Business Name : The Heaven Bookstore
● Sole trader
The Heaven Bookstore will be a sole proprietorship. This is the best suitable option for many small businesses across Australia, with 61% of Australia's business being sole traders.
The benefit of being a sole trader is the convenience and cost effectiveness of this structure. The business will incur a low start-up cost due to inexpensive registration with the Australian Securities and Investment Commission (ASIC) and minimal government requirements, namely no company tax.
As a result, the business will retain majority of its profits, which can be reinvested to encourage growth and profitability. The time-efficient process of setting up a sole proprietorship will also allow the business to focus on improvements and further innovation rather than a myriad of of legal compliance and bureaucratic issues that come with other structures.
Additionally, with a sole proprietorship, the owner could retain full managerial control so decisions can be made quickly, without the need to deliberate with partners or a board of directors or the delay of potential disputes.
The Heaven Bookstore will become a creative hub in the heart of Newcastle, celebrating words and a love of literacy by offering children and adults a quality selection of books to sustain a local community of lifelong readers.
Our vision is to become the largest and leading book distributor in Newcastle and to be the bookselling household name in Newcastle.
The Heaven Bookstore will be located at a shopping mall at Westfield, Kotara. It will have a large amount of space where customers can walk comfortably in the store and have a look around at the books on offer. Renting a building is typically more cost-effective in the short-term than purchasing constructing your own building, which is why this option is the most suitable while the business is still establishing.
While rental expenses may be relatively high, Westfield Kotara specifically a prime location due to high customer flow as over thousands of people walk into the shopping mall. This can be partly attributed to the mall providing free parking and being located in a central area. Because of these factors, having Heaven Bookstore located within the mall will provide competitive advantage to other bookstores and earn enough sales to be worth the expense.
The success of this location will be enhanced by having the store in close proximity to stores that attract a similar target market, so it is convenient for customers to visit Heaven Bookstore. This could be next to National Geographic where people purchase education resources and Heaven Bookstore can share the flow of customers.
The main financial goals include the following respectively:
- Maximising profits
- Maximising market share
- Maximising growth
Specifically, Heaven Bookstore has the goal of achieving a net profit of more than $150,000 over the 2018/2019 financial year. This will be achieved by encouraging sales through effective marketing strategies and efficient operations processes to increase demand and customer base while reducing expenses and non-value adding activities.
Heaven Bookstore also has the goal of capturing 40% of the market of book-buyers in Newcastle. Currently, the big competitors in the book market are Dymocks, QBD and Booktopia. Heaven Bookstore will dominate these by ensuring all the newest and high demand books are stocked and by creating strong relationships with customers through a loyalty program which tracks the customers' favourite books and buying patterns. This information can help Heaven Bookstore ensure customers are satisfied with the store so they can encourage further customers by word of mouth.
If Heaven Bookstore achieves the profit and market share increase as forecasted, the store will experience continual growth.
Non Financial Goals
The main non-financial goals include the following:
● Social goals
● Environmental goals
Heaven Bookstore aims to have a reputation for their community service and diversity. This will be achieved by sponsoring and supporting community events and ensuring ethical business practices. Internally, this includes equal treatment of employees, women in managerial roles and celebration of diversity, which studies show will result in more productive employees and less absenteeism. Heaven Bookstore would publicise their social work by hosting education seminars on cultural and gender diversity and publicly supporting charities and not-for-profit organisations to develop a good bond and engage with the community.
Heaven Bookstore has the environmental goal of supporting sustainability throughout its operations. This will be achieved by abiding by the ISO 14001 standards of environmental efficiency, being energy conscious by having dim lighting, and using green bags or encouraging customers to bring their own. This adds to Heaven Bookstore's reputation as a socially responsible business and will encourage future sales and growth.
Situational/ SWOT Analysis
- We hire people who have a strong desire and passion and absolutely love books
- We will have local authors readings and book signings
- Can have local authors and lectures and book signings
- We can make personalized recommendations to long term customers
- We will sell new and popular books
- Skilled workforce due to a comprehensive training program
- Competitive advantage due to a free and convenient parking in a prime location Weaknesses
- Small store space is a shopping mall which can be congested
- Rental expenses is relatively high
- Limited financing options as new businesses may only receive a limited line of credit and have limited equity financing options
- Have not experienced past failures so do not know where to improve on
- Health insurance costs are rising
- Business is slower during the summer vacation
- Competitive advantage due to free and convenient parking compared to some other bookstores.
- New technology will allow people to online order
- Interest rates are low, which means lower cost of debt financing
- The Australian Council for the Arts has today released a summary of new research into Australia book reading habits which reveals Australian ranking reading as their number 1 favorite leisure activity and they still prefer a printed book in their hands Threats
- Current economic growth is slow, therefore sales may be initially low
- Larger competing chains have more market power, which means they have an established customer base
- Increasing demand for eBooks may eliminate the need for physical books
- Younger market segments that are influenced by technology don't read as much as older generations.
