Market Analysis

According to information provided by Sydney Chamber of Commerce in the year 2009, there are about 200,000 Small and Medium Enterprises in Sydney Metropolitan area in Australia. This is a positive aspect of marketing depicting quite a sizeable market through which Blueprints Business Planning Pty Ltd can establish a market niche for business. However there are some specific challenges that is associated with this market that may need further assessment and analysis to determine its viability and potential to support a consulting business start up. At the moment majority of these businesses are not doing well enough to be able to contract out or outsource consulting services such as writing business proposals. This category of businesses or industry is also still unregulated and undefined. (Justin, 2016) The fact that Blueprints Business Planning Pty Ltd primarily aims at two major markets SME being one of them leaves the company exposed in terms of getting business that will sustain its operation especially within its first year in business. This means that the three shareholders may need to sustain the venture out of their own means for at least two financial years before the company can ascertain whether it can be able to wrestle out contract market share in SME support agencies and well established SME’s who can afford outsourcing consulting services. (Barrow, 2016) With the SME category of market showing strong indication of unstable market the remaining consulting service market of SME support agencies and already established SME’s are the ‘battle field’ of all the other companies providing management consulting services. The seasonality of the market is not very strong to dent a huge effect on business sustainability. In Australia, business tend to decline in the month of December and January which represents festive season where most of the companies take a break before resuming full time business for the reminder of the year. This analysis does not find this factor a threat to business given that research indicate businesses usually picks up immediately after this period of time. (Coke, 2014) The potential company strategic alliances indentified are suitable for the consulting management business that the company is targeting. Of note in this category are the accountants because when they manage to obtain business they are mostly focused on accounting related management consulting services yet most of the consulting management contracts comes as a package which may include business proposal writing and trainings among other related consulting services that accountants may no be comfortable handling. This therefore provides a good business avenue for Blueprints Business Planning Pty Ltd to tap and leverage on.

The proposed marketing plan is viable when assessed in terms of the products being offered. The business planning product has a right target market but as earlier I identified this market is still unregulated and ill-defined. Business planning product is therefore likely to suffer from lack of adequate market share for business. (Longenecker, 2007) It is therefore challenging to make viable projection on this product without further research to find out the number of SME’s which are well established and those that are still not stable in terms of finance. To suggest a better way of doing this Blueprint Business Planning Pty Ltd can find out how many SME’s in Sydney Metropolitan area have been in operation for two years and above. Research indicate that small and medium sized companies that have been in operation for more than two years tend to be doing well in business and have been in the market long enough to show that the company have some viability in terms of business. (Young, 2007) This information or statistics will go a long way in making a sound projection for this product in the market. The training product together with the small business development books go hand in hand as envisaged in the company’s business plan/proposal. (Ford, et al, 2010) The fact that the company plans to sale the books during and/or at the end of the trainings that they will conduct is a viable projection that is capable of raising good business revenue for the start up company. This can be attributed to the fact that during training or immediately after the training the value or the importance of the book is still fresh in the mind of the audiences which is likely to make them buy the books in good numbers. (Blackwell, 2011)  

Marketing Plan

Analyzing the operation plan of the Blueprint Business Planning Pty Ltd reveals a number of issues that need to be further addressed for the company to have better and smooth/efficient operational plan. 

Provision of consulting management services requires extensive research work if the company is to provide the tailor made consulting services to its clients. At this infant stage where Blueprint Business Planning Pty Ltd is a lot of marketing and profile building is also an area which will consume big chunk of company’s time and labor. At the moment the company plans to have one employee that is Jessic Jones who will double up as the company CEO to oversee day to day running of the company from her home office.  These two major time and labor consuming tasks of the company means that Jones alone may not be able to carry out these two factions effectively. (Young, 2007) Marketing is a very critical component of the start up because this is what will drive the company to get good market share that can sustain business. On the other hand research work is as essential as marketing because this is where the company will earn its respect or curve out is market niche that will set it aside from the competition for repeat and referral business. (ORUMWENSE, 2012) Analyzing the work load and the available labor reveals short supply of labor. The company will need a marker who will dwell on aggressive marketing such booking and attending appointments with prospective clients as well as pitching to them. At same time Jones can carry out the role of research fellow for any new client who might come in. The extensive research that will go into the first few clients will provide a springboard for the company to land more clients and more experience in the field that will enable the company to provide consulting service in future without necessarily going into extensive research. (Hossain, 2010) However, at initial stages extensive research for clients is necessary because the company would still be new with less experience in the market (Gray, 2013).

Looking at the financial analysis of the company as captured in it’s business plan the assessment returns a number of aspects that needs further explanations or/and analysis.

