To
Build or Buy
Name
Institution
Affiliation
Date
To
Build or Buy
A small business like a cafeteria is the most
suitable option one can engage on because no matter how human beings get
satisfied with other basic necessities, food remains to be the major requirement
one cannot do without. For this reason,
this business will attract more customers and eventually it will result in more returns on sales. A cafeteria needs a little amount of capital and it is easy to set
it up and operate.
Strategy
for a Business Concept
The
best business concept strategy that will enable a cafeteria to compete directly in the market is a business
plan which will confirm if the business idea is feasible or not. Therefore, a
cafeteria business may consider the following business plan as a strategy after
research and development before predicting the long-lasting outcomes.
Defining the business and vision. To
start up a cafeteria, the first step is to define the business and its vision
for the sake of making a driving force of the business and clarify the aim. In
order to clarify the vision, the business owner should be aware of the
customer, the kind of business he or she is in, products and services to
provide to customers, plans that are in place for the purpose of growth and he
or she should consider the primary advantage in the existing market.
Goal setting. To
set up a cafeteria, one should list down goals while providing a brief
description of their actions. In this step, the business should undergo a
period of research and development before predicting long-lasting outcomes. The owner should specifically explain the
possible achievements of the business by starting with personal goals then
business goals. For instance, what does he or she want to achieve as a person,
the size of the business he or she would wish the business to be, whether there
is a need to include the family in the business, if he or she desires to
recruit a staff to run the business and describe the quality of goods and
services to provide to customers for the sake of satisfaction. Further, the goal of the business should admire
types of foods and drinks to provide to customers while considering customers’
needs and preferences of foods to provide so that customers’ needs are met
(Kumar and Reinartz, 2012).
Understanding the customer. The
cafeteria should consider meeting customers’ needs while having in mind that it
cannot afford meeting the needs of everyone. First, it should start by
identifying the unmet needs that customers have or what is not currently
offered. For instance, the foods and drinks
that are essential to customers but they are not met available to them. Secondly,
the business should predict the foods and drinks that customers desire to have.
Thirdly, the business should have in mind how customers perceive some foods and
drinks.
Learning from competitors. This
strategy enables the business owner to
know how other competing cafeterias do business with their customers. This
strategy may help the business to reduce the presence of competitors in the
market. Therefore, the cafeteria should learn from the competitors by knowing
about the target market, type of existing competitors, how they approach the
market, identify their weaknesses and strengths, how to make improvements and
overdo the competitors and know the lifestyles of the ideal customer.
Considering the resources available. Resources
like funds should be the main consideration of a cafeteria business concept
because without financial viability it is quite impossible to set up the
business. Therefore, there should be a preparation financial projection and how
the business will be generating funds. The projections should take into account
the period of collection and payment terms for the suppliers. Further, the
projections will assist the business owner to know how much capital he or she
will need to invest.
Identifying market strategy. This
business concept strategy is important because it increases the business’s
efficiency and its presence in the market. It is assumed that without
implementing the marketing strategy business promotion, product and service
delivery will be difficult. The following are the steps of identifying a
marketing strategy for a cafeteria business and they include identification of the
target market to start the business, selection of the best qualified market to
meet the business goals, identification of marketing tools, strategies as well
as methods and finally testing the marketing trategy (Kumar and Reinartz, 2012).
Opening the New Business or
Purchasing the Existing Business
In
consideration of a cafeteria, starting up a new business is more sensible than
purchasing the one that exists in the market. This is because starting new business results to new great opportunities
and in terms of capital investment is a little bit fair than purchasing an
existing business. The new cafeteria business may prove an opportunity to
identify the existing trends in the market and have more knowledge on the market.
Further, it is far much better to start a new business than purchasing an
existing because one would wish to choose a strategic location for the sake of
accessing more customers.
Starting
a new cafeteria is more sensible than purchasing an existing as it caters for
the taste and preferences of customers as well as their changing needs. Since
customers may need something that is strategically located and convenient to
them, starting up a new cafeteria is the better option. In case the owner may
desire to provide foods and drinks that are of high quality to the customers,
opening a new business looks more sensible. Further, starting a new cafeteria
may make one develop new business ideas like how he or she can coordinate with
the existing market.
Choosing
to open a new cafeteria is the better option because the owner can easily
predict its success and expanding it would be effective. But with an existing
business it is difficult to predict its success because an individual may not
be to understand the previous management structure, he or she may not know how
the business was being operated and he or she may not be aware of the
weaknesses that exist in order to craft an appropriate
growth strategy in the market.
