Topic C05-Overview eng - hkedcity.netedblog.hkedcity.net/te_bafs_e/wp-content/blogs/1683... · · 2009-09-20Topic C05: Process of Developing a Business Plan Topic Overview p. 2

Topic C05: Process of Developing a Business Plan Topic Overview p. 1

BAFS Learning and Teaching Example As at April 2009

Learning Objectives: 1. To understand the importance of business planning; 2. To understand the process of developing a business plan; and 3. To develop a basic business plan for a SME. Overview of Contents: Lesson 1 Business Planning and Setting Objectives Lesson 2 Developing a Business Plan (Part I) Lesson 3 Developing a Business Plan (Part II) Resources:

Topic Overview and Teaching Plan PowerPoint Presentation Student Worksheet

Suggested Activity:

Case Study

Topic Overview Topic BAFS Compulsory Part - Introduction to Management

C05: SMEs Management Process of Developing a Business Plan Level S4 Duration 3 lessons (40 minutes per lesson)



Lesson 1 Theme Business Planning and Objectives Setting Duration 40 minutes Expected Learning Outcomes: Upon completion of this lesson, students will be able to: 1. Discuss the needs and importance of business planning; 2. Explain the process of developing a business plan; 3. Set objectives for a business plan; and 4. Define the mission and goals of a business. Teaching Sequence and Time Allocation:

Activities Reference Time

AllocationPart I: Introduction

Teacher introduces the lesson by describing the background of case of Uncle Bills Caf. PPT #2 3 minutes

Part II: Content

Activity 1 Case Study (Part I) Put students into groups of four to five and

identify the criteria Uncle Bill should consider in the set up of his business.

Teacher invites students to share their answers. Teacher discusses the importance of a business

plan. Teacher concludes the case study Part I by

discussing the answers with students. Summarise the six steps of a business plan

development.

PPT#3

Student Worksheet

pp.1-2

PPT#4-5

15 minutes

Teacher introduces the first step of business planning, i.e. setting objectives.

Teacher defines mission and explain the process of creating a mission statement.

Teacher displays sample mission statements of some well-known companies.

Teacher further explains what goals are and the process

PPT#6-13

20 minutes



of goals setting. Activity 2 Case Study (Part II)

Students are required to read the case of Uncle Bills Caf Part II and determine the mission and goals of Uncle Bills Caf.

Teacher invites students to present their answers.

PPT#14

Student

Worksheet pp.3-4

Part III: Conclusion Teacher consolidates the discussion and highlights the

key concepts covered. 3 minutes



Lesson 2 Theme Developing a Business Plan (Part I) Duration 40 minutes Expected Learning Outcomes: Upon completion of this lesson, students will be able to: 1. Explain the need of understanding the market during a business plan

development; 2. Discuss concerns related to customers, products, market structure and

competition in the market; and 3. Describe elements to be considered when deciding selling strategies. Teaching Sequence and Time Allocation:



Teacher reviews what was taught in the previous lesson. 3 minutes

Part II: Content Teacher introduces the second step of business

planning, i.e. understanding the market. Teacher further explains the information and data

needed for market research. Activity 3 Case Study (Part III)

Students remain in their groups formed in the previous lesson. Have them read the case of Uncle Bills Caf Part III and answer the questions.


PPT#15

PPT#16 Student

Worksheet pp.5-11

17 minutes

Teacher introduces the third step of business planning, i.e. deciding selling strategy.

Teacher further explains different elements, i.e. the 4 Ps, related to selling strategy.

Activity 4 Case Study (Part IV) Students are required to read the case of Uncle

Bills Caf Part IV and answer the questions. Students are invited to present their answers.

PPT#17

PPT#18 Student

Worksheet pp.12-16

17 minutes



Part III: Conclusion Teacher concludes the session by reviewing the major

steps of a business plan development. 3 minutes



Lesson 3 Theme Developing a Business Plan (Part II) Duration 40 minutes Expected Learning Outcomes: Upon completion of this lesson, students will be able to: 1. Describe the issues related to organise a business; 2. Describe the issues related to financial projection; and 3. Draw up an implementation schedule for a business plan. Teaching Sequence and Time Allocation:



Teacher reviews what students learned in previous lessons. 3 minutes

Part II: Content Teacher introduces the fourth step of business planning,

i.e. organising the business. Activity 5 Case Study (Part V)

Students remain in their groups formed in last lesson. They are required to read the case of Uncle Bills Caf Part V and answer the questions.


