Small Businesses in the UK
In the beginning of 2021, there were 5.5 million small businesses in the UK (Young, 2021). Small businesses show a solid commitment, establishing the standard where they work and they function with an open and simple business structure. They have a particular focus on their clients and customers and are driven to delivering them with closely what they want as to improve their place in the industry and achieve growth in the most sustainable way. However, they have limited reach but a good owner is the backbone of a small business and crucial to its success. This report discusses the business plan for Hannah’s Catering, a small scale business in the UK.
The food service sector is big and includes the places, organisations and corporations that are accountable for any food or beverage preparation outside the home. Catering can also be considered as a service that offers an agreeable change from home-based cooked food. Catering services and establishments are open to the public and sell food and beverages mainly to create a profit and these services also have tremendous economic significance to the country. The market size, evaluated by revenue, of the Catering Services sector, is £402.5m in 2021 (ibisworld.com, 2021). Meanwhile, the contract catering segment of the UK hospitality sector has extended rapidly over the past decade, yet few modern hospitality researchers recognize the existence of this significant market sector.
In relation to the current market trend, it has been surveyed by Nisbets’ spring 2018, where it is found that 600 UK catering industry professionals have the key challenges that include – condensed footfall, searching for employee, and improved business rates and rivalry. Moreover, only 1 in 10 catering professionals found that the administration and regulatory bodies is undertaking an adequate amount to upkeep the industry, while 34% have discovered an upsurge in the cost of raw components, and 22% trust there has been an increase in the labour price (Douglas, 2018). Though, the general stance of the catering sector from a professional outlook seems well and positive with 73% of survey-takers having a constructive stance, which is an upright mark for the industry forthcoming growth (Douglas, 2018).
From a future perspective, the continuation as the negative impact of single-use plastics, in specific, are driven more and more seeming to the general public in the catering industry and this makes a big amount of waste, much of which is not recyclable like most straws are not decomposable. The hospitality and catering sector contributes largely to these problem plastics, specifically considering straws in hotels and restaurants, and cutlery in takeout and food stands. Indeed, the European Union has already conversed of banning particular products for sale, and this may or may not turn out to be UK law, relying on the contracts that embrace the UK’s drawing from the European Union (virtual-college.co, 2018). It is going to be prudent for Hannah’s cater to practice sustainable processes and products in future. For example, the company can use ingenious plant-based plastic alternatives in the use of things such as cutlery and for paper straws. The next future development is the rising trend in the taking up of dietary selection and this will be compelled foremost by the ethical contemplations for the use of animals for food, however, the austere effect of the farming sector on the environment is further a significant aspect (virtual-college.co, 2018). Hence, Hannah’s Catering is required to supply progressively to those who want to consume fewer animal products.
The Food Service Sector
The marketing mix strategically positions a business in the marketplace and can be used with varying levels of force. This is to make sure the target audience is content, value perception is precise, and to stand out from rivals. In relation to Hannah’s Catering, the company marketing strategies will be as follows –
Hannah’s Catering will offer different products and services such as different types of meals for lunch and snacks to a diverse range of customers. The company services will be presented further to the airline services, companies or workplaces. Other than the food preparation and delivery, the caterers will provide food presentations at the time of events, decorations, lighting and table setting. It will prepare and deliver meals and snacks as per the requirements and specifications to the customers. Meanwhile, the company catering business product is ‘food’ which is necessary for all class/age of the customer and this product has no life cycle as the demand of different types food is always ascending (Kowalczuk, 2016). Ultimately, the company product and services will be targeted to wedding guests, corporate hospitality, long-term contracts and social events.
This strategy needs to cover the actual amount, the end user is likely to pay for a product or service. It is necessary for Hannah’s Catering to understand how a product is priced and will straightly impact it sells. The company pricing strategy will vary with the price of raw materials as well as the serving to different range of customers including – wedding guests, corporate hospitality, long-term contracts and social events (Baek et al, 2019). For instance, If they are able to book the event, any event booked less than 48 hours in advance will incur a 10% surcharge over regular pricing (whichever amount is higher) this is because of additional costs of accomplishing last minute events. Lastly, at the time of arranging to price, the company needs to consider its current business’ position among other competitors and accordingly, list the price for its catering services in the market.
This P includes different places—where a product is created, noticed in the advertisement, distributed, and sold. Hannah’s Catering needs to ensure that its target customer can discover its product or service at ease and the company must be presented to customers at the right place as well as the right time. With time, it is recommended to Hannah’s Catering to design and create an app so that its service reach within the grab of smartphone users. Meanwhile, it further needs to set up its office next to a heavily populated office building or corporate office so as to gain a steady stream of customers.
It is one of the significant strategies at the time of the catering business marketing plan and Isoraite (2016) called it an act directly to consumers. Hannah’s Catering to add value to its product and services, there will be a designing of Facebook and other social media pages and which will be boosted periodically to increase advertisement of the business with different digital marketing tactics. Meanwhile, the company will further create a YouTube story short video where it will focus to tap on future market trends such as sustainable packaging and delivery, vegetarian diet menu and so forth. Hannah’s Catering will further advertise its products and services by designing a corporate brochure and advertising in local publications for a week. Lastly, the company will target new customers through an ongoing sales promotion.
