Introduction
A business plan is a well organized document that shows the road map that the business will take so as to start or continue expanding. In some cases, business plans are wrongly drafted and this results in problems when running the business. In this work, ways of resolving low capital base for the alpha retailers are analyzed and evaluated.
Client
The client is called alpha retailers; the company is a start up business that has been established and it deals with the distribution of products to consumers. After starting the business, the managers realized that the capital set out to run the business is not enough.
The client now wishes to solve the problem of lack of enough capital within the business. To develop solutions geared towards solving this problem, the researcher conducted a situations analysis, developed tactics to solve these problems and ways of implementing and monitoring the success of the business.
Objectives
The main objective of this work is to formulate solutions through which the Alpha retailers can use so as to gain enough capital. Currently, the business is faced by the problem of the lack of enough capital due to poor business planning. This has seen the business exhaust its startup capital.
Situational analysis
The first step will be to perform a situational analysis of the business. This will entail a critical evaluation of the alpha retailers. To check the company’s internal and external performance, a SWOT analysis was carried out. SWOT analysis entails the examination of the business in terms of strengths, weaknesses, opportunities and threats. Strengths and weaknesses relate to the internal environment of the business while the opportunities and threats relate to the external environment.
Strengths: the business will be examined to determine its strengths. These include superior technologies, capital, experience in the field, having good competent workers and innovations. The business will be evaluated so as to identify these strengths.
Weaknesses: the business will be analyzed in order to identify the weaknesses the business faces. These include poor technology, lack of capital and small incompetent workforce.
Opportunities: these are the positive factors that promote the development of the business. They include a large customer base, good legal and regulatory framework, positive culture, good political climate, and government subsidies (Barney 87).
Threats: these are external factors that will affect the development of the business negatively. They include superior technology processed by the competitor, low market demand of the product on sale, seasonal and weather effects.
Audiences
The main stakeholders that will be involved in this problem solving:
- The company management: they will be involved in the formulation of appropriate strategies
- The company employees: they will be involved in the implementation of the strategies developed
- The project manager: he/she will help the company formulate appropriate strategies and tactics so as to get enough capital.
Strategy
In order for the business to perform well, there is a need to develop strategies to enable the company raise its capital base (Protiviti 3). The following are the main strategies that will be adopted
Borrow loans: in the short run, the business should borrow capital from financial institution and banks. Before borrowing the loan, the company should prepare an adequate business plan so as to convince the financiers to award the loan
Market the company to investors: this will entail the development of a good business plan which will be used to market the company to investors. The management will identify people who can invest in the business and become shareholders
Venture capital firms: this is an equity financing strategy where investors raise capital for the business and in return the get a stake at the business. The management will liaise with venture capital firms who will not only assist in raising the capital for the business but also provide strategic, market and management expertise to the alpha business.
Aggressive marketing: the working capital of the business can be increased by increasing the net profit which can be used to develop the business. The business should increase their marketing and sale promotions activities so as to increase the sales volume and subsequently the profit and the working capital.
Capital reinvestment: since this business is a small start up business, the company can monitor the cash inflows and outflows and most of the profits can be reinvested back to the business.
Use of more personal saving: the company can increase its capital revenue by asking the principle owners to contribute more money towards they business venture
Factoring all costs and excepted cost in the future: one of the major failures in business is failure to identify all the fixed and variable expenses so that they can be factored in the financial plan. This will prevent cases where extra cost result in reduction in capital.
Tactics
Reducing cost: in order to prevent excessive spending, the company management should look for ways through reducing costs such as checking employees and their productivity so as to get rid of any unproductive employees. The management should also look at the operations, productivity, distribution channels so as to identify methods of reducing costs.
Motivate employees and management: in order to improve the sales, the company should motivate employees and the management team to ensure that they perform at their best. This will increase sales and raise capital in the long run.
Check customer feedback: it is important for the business to monitor the customer feedback so as to respond to any negative feedback. This will ensure that the company’s customer base and hence the capital in the long run.
Improve the business culture: the management should improve the business culture so as to get long term benefits and improve their sales as well as the customer base.
Calendar budget
The budget entails the amount that will be used to institute that changes that will result to increase in sales.
The entire process will be carried out within one week. The main activities are shown in the Gantt chart below:
Evaluations
After developing and implementing the different strategies, it is imperative that the progress is tracked so as to ensure that there is a positive growth and that the capital base increases. Various methods will be used to evaluate the success of the adopted strategies. The main evaluation methods are:
Increase in capital: it is expected that they will be an increase in capital. This can be noted after evaluating the account books such as the balance sheet.
Increase in sales: the success of the adopted strategies can be evaluated from the sales record of the company. Greater sales will definitely result in the increase in the profits as well as the working capital
Increase in borrowed capital: if the proposed strategies are implemented, the amount of money generated as debt capital and equity capital is expected to increase.
Works Cited
Barney, Jay. Gaining and Sustaining Competitive Advantage. USA: Addison-Wesley. 1996. Print.
Protiviti . “Improving working capital management process.” The bulleting 4.11(2011): 1-6. Print.