Sara seems to be standing at the threshold of becoming an entrepreneur, and the research she carried out contains some valuable figures to take as a base for further consideration whether she should proceed with starting her new business. Being exposed to the film studies, she does not have a formal education in Marketing & Sales and some further education is needed, as 4Ps and now even 7Ps, Product Cycle, the purchaser profile and such are important terms and concepts in business planning and assessment.
When starting any venture, the cost assessment is important. The investments as well as expected returns and the timing of the return are important factors in deciding on the start-up.
4P’s is something that Sara looked into, to an extent. 4Ps include: Product, price of the product, promotion and a place. She obviously has a product that customers are already interested in, so the first “P” is taken care of. The next “P” is the price, which is subject to adjustment. Sara setting her price at £3 per serving of smoothie, basing it on the cost of the ingredients and packeging. Other factors that could affect the price are the competitiveness of the products, offered by the official facilities that sell commercial drinks. Maybe, the profit could be even higher, based on the figures obtained from researching products available from others.
Promotion. Sara is already planning to allot finances for the advertising campaign. However, more research is needed as to what advertising method would be most effective and less costly. Promotion is important, especially on the initial stages of business. Advertising signs can easily attract public’s attention, and, if placed strategically, will accomplish the purpose successfully. Also, it is mentioned that “the Park in keen to promote healthy products such as smoothies”. Perhaps, there are some ways of cooperation on the advertising or special campaigns that could reduce the cost of the promotion.
Place. Given the opportunity to set her mobile unit in the Central Park where many visitors are attracted daily, is an advantage. The statistical figures about flow of the visitors, although the data is outdated, are helpful in determining the price of the product and estimated returns. Being mobile gives an opportunity to experiment and find the best location.
Besides the 4 Ps, it would be wise to use an extended evaluation, which also includes process, people and physical evidence. This concerns the physical appearance of workers, uniforms and the other details, interpersonal relationships that may affect marketing etc.
Product life cycle needs an evaluation during the course of marketing. Sara considers entrepreneurship because she sees the demand for her product. At this point the cost of the product is high enough. However, as her product will become better known, the cost of it will drop and she will need to see if there are other salesmen who offer similar products and, therefore, create a market for customers to choose from. If others offer competitive prices, then her marketing strategy will have to be adjusted. Up until that period the sales have a potential to grow, however, having competitors brings at some point stability and no increase of income.
When considering the objectives of the endeavour, SWOT strategies are usually implored. Those allow considering internal and external elements which may influence the business. Those include Strengths, Weaknesses, Opportunities and Threats. Asking the questions such as what advantages my business have over the others, what limitations should be taken into account, what are the opportunities to improve performance and gain more profit and what possible troubles could be encountered helps factor those issues in and foresee them. Some things Sara already evaluated, such as possibilities of expansion to the sister park if all goes well in the Regent’s Park. However, there is no mention of Sara’s evaluation of any possible threats or difficulties. For example, Sara may need permits for the kind of services she will provide. This needs to be researched in advance.
The financial side of the endeavour is important. First, havening initial figures of the renting the place, advertisement, product cost and additional help cost, Sara needs to evaluate what finances she has available to start her endeavour that would need to be invested immediately. For example, perhaps the rent for the mobile unit can be paid in the end of the month of work, but the ingredients for smoothies and packaging need to available from the start. In the worst case a daily supply should be done, but it proves to be more costly and time consuming. Therefore, the money for initial investment should be acquired prior to the operation beginning.
Next, Sara should bear in mind that in the beginning the returns will not equate with profit as the difference between the cost and the price of the product also should cover the rent, payments to the colleagues and investments in more ingredients and packaging as well as promotion.
From the figures Sara obtained so far, she can estimate the returns. Again, it might not be so high at first, as major portion of it will be going to the development, but in the long run, Sara could see if the profit she expects to receive is to her satisfaction.
Regularly monitoring the business is a necessity not only in terms of development, but also in terms of the business assessment. Clearly kept accounting helps see the financial dynamics. Interacting with customers, customer satisfaction and being an attentive listener helps developing product into making it more appealing or customising it. Establishing lines of supply speeds up the operation and lowers the cost. After some time of operation, Sara could see what profit she is making, after subtracting the expenses from the income. Having clear figures and seeing what methods worked and which did not bring the results desired, she may think about developing her business further. What to take into consideration will depends on the way she would like to expand her business. Is she thinking of adding more products to what she already offers? Then she needs to consider covering cost of additional ingredients. She should also consider capability of the mobile unit and if she has enough colleagues to help her. If she is thinking about having another mobile unit, then it is akin to opening a new business venture and she will have to consider the cost of a unit, a rent, more helpers and additional product components. The decision to have another unit should not be taken lightly, just like when considering business in the first place, although it is easier to add to the existing business than it is to have a start-up.
In conclusion, Sara is well on her way to making solid decision about new business venture. The research she has done so far provides initial figures for the start-up, although some fine-tuning is needed and further issues such as possible difficulties, should be explored.