PPT#19

PPT#20-21 Student

Worksheet pp.17-18

12 minutes

Teacher introduces the fifth step of business planning, i.e. making financial projections.

Activity 6 Case Study (Part VI) Students are required to read the case of Uncle

Bills Caf Part VI and make projections on revenues and expenses of Uncle Bills Caf.


PPT#22

PPT#23-25 Student

Worksheet pp.19-21

15 minutes

Teacher explains the sixth step of developing a business plan, i.e. taking action.

Activity 7 Case Study (Part VII) Students are required to read the case of Uncle

Bills Caf Part VII, list out the major tasks of

PPT#26

PPT#27 Student

Worksheet

7 minutes



setting up Uncle Bills Caf and draw up an implementation schedule.


pp.22-23

Part III: Conclusion Teacher concludes the session by reviewing the whole

process of developing a business plan. PPT#28 3 minutes

1

1

BAFS Compulsory PartIntroduction to Management

Topic C05: SMEs Management- Process of Developing a BusinessPlan

Technology Education SectionCurriculum Development Institute

Education Bureau, HKSARGApril 2009

IntroductionThis session aims to introduce students to the process of a business plan development. Students will understand the different steps of developing a business plan.

DurationThree 40-minute lessons.

ContentsLesson 1 Business Planning and Setting ObjectivesLesson 2 Developing a Business Plan (Part I)Lesson 3 Developing a Business Plan (Part II)

2

BAFS Compulsory PartLearning and Teaching Example2

Topic C05Process of Developing a Business Plan

Activity 1: Case Study (Part I)

Uncle Bill has just returned to Hong Kong from Australia and is planning to open a Cha Chaan Teng.

He needs your advice!

Lesson 1

Activity 1 :

Start the lesson by describing the background of case of Uncle Bills Caf.Refer to Student Worksheet p.1 and explain to the class the background of the case. Uncle Bill has just returned to Hong Kong after living in Australia for 12 years. He was a chef at a Chinese restaurant in Melbourne. Uncle Bill is planning to open a Hong Kong style caf, called Cha Chaan Teng (). Being away from Hong Kong for 12 years, Uncle Bill is not so familiar with the local fast food industry. He seeks your advice for setting up his business.

3



Activity 1: Case Study (Part I)

What are the key factors Uncle Bill should consider in setting up his business?

Ask the class to form groups of four to five and discuss among themselves what important issues Uncle Bill should think about in setting up his cafe. Ask students to write down their answers on Student Worksheet p.2. Invite students to present their answers.

4



The Importance of Having a Business Plan

If you fail to plan, you plan to fail!

Introduce the concept of business plan with the idiom: If you fail to plan, you plan to fail and explain to the class that the importance of having a business plan includes the following:

A business plan is a roadmap for entrepreneurs to start a new business or to expand an existing business;

A business plan is a thinking process which helps entrepreneurs to understand the market condition, their strengths and weaknesses,to formulate suitable tactics and strategies for their business and improve their chance of success; and

A business plan is required if an entrepreneur wants to raise capital or borrow money.

5



Process of Developing a Business Plan

SetSetObjectivesObjectives

UnderstandUnderstandthe Marketthe Market

IdentifyIdentifySellingSelling

StrategyStrategy

OrganiseOrganisethe structurethe structure

MakeMakeFinancialFinancialProjectionProjection

Take ActionTake Action

Based on the discussion from Case Study Part I, outline the process of developing a business plan:

Set objectives What does Uncle Bill expect his business to achieve? For example, for self employment, profit making, customer satisfaction, etc.

Understand the market What is the market condition? Who are the competitors? Are their products different from ours?

Determine selling strategies What are we selling? What should the selling price be? Who are the target customers? How should we sell our products or services?

