Viability of Business Plan for Dough's Chips: A Small Chips Manufacturing Enterprise

This project report evaluates the viability of a business plan for Dough's Chips, a small chips manufacturing enterprise. It discusses the core components of the enterprise, their interrelation, market research, financial analysis, and potential issues and risks associated with start-up businesses.

Enterprise

EXECUTIVE SUMMARY
This project summarises the viability of formulating a business plan which essentially focuses on
varied key components in business, their significance and their inter dependence on each other.
This project report also illustrates evaluation of differential intrinsic as well as extrinsic forces
that have their influence on business through frameworks. This report also comprises of rationale
of business viability and supported financial statements.

Contents
EXECUTIVE SUMMARY.............................................................................................................2
Contents...........................................................................................................................................3
INTRODUCTION...........................................................................................................................1
DISCUSSION AND ANALYSIS...................................................................................................1
Scope and nature of enterprise.....................................................................................................1
Explanation of business core components and their inter relation with the enterprise...............2
Business planning and viable market research including financial analysis...............................3
Issues and risks associated with start-up business depicting the growth and development of
business plan................................................................................................................................6
Internal and external factors that needs to be addressed..............................................................7
CONCLUSION................................................................................................................................8
REFRENCES.................................................................................................................................10

INTRODUCTION
Business plan can be understood as a descriptive written document on a formal basis which
essentially contains goals, processes and time duration for achieving those organisational
objectives (Busch and Lacy, 2019). This project report aims to describe a business idea of a
small enterprise which is named as Dough’s Chips. It is a small chips manufacturing
organisation. This manufacturing unit is situates at Central London. This chips manufacturing
organisation is founded by Kristen Elbert. This enterprise produce potato and banana based chips
and pack them in an attractive packages. In order to make it affordable for common people, it
comes in different range. At its initial stage, it has been sold at company’s website as well as
physical stores of its distributors.
This project report critically evaluates the main components of an enterprise and also throw
light on their inter relation. This report demonstrates the understanding regarding planning as
well as performance of small business enterprises. It also highlights and critically analyse varied
potential issues that influences management practices of a small enterprise.
DISCUSSION AND ANALYSIS
Scope and nature of enterprise
Presented business idea is setting-up of a small manufacturing company known as Doug’s
Chips. This business is related to Snack Food Production Industry and entrepreneur want to set
up a manufacturing unit for producing chips as well as related packaged snacks. It will be
established at Central London and aim of this business idea is to manufacture highly standardised
quality and maintain hygiene practices while producing potato and tortilla chips. Their vision is
to make their brand Doug’s Chips a leading chips manufacturer in London. Their mission
statement is to make a reach to a large number of customers through their online and physical
channels. Entrepreneur of this business wants to make this business affordable to all groups of
people. Initially they will packets of chips which belongs to different rice ranges. Their main
target of customers will be the people of Central London who are at the age of 15 to 60 years and
have a stable income.
Its offered products will be potato, corn & tortilla chips, nut butters, popcorn and roasted
nuts. However, unique selling proposition of this manufacturing business will be potato and corn
chip as well as their packaging in attractive packages.
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After performing extensive marketing strategy, entrepreneurs have reached to some
strategies that can be used for making this business even bigger. At the initial stage, entrepreneur
will post relevant and engaging content on their website and social media pages in order to invite
people for the opening ceremony as well as to inform them about this new brand of Doug’s
Chips. Apart from this, for informing massive number of customers, they can position flexi
banners at some strategic places. They can also tie up with supermarkets to keep their produced
products in exchange of some commission or fee. Entrepreneurs can leverage the enormous
popularity of social networking sites for making their brand viable (Dzwigol, Dzwigol-Barosz
and Kwilinski, 2020).
Legal status of Doug’s Chips will be a partnership business as for setting up of a
manufacturing unit as well as other related job, it is needful for the entrepreneur. Operations at
Doug’s Chips will be taken care up by the entrepreneur and they will hire a staff for handling
various processes such as packaging, manufacturing, logistics and many more.
