written responses/reflection to the case questions.

Anonymous
timer Asked: May 13th, 2019
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Question Description

please i want it easy and basic and the answers more in DETAILS for the questions.
  • How should a business plan be structured and what should it include?
  • Why did professors consider RedPack’s business plan to be so good?
  • What are, in your opinion, the pros & cons of business planning?
  • How did RedPack’s business plan evolve over time?
  • Do you think that business planning was important for RedPack? Would you continue to work on the business plan if you were they?
  • Which aspects are, in your view, the most important in RedPack’s latest development? Can you sketch an outline of an updated version of business plan for RedPack?

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START UP REDPACK BEACH LOCKERS TO UNLOCK POTENTIALS “To plan or not to plan its business, that is the question for RedPack.” In August 2010 the three founders of RedPack Beach Lockers (RedPack) were contemplating the course their company should take. Having worked on the start-up of the business for the last one and half years, the young entrepreneurs were eager to see their company grow. In order to roll out the business on a profitable level, they urgently needed financing. This last stage was everything but easy. Despite their commitment, hard work, and a detailed business plan, they were not yet able to convince a single investor of RedPack’s potential. The three founders started to reflect on the development of their business and the mistakes they had made. One of the main discussion points was the usefulness of a business plan. RedPack’s initial business plan was to run a simple but innovative business: renting out lockers inside beach bars on Spanish coast for people to store belongings. As the plan developed, however, the entrepreneurs decided to move the target market to Portugal and use the lockers as an advertising platform for revenue.But pressing needs for income forced the company to diversify to the music festivals market and offer cell phone recharge service besides lockers; revenue came from operations. The process of developing the business plan helped the entrepreneurs re-think and re-evaluate their ideas and identify problems or inconsistencies along the road; it had been an important tool to communicate their ideas with external parties and helped them improve the business model to seek financing; it had also helped them evaluate what they had accomplished and create a prioritized action plan. It had forced them to conduct extensive market research that gave them valuable information about competitors and possible partners. Although having a business plan had many payoffs, to write it up and frequently update it took the entrepreneurs so much time – one of the entrepreneurs was even convincedthey could better use the time and energy on actual business development, marketing, and operation. Because the environment of a start-up company was turbulent, the entrepreneurs felt they were trying to predict the unpredictable and their business plan could never be up-to-date. In an effort to perfectionize their plan, the entrepreneurs feared they might have lost out on other opportunities. Venturing spirits Hélène de Saint-Front, Davy Bour and André Amaral met in a classroom in Holland in September 2008. After completing their bachelor studies, Hélène, Davy and André went on to study a master’s program in entrepreneurship at the Rotterdam School of Management (RSM). With different backgrounds and personalities, the three students had one thing in common—the dream to become an entrepreneur. The program turned out exciting. It gave them the chance to be in close contact with inspiring entrepreneurs and develop their own practical business plans. The three felt on the right track: Their natural predisposition and the academic environment were likely to help them pursue the entrepreneurial careers of which they dreamed. Profiles of the Entrepreneurs Hélène was born in a traditional French family. The third of five children, she learned how to advance her way at an early age. Dedicated to success, she was accepted to RSM, one of the best business schools in Europe. Passionate about business and her career, she is energetic and hard working with great skills in finance and networking. The idea of starting up and growing a business has always attracted her. Davy was born in a rural area in the north of France. On his 18th birthday, he left France for Holland to start a bachelor study in business administration, and afterward, continued on with a master’s degree. With an unusual mix of creativity and pragmatism, he has great design skills and powerful negotiation skills. He sees entrepreneurship as the fastest way to achieve success. André is the son of an entrepreneur in Portugal. As a child, he was in close contact with the family business management and eager to follow his father’s example. Getting into entrepreneurship was a natural step. Always attentive to new ideas and opportunities, André’s strength lies in strategy and sales. Creating ideas Hélène got the idea for RedPack at a workshop she attended at the University of Delft, lectured by Ken Morse, an MIT professor. The purpose of the workshop was for participants to come up with a business idea and develop it at a preliminary level. The workshop began with a brain storming session when the participants shared real-life stories where they felt a lack of a product or service existed in the market. The case that attracted most attention in Hélène’s group was told by a Spanish student regarding the lack of safety solutions on Spanish beaches. “When I want to go to the sea or take a stroll on the beach, I have to leave all my belongings in a towel without any protection and there are a lot of thieves around. I can’t find any solutions to this problem!” Hélène and her group members immediately recognized the problem. As it was a widespread issue from many parts of the world, creating a solution could lead to a promising business! The idea was simple but innovative— installing lockers at beach bars for people to store their belongings so they can fully enjoy the day at the beach. Thus, RedPack was born! Hélène presented the idea to a board of juries toward the end of the workshop. RedPack Concept 1: Install small lockers inside beach bars for people to store their belongings. The lockers, operated via a biometric system, will be developed and installed by RedPack. The bar owners will pay a fixed fee to RedPack to use the lockers, which covers the installation and maintenance of the equipment. The RedPack lockers would be adapted to the beach environment. Ideally product development would take place in collaboration with potential clients to customize to their needs. As a locker filled with