Organise the business In what form will the business be set up? How many employees are needed? What are the recruitment requirements? Who will the manage the business?

Make financial projection Where does the capital come from? What are the estimated revenues? What is the food cost? What is the expected profit?

Take action Set an agenda for the implementation of the business plan.

6



Step 1: Setting Objectives

What is the purpose of starting a business?People have different motivations:

Self employmentFinancial reward / making profitsPersonal satisfactionCustomer satisfactionInnovation

The first step in developing a business plan is to set the objectives of the business. Teacher may ask students these questions:

What is the purpose of starting a business? What does the owner want to achieve?

Explore what motivate people to run their own business. Possiblemotivations are:

Some people rather work for themselves than other; Some people hope to increase their income by running their own

business; Some people gain personal satisfaction on setting up a business; Some people want to satisfy others with their products or

services; and Some people may have creative ideas and want to introduce

them to the public.Ask the class to come up with more motivations.

7



Step 1: Setting Objectives

Define the mission of the business.Mission is what a business does in relation to its customers, products and the benefits to its customers.Companies often use a Mission Statement to define their goal in the long run.

Explain to the class that a business sets its objectives throughformulating its mission and goals. A companys mission has to show what a company does for its customers so the customers will purchase its products or services in return.Examples of mission:

The mission of an English language tutor is to help students learn English in an effective way.

The mission of a car repair shop is to provide efficient and reliable services for car owners.

8



Sample of Mission StatementOcean Park provides all their guests with memorable experiences that combine entertainment and education, while inspiring life long learning and conservation involvement. Our aim is to maintain a healthy financial status, while offering the guests a diverse range of activities at competitive prices. Ocean Park exists for the publics benefit and strives to deliver the highest standards of safety, animal care, products and guest service.(Source: http://www.oceanpark.com.hk)

Show the class the mission statement of Ocean Park and discuss itscontent.

Suggested discussion points: What does Ocean Park commit to doing for its customers? Is the mission statement specific enough for employees to follow? How does this mission statement address to Ocean Parks customers,

products (or service) and the benefits to its customers?

9



Sample Mission Statement

7-Eleven store focuses on meeting the needs of busy shoppers by providing a broad selection of fresh, high-quality products and services at everyday fair prices, along with speedy transactions and a clean, safe, friendly shopping environment.(Source: http://www.7-eleven.com)

Show the class the mission statement of 7-Eleven and discuss its content. Suggested discussion points: What does 7-Eleven commit to doing for its customers? Is the mission statement specific enough for employees to follow? How does this mission statement address to 7-Elevens customers,


10



Sample Mission Statements

Coca-Cola Company:To Refresh the World...in body, mind, and spirit. To Inspire Moments of Optimism...through our brands and our actions.

To Create Value and Make a Difference...everywhere we engage.(Source: http://www.thecoca-colacompany.com)

Show the class the mission statement of Coca-Cola and discuss its content.Suggested discussion points: What does Coca-Cola commit to doing for its customers? Is the mission statement specific enough for employees to follow? How does this mission statement address to Coca-Colas customers,


11



Sample Mission Statements

Virgin Atlantic:Mission 1: To grow a profitable airline...Mission 2: Where people love to fly...Mission 3: Where people love to work

(Source: http://www.virgin-atlantic.com)

Show the class the mission statement of Virgin Atlantic and discuss its content. Suggested discussion points:

What does Virgin Atlantic commit to doing for its customers? Is the mission statement specific enough for employees to follow? How does this mission statement address to Virgin Atlantics

customers, products (or service) and the benefits to its customers?

12



Sample Mission Statement

Walt Disney: To make people happy!(Source: Aaker, D.A., Strategic Market Management, 7th edition, p.29, John Wiley & Sons, Inc., 2005)

Giordano: To make people feel good and look great.(Source: http://www.giordano.com.hk)

Show the class the mission statements of other popular companies and discuss their contents as above. Ask the class: As a customer, what do they think about these mission statements?Have students find more sample mission statements of companies they are familiar with and share with classmates.

13



Goals Setting

Define the goals of the business.Goals are specific performance targets that a company wants to achieve in short term.Such goals should be consistent with the companys mission.

