For investors, assessing the viability of a business is a significant undertaking that requires a thorough analysis of all the factors surrounding the business idea. Before approving and investing in a particular business idea, it critical to examine the people involved, the context of the business, the opportunities available, and the risks associated with the venture (Haag, 2013). A plan of activities on Room for Dessert (RFD) is a combination of concepts that include dining restaurant and retail store. From a distance, the venture appears attractive and promising considering that the business will be operating in the US food industry that is worth US 7.2 billion. This paper examines the concept of the RFD in a bid to determine its viability. In particular, this business plan examines the people, context, opportunity risk, and reward factors.
The success of RFD will depend on the ability of the employees not just to perform their duties but also to work as a team (Haag, 2013). Evidently, the business plan has a distinct section that describes the management team who will be responsible for transforming the idea into a reality. The inclusion of experienced experts will assist in the implementation process. For instance, the President of the Company, Paul Conforti, has ten years’ worth of experience after holding several executive positions in different organizations. With the experience, the President will play a crucial role in influencing others to adopt an organizational culture that can encourage teamwork. Similarly, the credentials and achievements of the Vice President, Kim Moore, are equally attractive as far as the food industry is concerned. Her experience at H.E. Butt Grocery provides convincing evidence that her contributions at RFD will be necessary. The fact that she is a female also addresses the issue of gender equality at the senior most positions of RFD. The education backgrounds of the top management and the board members are quite impressive. For example, one of the board members, Michael Roberts used to be an HBS professor. It is also worth noting that the business plan has briefly described the Unit Management Team that will be responsible for coordinating the operations of the firm. The team includes a general manager, an assistant director, and two kitchen managers with essential experience in restaurant operations and baking.
In summary, the business report provides a satisfactory description of the management team. Evidently, the experience and academic attainment of the management team will assist the company to work as planned. However, it is evident that the plan has not accommodated the personnel in crucial departments. For example, the business plan has not mentioned the staff at the human resource department. The success of the firm depends on the ability of RFD to employ committed employees and engage junior employees through human resource management. Therefore, the business plan requires a human resource team in a bid to determine whether they have the skills and experience needed to keep employees motivated. Similarly, the plan has mentioned anything to do with the personnel responsible for finance and auditing. The finance department is crucial in addressing all the financial issues surrounding RFD’s operations.
It is also important to have outside parties such as lawyers, independent accountants, and suppliers. According to the business plan, the Company intends to involve the community by encouraging local artists and musicians to show their talents by performing and entertaining shoppers at the restaurant. However, it is worth noting that such entertainers will need to a reward. Unfortunately, the business plan does not have a provision for any compensation for the artists. Therefore, the lack of set-off and an estimated cost of such rewards make idea weak and might not attract the local artists as planned. In this case, the success of the business in offering quality services depends on the choice of suppliers. Therefore, failing the mention anything to do with suppliers makes business plan incomplete.
Regarding opportunities, it is critical to assess the nature of the business, the target customers, room for expansion, its economics, and the possible obstacles that might hinder the operations of the company (Price & Meyers, 2006). In this case, venturing into the food and beverage industry is a promising decision due to the nature of the industry. The repetitive nature of the needs makes the business viable since revenue is guaranteed. Apparently, consumers will always need food on a daily basis since it is an essential need. Apart from the opportunities that come with recurrent needs, there several areas worth examining before approving the business plan and investing in it. The idea is to define the opportunities that can be used to justify the investment of the capital required (Price & Meyers, 2006).
The description of the marketing strategy show reveals several opportunities that can potentially assist the business to penetrate the food industry successfully. The restaurant and hotel alliances can help RFD to grow its customer base. As the plan reveals, it is true that full menu restaurants might decide to refer their clients to RFD in an attempt to increase their table turns. The involvement of the community by allowing local artists to perform at the restaurant will create an opportunity for increasing the number of customers. The availability of space for special events and meeting gives room for the promotional events. The extra meeting space also creates an opportunity for generating additional profits increasing the number of revenue source to three: restaurant, retail, and special events. For investors, the diversification that creates several sources of income is critical to ensuring a stable flow of revenue and profitability. When one source performs poorly, the others will generate the profit required to ensure that the business operates profitably.
Regarding commissary, the plan offers a weak opportunity on how RFD was intending to avoid baking equipment investment by purchasing baking capacity from other producers. Such a decision with is detrimental to RFD’s operations in two ways. Firstly, such a move will force the company to share its profit with the producer; therefore, reducing the profit margin. Secondly, paying for the baking equipment will push the price of the product up. Thus, the cost competitiveness of RFD’s baked products will be significantly reduced and the company will not have the authority to control it. However, the opportunities outweigh this concern by far since it is an independent proposal that can be subjected to thorough scrutiny. Therefore, it is clear that RFD stands a chance to take the many opportunities in the food and beverage industry thanks to the comprehensive business plan.
