Sanford Sandwich Company Business Plan

Executive summary

Sanford Sandwich Company is a newly formed business that deals with the production of the finest sandwiches manufactured with natural ingredients and the best bread. I hope to establish a dependable big following by providing tasty and fresh sandwiches produced from local ingredients available. The ingredients will be supplied by the local providers. By the end of the first year of business, our profit target is set to be $20,500. The projections for the expected profits of the second and the third year are $71,100 and $159,700 respectively. All of this will be realized from a starting investment of $15,000. Our current investment is $5,000, against the total required investment of $15,000; this means that there is a deficit of $10,000 that we still need.

Business Overview

Weiss Sandwich Company is a newly formed business that deals with the production of the finest sandwiches manufactured with natural ingredients and the best bread. I hope to establish a dependable big following by providing tasty and fresh sandwiches produced from local ingredients available. The ingredients will be supplied by the local providers. The ingredients will be prepared on site with the aim of giving the customers a fresh natural taste. The reason for using local suppliers is to personalize them, thereby making our sandwich experience more exciting and unique. We also plan to carry out a contest for customers to showcase their talents by making their sandwiches in our outlet so that we can evaluate them and check on what we can add.

By the end of the first year of business, our profit target is set to be $20,500. The projections for the expected profits of the second and the third year are $71,100 and $159,700 respectively. All of this will be realized from a starting investment of $15,000. Our current investment is $5,000, against the total required investment of $15,000; this means that there is a deficit of $10,000 that we still need.

Financial overview

Our target is to expand the business by at least 5% every month. In order to achieve this, we have strongly emphasized on robust sales for the first year and we intend to improve on that in the second and third years respectively. Our sales projections for the first year are $85,348. For us to achieve this, we have a plan to aggressively increase our sales month by month. This target is in line with the tendency of the customers within the area to buy sandwiches. By the end of the third year, we expect that the sales will have tripled. The business intends to draw down a minimum amount for it to have enough working capital to sustain it during its first year of operation. The figures below indicate the projected cash flows and profit and loss.

*Figure 1.2: Projected profit and loss.*

Mission statement

Our intention is to give our customers good quality and good price. This will be attained by providing first-class sandwiches and competitive pricing of the sandwiches. Our ingredients will be sourced locally; this implies that our customers will get the finest locally produced sandwiches. We will take advantage of the fact that the consumers from the area normally want to support their local enterprises. Eventually we want to be branded as the best sandwich outlet in the South East, in addition to being recognized for supporting local suppliers and farmers.

Business objectives

Short term objectives

Our short term objective is to expand the business by at least 5% every month in order to realize a total sales target of $85,348. This means that we intend to sell twenty breakfast sandwiches and ninety lunchtime-sandwiches daily for 365 days of the year.

Mid-term goals

Our main aim is to continue growing the business by bringing on board additional customers month by month; this translates to the fact that the business will grow exponentially. In addition, we intend to excel in our services till we become recognized as the best sandwich outlet of the year. Consequently, we plan to expand by opening up another sandwich outlet in the region.

Long range goals

Expansion is our key strategy. We need to expand within and without and continue spreading to other parts of the world. The expansion does not just end there; we intend to expand beyond our borders to reach the other countries of the world.

Openings and fears

Openings

The main reason why we are setting up the sandwich outlet is to be exclusive in regards to the quality of our sandwiches, for instance:

Our customers will be highly entertained by our high profile sandwiches.
Our location is in a highly populated business environment; hence, we will have many customers.
We will offer packed breakfast or packed lunch to our customers.
There are new office blocks under construction within the area, which translates to additional customers.

Threats

Even though we expect our business to be successful, there are threats that it is likely to face, for instance:

Stiff competition from other sandwich outlets which are located within the same area.
We will be constantly on our toes to maintain our unique identity in order to stay ahead of our competitors. Our focus will entirely be on quality as we make use of the locally available ingredients.
Maintaining a competitive price for a new business is tricky; pricing still will remain to be our main focus.

Exit strategy

Best case

Just as it has been stated in our business objectives, our main motive is to make the sandwich outlet successful and consequently expand to a level where we open up other additional outlets within the region and beyond the region. Therefore, if everything works out as planned, we will appoint a professional manager and establish a professional team to run the business.