wallets and car keys was an attractive prey, further research needed to be done on how to insure the lockers and the valuables inside. RedPack as a start only considered placing lockers inside beach bars and shops, which was not subject to regulations. In the first summer season, a pilot of about 10 locker units would be placed on the most important blue flag beaches. The purpose was to test the business concept and gather information for further development. If the pilot was successful, RedPack would put in more effort in sales on the most promising European beaches during the next year. In the pilot, RedPack aimed to rent out the lockers for €7,300 per unit to cover marketing, operation, sales, management, manufacturing, maintenance and insurance costs as well as expected revenues (see Figure 1,2). A manufacturer would take care of locker production on a contractual basis, and the RedPack team would be responsible for the other activities to control costs. Figure 1 Figure 2 Hélène’s business plan was awarded the prize for best idea of the year. She sawgreat opportunities and was determined to launch this businesssoon and after two years expand it globally (see Figure 3).“We must take this opportunity and have the first lockers installed this summer no matter what… We cannot loose the momentum,” she said. Figure 3 Develo ping busine ss plans Hélène decide d to bring her idea to the market. One of the courses she took at RSM, New Venture Planning, asked students – three as a team – to write a detailed business plan for an idea of their own. Hélène took the advantage right away to develop the idea of beach lockers. She needed two other students to work with her – two people with an entrepreneurial spirit, the knowledge of the target market, and the willingness to take risks. André and Davy were perfect choices. She was friends with both and knew their personal and professional skills. André, speaking Spanish and Portuguese, had networks in both countries – the main target markets for beach lockers. In addition, Andréhad experience in sales from his previous jobs and hoped to start his own business right after graduation. Davy, on the other hand, had moved to Holland four years prior to obtain his bachelor’s degree. He spoke fluent Dutch and was familiar with the culture, which could be helpful in establishing relationships with Dutch manufacturers of digital lockers. He had experience in setting up new business for the company where he worked before. He was also skillful in design and computer programming. With this broad set of skills, the team members complemented each other: Hélène would be the CEO and in charge of the finance and accounting, Davy the head of marketing and communication, and André the head of sales and operations. When she proposed they join the team, both were excited and accepted the offer without any hesitation. In the first class, the teacher explained what a business plan was and how it should be structured. From that moment on, the team started to work on the business plan section by section and presented it to the rest of the class for feedback. This was an important exercise that trained students how to present their ideas, and receive external feedback that forced them to re-think some of their assumptions. As more sections were written, the initial business idea changed drastically. For example, the initial idea was to use biometric sensors in the lockers; however, after some research, the team realized that this system would not be the most efficient on beaches and changed it to a pin code system. Also, during discussions with the professor, they came up with the idea to use the lockers as an advertisement platform for other brands and leverage the revenue streams. Running into problems During the course, the team realized that the business plan for any start-up company is a complex document, where most of the answers are based on market research and benchmarking. Start-ups do not have essential records that they can use to estimate market share, revenues, consumer acceptance and all other variables involved in a business. Thus, start-ups have to base their assumptions on available market information to reduce uncertainty as best they can. The RedPack team soon ran into a serious problem: Because the beach locker concept was innovative, the team members could not find similar cases upon which to base their market research. Lockers were used in many other places, such as train stations, airports, libraries, and shopping malls, but rarely on beaches. The few beaches that actually had lockers available were in Cyprus and Australia. Even so, the lockers there had been installed either in a trailer brought by a car that could stop in the beach parking lot or on the boulevards by the municipalities and could be used for free. Moreover, neither solution used a digital pin code system or had a business model similar to a vending machine. Still, the team thought it would be important to identify other solutions for safety on the beach, and position RedPack’s concept against these alternatives in terms of price and convenience. After some brain-storming and market research the three young entrepreneurs listed the main solutions for keeping belongings safe on the beach, including: ask your neighbors to watch your belongings while you are away; leave your valuable belongings in the car; use a water proof wallet which you can take everywhere to protect your most valuable belongings; a mountable locker which can be installed on your umbrella; beach chairs or tables with incorporated lockers; lockers installed in a car trailer parked at the beach parking lot; or just an insurance that covers your belongings in case of theft. After mapping out possible competitors and alternative solutions, the RedPack team was convinced that their solution was the best in terms of price and practicality (see Figure 1). Figure 1: Competitors Diagram Despite their best efforts, some important information was still missing from the market research. For example, the manufacturers of digital lockers were not sure whether their product would be suitable for a beach environment, where the corrosion might occur quickly due to harsh climate and weather. Lockers were non-existent on the beaches in southern Continental Europe, which made it difficult to evaluate what items users would want to put in a locker and how much they would be willing to pay, and consequently, decide the size and pricing strategy. It was also impossible to collect information about beach bars, to assess their availability of space and the willingness to offer locker service. Due to the novelty of the business idea, the municipalities in Spain had a hard time deciding whether advertising on beach lockers would comply with commercial legislation. It was equally difficult for the team to assess the interest of other brands with whom to