Create a Restaurant Business plan for super bowl 2018 in Minnesota. 1. Decision
ID: 459548 • Letter: C
Question
Create a Restaurant Business plan for super bowl 2018 in Minnesota.
1. Decision Alternatives: Describe the process used to determine alternatives, including a discussion of other alternatives that seem relevant and the reasons these were not analyzed. Describe the final set of alternatives used in the decision analysis. Significant uncertainty about some important element of the decision.
2. Value Function Assessment: Present the general procedure used for the assessment. Show the parameters for the value function.
3 .Scenarios: Present the scenarios used to analyze the impact of uncertainties. Describe the process used to develop the final set of scenarios, as well as other scenarios that seem relevant and the reasons these were not included.
Please use these three guidelines in writing this business plan.
Explanation / Answer
Super Bowl 2018 in Minnesota - The business Plan
Before starting a small business, you need to determine what it is that makes your enterprise different from the rest. An effective differentiation strategy can be used to highlight a business's unique features and make it stand out from the crowd. In essence, differentiation entails using marketing to create the perception in customers' minds of receiving something of greater value than offered by the competition.
There are certain factors could be used as small strategies for a successful business & a uniqueness in the market as
1. Price Leader
You can differentiate your business by offering lower prices than the competition. This can be an effective strategy if you sell price-sensitive items.
A price leader strategy requires keeping a close watch on profit margins to ensure your prices aren't too low.
2.Customer Service
If you offer a more convenient location, faster service, more hours of operation, additional purchasing methods such as online shopping or free delivery, use these advantages to differentiate your business. This strategy can be effective if you are not able to offer the lowest prices, as some consumers may be willing to pay higher prices if they receive a high level of service in return.
Example- Free delivery at homes within some range of Kms but with a specified minimum amount range applicability
3.Innovator
Strive to be the first to offer new products or services, or offer creative promotions to attract customers and keep them coming back. Customers may choose you over your competitors if they expect to see something new and different each time they enter your establishment, as opposed to the "same old thing" offered by the others
Example
Free birthday buffet for the birthday male /female dining that day
Special ladies kitty party offers
Special offers & discounts on one of the weekdays( less sales day of your region)
4. Specialization
A better approach can be to specialize in one particular aspect. Instead of opening a general restaurant, for instance, consider specializing in buffet or rice bowl meals etc.Over time, you can establish yourself as an expert in your field and carve out your own niche in the market.
To make decisions for the different alternatives & determining factors to choose you need to know the decision making process as follows with total 8 steps
Step 1:Identification of the purpose of the decision
There are a couple of questions one should ask when it comes to identifying the purpose of the decision.
What exactly is the requirement or problem?
Who are the affected parties of the problem?
Does it have a deadline or a specific time-line?
For all above , we have the answers
Requirement is a successful running restaurant business
Affected parties will be consumers, society & the competitors
Yes specific deadline is 2018 (may be a defined month)
Step 2: Information gathering
In the process of solving the problem, you will have to gather as much as information related to the factors and stakeholders involved. For the process of information gathering, tools such as 'Check Sheets' can be effectively used.
Step 3:Principles for judging the alternatives
As an example, profit is one of the main concerns in every decision making process. Companies usually do not make decisions that reduce profits, unless it is an exceptional case. Likewise, baseline principles should be identified related to the situation in hand.
Step 4:Brainstorm and analyze the different choices
For this step, brainstorming to list down all the ideas is the best option. Before the idea generation step, it is vital to understand the causes of the problem and prioritization of causes.
Step 5: Evaluation of alternatives
Use your judgment principles and decision-making criteria to evaluate each alternative. In this step, experience and effectiveness of the judgment principles come into play. You need to compare each alternative for their positives and negatives.
Step 6: Select the best alternative
Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of the best alternative is an informed decision since you have already followed a methodology to derive and select the best alternative.
Step 7: Execute the decision
Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with the help of subordinates.
Step 8: Evaluate the results
Evaluate the outcome of your decision. See whether there is anything you should learn and then correct in future decision making. This is one of the best practices that will improve your decision-making skills.
Conclusion
When it comes to making decisions, one should always weigh the positive and negative business consequences and should favor the positive outcomes.
How to value a business ( assessment)
There are a lot of ways to value a business. There's no "right" way, though you could probably come up with several wrong ones. Ultimately, the business is worth whatever you think it's worth, based on the criteria you set forth. But you can make your estimation by using several different ways to value the business and then choosing the mix that reflects your final value estimate.
