Business Plan for F & RM Organization

This business plan outlines the establishment of F & RM, a construction and remodeling company in London. It discusses the innovative strategy, market analysis, marketing plan, operations, and financials of the organization.

BUSINESS PLAN
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Executive summary
The current business plan has been formulated by acknowledging a need base
consideration of housing that is continually raising at a higher pace. It is along with another
supreme concern of bridging innovative houses in support of some newer technical measures
in it. It is thence with an analogous reference to it, a new construction and remodelling
company named F & RM is being set up in the London area of UK.
In context to which, below is the outlined plan with projected products and services
along with the innovative strategy and strategic positioning that is being required to be
undertaken by the newly established business. Beside this, it has together depicted a carried
analysis of the market by together proposing its stipulated strategies of marketing,
operational, logistic and human resources, etc. Lastly, it has represented the financial
consideration of F & RM by indicating its proposed budget.
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Table of Contents
Business Outline.....................................................................................................................4
Market & Competitive Analysis............................................................................................5
Marketing...............................................................................................................................6
Financials...............................................................................................................................8
Conclusion............................................................................................................................10
References................................................................................................................................11
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Business Outline
The demands of the houses are increasing as in the earlier time, the purpose of the
house was different but in the present time, with the innovation houses are made by people
for maintaining a position in the society. With this idea, F & RM organization has been
developed which will focus on the constructing and the remodelling of the houses. There are
times, when people are not happy with the house they are living in and besides this they do
not finance to buy the new one. For this reason, a business is started which will help to give
new shape to the house. In this business plan, the property will be rented and they will be
rebuilding according to the needs and desire of the customers. The plan will be suitable for
those who do not have much financial power to rebuild the house. Therefore, considering this
dimension, F & RM organization will be providing affordable services to the customers so
that they can also recommend the services to other customers.
Products/service plan
Basically, in this business plan the service is only the product which will be rendered
to the customers. The service plan is that the property will be bought from the auctions and it
will be UK famous auctioneer (Osterwalder and Pigneur, 2010). Besides this, it is taken
specific because in this auction the houses which are sold are good and it will be challenging
to rebuild them. On the other hand, the engineers will analyze the expense which will occur
on rebuilding. This is basically the service plan which is made for the customers so that they
can get the house according to the requirements. For F & RM organization this service plan is
made because it will be a profitable business because it will cheaper from buying the new
house. Even, it is not feasible for every individual to buy from the auction so in this case,
they will get the house rebuild.
Innovative opportunity/strategic positioning
This is one of the most innovation businesses because in London poor sanitation, less
heating facilities are faced by the individual. Further, repairing is done for the short period of
time which is not beneficial for the large extent. So to solve the problem it is the innovative
step which can help to rebuild the house. Another reason, it is the innovative idea because the
auction house will be taken by the F & RM organization as there are many individual who are
not able to take it, so for them it is the easier option (Tellis and Johnson, 2007). Further, it is
strategic opportunity because the target customers are the individuals who are having less
income and they are not helped by the council residence. So in this case, the target market is
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huge which will help in earning more revenue as well as assist in increasing profitability. As
with the increasing population, the ventilation and the congested localities problem will
increase so this idea will help in solving the issues of the customers. This will help in
attracting the customers which will result in developing strategic positioning. The positioning
of the business plan is that the F & RM organization will be resolving the issue of the
customers by providing them new house and the expense attached to it is low.
Market & Competitive Analysis
This section is to analyse the competitive environment of the market in which F &
RM organization is referring to enter with a newly established business (Barringer, 2012).
This sector is referred to the construction and real estate industry of UK where it is together
referring to set up in London. However, this duly necessitates the concerned organisational
bodies of F & RM to conduct a primary analysis of their market that they have chosen to
launch their new business. It is with a fundamental concern of acknowledging the services
that are being provided by their contenders by carrying out a competitive analysis for the
same. Such evaluation will jot only assist them to lessen any risky assumption of setting up a
new business in a newer marketplace but will also higher the chance of successful
attainments (Neck and Greene, 2011). This competitive analysis can be further done with the
help of Porter's five forces model by referring to its five leading constituents that are as
depicted below-
 Competitive rivalry- It is the foremost consideration while carrying out such
analysis of a market where in context to acknowledge the current state of UK's
real estate and construction industry, there existed a high level of rivalry. It is
basically in context to a high number of contenders who are already dominating
this market to a great extent. It is therefore important for F & RM to find out a
distinct approach of provisioning their services to the clients that differs from
their contenders and must feature certain additive inclusions. Threat of new entrants- It is yet another vital element of this model that will
entail the risk of new entrants in the market chosen by F & RM to set up their
new business. It is however referred to be at a moderate state where it will not be
an easy task for ant new comer to enter and build a luxurious habitation in the
area like London (Jasra and et. al., 2011). It hereby necessitates a new entrant to
firstly pursue enormous number regulatory norms with a considerable reputation
of their business and then refer to do the same.