The goals of a business are specific performance targets that a company wants to achieve in short term, say, within a few months to a couple of years. Such goals should be consistent with the companys mission.Examples of goals:

To double the sales within 2 years. To increase the gross profit margin by 10%. To expand to the Taiwan market in the next 12 months. To launch the new product before Christmas.

Ask students to suggest some goals of a business.

14



Activity 2: Case Study (Part II)

Referring to Uncle Bills case, lets move on to step one setting objectives.Please define the goals and create a mission statement.

Activity 2 :

Ask students to set goals and come up with a mission statement for Uncle Bills Caf. Suggested mission statements for Uncle Bills Caf:

To provide tasty and healthy fast meals in a clean environment at a reasonable price;

To give customers a new food experience by providing specialty meals;

To satisfy customers needs by providing home-made style meals; and

To serve economical and healthy fast food. Suggested goals for Uncle Bills Caf:

To start serving late night supper in three months; To achieve a monthly revenue of $150,000 in six months; To increase the business volume by 30% in the second year; To breakeven after the first year of operation; and To recover the initial investment in the third year of operation.

Ask students to share their ideas in class.

End of Lesson 1

15



Step 2: Understanding the Market

Identify market condition related toCustomersProductsMarket structureCompetition

Lesson 2

Teacher starts by reviewing the steps of developing a business plan and then explain the second step of business planning, i.e. understanding the market. Based on the four items, i.e. customers, products, market structure and competition, teacher explains to the class that the following questions needed to be considered in this stage:

Who are the potential customers? What are the characteristics of the potential customers? Are there any competitors in the market ? If so, who are they? Is there any company dominating the market? Are the competitors products different from ours? If yes, in what

aspects? What is the degree of competition in the market?

16



Activity 3: Case Study (Part III)

Read the case carefully and answer the questions.

Activity 3 :

Ask students to remain in their groups formed in the last lesson and read the case of Uncle Bills Caf Part III, then answer the questions.Suggested answers to the questions:

1. Students and workers from the neighborhood; and residents in the area.

2. Fast food chains, Burger joints, noodle shops, convenience stores, and Chinese restaurants are direct competitors. The Western cafis less direct.

3. Uncle Bill plans to offer typical Cha Chaan Teng foods. 4. Uncle Bill should set prices that are competitive, i.e. close to

average or a bit lower, within the area.5. Uncle Bill distribute flyers or cash coupons to pedestrians on the

street, nearby schools, office buildings, and residence.

17



Step 3:Deciding Selling StrategyBased on results of the survey, decide

What Uncle Bill should sell.What the prices range is.What the promotional strategies are.What channels should be used for product selling.

The third step of developing a business plan is to make decision on issues related to sales and marketing strategies. The 4 Ps, i.e. Product, Price, Promotion and Place, framework may be used. Product

What products should Uncle Bill sell? How do we differentiate his products from the competitors? How can the products satisfy customers needs and wants?

Price How should the prices be determined in order to maintain

competitiveness ? Should he set lower prices for a higher sale or higher prices for a

larger profit margin?Promotion

How should he inform potential customers about the products? How should he attract new customers? How should he enhance the desirability of the products?

Place How should he deliver the products into the customers hands? What is the best distribution channel?

18



Activity 4: Case Study (Part IV)

Read the case carefully and answer the questions.

Activity 4 :

Have students read the case of Uncle Bills Caf Part IV and answer the questions. Suggested answers to the questions:

1. Uncle Bill adds Australian style coffee and Chinese soups to his cafs menu to differentiate his caf from others.

2. Uncle Bill sets average prices for breakfast and lunch but sets a higher price for dinner set menus that come with Chinese soups.

3. Uncle Bill plans to promote his new caf by offering tea set coupons for spending that exceeds $100.

4. Uncle Bill plans to increase sales by offering take-away and free delivery service to nearby schools, offices and residence.

5. Other reasonable suggestions are also acceptable. Students are encouraged to suggest innovative and unconventional ideas.

Invite students to present their answers.

