New Business Venture Planning

Freshman (College 1st year) ・Business ・Harvard ・8 Sources

Various types of companies you could set up and evaluate the possible advantages, constraints and risks associated with each company. A building company is one company that can use this funding. Building, colleges, hospitals and skyscrapers can be a lucrative activity for a construction firm. However, there are disadvantages that endanger the business. Knowing the advantages and disadvantages involved in the building will help decide if it is the necessary undertaking. The benefits of a construction company include the fact that construction industry is ever increasing and this is because of the aging buildings and growing population. A number of construction workers are also expected to increase immensely by 19% through 2020 when compared to other industries. Furthermore, construction is projected to continue growing for both retrofitting and new work on highways, buildings, and bridges. Construction also provides the chance for specialization so that a company can effectively compete with other businesses. Though some companies function by providing general services of construction, others are focused on particular types of work. Specializing is important because it allows a company to reorganize production so that workers become more proficient and familiar with the processes, contributing to well-being and efficiency.

However, the construction industry is always growing and this makes consumers more discerning when they shop for lower bids and this makes it hard for construction companies to earn a profit. Purchasing raw materials, construction equipment, updating tools, buying liability insurance and maintaining construction vehicles can be quite costly. Furthermore, legal obligations involved with running a construction company is complex. Besides business licenses companies in the construction industry must maintain a current contractor’s license as well as other permits. Those companies which work on public projects are also required to procure performance bonds to guarantee that they will complete the work based on contract specifications and legal guidelines. Comprehending local laws which govern codes of construction can be difficult and in the case of mistakes, they can result in repairs that are costly or adjustments to meet the requirements for compliance.

Some of the risks which a construction company might also face include equipment damage. In this case, when tools are damaged, it means that jobs cannot be done. While some tools are easily replaced, some are not and this requires the company to have a property insurance policy which is expensive. Also, construction businesses are likely to face seasonal slowness. For instance, countries that have severe winters are likely to slow construction processes. On the other hand, even when the company is situated in warmer climates, there are chances of economic downturns which can make a normal work process an extended vacation.

Another business which can be set up with this funding is a cupcake bakery. While operating a cupcake bakery can be difficult because of the start-up equipment costs, there are key benefits for operating the business. Running a bakery gives the owner control over the business where it can create a consistent customer base and further expand at the right time. A cupcake bakery just like most bakeries allows the business to have control over the products. For instance, the business will make an endless variety of designs and flavors. Furthermore, a cupcake bakery has long been considered recession proof based on the fact that individuals have to eat and most of the individuals like to pay for products which are fresh. Baked products are considered comfort foods which can be prepared as tasty and nutritious. In view of these advantages, the business will be able to attract customers and build a strong customer base in the local area to the extent that the business is sustainable. Bakery businesses also provide the potential for great creativity. The owner and the employees can experiment with original recipes, and also use decorations to express the style of the business. Workers who are allowed to express their ideas are always more satisfied with their work than those who are expected to churn out the same kind of product day in day out.

Most importantly, running a cupcake bakery provides the opportunity of expanding the business as required. Sometimes there is the opportunity to grow into a bigger area ad though you might not want to enlarge the physical size of the bakery, the business can increase the number of different products being offered as well as the amount to be baked in a session. But there is need to monitor sales and consider the prices of ingredients before expanding the business. Another benefit of a bakery is that it provides its personnel with specifically defined roles. For instance, employees can be assigned roles such as dough preparers, cashiers, packagers and inventory specialists. The benefit of these easily defined roles is that each person knows what they are supposed to do and the manager can oversee essentially based on these responsibilities.

However, a cupcake bakery also has its limitations. For an owner of a cupcake business is supposed to understand financial management as well as have background knowledge in baking. Products which have been baked are also perishable in the sense that when the company does not sell the bread at the moment, it has to be marked down the following day yet it still costs the same amount to bake. Therefore, having a proper understanding of the costs of the goods baked gives a person a better idea of the price to charge for these products. And when finance is not the strong point of the business owner it will be important to employ an accountant to create an accounting system.

An analysis of the sources of finance for each type of business organization (AC1.2) analyzed in (a)

It is clear that setting up a construction company is more expensive than a cupcake bakery. Furthermore, despite the challenges of setting up a bakery its benefits outweigh the limitations. Therefore I will set up a bakery company. The cupcake bakery will be created with the goal of capitalizing on profits in the bakery and confectionery business in the country and it will go all the way to make sure that it does all that is required to retail different designs and tastes of cupcakes. The company will be baking and selling cupcakes which have been baked with different designs, variations, themes, and flavors. Furthermore, the company will use a different style of wrapping so as to appeal to our target customers.