There is a huge margin of variation in terms of the company value at the end of the first year in business. The first method of calculating the company value in the next one year reveals an expected value of $85,880. This method uses the projected company turn over of $107,350 multiplied by a factor of 0.8. This factor is the industry average for calculating company’s net-worth when putting it up for sale. Using this peer value, Blueprint Business Planning Pty Ltd posts an impressive projected net-worth in one year that greatly varies with the value obtained when return on investment (ROI) method is used. The ROI method estimates that Blueprint Business Planning Pty Ltd will have a value of $3,103.67 in the next one year, a great variance using the multiplier factor method. What this essentially means is that there is need to relook into the issue of financial projection given this big variance. The value of the company should therefore not be overestimated that may give wrong impression to the investors and raise expectation which may became a challenge in future to contain and manage amongst the shareholder. (Sandlin and Riddle, 2010)

Operation Analysis

The company is projecting an annual earning of $42,000 for the Managing director and $45,000 for the consultants. Since the company is projecting to begin with only one employee at the moment that is the Managing director Jones the total annual labor cost would be $42,000. Comparing this cost with the initial shareholder contribution of $10,000, the outcome reveals serious cash-flow problems for the company unless the share holders inject extra funds within the next 2-3 months of operation. Breaking down these expenses, the first month the managing director is expected to earn $3,500. This is also the cost of obtaining home-based business license from the local authority which is not stated in the company’s business plan. Therefore the company will likely run into cash flow challenges that may render its operation untenable given lack of finances to carry on activities of the company while it’s still waiting for first few clients. (Kintler and Adams, 2010).

Analysis of the pricing strategy of the company indicates a sound judgment and estimation of the expected price of the company products/service. (Holje,2010) In any market, pricing is one of the most important factors that determine the success of a company. In particular, price has to go hand in hand with the value of the service or/and the product the company is in the market. In the case of Blueprint Business Planning Pty Ltd, the pricing is begged on industry average that is to mean the company is not going to charge anything higher than what the market is used to. (Dz?wigo?, 2015) This strategy is sound in wooing customers to new venture although this aspect can still be improved as it will be captured in the recommendation part of this paper. The company for example says in its business plan that an average industry price for 10 page business plan is $2,000 and this will be its benchmark price for the same service. (Consulting business, 2014).

Conclusions and Recommendation

In conclusion, startups needs a viable analysis of all it factors in order to have a high success rate. Without sound analysis the business venture is likely to encounter unexpected outcomes that the company was not prepared to handle or face. Depending on the magnitude of these unforeseen outcomes the startup may collapse or affected badly that it may take time before recovering to the initial growth path. Research indicates that most of the startups close business within the first two years of operation. This theory therefore means that any business that is two years and above old can be regarded as established business. By this time many of the starts ups or Small and Medium enterprises would have managed to secure a sizable market share that enables it to generate enough revenue and profits that will sustain business. The case study under discussion had a mixture of both positive and negative aspects of business. The plan according to the analysis done had some strong showing in the pricing of its products which it will be based on industry average.

Labor

 In order to have a proper market forecast and viable expectations this paper provides a number of recommendations that the company can implement in its business plan in order to have a better prospects in the market. The company needs to establish a proper statistic regarding companies or SME’s that are still at infant stage in Sydney Metropolitan area since this is its primary area of operation. The 200,000 SME’s indicated in the business plan are not categorized this means that there is a possibility that a huge chunk of this primary target is composed of young SME’s of age two years and below which may not have funds to outsource business consulting services. The company business plan says all their products targets SME’s with sufficient annual average turnover of A$200,000. This is amount is quite sizeable for majority of the start ups this therefore means that a good analysis need to be carried out to find out of the 200,000 estimated number of start-ups within Metropolitan area in Australia how many or what is the percentage of these SME’s that have an annual turnover of A$200,000. When this figure is obtained then Blueprint Business Planning Pty Ltd can make sound estimation or projection on the market size. This estimation will then lead the company to make sound judgment of the company net-worth after one year in business.

On labor, the company should consider employing one staff in addition to Jones o do the work of marketing as Jones deals with researching and consulting services. This will ensure that the two important aspects of the company that is Service delivery and marketing are handled sufficiently as required so that the company can withstand competition in the market and gain its market niche.  

Although pricing is one of the positive aspects of this business plan the same can still be improved owing to the fact that the company is be new in the market and so this means that for it to penetrate market it has to have an extra incentive to market which will attract more customers to the company than a competition. One way of achieving this is through pricing. This can be done by reducing the company prices lower than what is offered in the market thereby appealing to more clients than the competition. However caution should be exercised to ensure that the profit margin is within sustainable range for the business. If the company does not find the concept of reducing price viable then it can still attract the market through other means such as offering the best quality products and/or serving it’s customers with the best level of customer service.   

The company should also consider revising the cost of the employees especially for the first year of operation in tandem with raised initial capital of $10,000 or consider increasing the amount of the initial capital injection to avoid having the company running into cash-flow challenges. As it is the initial capital raised may not be able to run the company smoothly for the first few months of the year assuming that the company does not get business. Consulting services may take a bit of time before a new company gets the first client after which the company can start receiving more number of clients has its gets known in the market. For this reason, Blueprint needs to adjusts its expenses on labor accordingly especially for the first few months of the first year in business to give the company ample time to start getting clients before reviewing the expense upwards. Alternatively more capital can be injected into business such that the same desired results are achieved.

References

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