End of Lesson 2

19



Step 4:Organising the Structure

Legal form of the businessOrganisational structureManagement

Lesson 3

Teacher explains different issues to be considered when organising the structure:Legal formThe first question concerns the legal form of the company. Normally, SMEs start in the form of sole proprietorship or partnership. Followed by the growth of the business, they then transform into corporations. Organisational structureAnother important issue is manpower planning determine recruitment guidelines such as salary, benefits, training, motivation etc.ManagementWho will be responsible for managing the operation of the business?

20



Activity 5: Case Study (Part V)

Read the case carefully and determine the manpower requirements of Uncle Bills caf.Estimate their salaries.

Activity 5 :

Students read the case of Uncle Bills Caf Part V, answer the questions and complete the table. Invite students to present their answers.

Suggested answers:Uncle Bill may set up his caf in the form of sole proprietorship which is simple, fast and less expensive.The job needed to be done is:

1. Purchasing and sourcing2. Preparing foods and drinks3. Controlling of cash flow 4. Staffing5. Providing take-away services and6. Cleaning

21



Activity 5: Case Study (Part V)

39,5007Total

5,5001Waiter/waitress (full time)

4,0001Cleaners

2 x 3,0002Waiters /waitresses (part-time)

8,0001Assistant chef & bartender

6,0001Cashier/waitress (Auntie May)

10,0001Sou Chef (Uncle Bill)

Estimated monthly salary ($)

Number requiredPosts

Suggested manpower requirements of Uncle Bills caf: A Sou Chef (Uncle Bill) and manager drawing a salary of $10,000; A cashier/waitress (Auntie May) drawing a salary of $6,000; An assistant chef to prepare foods and drinks with an estimated

salary of $8,000; A full-time waiter or waitress with an estimated salary of $5,500; A part-time waiter or waitress during peak hours, i.e. breakfast and

lunch time with an estimated salary of $3,000; A part-time waiter or waitress for delivery with an estimated salary

of $3,000; and A cleaner with an estimated salary of $4,000.

Other reasonable answers are also acceptable.

22



Step 5:Making Financial Projection

Estimation of revenues, expenses and cash flows.Dont be too optimistic on the projection of sales, revenues and cash inflows.Solvency is crucial to the survival of a business.Keep petty cash for emergency.

The fifth step in developing a business plan is to make financial projection. Teacher asks students the below questions:

Where is the capital from? What is the estimated gross revenue? What is the food cost? What is the estimated profit?

Financial projection involves fund raising, estimation of revenues, expenses, cash flows and all other matters related to money. Estimation of revenues is the hardest part in business planning. Without going into details, I would like to highlight the fact that business owners are usually too optimistic towards the forecast of sales, revenues and cash inflows of a new business. Therefore, a more conservative projection is recommended. Moreover, solvency is crucial to the survival of a company. So keeping some extra cash for emergency is required during the process of budgeting.

23



Activity 6: Case Study (Part VI)

Read the case carefully and project annual revenues and expenses of Uncle Bills caf.

Activity 6 :

Ask students to read Part VI of the case of Uncle Bills Caf and complete the financial projections for the new caf. Invite students to present their answers.See suggested answers in the following slides.

24




Total annual revenue = $4,525 x 360 = $1,629,0004,525Total revenue per day

7502530Take away & delivery1,2253535Dinner

4501530Afternoon tea1,2002060Lunch

9001560Breakfast

Total revenue

($)

Value per transaction

($)

No. of transactionsItems

Suggested answer for revenues projection. Other reasonable answers are also acceptable.

25




1,608,700Total expenses per year

36,000Miscellaneous

48,000Insurance

120,000Utilities

520,000Salaries, bonus and MPF

396,000Rent and management fees

488,700Food supplies

Projected annual amount ($)Items

Suggested answer for expenses projection.Based on the projected annual revenue of $1,629,000 (see last slide), Uncle Bill is expected to make a net income of $20,300 in the first year.Extended discussion:Suppose Uncle Bills goal is to recover the initial investment of $520,000 in the third year of operation (see suggested goals on PPT#19), and assume:

Uncle Bill wants to recover about 1/3 of the initial investment in the second year;

Operation costs will increase by 5% in the second year;Ask students to make a financial projection for the second year.Suggested answer:Projected total expenses for the second year are $1,608,700 x 1.05 = $1,689,135; Recovery of 1/3 of the initial investment in the second year is $520,000 x 1/3 = $173,333;Total revenue required to meet the goals is $1,862,468, i.e. 14.33% growth in revenues from the first year.