The production process
Heaven bookstore will have the input of staff and labour hours and books sourced from suppliers, such as wholesalers and publishers. The inputs will be transformed into a retail service that displays books in a logical physical layout to customers and having technology that ensures that inventory management and sales are conducted efficiently and accurately. The output of Heaven bookstore will not only be high quality books, but also exceptional customer service. This operations process will ensure that the output will maximise customer satisfaction.
Since employees are the face of Heaven Bookstore, the focus will be on total quality management. In training programs and while working, employees will be encouraged to focus on quality in everything they do so customers are continually satisfied and will repeat purchases. Areas of focus include cleanliness and presentation of the store, efficiency of service as well as the physical quality of the goods sold.
The target market of this bookstore is young adults to people who are in their 30s. This is because 95% of Australians in this age group enjoy reading for pleasure or interest and 68% would like to read more, with relaxation and stress release the most common reason for readling. 75% of Australians believe that books make a contribution to their life that goes beyond their cost. This bookstore is currently aimed at the Newcastle Region, which has about 546,788 residents in total, and residents within the target age range.
The books that are sold by Heaven Bookstore will be positioned with the image of a high quality. If there is a tear or anything is wrong with the book, customers will be assured exchanges and refunds.
The business name for this small business is Heaven Bookstore, and the logo is as pictured. They will contribute to the success of the business by making the target market feel a sense of joy and relaxation when they see the logo.
The type of book that this bookshop selling is fiction stories that are really popular and are on high demand. The popular reads will be on a bookshelf display with lights around them to highlight and promote the product.
The price method that Heaven Bookstore is setting is penetration pricing, which is the pricing strategy when the price of a product is initially set low to encourage a wide fraction of the market to purchase the books and switch over from competitors to initiate word of mouth for the store. This strategy will hopefully provide the business with a competitive advantage resulting in increased market share, growth and revenue.
The strategy works on the expectation that customers will switch to a new brand because of the lower price as it becomes more appealing and satisfying compared to the higher priced competitors. Therefore, it would give the Heaven Bookstore a competitive advantage which would lead to increased market share, faster growth and increase customer relationship. while this strategy may mean lower revenue per unit, it will lead to increased sales volume, and lead to greater total revenue in the long term.
Heaven Bookstore would use many promotion techniques to attract customers and help to maintain their loyalty.
One way to promote the business is through brand loyalty through image reinforcement. This can be done effectively through the use of social media. Heaven Bookstore will be advertised through social media such as Instagram, Facebook, email marketing, Blogs and Reddit. During these posts, Heaven Bookstore will inform and persuade to buy the books offered and enhance image by offering the main features that the business would have to offer. Furthermore, the business will use TV advertisements in local stations. This may be costly, but it reaches a large audience.
Another way that the business could promote this is by personal selling. Heaven Bookstore could arrange for one of its staff to go knocking on doors and modifying the message to suit the person's needs and wants. This would allow the customer to be interested as the books would be well suited to them.
The distribution channel that will be used is: wholesale – retailer – consumer. There are many advantages to this.
Most business don't have the energy to go out and get the stock so wholesalers deliver goods and stock to your doorstep.
Also, if a retailer purchases their stock from a wholesaler frequently, they may receive specials offers and develop a unique partnership. There is a good chance that the wholesaler will have a loyalty system in which Heaven Bookstore can earn points and gain discounts to lower their cost of goods sold.
Income Statement for Heaven Bookstore for period 1/7/2018 – 30/6/2019
Individual Expenses Profit Totals
Cost of Goods Sold
Opening Stock 63,000
Closing Stock 80,000
Cost of Goods Sold 90,000
Gross Profit 310,000
Loan Interest 10,000
Telephone and telephone system 500
Internet Fees 500
Accounting Advice 2,000
Legal Advice 200
Total Expenses 145,350
Net Profit 164,650
Heavens Bookstore Pty Ltd
As at 1/7/2018
Current Assets Sub totals Totals
Accounts Receivable 3,000
Inventory 3,000 13,000
Goodwill 5,000 32,000
Total Assets 45,000
Accounts Payable 3,000
Overdraft 1,000 4,000
Non – Current Liabilities
Bank Loan 10,000
Car finance loan 18,000 28,000
Total Liabilities 32,000
Total Equity 13,000
Cash Flow Statement for Heaven Bookstore for period 1/7/2018 – 30/6/2019
Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun
Opening Balance 7,000 17,919.82 34,439.64 40,959.46
Sales 20,000 25,000 25,000 30,000 50,000 70,000 35,000 25,000 25,000 25,000 35,000 35,000
Total inflows 20,000 25,000 25,000 30,000 50,000 70,000 35,000 25,000 25,000 25,000 35,000 35,000
Cash outflows ($'000)
Rent 6666.67 6666.67 6666.67 6666.67 6666.67 6666.67 6666.67 6666.67 6666.67 6666.67 6666.67 6666.67
Wages 350 350 350 350 350 350 350 350 350 350 350 350
Electricity 167.67 167.67 167.67 167.67 167.67 167.67 167.67 167.67 167.67 167.67 167.67 167.67
Advertising 10,000 10,000 10,000 10,000
Loan Interest 833.33 833.33 833.33 833.33 833.33 833.33 833.33 833.33 833.33 833.33 833.33 833.33
Telephone and telephone system 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67
Stationary 4.17 4.17 4.17 4.17 4.17 4.17 4.17 4.17 4.17 4.17 4.17 4.17
Postage 333.33 333.33 333.33 333.33 333.33 333.33 333.33 333.33 333.33 333.33 333.33 333.33
Internet Installation 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67
Accounting Advice 2,000
Legal Advice 200
Delivery 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67 41.67
Total outflows 9,080.18 8,480.18 18,480.18 8,480.18 8,480.18 18,480.18 8,480.18 8,480.18 18,480.18 8,480.18 8,480.18 20,680.18
Closing balance 17,919.82 34,439.64 40,959.46
The phases of the human resource cycle include the following:
As Heaven Bookstore expands, the business will take on one or two staff each year.