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 Threat of substitute products and services- This component is together referred to
be at a moderate position where F & RM is providing the best possible service at
an affordable range (Bryman and Bell, 2015). As a result to which, it is extremal
difficult to come up with a substitute product or service where rebuilt is always
referred to be an affordable consideration rather than opting for a rented property
or buy a new one. It is also due to a considerate area that have been chosen by
this business where London represents a high end of luxury market and thus
proposing such type of service at an affordable range is difficult to find. Bargaining power of suppliers- It is referred to be at a high position where this
industry is in a prime requisition of large number of suppliers as a way of heading
towards a profitable business. This has in turn resulted in rising the price of the
workers who are also referred to be technical suppliers. Where it in turn gives a
principal opportunity to the suppliers to bargain for high prices (Barringer, 2012).
 Bargaining power of buyers- It is referred to be at a fluctuating state where it is
presently at a slight level. This is mainly due to a high end luxury domicile area
of London that automatically depicts a high bargaining power of the buyers to
deal for an affordable service. Else, they are mostly having another option of
adjusting into an inexpensive structure of pricing.
Marketing
Marketing Research: F&RM needs to perform effective market research activities so
that a perception about the target markets can be acquired. Primary and secondary market
research have to be conducted for understanding level of competition and customer
preferences in construction and real estate industry (Tellis and Johnson, 2007).
Marketing Segment: Segmentation helps in identifying accurate details regarding the
target audience. The company needs to perform marketing segmentation for developing
services according to choices and taste of the segmented and targeted customers. The
rebuilding activities will then further be designed for meeting respective expectations of
current market segment. The marketing segment selected for F&RM is the higher income
groups and the business corporations (Barringer, 2012).
Marketing Strategy: Marketing is a business process which helps in communicating
the best features of products and services. When a strategic planning approach is adapted by
F&RM then effectiveness of the concerned marketing plan increases. The marketing strategy
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unfolds different aspects regarding the products and services produced by organisation.
F&RM being a construction industry company have to determine the flaws or gaps which are
leading to decrease in growth. Moreover, marketing strategy will enlighten the promotional
strategies and techniques which shall be adapted by the company for communicating their
services.
In order to sell the services to the end users, it is vital for F & RM organization to
emphasize on appropriate promotional aspects as that will also generate awareness among the
end users. Further, to promote rebuilding services, brochures and retail outlets can be
communicated among people so that they can get knowledge about the services that will be
delivered by F & RM organization (Bryman and Bell, 2015). Uniqueness of services is
essential from all grounds as that can only help the business to acquire the interest of clients.
There are several construction business entities that work for the purpose of rebuilding the
houses; thus aligning the services with them, F & RM organization can also sell their
services. However, the business will have to focus on affordable services so that middle class
people can afford it.
Operations/ Logistics and Human Resources
Operations management is regarded as the most important function of an organization
that is entitled to manage all the aspects of business in appropriate manner. With the help of
operations management, F & RM organization will be able to acquire resources in
appropriate manner and through this demand for the services can also be enhanced
accordingly. Thus, through operation management, F & RM organization will be able to carry
out each and every activity in prominent manner (Jasra and et. al., 2011). This will assist the
business entity to acquire raw materials from feasible sources so that the cost of operations
may not get increased. At the same time, in order to manage the functions of logistics, F &
RM organization will have to ensure that adequate number of people will be employed so that
they can manage all organisational work aspects in prominent manner.
F & RM organization will also have to emphasize on human resource management
which will be managing different aspects of the organization. Thus, the top authorities are
required to undertake decision related to appointing people for the organization who will be
handling different job roles and responsibilities. Similarly, while employing people in F &
RM organization, it is also crucial to consider their roles and responsibilities so that all the
activities can be managed respectively (Neck and Greene, 2011). Along with this, F & RM
organization will require to appoint financial manager, HR manager and different employees
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who can work with the company in all areas. Since, F & RM organization will be a
construction company; therefore it will be crucial for the organization to emphasize on
logistics services so that they can transfer services from one place to another. Emphasis will
be laid on such aspects so that F & RM organization can enhance the value of internal
business functions.
In order to develop a new plan, it is essential for the business entity to have something
innovative and creativity because investors usually invest in such plan only. Therefore, in this
respect it can be said that employees of F & RM organization will require to have innovative
and creative skills as then only, they will be able to persuade the customers. The business will
be a construction based business; therefore major roles will be played by site managers and
other labours who will be working on the field (Osterwalder and Pigneur, 2010). Hence, F &
RM organization will require 2 site managers who can look upon the entire site functioning
and the projects that are being provided to F & RM organization from diverse clients. Apart
from this, F & RM organization will have to appoint Human Resource Manager as well who
will be looking on company’s prospects regarding internal and external work procedure.