26



Step 6: Taking Action

List the tasks required to be done Create an agenda for the tasksExpect the unexpectedHave a contingency plan

Explain to the class that the final step of business planning is to create an agenda to implement the business plan.Firstly, make a list of all the tasks required to be done.Secondly, estimate how much time is required to complete these tasks.However, during the implementation of a business plan, unexpected things could happen, e.g. delay in the decoration of premises, problems in satisfying licensing requirements, inability to recruit enough staff or the right staff, change in market condition such as a new competitor, etc.Business owners should always take such possible problems into consideration and make plans for alternatives, it is so-called Plan B.

27



Activity 7: Case Study (Part VII)

Make a list of the major tasks to be done and time required before the opening of Uncle Bills new caf.Create an agenda for the tasks.

Activity 7 :

Ask students to make a list of the major tasks to start up a cha chaanteng and estimate the time needed to complete the tasks. Complete the schedule on Student Worksheet p.23. Major tasks include:

Searching for/renting the premises (Uncle Bill has selected a suitable shop premises);

Application for business registration and other licences (2 months); Renovation arrangement with contractors (1 month); Renovation (1 month); Purchase and installation of equipments, food wares, furniture,

fixtures, electrical appliances, etc. (2 months); Staff recruitment and training (1 month); Securing suppliers (1 month); Soft opening(1 week).

Invite students to present their answers.

28



The End

Conclude the session by reviewing the steps in developing a business plan (teacher may go back to PPT#5).

End of Lesson 3

Topic C05: Process of Developing a Business Plan Student Worksheet p.1


BAFS Compulsory Part - Introduction to Management Topic C05: SMEs Management Process of Developing a Business Plan Activity 1: Case Study (Part I) What is in a Business Plan? Form groups of four or five. Read the following case carefully and discuss the questions.

Uncle Bill has just returned to Hong Kong recently after immigrated to Australia for 12 years. He was a chef in a Chinese restaurant in Melbourne. Uncle Bill plans to open a Hong Kong style caf, so called Cho Chaan Teng (hereafter referred to as Uncle Bills Caf). Being away from Hong Kong for 12 years, Uncle Bill is not completely familiar with the local fast food industry. He now seeks your advice for a business plan development. First of all, he would like to know what his considerations are in developing his business plan.



Brainstorm ideas about Uncle Bills consideration in developing his business plan. (Hints: Assume that you want to start a small business to sell snacks at school, what kinds of questions would you ask yourself? Suggested questions include, What is my purpose?, What types of snacks should I sell?, What should the price range be? and Is there anyone else selling snacks at school?, etc.) _______________________________________________________ _______________________________________________________

_______________________________________________________ _______________________________________________________

_______________________________________________________ _______________________________________________________

_______________________________________________________

_______________________________________________________ _______________________________________________________

_______________________________________________________



Activity 2: Case Study (Part II) Setting Objectives Read the case carefully and help Uncle Bill determine the mission and goals of his new cafe.

After discussing with you, Uncle Bill understands that the process of business planning should involve the following major steps:

1. Setting objectives; 2. Understanding the market; 3. Deciding selling strategy; 4. Organising the business; 5. Making financial projections; and 6. Taking action.

Now Uncle Bill wants to move on to the first step - setting objectives.

Uncle Bill understands that people are more health conscious nowadays. He wants to serve healthy, nutritious and tasty meals to customers in a hygienic environment at a reasonable price.

He aims for a break-even in the first year, i.e. revenues equal expenses. He also wants to recover his initial investment in the following two years.



Please help Uncle Bill draft the mission statement and set goals for his caf.

Mission of Uncle Bills Caf

__________________________________________ __________________________________________ __________________________________________

Goals of Uncle Bills Cafe



Activity 3: Case Study (Part III) Understanding the Market Read the case carefully and answer the questions.