Current Market Trends in the Catering Industry
People are not just those who the company are marketing and selling to (Klein, Meier and Powers, 2017). It also comprises of employees, salespeople, consumer service teams, and anyone involved in the sales and promotional processes. As identified above, the current trend includes challenges in finding for skilled employees in the catering business, it is necessary for Hannah’s Catering to recruit people who can reflect and promote company value and core offerings to the target customers in the most effective way.
It implies to the delivery of a product or service to a consumer and the process, more or less be contingent on the client’s needs, includes assenting upon a fixed menu and organising food delivery. Hannah’s Catering must hold for minimal staff so that to reduce costs however, the process will differ in service in contexts to wedding guests, corporate hospitality, long-term contracts and social events.
For every organisation, a consumer will always obtain somewhat physical to confirm their buying and Lim (2021) also stated that individuals like to receive something that induces their senses to confirm that they have contracted a product or service, even if it is merely the receipt. However, in the case of Hannah’s Catering, the company can further focus on different intangible elements as well such as the brand logo, its slogan or tag-line or delivery experience. It will help the company to draw the interest of more number of people and target them in a differentiated way while achieving sustainable success.
A competitive analysis is a vital part of an organisation business plan (Musanganya and Sinumvayo, 2017). With this assessment, it can be identified what makes the product or service distinctive and so, what attributes the company play up in order to entice its target marketplace. Meanwhile, SWOT analysis has been done below in contexts with Hannah’s Catering industry –
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Strengths – Higher flexibility of operations (mainly for small and medium enterprises). – Constructive entrepreneurial ecosystem encouraging greater growth ambition among SMEs. – Supportive role of national and local government for the encouragement of SMEs in the UK. – Wider target market i.e. wedding guests, corporate hospitality, long-term contracts and social events. |
Weaknesses – Initial lack of expertise as of the higher cost of new equipment and breakdown. – Low financial control as to when risks are miscalculated resulting in higher costs and expenses. – Incapability to implement technological advancement and provide training considering the budget constraints. – Concerns regarding communication like keeping up to date with new food standards and risks of leadership. |
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Opportunities – The first opportunity for Hannah’s Catering could be the extended services such as targeting sports groups, school clubs and other outside catering. – To drive their move to sustainable products as soon as likely to comply with approaching EU laws and develop better relations with the government and the customers. – To include menu options vegan or vegetarian-specific as the rewards should be worth it. – To bring ease for customers and clients to book orders via a smartphone application so that to reduce the staff needs and increase customer satisfaction as well. |
Threats – Risks as of budget constraints due to the cost of training, food hygiene and safety. – Competition from medium and large scale brands such as Bubble Foods, Caper & Berry, Rocket Food and FoodByDish. – Following of stringent health rules in the UK as well as change in consumption habits. – The Food Standards Agency (FSA) authorities can further create challenges if Hannah’s Catering does not meet the standards laid down by the body (food.uk, 2021). |
As all investments involve some degree of risk, it is necessary to be transparent so that each of the investors may know from where the funding has been sourced and how it will be expended for the growth and day-to-day function of the catering business (Chapman and Lindner, 2016). The funds for initial investment will be sourced via a government-backed Start-Up loan so that to start and grow Hannah’s Catering business. It is a type of personal loan that will be charged a fixed interest rate of 6% per year. The spending outlay will be as follows –
|
Particulars |
Spending |
|
An initial investment of £15,000 |
– |
|
Equipment’s |
£1,500 |
|
Furniture |
£5,500 |
|
Utensils |
£4,500 |
|
Wages |
£1,800 |
|
Advertisement |
£1,500 |
|
Prepaid Expenses |
£200 |
|
Total |
£15,000 |
Operations and Management Plan is an important section in the business plan. Hannah’s Catering will sensibly watch meaningful cost controls i.e. optimum exploitation of resources and therefore, will draw a customizable operational and management plan. It includes creating decisions related to the physical location, equipment’s and human resources so as to get the product and services off the ground.
The physical location for Hannah’s Catering will be positioned at Borough Market in London as the market has been around for hundreds of years and it is also much accessible like a short walk from London Bridge on the south side of the Thames, beside Southwark Cathedral. The clients when arriving to Hannah’s office can also park their vehicles in some private parking options facility available there and it is also a road to many successful food businesses bringing unique perspectives for the company in every way.
Future Developments in the Catering Industry
Catering businesses need a significant amount of planning when choosing the right equipment and supplies such as holding cabinets, chafing dishes, food pan carriers, catering carts, ice beverage bins, punch bowls and many more. However, the list will never be all-inclusive, and it depends upon the business model considering the type and amount of equipment it requires with the type of catering the company wish to do. Many of the equipment, comprising serving dishes, can be leased. As Hannah’s Catering will be delivering a whole-service catering option, it will also require to purchase or rent serving dishes, plates, glasses, utensils and table decorations.
