place on a day to day basis will be myself and family members. We will share opening hours. At the start of the business I will be working both weekdays and weekends. This will be so I can become familiar with the customers I am attracting and can get a good overview of how the business runs and the pro’s and cons. After the first few weeks or possibly months depending on the time it will take me to gain the information I need I will then work on weekends and also the busy days of the week [these days will be decided after we know more about how the business is running] When I am not working my family members will work. We will be able to attend to all duties such as manager, all the way to cleaning the premises. This way we can keep expenses down and also many other time consuming activities involving employees can be avoided. Market Research
Loughborough is the largest town in Leicestershire, England (the centre of Leicester excluded), the population of the town in 2004 was assessed at 57,600. It is the administrative centre for the Charnwood district and home to Loughborough University. Loughborough has its own newspaper & guide, the Loughborough Echo & Loughborough Guide, but in common with many towns and villages in Leicestershire is also served by the Leicester-based Leicester Mercury. The centre of Loughborough's shopping area is the pedestrianised Market Place. A large outdoor market is held there every Thursday and Saturday, while a smaller flea market is held on Fridays and there is a monthly farmers' market. Major chains with shops in Loughborough include Tesco, J Sainsbury, Boots the Chemists, Thorntons and Argos. 'The Rushes' shopping centre has recently been built on the site of the former bus station and includes JJB Sports, M&S, Woolworths, TK Max and more recently Virgin Megastore. The Rushes is linked to the existing town centre area by the streets Churchgate & Churchgate Mews; the latter includes many individually styled boutiques, a beauty salon and one of Loughborough's more widely known retail outlets, The Left Legged Pineapple (an independent record shop).
For my market research I used both primary and secondary market research. Firstly primary market research
Primary marketing research is collected for the first time. It is original and collected for a specific purpose, or to solve a specific problem. It is time consuming, but is more focused than secondary research. There are many possibilities in primary research but I chose the following. 1. Surveys 2. Mystery shopping Myles Neal – business coursework 2006 6
Surveys At this stage I created a specific survey related to my product and what service I was going to offer. [The survey is included within documentation]
Secondary Market Research
Information from: http://www.leics.gov.uk/index/your_council/about_leicestershire/statistics/research_info_ population.htm Mid-2004 Settlement Population Estimates with largest absolute change 2001-2004
District Settlement 2004 Absolute Change Percentage Change Population 2001-2004 2001-2004 Estimate
Charnwood Loughborough 57,560 1,860 3.2%
From the above information we can estimate that the population in Loughborough will increase as times goes on, this will help my business as if the population increases I have more people to try and attract to my shop. Competition Upon searching and researching other internet café’s that were located in Loughborough and only managed to find the following one known as Net Space. Some of the information I found is shown below Price: £1.50 per half-hour, £2.25 per hour Telephone 01509 269999 Email: [email protected] Opening Times: Monday to Friday, 9am-5pm Tuesday to Thursday, until 9pm (term-time only) Saturday, 10am-4pm Address: 7 Baxter Gate Loughborough, Leicestershire LE11 1TG United Kingdom url: home.net-space.co.uk Myles Neal – business coursework 2006 7
A very positive aspect of this information is I am able to see my direct competitions price and opening hours. As a result I will be able to take both of these into consideration of my opening hours and price I charge for customers. I have also decided I can mystery shop at the location too.
Other information I found was from:
http://beehive.thisisleicestershire.co.uk/default.asp? WCI=SiteHome&ID=11414&PageID=67721
This included the following information:
Loughborough's town centre 'cyber venue' offers a range of services to the local community and visitors to the area. In the NetSP@CE cyber cafe, computers with Internet access and Microsoft Office programmes are available for hire. Printing, photocopying and fax facilities are also available. If you are new to using a computer, friendly staff are on hand to get you started, whether it's using the Internet to book a flight, setting up an email account or typing a letter.
There's no need to book - we have fourteen machines available for public use, so just drop in! We also offer a range of IT courses, Learndirect courses, English for Speakers of Other Languages and Skills For Life classes.