Starting
a new cafeteria is sensible because lower costs are incurred as the starting
capital. For instance, the owner may choose to start a small-scale business
that is less costly and may prefer to keep the operating expenses to a minimum. But when buying an existing business
an individual may spend more money to acquire the business. For instance, one may
be needed to pay a transfer fee as a
legal requirement and in case it is a large scale, the individual is forced to
pay all the necessary costs. Further, buying a business might be more
disadvantageous because extra costs are incurred. For instances, incurring extra
costs for structure renovation.
Opting
to start a new cafeteria is sensible because the owner has the total
operational freedom that is important in generating new ideas. But buying an
existing business may have some models that the individual may not understand
how to run them. Therefore, when buying an existing business, an individual is
required to adhere to some rigid business traditions that may not provide room for new methods. A new
business seems to be far much better because its operations are easy since the
owner understands the dynamics and can easily attract more customers through
marketing tools, policies, and
techniques.
Most Appropriate Form of Ownership
The
new cafeteria is a partnership ownership. A partnership is a business formed
when more than one individual who wish to
come together to pool resources like finances, labor skills and eventually share profits and loss as agreed
by the partnership terms (Sherman, 2012).
A partnership as a form of business ownership has the following advantages:
More money is
raised because of the nature of the business, the members are likely to raise more money that is
meant to start up the business. This implies that the more the individuals, the
more money is pooled into the business that will enable it to grow and advance at a high rate (Sherman, 2012).
Moreover, it implies that there will more profit that will be shared in case
the business is terminated.
It
is easy to run since much of the responsibilities are equally among the
partners. This will help the partners deliver to the best of their levels by
sharing tasks according to their skills. For example, if a partner is good in
mathematics he or she can be responsible for
record keeping and accounts, while the other individual who is good in
communication he or she can be in charge of marketing.
Though
a partnership has advantages, it has its shortcomings: first, the business is
subjected to unlimited liability. This means that each member may share all
that business liabilities as a result of the risks that may face the business (Sherman,
2012). Secondly, the process of decision making is slow. This is because a
partnership is jointly managed and it important for all individual to agree on
what should be done. This means that individuals have minimal freedom with
regards to the management of the business. Therefore, it can take time for all
members to agree and make a common decision.
Business Plan for the Cafeteria
The
business plan for the cafeteria is essential for the sake of enhancing growth
and accumulation of more profits. Therefore, the business plan includes: business
summary; the cafeteria basically sells fast foods, beverages, and hot drinks. The cafeteria will cover an area of
approximately 3,100 square feet located near Yale University. The startup capital
of the cafeteria will be $400,200. This startup capital, $167,000 will be an
equal individual contribution and the remaining $233,200 will be obtained
through a bank loan. The business will be operating at reasonable expenses in
order to accumulate its gross profits.
Business
objectives. The
objective of the cafeteria is to take a lead in the existing competitive market
in the area and ensure that it becomes
selected as the best new cafeteria. Secondly, to accumulate reasonable profits
in the first month of operation and maintain a gross profit margin annually.
Thirdly, to accumulate more profits than the existing competitors. Fourth, to
make sure that the foods and drinks provided to customers are of high quality
to meet customer satisfaction.
Key
to success. In
this, the structural design will be
attractive to the clients. The cafeteria
room would be equally descent for fast and efficient operations. The cafeteria
workers would be trained for the sake of best preparation of foods and drinks
that will favorably compete in the market (SBA, 2014). The marketing strategies
would establish a strong base of loyal clients and assist in utilizing the
sales of high margin products.
Business
mission. The cafeteria will try its level best to
make a unique environment for customers where they can have fun while enjoying
their foods. It will be situated in a convenient location for the customers.
The cafeteria will make foods and drinks available for students at relatively
low prices and the general public who may not afford in other restaurants that sell their foods at high prices. The
customers will be handled in a friendly manner and offer them with consistent quality
foods and drinks. The cafeteria will invest its profits to facilitate employees’
satisfaction.
References
Kumar,
V., & Reinartz, W. (2012). Customer
relationship management: Concept, strategy,
and tools. Springer Science & Business Media.
SBA
(2014). Plan your business. Retrieved from: http://www.sba.gov
Sherman,
A. J. (2012). Raising capital: Get the
money you need to grow your business. New York: American Management
Association.