Explanation of business core components and their inter relation with the enterprise
Management- It can be understood as a practice of administering, supervising, controlling
and directing various processes as well as personnel of an organisation (Dzwigol and Et. Al.,
2019). Management is an essential aspect of any establishment. It is closely interlinked with
every process of an organisation. As all processes needs to be managed effectively and carefully
in order to achieve organisational goals as well as objectives. It is related with managing
employees, making strategies related to financing, marketing or maintaining operations in a
strategic manner. In relevance to Doug’s Chips, its entrepreneurs have to manage all the
processes along with employees.
Legal Status- This can be described as a legal identity that is needed for business to
perform its functions in an effective manner. Legal status of business enterprise can be sole
trader, partnership, Joint Stock Company and many more that assess the nature as well as scale
of operations in an effective manner. Legal status of Doug’s Chips is partnership business as it
needs huge capital investment for setting up of a manufacturing unit. It is closely related with
management and finance aspects of an organisation. As due to partnership, management of
operations along with profits can be bifurcated among partners in a strategic way. Financing the
capital and other requirements of Doug’s Chips can be distributed as per the agreed terms of
partners.
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Operations- Business operations can be understood as varied activities that are to be
performed in order to increase the value of an establishment as well as to earn profits. Business
operations of Doug’s Chips are manufacturing, packaging, supplier connectivity, collaborations
with supermarkets and logistics. These are closely inter related with finance, legal status and
aspects of business strategy. As for making the business operations successful, all these aspects
are necessary.
Employees- These are considered as assets for any organisation and these are connected
with marketing and management aspects of business (Hanson, 2019). In relation with Doug’s
Chips, these employees are considered as significant element as they are the one who actually
works on operational level and will be managed effectively by entrepreneurs.
Marketing- It is a crucial segment while setting up of a new enterprise as through this
entrepreneurs of Doug’s Chips can make their reach to large customer base. This aspect is related
to business strategy as for making marketing practices successful, this play a significant role.
This is also related with finance as it is needful to invest in marketing practices to make it more
impactful.
Finance- It is described as life blood for organisation as it is the source where investment
can be made for attaining organisational objectives in an effective way. This aspect is related to
the elements of business strategy and effective marketing practices. It is important for
entrepreneurs of Doug’s Chips to manage their finance strategically in order to operate their
operations in an effective manner.
Business strategy- It is important for every organisation to formulate strategies for making
the business operations viable and successful. In accordance with Doug’s Chips, this element is
related with marketing strategies and practices for operating business activities effectively.
Legal compliance- It is significant for entrepreneurs of Doug’s Chips to make legal
compliance with government regulations. It is related with managing the operations with all legal
compliances which help them to avoid any expensive litigation.
Business planning and viable market research including financial analysis
In order to ascertain viable features and attractiveness of market, it is beneficial for
organisations to use Porter five forces model. It aids them to identify their competition in market
and frame competent strategies to face them in a reliable manner (Jasti, Kota and Kale, 2020).All
the elements of Porter five forces in relevance with Doug’s Chips are mentioned below:
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Competitive rivalry- This element can be understood as number of competitors present in
market. If there are large number of competitors are present in market offering similar products
then it lessens the power of an organisation (Mao and Et. Al., 2018). Whereas, small number of
competitors, increases the viability of an establishment. In snack food production industry, there
is high intensity of rivalry due to its maturity approach of its market. However, in order to
become viable in market entrepreneurs of Doug’s Chips can formulate strong advertising
campaigns which help them to face competition in industry.
Threat of new entrants- Entry of new entrants can poses a threat for organisations as it
increases the level of competition. Threat of new entrants is low due to large capital requirements
for entering in snack food production industry of UK. Stringent legislations as well as complex
distribution channels made entry of new entrants difficult. Entrepreneurs of Doug’s Chips has to
invest more resources in making their distribution channel more effective which helps to
compete with other start-ups.