7-8 Baxter Gate Loughborough Leicestershire LE11 1TG [email protected] 01509 269999
Opening Times: Monday to Friday, 9am-5pm Tuesday to Thursday, until 9pm (term-time only) Saturday, 10am-4pm
I also managed to find a list of internet cafes in Leicestershire this was located on the following site
http://www.touchlocal.com/nat/c-1086-t-15557-Internet+Cyber+Cafes-Loughborough Myles Neal – business coursework 2006 8
Diagram of Loughborough
Below you can see a picture of part of Loughborough City Centre. On the picture I have included where my competition is located. As you can see they are in the centre of Loughborough, so when finally deciding where my premises will be located I will take their location into account so I can try to avoid them as much as possible so there will be less competition. I will also try and locate in a more “available” location for my customers so that I can attract possible new customers [maybe some from “NetSp@ce”] Myles Neal – business coursework 2006 9
Mystery Shopping Mystery shopping is an effective marketing exercise that I can use to measure and report covertly on my company in either a retail environment or a business to customer environment.
Mystery shopping includes:
Customer service evaluations Telephone mystery shopping Exit interviews / surveys Web site evaluations Site visit / shopping experiences
Mystery shopping will help me identify:
If customer service procedures are followed – enabling me to monitor good practice or introduce measures for improvement. Poor performance gaps so I can close them. Training needs. Service quality delivered. Myles Neal – business coursework 2006 10
Myles Neal: Primary Market Research: Internet Café Questionnaire Name: Sex: Location: Age: 1) 13-18 year 2) 19 – 30 3) 31-50 4) 50+ 1. Have you ever used an internet café? A) Yes [If yes please specify in the space provided below] B) No
Location:
Price you paid for internet access:
Your thoughts:
2. Would you use an internet café if one was available? A) Yes B) No
3. Do you have internet access at home? A) Yes B) No C) Not at the moment but hopefully in the future
4. What is more important to you A) The price of using the internet B) The price of refreshments C) The environment of the shop
5. How often do you spend on the internet a week? A) 0-10 Hours B) 10-20 Hours C) 20-30 Hours D) 40 Hours +
6. How much would you be willing to pay for internet access [Per Hour?] A) £0.50 - £1.00 B) £1.00 - £2.00 C) £2.00 - £3.00 D) £3.00 +
7. What do you use the internet for? A) E-mail B) Games C) Instant messaging D) e-commerce [Buying Items e.g. Tickets, auction sites, products] E) More than one of the above
8. How often do you shop in Loughborough centre each week? A) 0 times B) 1- 5 times C) 5-10 times D) +10 times
Thank you for taking your time to complete this questionnaire, if you have any questions please feel free to ask. All information you have provided will be kept safe and secure: Contact: 07852302936 / 0150926201010 Myles Neal – business coursework 2006 11 PRIMARY MARKET RESEARCH RESULTS
From my research I have found many interesting things that I have to take into account for my business – these include the following 1. I have found that my target market is going to be teenagers especially males between the ages 13-18. This is because according to my market research they would be the ones who would use the internet café also they would be the ones that would use it the most. Thus generating a large footfall. 2. Furthermore as well as male teenagers even though they will be my main target market and my main focus I will also take the other groups into consideration as there seems to be a big possibility of attracting more and different types of customers.
Marketing Mix Price Based on my market research and questionnaires determining a fair market, hourly price for online use was fairly straight forward and I have decided the following
Internet Use £0.75 per half-hour, £1.00 per hour
Printing 20p per sheet
Use of fax machine 50p per sheet
Use of games and internet £3 per hour £5 for 2 hours
I have considered that if my business is successful in the first year there are other products that could become available such as a membership card which would allow discounts for internet & games access. This would be £50 a year, for a customer to have a membership. Myles Neal – business coursework 2006 12
Product Brand name After careful consideration I decided that our product was going to be called LIC [Loughborough Internet Café] This name is extremely easy to remember so will easily stay in peoples mind and also it is very catchy for example a number of students in a conversation – “Do you want to go down LIC”
Promotion Upon considering my location, market research and questionnaires I have decided that I will have to try and build a very loyal customer base who will recommend LIC to there friends and family. So to originally gain this loyal customer base I believe it will be best if I make a very good advertisement campaign. Marketing efforts will be very focused on the local market and will run throughout the first 6 months of the business and if successful I will revaluate and possibly advertise more. The type of promotion I have decided upon is first of all leaflet dropping. This will include me, family and friends. We have already committed to the idea of leaflet dropping in many houses in the local town centre. This will be very cost effective as I won’t need to pay my family or friends to drop the leaflets and I will design the leaflet myself. The only cost I have to consider is that of printing but this will be very low price. Furthermore I have also chosen to advertise in the local newspaper which is read by numerous people from Loughborough called the “echo”. In addition other forms of promotion will include asking shop owners to advertise in their shop window [In return I will advertise for them].