As part of the company’s approach to create numerous sources of revenue in line with the fundamental model of the business, the company will operate a community based and an in-house consultancy service and training which are connected to baked foods and particularly cupcakes.

An evaluation of the legal considerations relevant to planning a business venture (AC 1.3)

When starting a business, it is important to consider more than just making a profit. Depending on the legal system of a particular country, a business might have to purchase permits and licenses to operate a business legally. It is not an easy task to tell the required licenses for a business without knowing the business potential. In this case, the first license that will be required for the cupcake bakery is the operational certificate. Several places need these certificates for a business to run within its limits. Fundamentally it will register the bakery with the local government and provide the company the right to run the business.

As a food company, the business will need to adhere to the local government's guidelines. Once the business has been verified that it is working within the regulations, the company will be given a permit. Furthermore, to maintain this permit, the business will be required to pass regular inspection tests conducted by the health department. Besides the food handlers permit, the business will need handlers permit for each person/employee that handles food in the company. In most cases, local governments distribute these permits to those individuals who have taken classes for procedures of safe food handling. Furthermore, the local government will require that these permits are updated each year.

An analysis of the market conditions that will impact on setting up your new business venture (AC 2.1)

After financing for the business has been lined up, a suitable location has been found and business plan has been drafted, it will be important to focus on factors that might affect business. In most cases, there are few factors to take into consideration for the business to be competitive and meet customers’ demands (Sahin et al. 2011 p. 9).

Market Trends

It is a collective tendency in the baking and confectionery field to find bakers endeavoring to get the better of each other. Certainly, individuals in this business are well-known for their tremendous creativity and are why they can come up with cupcakes in different designs, flavors, themes and different wrapping just to charm to their target customers (Kara 2005, p.107). Another tendency in the cupcake field is that most cupcake businesses have gone an extra step from just retailing their products in shops to taking them out to individuals in parks, sports centers and public places through food trucks and vans. Others have even moved ahead and begun selling their cupcakes to the public through vending machines. Therefore, it is clear that these market trends will affect the business because the company will be required to adopt better strategies to reach a bigger customer base.

Price Fluctuations

Some materials which are used for baking cupcakes are subject to extreme fluctuations in cost on yearly basis. Based on previous industrial snapshot report that was prepared by the center for economic strength, wheat and vegetable oil prices can change by up to 50% in the course of the year while natural gas prices can alter by 26% (Ghosal and Loungani 2000, p. 340). These changes can harshly affect the company’s profit margin leading to the company passing the cost to consumers. Therefore, we will make sure that we negotiate a stable price on raw materials.

Task 2 Business planning

  1. The organisation

You will need to develop the mission, vision, aims, and objectives of the business (AC 3.1)

Vision Statement

My vision as a cupcake baking and retailing business is to be the best choice in the entire location of my business and also be among the leading companies in the country.

Mission Statement

The company plans to offer high-quality cupcakes at a price that is competitive, that will create a loyal base of customers. The company hopes to grow from small scale production to a big business whose products can be purchased from numerous places in the country.

Propose business structures and systems that will deliver the business aims and objectives (AC 3.4)

Business Structure

It is part of the business strategy to create a topmost cupcake baking and selling venture. To achieve this, the company will perfect a plan to have the right thing from the beginning. For instance, I will go an extra mile to make sure that the business has employees who are competent to fill in the vacant spots in the business. The image that represents the type of business that I intend to build as well as the goals that the business wants to achieve is what will inform the amount that will be spent to guarantee that a standard bakery is built. And I will also ensure that the business has a robust distribution network and a dedicated workforce.

Therefore, the business structure will be structured in the following way; the chief executive officer will be the owner and his responsibilities include increasing the effectiveness of management by selecting, recruiting, training, assigning accountabilities and creating the vision and mission of the organization. The second position is the bakery manager who is responsible for overseeing the smooth functioning of the organization. He will make budgets and map out a strategy which will increase efficiency among workers in the bakery. For advertising the business’s product, the company will have a sales and marketing department which will be headed by a marketing manager. His responsibilities will include managing external research and finding ways to attract and retain customers. The bakers or casual workers will be responsible for making different styles and flavors of cupcakes as well as all the bakery products. The accountant or the cashier responsible for administering payrolls, preparing financial statements and budgets for the business. Distribution van drivers will run errands for the company and deliver customer orders on time. The Customer service executive will ensure that all client contacts are kept and customers are provided with personalized services. Furthermore, the customer service executive will be required to be well-informed about the organization's promotional campaigns and products to guarantee correct and helpful data is provided to consumers when they make inquiries.