Worst case

If we fall short of our first years targets, it will mean that our business model is not viable; therefore, we will have to track and monitor the business activity and operations on a daily basis. We intend to do a monthly examination of our sales and revenue so that we know our exact position. Also, the progress of the business will be checked at half a years time. If we still fall short of the targets we should re-assess our marketing and publicity. When our efforts do not pay off, then we will adopt the next option, which is to liquidate the business and pay off the debts which will have accrued by then. Actually, these debts will be negligible.

Market breakdown

Market research

Our business idea and business plan have been validated through a market research that we carried out. The sandwich market in the US is growing rapidly and it is highly valued. Very many people will have a sandwich for lunch. Our location is very strategic to capture the attention of the surrounding residents and businesses. We offer the best sandwich prices than our competitors, which enables us to earn good revenue. The basis of the market research is to make us stand out among the other sandwich outlets. Our market research focused on the competitors, whereby we looked at their pricing, products, customer service, and the general business. In addition, we developed a short questionnaire to interview the surrounding residents and the business with an aim to give us a clear picture of their expectations.

The US sandwich market

The US has the highest valued sandwich market all over the world. The market is valued at more than 3 billion pounds (Mortimer, 2011, p. 20). At least half of the US population consumes a sandwich every year, considering that more than one and a half billion sandwiches were sold in the previous year (2014) with an optimum price of $1.66 (Cushing, 2005, p. 62). Of the many sandwiches that are bought, 55 percent is take-away and the customers consume them over lunch. 7 percent is considered to be snacks (Gallaugher & Ransbotham, 2010, p. 200). Men are the leading consumers of sandwich as they account for 58 percent of the sandwiches sold. The optimum price of a sandwich is $1.67. The age bracket of the majority of the sandwich consumers is between 25 years to 44 years and they account for 51 percent of the sandwiches sold.

The local area profile

The profile of the local area where the business will be set up is as per the government records. The area has a total population of 259,536 people, in which 125,473 are males and the rest (134,063) are females. 48,697 individuals are aged between 0 to 15 years. 191,158 individuals are aged between 16 to 75 years (Kumar, 2005, p. 12). There are 111,243 households with residents with an average size of 2.33 family members. There are many big business complexes; therefore, many organizations are accommodated. The various organizations that are accommodated in the business complex include: shops, restaurants, banks, shopping mall, and many offices. In addition, the area has a local university. The transport system in the area is also effective as there are both a bus station and a railway station.

The findings of our market research pointed out to the fact that the area is a prime location for our sandwich outlet because of the following reasons: there is a large population of the residents, our sandwich outlet will be located along a busy street, the location is our local area and we have a better understanding of the residents, and the residents in the location are considered to be high net worth people who have a higher propensity to consume the sandwiches.

The other sandwich shops are also located along the busy street; this will enable us to compete on the same level. An analysis of the street was also carried out with the aim of monitoring the human traffic in the morning hours and in the afternoon hours. The morning traffic was monitored between 7:30 and 11:00 in the morning, and the afternoon traffic was monitored between 12:00 and 3:00 pm. The research findings revealed that on average at least 1,000 people use the street in the morning while around 2,000 people use the street in the afternoon.

The market research also involved taking a closer scrutiny of the competitors. Along the street, there are other sandwich shops. The Sandwich Deli does not open in the morning; it only opens in the afternoon and it serves an average of 150 customers daily. Just Sandwiches trade from morning and it serves an average of 275 customers daily. Tramezzino also opens from morning, though they start selling sandwiches in the afternoon; on average, it serves 200 customers daily.

Customer profile

In line with the survey conducted on the potential customers, our sandwich outlet has narrowed down to the following attributes that fit our customer profile: we will target the age group of between 20 years and 40 years. Many of our customers come from within the surrounding residents and their delight is to buy from the locality in order to enrich the local suppliers who are mostly farmers. Most of the customers live and work within the locality.

Our sandwiches and service

The price of our sandwiches is set in line with the local forces of demand and supply, considering the fact that the ingredients are available from the surrounding suppliers within the town. In addition to the sandwiches we will provide drinks. The breakfast sandwiches are intended to offer a wonderful dining experience to the intended customers. The price will be set at just $2.00 which is cheaper that what the competitors offer. We have local suppliers who will provide good quality bread to us.

The fillings used for the lunch sandwiches are chicken, beef, bacon, cheese and ham. Some of our specials for lunch sandwiches are smoked ham with garlic mayonnaise, smoked bacon with garlic mayonnaise. The price of our lunch sandwiches is valued at $2.50 each.