Place After market research I have decided that Loughborough Town centre would be a very beneficial place for my business. Due to there being only one competitor there is no other real competition. This is one of my main reasons for this area. At first I wondered if this could have been because an Internet café would not succeed or attract the needed customers to make profit but according to the research I have done I found that the potential customers needed where available and would also enable a large footfall and thus generating a very good income. Myles Neal – business coursework 2006 13 SALES FORECASTING
Prices Based on my market research and questionnaires determining a fair market, hourly price for online use was fairly straight forward and I have decided the following
Internet Use Printing Use of fax machine Use of games and internet Membership Fee
£0.75 per half- 20p per sheet 50p per sheet £1.50 per her £50 a year hour £1.00 per hour £2.00 for 2 hours
Furthermore from the market research I have done [both primary and secondary] I have been able to conclude the following possible sales that LIC will have.
THE population of Loughborough is 56, 700 In Loughborough there are 9, 000 teenage males in Loughborough. These 9,000 male teenagers are my target market. I know that for many reasons and realistically I will not be able to attract every single one of these teenagers. I believe that it is possible to attract 2000 of these possible 9,000. In my opinion this is realistic as the responses I got in my market research where very positive from my target market. As I believe it is possible to attract 2,000 customers I believe that I will definitely attract 600 customers. This 600 comes from my target market and also from other possible customers. Therefore if on average my customers:
Each visit: 48 Times a year
Average Spend: £1.50
there is 1 competitor in the area I will be located therefore I will have 50% market share
600 people use my internet café 48 times a year = 28800 visits a year/2400 visits a month
28800 x £1.50 = £43200 annual income
£43200 = annual income £3600 = monthly income Myles Neal – business coursework 2006 14
Monthly Sales Forecast
January February March April May June July August September October November December
£1,200 £1,500 £2,000 £3,000 £3,600 £2,000 £8,000 £6,500 £2,200 £3,500 £3,500 £6,200
January As the business is just starting I expect possibly a lower income than all other months. Although I expect as there will be interest to at least try the internet café once sales will still be good. There are also other issues which could affect the business in January. As New Year and Christmas have just been thus people have less money to spend school also begins again for students.
February Short month and therefore less time to generate income also school, college and university so target market won’t visit as much although there is a two week break from college and schools for half term which will help maintain a steady income
March Students have college and school and university therefore it is possible that the number of visits could decrease. Despite this march is a longer month therefore more time to generate income
April Students have Easter break which is two weeks long for most. Therefore this could mean a possible increase in number of visits.
May May is an average month, students are back to school, college and university and therefore footfall should remain steady
June June is also an average month. Although students have exams during this month and as this is my target market I expect a decrease in sales.
July July is the peak of the summer holiday for students and with the weather hopefully being nice people will want to get out and hopefully go to places and much more. Hopefully one of these places will be LIC
August In August students will still be on summer break and therefore footfall will hopefully still be higher, although a decrease is expected due to the fact that it is the last month of the summer break therefore the target market may not have as much money to spend
September The summer break ends for students and therefore footfall may possibly decrease. Furthermore money would have be used over the summer so it is possible that visits could decrease due to lack of finance for customers
October In October college and school’s yet again have a half term break so an increase in footfall will be expected once again.
November A normal footfall will be expected. My target market will be at school and college and no half terms.