become advertising partners. The team was frustrated and the three friends’ ideas on how to pursue the business plan began to diverge. Hélène, passionate about numbers, financial instruments and planned actions, strongly believed in the usefulness of the business plan. For her, the business plan was an action guide where the assumptions and predictions must be considered accurate and taken seriously. Davy, a creative mind with a driven attitude, recognized the importance of the business plan in clarifying ideas and re-defining strategies, but saw it less relevant in guiding actions. André was totally anti-planning. Used to the unplanned lifestyle of southern Europe, he could not accept that assumptions and predictions were accurate. Writing a business plan, in his view, was a waste of time. Moreover, many others had succeeded without planning. Researching the field in Spain Despite the divergent opinions about planning, in February 2009, the RedPack team traveled to Spain – their entrance market – for a field research. A few weeks before the trip, the team participated in a business plan competition organized by the technical university of Delft. RedPack was awarded the runner-up prize of €1000, which became, at that stage, the team’s only start-up capital and which was used for their travel budget. To make the most out of the trip, the team decided to spread out along the Spanish coast. While Davy stayed in Holland to keep up with the course work, Hélène traveled to the Cataluña coast and André to the South of Spain, together with his classmate, Daniel Tocca, who had lived in the area and had a useful network. Before leaving Holland, the team prepared a questionnaire to find out how much people were willing to pay for the locker service, whether they considered it a real need, how big the lockers should be, where they should be placed and which was the best beach to launch the product. The team also planned to talk with beach bar owners to evaluate their openness to having lockers installed in their bars. With “bootstrapping” as their motto, the two groups traveled the coast for a week. While Hélène handed out dozens of questionnaires on the beaches to gather statistics for the business plan (see Appendix 1), André and Daniel talked to many bar owners and local residents to find out their opinions of the product. They also met with municipalities to discuss potential collaborations and legislative issues. The trip proved extremely helpful, and some of the previous assumptions were challenged by their latest findings. For example, the team had thought about installing only small lockers for the most valuable belongings, but the interview research showed that users preferred bigger lockers for all their belongings. Also, the initial idea of installing lockers inside beach bars was confronted. The team realized that Spanish beach bars usually do not have much room available for lockers, and the majority of the interviewees preferred to have lockers installed in the terrace of the bars. RedPack Concept 2: Install medium-size lockers inside and outside beach bars, for people to store valuable belongings and backpacks. The lockers are developed by RedPack and equipped with a pin-code system. RedPack operates the lockers and shares revenues with bar owners. The lockers are used as an advertising platform that represents an important revenue source. The three friends began to evaluate the possibility of developing outdoor lockers to avoid depending on beach bars. With both indoor and outdoor locker systems available, RedPack could reach a larger market share and offer suitable solutions for different cases. The team concluded their business plan and received the best grade in class. After having gone through many changes, the concept was now mature, ready to be turned into a real business. Also the technology that Redpack plans to offer was definitely feasible. The lockerboxes would have to be modified to fit into the beach environment, but in essence they were not a new product, making their realization even easier. The detailed first steps as well as the financial projections of the three RedPack entrepreneurs are presented below. The team used all the data collected to fine-tune their business plan (see Appendix 2) that included detailed profitability and financial analysis (see Appendix 3). Revenue assumptions For each customer, RedPack would generate a yearly revenue of €7,966 with 50% generated by advertising, estimated at €2,370 per locker per year. This revenue would be a monthly fixed cash flow for the locker rent based on expected utilization rate, for a maximum of € 2,000 in July, and a variable one for advertising, depending on how attractive the beach was, that the team estimated at €600 per unit per month in peak months. For 20 bars installed in year one in Spain, RedPack expected to break even with a revenue of €180,000, for an initial investment of €220,000. In year two and three RedPack would expend its customer base in the primary market in other countries and enter the secondary market, expecting to have 250 units in operation by the end of year three. Then on year four and five RedPack would expand massively in the secondary market, to reach a total of 500 customers after five years, which represented 1% of a potential market of around 50,000 beach bars in Europe. This way, RedPack would achieve a 37% net margin and a Return on Average Capital Employed of 45% from year three onwards. Main costs and cash flows The main expenses would be salaries (assuming a salary of €4,000 per month for 1 FTE with a 2% yearly increase, and €3,500 per month for the seasonal local operation manager) sinceRedPack sales forces would play a major role in the development of the brand. The depreciation over five years of the lockers estimated at€6,400 per unit (80 small pin code lockers) would account for 27% of the total expenses, and direct costs like installation (€400), maintenance, insurance and storage (€300 per unit per year) would account for another 13%. Marketing expenses (6%) would include communication, selling and promotion. Other expenses were office equipment and travelling costs. The most important cash outflow would be the purchase of the lockers just before the high season started. The orderhad to be made after contracts signed with bar owners, allowing RedPack to negotiate with the locker manufacturer to stretch the payment over two months after delivery. Those contracts assess that the lockers would be paid back by the end of the season as the yearly renting price covered the manufacturing, installing and extra services costs for each locker. Financing strategy Together with owners investment and bank loans, RedPack still needed an external investment of around €600,000 in two rounds, €100,000 in year one and €500,000 i ...
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Tutor Answer