Marketing and promotion

Before the launch of our sandwich outlet, we intend to carry out a marketing campaign whereby we will officially announce the launch of the sandwich outlet and we will emphasize how different it is from other outlets in the locality. We will also inform the potential customers on our unique identity that makes us differ from the other sandwich outlets. We will work aggressively in the first three months in order to maintain our profile. We will also use posters to advertise the official opening date and also carry out a tasting session on the due date. Our marketing and sales campaigns will be aimed at capturing the attention of the competitors customers so that we can bring them on board.

Main competitors

There exist three other sandwich outlets along the street on which we want to establish our outlet. The three have been in the business for quite some time with Tramezzino being the oldest. The sandwich deli was established before Just sandwiches. The three outlets are considered to be our healthiest competitors. They have an advantage over us because we are just a new outlet and they have all the customers who we wish to have. Also, they offer good sandwiches, which we intend to improve on. The competitors also have weaknesses, including: poor choice of bread portions, The sandwich deli is not always opened in the morning, and also their primary focus is not just the production of sandwiches. Our main focus is to take advantage of their weaknesses and convert them to our strengths and also improves on their key strengths, thus, making us unique in the process.

Our suppliers

We did a market survey with an aim of understanding the surrounding local farmers who will be our potential suppliers. We were interested to know their terms in terms of prices, supply standards and their terms of credit. We met with each potential supplier one at a time. We intended to understand more about their offers and conditions for payment, and of course, we would choose what works best for us for the interest of our business. Our aim was to identify our sources for bread, meat, sandwich fillings, and vegetable. Also, we interviewed some of the customers of the suppliers in order to confirm and double check the quality of the suppliers produce. All our suppliers will be from the surrounding residents and they have fresh produce. They produce high quality bacon and corn-fed chicken.

Our fresh fruits and vegetables will be sourced from Daves Veg, which produces high quality vegetables. The supplier is also based within the locality. All our bread will be sourced from Bread Fresco, who has agreed for a payment period of 1 month. They boast of being the number one supplier of bread in the town, which everyone really enjoys.

Financial Projections

Sales prediction

Our sales target every month is to sell ten sandwiches for breakfast daily and also fifty lunch sandwiches daily. Our business is expected to grow by at least 5% every month; meaning that by the third year, our sales target will change to sixty sandwiches for breakfast and two hundred and eighty sandwiches for lunch. In line with the sale of sandwiches, we will ensure that at least 75% of the customers buy coffee or a soft drink.

Direct costs

These are the continuing costs that we are likely to incur in our daily production of our products. The direct costs include the amount of money we will spend daily to source or our ingredients for the production of our sandwiches and coffee.

Overheads

These are the costs we intend to incur in the daily business operations. These costs cannot be avoided, and the business can come to a stop if we cease to pay them.

Fixed assets

Our fixed assets will just be the items needed for production and display, for instance: coffee maker, fridges and cookers.

Investments

Out of the $15,000 required to start up the business, I have personally raised $5,000. The total monthly expenses will be $1,500. Every month I will pull $1,800 for my upkeep so the business also moves on. I am searching for an additional investment of $10,000. I am talking to banks and other potential bodies. The projected cash flow, balance sheet and profit and loss account are attached in the appendices.

Conclusion

Profit maximization is the best gift a business can give to its shareholders. The business achieves this by keeping the marginal cost at the same level as the marginal revenue. The arrangement of the market in which the business operates will influence the decision of the firm to maintain its output to a certain level. The concepts of managerial economics can be narrowed down to the theory of the firm which recognizes the fact that profit maximization is the main objective of a business.

The owner of the firm is recognized to be the key decision maker in the firm, and the most important thing for the owner is value to create wealth. This can only be achieved by making profits. Economics necessitates the use of limited factors of production to produce goods and services while keeping the costs at a minimum. Using the principles of cost analysis, businesses can adopt this strategy of production and make the best use of scarce resources to achieve a desirable end.

The organization of the market in which the business functions will affect the decision of the firm to maintain its output to a certain level. Non-profit institutions like schools, colleges, community museums, and cooperatives also use the theoretical concepts of economics and strategy in order to make decisions. These decisions help the business to achieve the economic goals efficiently. The concepts of economics are very influential in making relevant optimal business decisions. These economic decisions can be used to predict the outcomes of the business. For instance, an economic decision to use an optimal amount of resources in the production of a certain good will make it possible to predict the economic consequences of the decision in relation to the competition from other businesses in the same line of production.