December As its Christmas I have taken into consideration that people will want to spend money to buy presents and shop online. Also it is the winter break for all students which could be a positive factor to footfall and the number of times customers visit also making it easier for them to visit Myles Neal – business coursework 2006 15 Planning Operations
Physical resources Premises – My premises for “LIC” will be in the middle of Loughborough located on Market Street, this will be very beneficial for many reasons Firstly it has a very large amount of people on a day to day basis and is very busy on the weekend. Furthermore it is also located away from my competition therefore decreasing the threat that they pose and also allowing me to gain my own customer base. Although being located away from competition it is not so far that if there customers are un-happy that they can re-locate to “LIC”. The premises will rented and will cost £7,000 a year. The advantages and disadvantages off renting are shown below:
Advantages Disadvantages Rent
Not responsible for maintenance Payments are higher than mortgage
Doesn’t need a large deposit Rent can go up
Less budget control
You don’t own premises
Other costs Electricity, gas, water, possibly security, rates, insurance
Equipment
Can buy or rent – for our business rent equipment
Long term leasing is not the best option but short term it is as it helps cash flown
Advantages Disadvantages
Leasing Helps cash flow Do not own asset [not a huge disadvantage as once No large outlay bought value decreases]
Not tax reductions Myles Neal – business coursework 2006 16
Fixed
Insurance with Hiscox Insurance Company Limited: £14.22 per month
Office costs
11 computers with free scanner and printer and cables at £429.99 = £4729.89 1 Office water machine = £285 Cash Register = £180 Nettime CS 15 Clients = £168 11 Low back leather face chairs at £24.99 each = £274.89 11 PC Line Atlanta workstation computer desks at £34.99 each = £384.89 BT Paperjet 45 Phone and fax machine = £93.61 PC Multiplayer games = £300 Filing cabinet = £29.99 Rexel Buster Handheld Stapler = £2.49 Whole puncher = £2.99 HSE 10 Person First Aid Kit in Compact Box = £5.99
Total £6511.74
Fixed Costs
My annual Salary: £19,200 Staff annual expense: £2,400
As stated in the contract, the lessor is responsible for the payment of utilities including gas The utilities that LIC must pay is the phone bill generated by twelve phone lines; eleven will be dedicated to modems and one for business purposes. The basic monthly Myles Neal – business coursework 2006 17 service charge for each line provided by BT Business Total Broadband Option 3 is £40.50 a month. Also BT will provide the land line for incoming and outgoing calls for £10.75 a month.
Internet Cost: £40.50
[As the internet speed will be very fast and shared this will not be £40.50 for each computer, it will be for all]
Landline Cost £10.75
Marketing Expense: I will allocate £600 for promotional expenses at the time of start-up. This money will be used for advertising in local newspapers in order to build consumer awareness, the cost of starting up the business website and the making and printing of flyers. The flyers will be spread door to door and also will be distributed at our peak time when LIC is open. This distribution will be done by me and family.
Wages My wages: £400 a week £1600 per month Wages for Family Staff: £50 a week £200 per month
Costs Premises - £7,000 a year Total Office Costs £6511.74 Fixed Costs- £65.47 per month
My aims and objectives Having referred back to my original aims and objectives I believe that they are achievable and possible. As a result I do not believe that they will need changing as they are still very fitting and what I believe LIC can reach. Myles Neal – business coursework 2006 18
Evaluation
In my opinion my business plan is well thought out, I believe that my business would be successful if it was to become a real business. From the financial plan it is clear that LIC would be a profitable business and would also be very successful and gain a good reputation. I believe my business plan clearly demonstrates how my business would become profitable and also how there is sufficient demand for my product and service In my opinion there is a clear sustainable competitive advantage for LIC and this has been shown throughout the business plan. Furthermore I feel the business plan describe what my business is about and does in enough detail. It explains what my business offers and the products that will be sold. In addition I feel the date that I have found and the financial plan is very reliable as the amount of surveys I did where a reasonable amount. Possibly if I was to want even more accurate data I could carry out more surveys and even though my market research is detailed I could possibly do more to make my data even more reliable. LIC is clearly feasible and from the financial plan it is clear that profit should be reachable and achievable.