After setting the mission and goals of his caf, Uncle Bill continued to plan his new business. He found a vacant premise in the area near your school that meets the requirements of cha chaan teng business, so he carried out a survey in that area (see map below) in order to further develop his business plan.

School

Burger shop Con

veni

ence

st

ore

ChineseRestaurant

Fast foodchain

WesternCaf

Noo

dle

shop

UncleBillsCafe

Scho

ol

OfficeBuilding

OfficeBuilding

Office &Residential Buildings

Office & Residential Buildings

ResidentialBuildings



These eateries mainly serve people who live, study or work in the area. Those places are usually very busy during breakfast and lunch time. It is less busy in the evening after office hours. Dinner customers are mainly residents from the neighborhood. Uncle Bill obtained the following observations after visiting the different eating places in the area:

Fast food

Chain

The most crowded restaurant in the area frequented by all sorts of customers including residents, workers and students

Target customers are the middle to lower income earners

Prices are inexpensive Foods are greasy and unhealthy Self-served and hygienic

Burger Joint

Ranks second in terms of business volume Targets to younger customers Prices are inexpensive Serves mainly high calorie junk food Self-served and hygienic

Noodle Shop

Many students like to have lunch at the noodle shop

Noodle in soup is $15 a bowl Run down and unhygienic environment



Convenience Store

Some students and workers prefer to have a quick breakfast or lunch here

Serves snacks and refreshments They offer take-away service here

Chinese Restaurant

Relatively more expensive than other eateries

Serves traditional Chinese cuisine Diners come in large groups Customers come from other areas

Western

Caf

High end expensive restaurant Serves Western dishes The least crowded place



Uncle Bill has interviewed a few people during breakfast, lunch and dinner time. Here are some of their responses:

Clerk

Students

Young couple living in the area

Id like to see more selections of restaurant in this area. I am tired of eating at the same restaurants. I like cha chaan teng food.

We want inexpensive, fast and tasty foods. Our lunch break is rather short. It will be great if we can order take-out.

We seldom cook at home. We like Chinese soup. Home-made Chinese food is our favorite. We dont mind paying a little bit more for healthy and good foods.



Office lady

Uncle Bill believes that there is a high demand of a new cha chaan teng in this area.

I usually have breakfast and lunch near my office. However, the food is too heavy and oily. I like something that is lighter; like a lot of veggies.



Discussion Questions 1. Who are the potential customers for Uncle Bills Caf?

____________________________________________________ ____________________________________________________ ____________________________________________________

2. Who are the direct competitors of Uncle Bills Caf?

____________________________________________________ ____________________________________________________ ____________________________________________________

3. What kind of food does Uncle Bill plan to offer? Do you have any

suggestions?

____________________________________________________ ____________________________________________________ ____________________________________________________



4. According to your opinion, what should Uncle Bills price range be?

____________________________________________________ ____________________________________________________ ____________________________________________________

5. How should Uncle Bill promote his new cha chaan teng?

____________________________________________________ ____________________________________________________ ____________________________________________________



Activity 4: Case Study (Part IV) Deciding Selling Strategy Read the case carefully and answer the questions.

Having a good understanding about the market, Uncle Bill decides the following issues:

Students of nearby schools Workers of nearby offices Residents in the area Middle to lower income group

The direct competitors are the fast food chain, Burger

Joint and noodle shop Less direct competitors are the convenience store and

Chinese restaurant The Western caf targeting higher end customers is not an

important competitor



Typical cha chaan teng foods Combos with traditional Chinese dishes and soups at a

reasonable price Specialty Chinese soup Healthy menus and mini-menus: Low-fat dishes with plenty of

vegetables in smaller portion

The prices of breakfast and lunch set meals are similar to

those of the fast food chain Higher prices for dinner menu compared to the fast food

chain Lower prices for dinner menu compared to the Chinese

restaurant



During the first three months of operation, offer tea set coupon for spending over $100

10% discount for paying more than $200 in order to attract customers to come in groups

Daily special: one popular dish is priced at 30% off the regular price everyday

Distribute promotion leaflets in the area

Aims to increase revenue Offer free delivery services to nearby schools, offices and

residence



Discussion Questions 1. How does Uncle Bill plan to differentiate his meals from the other

restaurants?