ProfJamesmiller
School: Rice University

Hi, I have completed the paper. Please find attached. It has been nice working with you. It was however difficult to find the name of the source you attached and was hence unable to include it in the citations. You could send the name of the source and the author for citation purposes since most of the answers were retrieved from it. Thank u. 😊

Running head: BUSINESS PLAN

1

Business Plan
Institution Affiliation
Date

BUSINESS PLAN

2
Structure of a Business Plan

Stutely (2012), finds out that the decision to write a business plan for any organization is
very important since it helps the specific company launch, develop, and thrive. It is with no
doubt that all forms of nosiness plans provide a clear strategy and vision for the given company
to achieve its goal. Therefore, a typical plan should include, an executive summary which is
typically the first section of the plan and it ought to be short and well written. In this section, the
main aim is to attract your readers in such a way that they want to know more about your
company. The second in priority is the business description. This ought to be a high-level
overview of one’s business, and it tends to explain basically who you are as a business, what
your objectives are and an overview of one's products, services, customers, and the suppliers.
Market analysis is another crucial factor to include in a business structure. It basically
shows the knowledge that one’s company has of the specific industry. It ought to present
conclusions that are built upon thorough research of the market and put any detailed findings on
an appendix. Another crucial factor of a business plan is strategy and implementation. In this
part, the company ought to summarize its sales and marketing strategies and how it plans to
enact them by means of an operating plan. The last and most important step is the financial plan
and projection. This is the last step an...

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Anonymous
Tutor went the extra mile to help me with this essay. Citations were a bit shaky but I appreciated how well he handled APA styles and how ok he was to change them even though I didnt specify. Got a B+ which is believable and acceptable.

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