Bargaining power of suppliers- It refers to power of suppliers regarding how easily they
can drive up the prices of their raw inputs (Moniuszko-Szajwajand Et. Al., 2018). These factor is
essentially affected by uniqueness of raw materials, switching cost and number of suppliers in
market. In snack food production industry, bargaining power of suppliers are high as they are
less in number and provide effective dealings to chips manufacturing companies. In relevance
with Doug’s Chips, they can collaborate with efficient suppliers for bringing effectiveness in
their production processes.
Bargaining power of buyers- This element refers to ability of customers to drive the
prices up or low in market. In relation to snack food production industry, bargaining power of
customers is moderate as they can switch to other brands in an easy and quick way as there are
many organisations which provides similar goods. Entrepreneurs of Doug’s Chips have to face
moderate bargaining power of their buyers as they follow a standardised process for producing
chips.
Threat of substitutes- This can be understood as threat to companies whose products
have close substitutes in market (Pan and Et. Al., 2020). In snack food production industry,
threat of substitutes is high as there are many manufacturing companies produce similar kind of
goods. In accordance with Doug’s Chips, entrepreneurs have to bring some attractiveness in their
products in order to make them viable and presentable.
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Justified reasons for assessing the viability of business
It has been assessed that Doug’s Chips have potential in its idea and have to face many
hurdles in setting up of company. But its strengths of standardised process and strong
distribution network, makes this idea viable as well as assures its success. It can easily reach to
massive number of customers through its official website and strong collaborations with
suppliers and supermarkets.
Cash flow forecast
Cash flow projection is a kind of budgeted document which depicts inflow and outflow of
cash on the basis of past performance of business and market research. An effective forecasting
process for estimating cash inflow and outflow is considered as beneficial for organisations to
have an understanding regarding their long-term viability. Through this, entrepreneurs of Doug’s
Chips can have a valuable insight regarding their future plans as well as possible outcomes. Cash
flow forecast for Doug’s Chips are as follows:
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Break even analysis
Break even analysis is used by establishments for examining the relation between fixed
and variable cost along with revenue (Pérez Ortega, 2020). It is beneficial for entrepreneurs of
Doug’s Chips in assessing their break-even point for better evaluation of varied business plans as
well as projects. Projected break-even analysis of Doug’s Chips are as follows:
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Capital investments and cost structure
This can be described as a practice of acquisition of physical assets by an organisation in
order to achieve organisational goals and objectives (Rafiei and Ricardez-Sandoval, 2020). It is
beneficial for business to assess their long-term viability and show their confidence in further
expansion of business. Capital investment and cost structure statement in relation to Doug’s
Chips are as follows:
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Projected sales
This can be described as an estimate of generation of revenue by an organisation during a
specified period. It is beneficial for Doug’s Chips as it aids them to have an estimate of their
revenue generation streams. Projected sales report in relevance with Doug’s Chips are as
follows:
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Projected profits
Projected profits can be understood as an estimation of generating profits in a specified
time period on a future basis (Ramanadham, 2019). Projected profit statement in accordance with
Doug’s Chips are mentioned below:
Issues and risks associated with start-up business depicting the growth and development of
business plan
Competition- It can be consider as a foremost risk for small businesses as they have to
compete with larger and well-established organisations in market (Samiei and Habibi, 2020). In
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order to set-up a business unit, entrepreneurs should not only evaluate customer needs but also
present competition in marketplace. Entrepreneurs of Doug’s Chips have performed extensive
market research which in order to be at competitive edge for a healthy competition.
Culture of central London- People resides at Central London are dynamic in their
perceptions, tastes and attitude. They want to live a life of high quality and highly believes in
exploring. There changed dynamics can be a risk for Doug’s Chips as they follow a standardised
process in their manufacturing unit. Through which customers at London may get bored after
some time and switch to another brand.