You can start by looking at the value of the business's assets.
What does the business own?
What equipment?
What inventory?
After all, you'd have to buy all the same stuff if you were starting a restaurant from scratch, so the business is worth at least the replacement cost. The balance sheet can give you a good indication of the value of the company's assets. If the company doesn't have a good set of books, think twice about buying it. You can get badly burned if the current owners don't even know accurately whether or not the business is profitable.
The other valuation approaches all think of a business as a stream of cash. They value a business by trying to come up with a value for that stream of cash.
Revenue is the crudest approximation of a business's worth. If the business sells $100,000 per year, you can think of it as a $100,000 revenue stream. Often, businesses are valued at a multiple of their revenue. The multiple depends on the industry. For instance, a business might typically sell for "two times sales" or "one times sales." If you have a good stockbroker, he or she may be able to help you research typical sales multiples for your industry. A good business broker can also help you if he or she has done valuations in the industry you're investigating.
But alas, revenue doesn't mean profit. If you're in doubt, just look at Amazon.com: It had 2002 sales of almost $4 billion, but no profit. In fact, it hasn't made one cent of profit since the day it was founded. How much would you pay for an ongoing $4 billion per year that you have to pump an additional $380 million per year into just to keep it afloat?
That's why earnings matter and why multiples of earnings may be a better way to think about valuation. If a company had a profit of $10,000, that cash can be used for growth or dividends to you, the shareholder. Estimate the earnings for the next few years and ask how much that income stream is worth to you. Be careful, though. Don't just assume earnings will be stable. Competition, supplier price changes and a declining industry can affect earnings. Make sure to reflect that in your projections.
One quick and dirty technique is to divide the current yearly earnings by the long-term Treasury bill rate. For example, if the shop earns $10,000/year and T-bills are returning 3 percent interest, the business is equivalent to $333,333 worth of T-bills ($10,000/3 percent=$333,333, so $333,333 invested in T-Bills would return the same $10,000 income). So if you had $333,333, you could earn your $10,000/year by investing in T-bills with a lot less effort than running the shop. This technique puts an upper limit on your valuation. After all, why would you spend more than $333,333 on a store when you could earn more by spending the same money in T-bills? Of course, using this quick-and-dirty technique assumes that the teashop will have the same earnings year after year, and assumes that only monetary return matters.
These techniques-asset valuation, sales multiple, earnings multiple and cash-flow analysis-value the financial side of the business. Nonfinancial considerations also come into play. You might pay more for a teashop if it's next to a restaurant you own, since the combined business may be worth more. Or maybe you've just always dreamed of owning a teashop. Be careful with letting your dreams influence your valuation too much, however. My friend Vinnie always wanted to own an occult supply store. He got his wish, but not a good valuation. It cost him years and much heartache to dig his way out of the situation.
I hope these ideas give you a head start in valuing the business. I'd also recommend you get your banker involved in the valuation. Since your banker will be helping finance the business, he or she will have a good sense of how to do a good valuation for shops in your area.
ENTREPRENEURSHIP, RISK AND UNCERTAINTY: LONG-TIME BEDFELLOWS
For many technology companies, the recent bursting of the internet bubble was not their first encounter with uncertainty, nor is it likely to be their last. Indeed, focusing on the end result of the last expansion obscures the persistent reality that entrepreneurship, risk and uncertainty have been long-time bedfellows. Every high-technology new venture struggles to answer the following questions: Will our technology actually work as planned? Will it deliver the desired benefits to consumers? Is the timing of its introduction too early or too late? Will the market be big enough and keep expanding? Will our competitors react in unexpected ways? Will our management team have the skills to grow the company? Will our investors stand behind the company?
Risks are the stuff of daily business in the start-up world, and entrepreneurs and investors must try to anticipate, quantify and mitigate a host of risks. What entrepreneurs fear most is the type of extended risk for which they have no reference points and which redefines overnight the bedrock of norms on which the company based its assumptions. Such risk is akin to what the economist Frank H. Knight termed “uncertainty.” It can be argued that this is what happened for many entrepreneurs when the internet bubble abruptly exploded. It is also, as the cover of the Oct. 8 issue of Business Week magazine reminded us, what happened when terrorism unsettled “the state of nature” and brought forward the type of “unquantifiable risk” that the markets loathe because “they cannot put a price on it.”
Encountering uncertainty in an already turbulent environment requires start-ups to pursue survival tactics in order to support their long-term strategies.