Ration Analysis The use of financial rations to compare and interpret financial statements. This method allows for in depth monitoring of financial performance from one period to another, comparisons over time, comparisons with other companies, and analysis of current financial performance
Payback:
Office Equipment Cost 6511.74 0.1years 4883.81 0.2years 3255.87 0.3years 1627.930 0.4years 0
Office Equipment costs £6711.75 it takes 0.39 years to payback SWOT Analysis Myles Neal – business coursework 2006 19 Strength LIC has many strengths to it and these include the following, Firstly one of the strength of the LIC the products it sells. From carrying out market research via questionnaires I was able to distinguish what products will be suitable in terms of what products would be brought by the customers in the market. The Loughborough Internet café will offer a service, that apart from NetSp@ce, no one provides efficiently in the area it is located. This means that people will be given a choice they have only slightly been given before. Furthermore the unique price that is low and very competitive will encourage the customers and public to at least try once. In addition the location is an extremely positive as it will attract many customers In addition strength is how LIC will encourage those who have less experience or education on computers or don’t own one or have the ability to use the internet to try and give it ago in this fast technology and computer reliant world. From the financial plan we can see that over £50 is spent on advertising each month. This is strength as at it will attract customers and also it is more than my competitor seems to have done or be doing. Furthermore it will enable me to appeal to customers who may not have considered using an internet café before and also customers that may not have heard off my business until such advertisement. My advertising will be taken in the form off leaflets, posters and adverts in the local newspaper [The ECHO]
Weakness The internet café has weakness including the following. Firstly it is a small business that is unique and the lack of competitors or people entering the market could be for the possible reason that internet cafes in the past have not been successful in Loughborough. This means there it is hard to predict reactions to LIC. Despites the market research being very positive and having what seem as very good and sufficient numbers of potential customers there is still the threat that these customers may not actually come to the place. There are also factors such as weather. If the weather is really good it may have a negative effect as people wont want to be on a computer when they can be doing other stuff. Although this could be the other way round as people might use LIC as a socialising place thus hot weather could be a benefit. The major weakness that it will face LIC is the sales that it estimates. As the store is being opened up in the city centre there fore it is unpredictable. Furthermore the other weakness is, unless there is a large customer base and roughly the predicted amounts of customers do use LIC then it will be hard to make the money needed. The Internet Café LIC will face several opportunities that they can take advantage off. As it will be myself and family that will be working within LIC, this will enable us to hopefully build a relationship and get to know our customers. This will be an advantage as they will feel that they know the people who run the place and that they can always talk to us if there is a problem or they have anything to say. As a result it will help us in the long run of maintaining a happy customer base and also will help to LIC getting a good reputation through word of mouth hopefully. Myles Neal – business coursework 2006 20
Opportunities LIC has many opportunities in the market it is entering. As the competition is so low it will enable to attract a very varied amount of customers. Also the fact that the internet café has such a wide appeal and it is something that everyone can use no matter how old or if they are male or female. Furthermore my competitor has vulnerability as it is not as successful as it would like to be. As a result this shows that it is weak and I can take advantage of this if my business is strong and provides what the customers want and also what my competitor does not offer then I have the chance to steal competitors current customers. Furthermore the lifestyle of people and how the world we live in has become very computer orientated and also computer games still have a huge way in peoples life. This will be an opportunity for me as people currently always want computers and also online game play. As a result of the last two opportunities I am given an opportunity within to use very efficient tactics and have a very good chance of success
Threats The major threats that the LIC will face is from its competitors. LIC has one competitor but it is not a very successful competitor it has been in the market for a long period of time which has allowed them to firstly understand the market and secondly be able to gain a high percentage of the market share. Although the competitor is not a huge threat that does not mean that LIC can expect to be successful. There are still lots of other threats in the form of indirect competition. The indirection competition LIC faces is from other sources of entertainment. Due to the very large amount of entertainment that is available LIC will have to try and attract customers and appeal to them. This will hopefully be achieved by advertising. In addition as the centre of Loughborough is busy and has a lot of different shops there will always be indirect competition from these shops. The way LIC will overcome this though will be due to the small amount of money that is required to use the service we provide. As a result hopefully this will still attract people who only have a small cash flow and not a high amount of disposable income Risk assessment + contingency planning Potential Action Need to Risk Likelihood Contingency plan impact prevent it It is very possible that If sales are not The action that is If sales do go low and sales will not be as as high then needed to prevent things go wrong then high as needed. This payback may sales being to low LIC will change what it is because the sales take longer and is enough offers to better fit the are only estimates and also targets advertising and customer’s needs. are only based on will be harder making sure what Possibly a loan to Sales not as market research. It is to reach we provide is increase advertisement high not guaranteed that actually what and marketing and also the market research customers want. more market research. will be the same as when the business is actually available Myles Neal – business coursework 2006 21
