Executive Summary
Art Gallery Centre, a gallery that is planned to be opened on the 1st of January, 2010. In a business plan presented on the main aspects of the venture, the conclusion was that there is a high level of profitability that the business will be successful.
As requested, we evaluated the business plan and the research based on which the plan was presented. The report evaluates the business plan in terms of the conducted research, stating that the business plan does not correspond to its main tasks.
Accordingly, the report shows that the research lack primary and secondary resources. Overall, the report recommends that the business plan should be revised, implementing additional primary and secondary resources to correspond to the business plan purposes.
Report
In the current market conditions, every company striving for success cannot manage without a plan of its development. A detailed business plan is necessary, both at the stage of foundation and at the stage of promoting products and services and business expansion. In that regard, the business plan serves as a guideline for venturing or strategically developing the company.
In the business pan conducted for the Art Gallery Centre, the research indicated the profitability of the proposed business. This report analyzes the business plan conducted for the Art Gallery Centre in terms of the research and the sources which served as the basis for the business plan conclusion. The report analyses the research based on the findings reported in the business plan and the cash flow forecast, which is presented within this report.
The Analysis
The conducted research utilized primary and secondary resources to outline the business plan points. In that regard, the information provided in the cash flow (see Appendix), implies the usage of primary resources such as the information provided by the company. Accordingly, the main tasks that could be resolved through business planning could be considered the following:
- The determination of the capacity and the perspectives of the product market development.
- The assessment of the possible expenditures for the sales of the products.
- The regulation of costs in accordance with possible prices for-profit prediction.
- The detection and planning of economic activity.
- The determination of the reasonability of developing the current business direction in the formed economic conditions.
It can be seen that the current business plan addressed merely two tasks of the aforementioned list, i.e., the assessment of possible expenditures and profit prediction. In that regard, the business plan should not “merely aim at emphasizing the strengths of the company, but rather at presenting a realistic portrait of its problems, risks, and obstacles.” (Schwetje and Vaseghi, 2007)
The realistic portrait of the problems might cover several aspects of the business plan, such as technical, financial, and commercial practicability. Based on the provided information, only the financial aspect might be considered.
Accordingly, the scheme of laying the financial assessment of the plan implies the assessment of the project’s cover of expenditures during the assigned timeframe. The cash flow forecast (see Appendix), might serve as an assessment for the project’s cover of expenditures, where the cash flow of the project realization is analyzed. The total sum of the cash flow should cover the total investment considering the time value of money.
Additionally, the research for the business plan should include primary and secondary resources in order to assess the competitiveness of the business. This research should be utilized in order for the business plan to be able to characterize the external marketing environment of the company. In that regard, the research should answer statements such as the following:
- The largest competitor in the analogous sphere, i.e., art galleries.
- The state of their business, i.e., sales, profit, implementation of new business models, the technological aspects.
- The state of their products, i.e., the characteristics of their products, the quality, and the customers’ feedback.
- The price levels, i.e., the general reference pricing policy.
In that regard, it can be seen that the business plan assessed only a part of the marketing strategy, in which one scheme of product distribution was presented, i.e., online sales. In general, the marketing strategy should “address the details of your market analysis, sales, advertising, and public relations campaigns.” (Pinson, 2008)
It might be assumed that some parts of the marketing strategy are not required at this point, such as public relations. Nevertheless, in order to assess the competitiveness of the gallery, its position should be measured to other market players.
Thus, the business plan should refer to secondary research of the competitors, where it will involve “utilizing all resources already available, including the Internet, business journals, trade associations, trade publications, business directories, local or national periodicals, and books.” (2009)
It can be seen from the report that it did not utilize the information provided from the cash flow chart, in order to state all the possible risks. The report indicated only one aspect of the expenditures, i.e., labor, while other aspects such as refurbishment and rent, were not included although being higher in total and more subject to changes in the near future.
In that regard, the statement of a free online advertisement does not accurately represent the direction of the company’s expenses in the online section. The maintenance of the website is one of the expenditures on a regular basis, which includes not only labor, by assigning an employee for the services. The website should be administered and constantly updated with new products and information.
Conclusion
In conclusion, it could be stated that the research conducted for the business plan is lacking in terms of efficiency and resource utilization. The report pointed out obvious deficiencies of the business plan in dealing with its common tasks. In that regard, the business plan should convince the stakeholders with the profitability of the company’s activity in general, and in the new direction in going online specifically.
There is a need for the business plan to be developed, not only in accordance with the changes in the external conditions of the plan’s realization but also to internal changes, so the planning does not change into a process of constant corrections.
In that regard, the research for the business plan should cover the aspects that will require adaptation. The present plan does not cover such factors, where any additional considerations in regard to the adaptation or the possible associated risks were not presented.
Recommendation
There is an apparent lack of primary research, according to which the business plan is lacking vital information. In that regard, it will recommend that primary research should be conducted to gather all the necessary information. This proposed source of the primary research should be a series of interviews with the main stakeholders in the company, where the main objectives and the goals of the company should be requested.
Additionally, in order to assess the marketing position, the primary research should utilize such instruments as surveys and questionnaires, in order to evaluate the reasonability of operating online. Accordingly, the business plan should be revised where the management of online content should be changed in accordance with the results of these surveys.
In that sense, if the results showed the low response for the customers to shop online, there will be unprofitable to implement online shopping, and thus the website might be merely informative of the company’s products.
Additionally, the risk factor should be assessed when conducting business plan research, where, according to the cash flow forecast, the risk factor is not considered, and thus there is a financial risk related to the possibility of non-fulfillment of the financial obligations before the investors.
Accordingly, the investors, as well as the company’s stakeholders, are interested in obtaining the picture with all the variables being present.
Additionally, the position of the company’s competition is a vital part of the business plan, where it was shown that the plan is not merely a correlation between the desired and the outcome, where conforming institutionalized rules is a major factor for the companies when writing a business plan.
References
(2009) How to Conduct Research for Your Business Plan. All Business.
HONIG, B. & KARLSSON, T. (2004) Institutional forces and the written business plan. Journal of Management, 30, 29-48.
PINSON, L. (2008) Anatomy of a business plan: the step-by-step guide to building your business and securing your company’s future, Tustin, CA, Out of Your Mind… and Iinto the Marketplace.
SCHWETJE, G. & VASEGHI, S. (2007) The business plan: how to win your investor’s confidence, Berlin; New York, Springer.