Supplier’s behaviour- It can be a risk for start-up businesses as their sales is mostly
depends on their production process and this depends on raw inputs which are delivered by
suppliers (Santos-Neto and Costa, 2019). It is a risk for Doug’s Chips as they have to depend for
raw materials on supplier’s behaviour which can hamper their revenue growth.
Government legislations- Changes in political legislations can be a serious issue for new
start-up business. Due to Brexit which marks the exit of United Kingdom from European Union
has bring many changes in processes or methods of doing business. This arrangement has bought
many changes in business patterns regarding trade deals, employment regulation and
immigration processes. This situation will also affect the business operations of Doug’s Chips.
Ineffective sales funnel- It is imperative for owners of start-up business to effectively
evaluate their sales funnel in order to frame strategies for increasing their conversion rates (Shao
and Et. Al., 2020). For maintaining sales during the course of business, entrepreneurs of Doug’s
Chips need make effective optimisation in their products and distribution network. So that
customers remain stick to the brand.
Internal and external factors that needs to be addressed
In order to assess the viability of an organisation, it is required to evaluate varied internal
as well as external factors that impact extensively business operations either directly or
indirectly. Internal factors essentially comprises of employees, finance, production capabilities,
competitors and many more. Whereas, external factors encompasses of macroeconomics forces
such as technological, socio-cultural, legislative, economical and many more. For having the
accurate knowledge regarding forces that affect market dynamics, SWOT analysis can be used
by entrepreneurs of Doug’s Chips.
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SWOT analysis can be understood as a strategic framework which is used by
organisational managers to discover potential threats as well as opportunities (Zdravković,
Panetto and Weichhart, 2022). It aids them to assess varied intrinsic as well as extrinsic forces
that impact business operations adversely. This analysis assist entrepreneurs of Doug’s Chips in
making their business model more effective as well as aid them in taking critical decision in
relation to threats and opportunities. All the elements of SWOT analysis in relevance with
Doug’s Chips are as follows:
Strengths
 Standardised production- Strength of
Doug Chips is their standardised
production methods which will help
them to generate more revenues. Strong distribution market-
Entrepreneurs of Doug’s Chips has a
strong distribution channel through
their tie up and collaborations with
various supermarkets. Through this,
they can reach to a large number of
customers. Packaging process- Entrepreneurs of
Doug’s Chips has a strength of
excellent packaging process. They will
use attractive packages for influencing
more customers towards their brand.
Weaknesses
 Lack of research and development
department- At the initial stages of
business, entrepreneurs do not have
enough resources to make a separate
research and development department.
 Less investment in adopting new
technology- Entrepreneurs of Doug’s
Chips has made low investment in
implementing new technology in their
operations as well as distribution
network.
Opportunities New trends in market- Attitude of
customers of demanding more varieties
can be an opportunity for Doug’s
Chips.
 Digitalisation era- Entrepreneurs of
Doug’s Chips can start to sell their
Threats
 Economic challenges- Due to global
pandemic, there is a great change in
spending patterns of people which can
be a threat for Doug’s Chips.
 Legal compliances- For running a
manufacturing unit in Snack Food
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products through online platforms
which help them make their distribution
channel stronger.
Production industry, it is compulsory to
follow various legislations. Non-
compliance of legislations can poses as
a threat for Doug’s Chips.
CONCLUSION
From the above mentioned information, it has been assessed business plan is a written
document which contains goals, objectives, methods and processes in a detailed form. SWOT
analysis is a strategic framework which is used by organisation to critically evaluate all the
intrinsic as well as extrinsic forces that impacted business operations in an adverse way. Porter
five forces is a tool which help organisations in assessing their competitive advantage as well as
formulation of differential corporate strategies. Various components of business are marketing,
sales, finance, management and many more. These are inter connected to each other in numerous
ways. At the initial phase, start-up business faces many issues like competition, supplier’s
behaviour, government legislations, cultural practices and many more which create hindrances in
growth as well as development of business operations.
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