Not very likely Not high As there is a lot of If damage does occur to impact CCTV cameras the property then and police around repairs will be done as where my soon as possible and business is located depending on the extent Damage to it will be an and cost of the damage premises unlikely place for means of finance will damage. Also the be taken into reputation of the consideration. location is good which is also positive Not very likely High When LIC opens If a new competitor it will have to does enter the market become dominant then I will change and successful in tactics and try to make the shortest and sure I remain all my quickest possible customers and all the time. Then if possible customers that competitors are to they may attract I will New enter the market try to attract them first competition LIC will try to so that they will not steal their gain any customers and potential will find it hard to be customers and successful in the retain their current market. customers
High The impact of Anti-virus If a virus or hacker a virus or software and does occur then I will hacker could firewalls will be format the computers mean that the installed and and re-install all company updated very programmes that are would be regularly and needed. This will be unable to open many checks will time consuming and Virus or as it would not be taken on a could possibly take a Hacker be able to regular basis few days if the virus or provide a hacker has got into all service systems. If I do not format the computers then a call out computer technician maybe called out Myles Neal – business coursework 2006 22
PEST FACTORS ON LIC
PEST analysis looks at the external business environment and is an appropriate strategic tool for understanding the future of the environment in which LIC will operate. This helps by enabling to take the advantage of the opportunities and minimize the threats faced. When strategic planning is done correctly, it provides a solid plan LIC to grow in the future With a PEST analysis, I am able to see longer horizon of time, and I’m able to clarify strategic opportunities and threats that LIC faces.
Political At the moment and in the future there is not many political factors that will effect LIC as a whole. The stability of the political system is very good at the moment and there is a lot of warning before new legislation comes into action. Some new laws that could affect the internet café could be based around downloading issues and also laws such as internet cafes having to have filtered networks. This would be an issue to the business as people could become frustrated if they came to the café at what they wanted to access or do was no longer available. Furthermore it could also possibly mean me losing a lot of customers
Economical As the economy is very strong in England and is also stable people at the moment have a lot of disposable money to spend especially that of my target market. As long as this remains my company should be successful and should benefit to. Factors that could possibly affect my business are that of changing to the euro. This could mean that my prices would have to alter and also issues such as prices with my ISP [internet service provider] could change to. Although hopefully if this was to happen this would hopefully not affect my sales.
Social One social factor that affects LIC is the amount of people who own computers. Computers are becoming a common place in the home today or even on the go in the form of laptops and wireless internet. As a result it could be possible that in the future my business my struggle as people will not require internet access as they either have it at home or wireless in the form of laptops, PDA’s and other forms of internet access. If this is the case then the internet café will have to consider alternatives and other ways of attracting customers in the future such as offering refreshments and not just internet access. Other possible products I could offer in the future to resolve this could be classes for beginners on computers. Furthermore another social factor is that people are using computers increasingly more. As demand for computer usage increases this will hopefully increase the demand for my services and products. Myles Neal – business coursework 2006 23
Technological The technological factors that affect my business vary. One of these includes the advances in computers. As computers become more and more advanced and new ones become out of date very quickly. I will have to update my system very regularly and possibly have to purchase new computer more soon than I have predicted. Furthermore other factors include the advance in broadband and internet speeds. As the internet becomes quicker and quicker more people want to use it as it is instant. As a result I will have to provide the best internet connection so that my customers are happy and so that there is no complaints. As a result this will also be time consuming and possibly cost a lot to. In addition as technology becomes more advanced people’s internet increase. This can mean people who have never considered the internet or computers could be attracter to the idea of the internet café this means that there will be a lot more potential customers for me to attract. Also as mentioned in social factors it is possible that as wireless internet advances people will not need internet cafes as there will be alternatives such as laptops and much more. This is a threat that does not look to immediately affect me as wireless internet at the present time is expensive and people at the moment don’t understand how to use it that much so as a result my cheap and easy to use service will still attract customers.