Furthermore, F & RM organization will also be emphasizing on employing 8 labours at the
initial stage, who can perform all the activities that are mandatory under Construction
Company.
Financials
With the help of income statement, financial plan of F & RM organization is
presented here. Apparently, the level of revenue will keep on changing and this will also have
a direct impact on business sustainability and profitability aspects. According to the expected
budget and financial requirements, F & RM organization will be managing all its functions
and operations (Tellis and Johnson, 2007). The business will also have to develop fund
raising strategy so that investors can be attracted who can help the business in raising funds.
The business must have to adopt new technologies and equipment so that cost of production
can be reduced and level of profitability can be enhanced. This will be beneficial for overall
success of the business.
Cash Flow
Cash flow statement
Pre-operating
year Year 1 Year 2 Year 3 Year 4 Year 5
Cash inflow
Revenue 0 1255000 1380500 1518550 1670405 1837445.5
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Owner's capital 3500000 0 0 0 0 0
Bank Loan 2500000 0 0 0 0 0
Total cash inflow 6000000 1255000 1380500 1518550 1670405 1837445.5
Cash Outflow
Purchase of Fixed Assets 2400000 0 0 0 0 0
Legal & Registration charges 20000 0 0 0 0 0
Infrastructure 1500000 0 0 0 0 0
Purchase 0 376500 414150 455565 501121.5 551233.65
Rent 0 180000 180000 180000 180000 180000
Utilities & Maintenance 0 62750 69025 75927.5 83520.25 91872.275
Salaries & wages 0 225000 243000 262440 283435.2 306110.016
Insurance 0 30000 30000 30000 30000 30000
Promotions and advertisements 150000 31375 34512.5 37963.75 41760.125 45936.1375
Miscellaneous expenses 500000 62750 69025 75927.5 83520.25 91872.275
Interest 0 150000 135000 135000 135000 135000
Tax payment 0 -20675 -6842.5 5145.25 18409.535 33084.2293
Loan Repayment 0 250000 250000 250000 250000 250000
Total cash outflow 4570000 1347700 1417870 1507969
1606766.8
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1715108.58
3
Net cash flow 1430000 -92700 -37370 10581 63638.14
122336.917
2
Opening balance 0 1430000 1162300 1343130 1529131 1734043.14
Net cash flow 1430000 -92700 -37370 10581 63638.14
122336.917
2
Closing balance 1430000 1162300 1343130 1529131
1734043.1
4
1959782.41
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Income statement
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue
125500
0
138050
0
151855
0
167040
5
183744
6
Less: Cost of goods sold 376500 414150 455565 501122 551234
Gross profit 878500 966350
106298
5
116928
4
128621
2
Utilities and maintenance 62750 69025 75928 83520 91872
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Salaries & Wages 225000 243000 262440 283435 306110
Insurance 30000 30000 30000 30000 30000
Promotion and advertisements 31375 34513 37964 41760 45936
Depreciation 240000 240000 240000 240000 240000
Miscellaneous expenses 62750 69025 75928 83520 91872
Rent 180000 180000 180000 180000 180000
Prelimniary expenses written
off 15000 3138 3451 3796 4176
Total operating expenses 831875 865563 902259 942236 985791
EBIT (Operating Profit) 46625 100788 160726 227048 300421
Interest payment 150000 135000 135000 135000 135000
EBT (Earning before tax)
-
103375 -34213 25726 92048 165421
Tax payment -20675 -6843 5145 18410 33084
Net profit -82700 -27370 20581 73638 132337
Conclusion
Concluding the entire business plan, it can be said that the business idea of F & RM
organization will be beneficial if number of clients and customers will increase in future.
Looking towards the current scenario of market, it can be said that the business may get
success as it is a feasible idea to develop such type of entity. Economic problems have been
increasing among people; therefore they are unable to spend resources on house rebuilding;
therefore in this area, coming with a new business service will be a profitable aspect for F &
RM organization. Thus, this will assist in enhancing the market share of the business through
reaching out large number of customers. Further, emphasis will also need in the area of
promotion.
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References
Barringer, B., 2012. Entrepreneurship: Successfully Launching New Ventures.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Jasra, J.M. and et. al., 2011. Determinants of business success of small and medium
enterprises.International Journal of Business and Social Science. 2(20).
Neck, H. M. and Greene, P. G., 2011. Entrepreneurship education: known worlds and new
frontiers. Journal of Small Business Management. 49(1). pp.55-70.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for
visionaries, game changers, and challengers. John Wiley & Sons.
Tellis, G. and Johnson, J., 2007. The Value of Quality. Marketing Science. 26(6). pp. 758-
773.
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