The Product

Analyse gaps in the market for potential products (AC 2.2)

The fact that any person with skills in baking can decide to venture into making cupcakes implies that the business is open to several people hence we expect a high-level competition in the industry. There is hardly any town that you will not find people baking cupcakes. But as a cupcake we understand that to have a competitive edge we will need to carry out a strong analysis of the demographics and the environment (Davis, Misra and Van Auken 2002, p. 220). Therefore we are going to be the only cupcake business that deals with all types of flavors. We will make and sell cupcakes which are of different variants, designs, themes and also incorporate different types of packaging just to appeal to the target market.

Analyze Target Markets for Your Business Venture (AC 2.3)

A look at where we will retail our product shows that there is certainly a large pool of clients. Basically, our target market cannot be limited to a certain cluster of individuals but each person who wants to try and those who love cupcakes. One thing that is certain is that there no demographic and psychographic restrictions in the composition of the target market for cupcakes. Kids and grown persons all consume cupcakes; the demography incorporates the entire population and that is the reason why there are instances where cupcakes are served in children parties, baby shower, and wedding reception. All this shows that the target market for cupcakes is large and far reaching, the business can, therefore, establish its own niche if it wants to serve a particular purpose (Thach and Olsen 2006, p. 320)

Interpret the external factors and market conditions you analyzed in your report to justify the need for your product (AC 3.2)

But since there are high chances that external factors might affect the business particularly production. The business will put proper measures to ensure that it deals with the problem of market trends and price fluctuations. For instance, based on the fact that the baking and confectionery industry tends to outsmart each other through creativity, it is no doubt that we will also uphold our business inventiveness approach to come up with cupcakes of different designs, flavors, themes and diverse wrapping styles just to charm our target market. On the other hand, the business structure shows that the company will have drivers who will be running errands for the company. These drivers are important because they will help deal with our approach of taking our products to sports centers, parks and public places through food trucks and vans. To ensure that the company continues making consistent products which are appealing and affordable to customers, we will negotiate a stable price on raw materials so that extreme fluctuations of raw materials do not affect our profit margin and pass the cost to customers.


Produce business planning forecasts based on targets (AC 3.5)

It is vital to indicate that our sales projection will be based on the information collected in the course of our market survey, feasibility studies and also some of the expectations readily accessible in the industry (Seskauskis and Narkevicius 2016, p.10). Our sales projections of the first three years of operations will be;

The first year- $120000

The Second year -$ 260000

The Third year- $ 580000

Another important thing is that the forecasting is made based on what is attainable in the field and with the assumption that the business will not face any major meltdown and the arrival of a rival in the same location of our business within the first three years of our operation.

Identify your business responses if these targets are not met (AC 3.6)

But in case these sales forecasts are not met, the business will have a meeting and determine where the problem came from. In this process, the company will establish why it did not make sales. Though it is not an easy process, pinpointing the problem as soon as possible will help minimize strife between departments (Davis and Mentzer 2007, p. 480). After getting to the bottom of the problem, the company will improve its metrics not only to look at where the coming is coming from but to look at where the company is headed. As a company that is in the business to be successful, we will use metrics to improve performance and prevent future shortcomings. We then develop systems to manage each quarter. Meaning that we will engage in knowing what business need to attract huge numbers of customers. For instance, we install a system that ensures all back orders are delivered before the end of the quarter and guarantees that sales are brought up before the deadline elapses (Moon, Mentzer and Smith 2003, p. 20). Additionally, we may try a fresh approach to convincing customers to place orders now rather than later in the year.


Davis, R., Misra, S. and Van Auken, S., 2002. A gap analysis approach to marketing curriculum assessment: A study of skills and knowledge.Journal of Marketing Education, 24(3), pp.218-224.

Davis, D.F. and Mentzer, J.T., 2007. Organizational factors in sales forecasting management. International Journal of Forecasting, 23(3), pp.475-495.

Ghosal, V. and Loungani, P., 2000. The differential impact of uncertainty on investment in small and large businesses. The Review of Economics and Statistics, 82(2), pp.338-343.

Kara, A., Spillan, J.E. and DeShields, O.W., 2005. The effect of a market orientation on business performance: a study of small‐sized service retailers using MARKOR scale. Journal of small business management, 43(2), pp.105-118.

Moon, M.A., Mentzer, J.T. and Smith, C.D., 2003. Conducting a sales forecasting audit. International Journal of Forecasting, 19(1), pp.5-25.

Sahin, A., Kitao, S., Cororaton, A. and Laiu, S., 2011. Why small businesses were hit harder by the recent recession.

Seskauskis, Z. And Narkevicius, R., 2016. Sales forecasting management.

Thach, E.C. and Olsen, J.E., 2006. Market segment analysis to target young adult wine drinkers. Agribusiness, 22(3), pp.307-322.

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