Recruitment and Selection
After staffing needs are identified, the recruitment and selection phases would proceed. Recruitment is the stage of the human resource cycle that involves seeking applicants and selecting the most suitable candidate. Selection is choosing the most suitable applicant for a vacancy involving identifying the skills, qualifications and experience of applicants in relation to the job specifications. The business would find people with the suitable skills and qualifications that match the jobs we offer, such as excellent communication skills to be customer service assistants. Job descriptions may be posted on platforms like LinkedIn and Indeed to assist this. The job descriptions will be created by the business owner doing a job analysis of studying employees duties and tasks that are doing in one day. Some of these tasks would be offering advice and recommending books to customers, maintaining up to date knowledge of current titles, dealing with mail, email and web-orders, helping with book events, cleaning and maintaining the store, as well as contributing ideas for improving the store.
In order to maintain staff loyalty, the business will provide fair remuneration.
● Starting wages range between $14 and $20. Most workers will be from high school or uni students who love to read. On average, most workers work about four to five hours weekly. This complies with national minimum wage laws.
● Working hours will need to include some irregular hours. Shops are increasingly open for longer hours during the week and at least part of the weekend. Workers will generally get paid $20 -$25 on weeknights or public holidays.
● Staff will also be motivated by a range of rewards for top performances. Rewards can include bonuses, store gift cards and promotions.
Training and Development
The selected employees will be adequately trained through a comprehensive induction program and policy manual as well as consistent on-the-job training from managers and supervisors, such as job rotation between point of sale and stocking shelves.
The business will do this through the process of enhancing the skills of the existing staff and training the new staff that come on board each year.
The chosen employee will be trained through a orientation programme to inform them about their part to play in the business. Some events that might happen is an introduction to colleages, tour of the business premises and at the end of the programme they would receive a copy of the handbook.They would also receive superannuation account, bank account tax file number and emergency contacts.
Throughout the employees work experience, they will enhance the skills of the existing
Apart from an induction, the business will provide the employee with on the on job training and off the job training.
On-the-job training methods are as follows:
The employee will be given different job assignments. This will have them moving from one job to another over a week or so. This would allow them to engage in different aspects of the business and acquire new skills. Job rotation also benefits the employee by helping the to understand the problems that might be faced by other employees.
Coaching and Job Instructions / Step By Step Training:
Under this method, the trainee will be supervised by the manger who will function as the coach and reflect the business culture in the training. The trainee will get fantastic feedback to the trainee and a sense of what the coach expects him to do. Sometimes the trainee may not get an opportunity to express his ideas. .
The following are some of the off-the-job techniques that the business uses to effectively train their employees:
Case study method:
Usually case study deals with any problem confronted by a business which can be solved by an employee. The trainee is given an opportunity to analyse the case and come out with all possible solutions. This method can enhance analytic and critical thinking of an employee.
Voluntary and Involuntary Separation
These maintenance strategies will be in place to avoid voluntary separation from the business and all situations regarding involuntary separation will be dealt with professionally with adequate redundancy packages for permanent workers. Exit interviews can also be used to gather information about how to improve the business' human resource management.
Projected Sales + Revenue Projected sales revenue are shown in the following extract from the monthly cash flow statement:
Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun
Sales revenue ($) 20,000 25,000 25,000 30,000 50,000 70,000 35,000 25,000 25,000 25,000 35,000 35,000
● Sales volumes are going to be lowest during the first month of trading (June 2018), resulting in a projected $20,000 in total revenue.
● Sales will gradually increase as the business increases market share due to the customers responding to the marketing strategies such as advertising and loyalty programs, with an extra $5,000 in revenue in August and September.
● The business is anticipating a spike in sales during the holiday season, resulting in sales revenues of $50,000 in November and $70,000 in December.
● There may be a slowdown in sales after the holidays (February to April), but the business' sales volumes are anticipated to continue its growth trend afterwards as a result of more effective marketing strategies.
Start-up cost: $45,000 to purchase assets + and another $10,000 in cash to spend on expenses for first month of trading = $50,000
Break Even Analysis
In this break even analysis, the fixed costs are $145,350. The average variable cost per unit is $9. The average sales price would be $30.
These figures are used to calculate the breakeven point with this formula:
Using this analysis, Heaven Bookstore will reach their breakeven point by selling 4,921 units over the 2018/19 financial year.
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