Since RFD is dealing with food and drinks, it is important to examine the trend in eating habit of the targeted population. Nowadays, consumers are becoming keener on consuming healthy food as a way of avoiding costly medical conditions due to poor diet (Choi & Zhao, 2014). Therefore, the section on moderation seems attractive since it addresses the significance of eating just enough quantity. In doing so, consumers tend to avoid medical complications that are associated with eating more than what their bodies require. The author of the business plan supported the argument of moderation of the eating habit using empirical studies that provide statistical pieces of evidence. For example, a report indicates that candy and gum sales increased by 5% while desserts and toppings sales grew by 4.4 %. The business plan also has crucial issues such as convenience, relaxation, and comfort among others. In this case, it is evident that the business plan has addressed the demographic trends. However, there are several context factors the will determine the success of RFD. They include demographic trends, interest rates, inflation, and regulatory environment among others. It is worth noting that RFD’s management team does not have any control over these context factors. For example, the plan has failed to address the issues of inflation rates and interest rates. Examining the inflation rates is crucial in determining the ability of consumers to purchase the products continuously. As the plan shows, the ability of consumers to spend their money on personal gratification, relaxation, and comfort depends on their economic status. Therefore, the changes in inflation can lead to drop in the consumption of some products, as consumers shift to essential goods as a way of economizing their income.
Risk and Reward
The overriding objective of RFD’s management is to achieve profitability while at the same time expand the company’s market. Specifically, the management team is targeting 35% cash-on-cash returns. The team is also targeting a business model that will generate $1,000,000 in unit sales. However, the competition in the market means that the firm is also facing the risk of loss-making in case the strategy does not go as planned. Under the Scenario analysis, the business plan has addressed the possible risk that will potentially affect the operation of the RFD. For example, the competition is a risk worth considering. The existence of well-established businesses in the same industry makes it difficult for the management to be sure that the plan will work perfectly. For example, the business will need to penetrate a market that is already dominated by well-established restaurants. Therefore, RFD will need to offer better options regarding price, quality, convenience, and value for money. Failure to do so, consumers will continue using the services of the competitors leading to an unsuccessful venture for RFD.
The shift of consumers’ preferences is yet another risk that the plan has addressed convincingly (Mullins & Komisar, 2010). The business plan raises a genuine concern that consumers might shift from the moderation eating habit to a different habit later rendering the business plan irrelevant. In this regard, it is important to note the date that this report was prepared to determine in comparison with the status of the consumers’ preferences today. On the same note, the studies conducted in this study reflect the views and sentiments of customers in 1992. Therefore, the plan is only viable during the late 1990s. Since then, the campaign to promote healthy eating habits has shifted the concerns of consumers from eating moderately to eating organic foods.
In summary, this business plan presents a brilliant business idea. Evidently, the business plan has addressed crucial areas of the food industry. The plan provides a path that can assist Room for Dessert Company to penetrate and dominate the US market. For instance, the educational background and experience of the management team offer the much-needed leadership that RFD needs to succeed in the highly competitive market. The business plan qualifies regarding risk analysis and opportunity analysis out of the four main areas. As described earlier, the business plan is lacking when it comes to people analysis and context factors. As described earlier, the context of the study is important when looking at the relevance of the strategies. Apparently, the author of this business plan understood the risks that RFD will face after entering the market. The most significant risk is the shift of consumers’ preferences since it renders the business plan non-applicable. Since the study reflects the sentiments of consumers in the late 1990s, applying the same five or more years later might fail since the preferences would have shifted due to changes in consumers’ sentiments. On the other hand, the plan has not addressed all the people that will be needed to address the critical departments. For example, the plan will require qualified personnel in human resource, finance, auditing, and marketing. The program also lacks a brief description of the external players such as suppliers and lawyers. For investors, the insufficiencies discovered in the analysis of people and context makes the business plan unattractive. Therefore, investors have all reasons to reject the business plan to avoid the same risks identified in the study.
Becherer, R. C., & Helms, M. M. (2009). The value of business plans for new ventures: Company and entrepreneur outcomes. Journal of Small Business Strategy, 20(2), 80-93.
Choi, J., & Zhao, J. (2014). Consumers' behaviors when eating out: Does eating out change consumers' intention to eat healthily?. British Food Journal, 116(3), 494-509.
Haag, A. B. (2013). Writing a successful business plan: An overview. Workplace health & safety, 61(1), 19-32.
Mullins, J. W., & Komisar, R. (2010). A business plan? Or a journey to plan B?. MIT Sloan Management Review, 51(3), 1-16.
Price, C., & Meyers, A. D. (2006). The 12-step innovation roadmap: how to analyze and prioritize new business ideas. Physician executive, 32(2), 52-61.
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