____________________________________________________ ____________________________________________________ ____________________________________________________

2. What is Uncle Bills pricing strategy?

____________________________________________________ ____________________________________________________ ____________________________________________________

3. How should Uncle Bill promote his new caf?

____________________________________________________ ____________________________________________________ ____________________________________________________



4. How does Uncle Bill increase the revenue of his caf?

____________________________________________________ ____________________________________________________ ____________________________________________________

5. Do you have any further suggestions for Uncle Bill?

____________________________________________________ ____________________________________________________ ____________________________________________________

____________________________________________________



Activity 5: Case Study (Part V) Organising the Business

Uncle Bill is convinced that this will be a successful venture. What form of business do you suggest to use? Give your reasons. _________________________________________________ _________________________________________________ Uncle Bills new caf can accommodate 30 persons. He will be the chef and manager of the caf. His wife, Auntie May, will be the cashier and waitress. Advise Uncle Bill what the roles of other employees are. What are the tasks needed to be done in a cha chaan teng? 1. ______________________ 2. ______________________ 3. ______________________ 4. ______________________ 5. ______________________ 6. ______________________



Name the positions, estimate the salaries and complete the following table:

Posts No. required

Estimated Monthly Salary including MPF

($) Cook (Uncle Bill) 1 10,000 Cashier/waitress (Auntie May) 1 6,000



Activity 6: Case Study (Part VI) Making Financial Projections

Uncle Bill has made the following projection on the initial investment required for his new caf: A. Projection of initial investment:

Items Projected amount ($)

Decorations 200,000 Cooking equipments and utensils 120,000 Furniture and fixtures 50,000 Electrical appliances 30,000 Rental and utilities deposits 100,000 Others 20,000 Total 520,000

B. Projection of Revenues: Next, Uncle Bill has to project the revenues and expenses for his new caf. Estimate the number of meals Uncle Bills caf will be able to sell and the average revenue per meal per day:

Breakfast: _______ x $______ = $________



Lunch: _______ x $______ = $________

Afternoon tea: _______ x $______ = $______

Dinner: _______ x $______ = $________

Take-away & Delivery: _______ x $______

= $________

Items No. of

transactions

Value per transaction

($)

Total revenue ($)

Breakfast Lunch Afternoon Tea Dinner Take-away & Delivery

Total revenues per day Assume Uncle Bills caf will open for 360 days a year, the projected annual revenues

= _______________ x 360 = ______________



C. Projection of Expenses: Complete the following table assuming: 1. Food cost is 30% of the revenues; 2. Rent, rate and management fee are $33,000 per month; 3. Salaries, bonus and MPF are $45,000 per month; 4. Utilities expenses are $10,000 per month; 5. Insurance is $4,000 per month; and 6. Miscellaneous expense adds $3,000 a month.

Items Projected annual

amount ($) Food supplies Rent, rates and management fees Salaries, bonus and MPF Utilities Insurance Miscellaneous Total expenses per year

Projected net income = Revenue expenses = __________________



Activity 7: Case Study (Part VII) Taking Action

Now Uncle Bill has gone through the important steps of his business plan for setting up a cha chaan teng. He is now going to create a schedule for implementing his plan. What are the major tasks required to be done and the time needed before the grand opening of Uncle Bills new caf? 1. ______________________________________________ 2. ______________________________________________ 3. ______________________________________________ 4. ______________________________________________ 5. ______________________________________________ 6. ______________________________________________ 7. ______________________________________________ 8. ______________________________________________ 9. ______________________________________________

Complete the work schedule chart for Uncle Bills Caf on the next page.



Uncle Bills Caf Work Schedule

Tasks

Lease shop premises Find contractor Renovation

Today Month 1 Month 2 Month 3

Documents

Topic C05-Overview eng - hkedcity.netedblog.hkedcity.net/te_bafs_e/wp-content/blogs/1683... · · 2009-09-20Topic C05: Process of Developing a Business Plan Topic Overview p. 2