It is important to know that a team of managers and employees play significant roles in carrying out most of its company’s operating plan (Osborne and Hammoud, 2017). Therefore, it is essential to state who they are, what their qualifications are and what their responsibilities will be. Hannah’s Catering must have a clear hierarchical structure to better understand and help different stakeholders for the purpose of the trust. For example, the company needs to train its floor staff as they will play the role of brand ambassadors of Hannah’s Catering i.e. they are the ones who are in direct contact with the customers.
There is no current or historic financial information available for Hannah’s Catering as it is introducing a new business in the UK market though the projections can be done via anticipated profit and expenses by month.
Hannah’s Catering break-even point demonstrates how many individuals it requires to serve in order for its services to make money, centred on how much money the average customer spends. To perform a break-even analysis, the first numbers that need to be collected are the fixed and variable costs (Sintha, 2020). While evaluating the daily sales or deliveries required to be break even within the time period, the average daily sales needed to break even will be –
Break-Even Point = Total Fixed Costs ÷ (Total Sales – Total Variable Costs ÷ Total Sales)
For instance, the estimated breakeven point for Hannah’s Catering will be –
€ 60,000 ÷ (€200,000 – €140,000 ÷ €120,000)
€ 60,000 ÷ 0.5
Break-Even Point (in Euro) = €1, 20,000
Hence, Hannah’s Catering break-even point was when it reached an average of €1, 20,000 in sales per month.
To apply for a government-backed Start-Up Loan, it is necessary for Hannah’s Catering to know that it will charge a fixed interest rate of 6% each year and the company can repay the loan over a tme-period of 1 to 5 years. There is no application fee early repayment fee as well.
According to Lane (2018)`, all businesses require an exit strategy at a certain point, even if that just means transferring ownership of the firm when one owner decides to retire. This helps of make sure the smoothest possible transition while freeing maximum value from the business. Hence, Hannah’s Catering will take the decision of key basic options for exiting a business and that includes – sell the business, passing it to a strategic partner, negotiating a management takeover and wind the business down. In the end, it is necessary to ensure that if the company have the patent, trademark, copyright (e.g. software) to transfer into the third party, it has been done in an effective way where all parties duly signed appropriate transfers of their rights. It will prevent the company to not facing any sort of legal consequences in the future.
Marketing Strategies for Hannah’s Catering
The first source of finance for Hannah’s Catering could be bank overdraft, a traditional way to realize fund where it provides assistance when the bank balance of a particular company or individual fall underneath the minimum level. This could make them borrow a certain amount of money from the bank itself though the interest rate is much higher while funding from this source of finance. Hannah’s Catering can also meet its long term growth needs by using bank loan as the facility where the financial institution shall agree on the loan tenure and in exchange, the leaders or owners of Hannah’s Catering gives some collateral. According to Cerqueiro, Ongena and Roszbach (2016), it provides as the ideal choice for backing fixed asset investments whereas bank loans are also provided at a lower rate in comparison to the bank overdraft.
Hannah’s Catering have also available alternative sources of business finances in the UK market such as angel investors are high-net-worth individuals, often with extensive business experience, who can offer capital early in a business’ life – in exchange for a share of the equity (Mason, Botelho and Harrison, 2016). For the same, Hannah’s Catering needs to be proactive like attending events and taking the business cards as well as designing a short elevator pitch that elucidates its business concept. Meanwhile, Hannah’s Catering can further reach to incubators as they foster early stage businesses through its initial stages of development – this upkeep Hannah’s Catering to drive on until the business is finance and resource-rich enough to upkeep itself (Ogutu and Kihonge, 2016).
Any ethical and values principles will often be understood rather than formally expressed through ethics policies, codes and programmes (Remisova, Lasakova and Kirchmayer, 2019) and therefore, Hannah’s Catering will have a policy that will deliver a context and the vocabulary for personnel to advance any concerns. Moreover, the company reinforces and marks explicit the principles and values that are part of the company culture, so enabling them to be communicated to stakeholders. Lastly, Hannah’s Catering ethical values will be inclusive to integrity, honesty, openness, respect, fairness and responsibility.
References
Baek, U., SIM, Y. and LEE, S.K. (2019) Analysis of hierarchical competition structure and pricing strategy in the hotel industry. The Journal of Asian Finance, Economics, and Business, 6(4), pp.179-187.
Cerqueiro, G., Ongena, S. and Roszbach, K. (2016) Collateralization, bank loan rates, and monitoring. The Journal of Finance, 71(3), pp.1295-1322.
Chapman, D.W. and Lindner, S. (2016) Degrees of integrity: The threat of corruption in higher education. Studies in Higher Education, 41(2), pp.247-268.
Douglas, A. (2018) UK catering industry continues to grow with a reported worth of £1bn [ONLINE] Available from: https://www.foodserviceequipmentjournal.com/uk-catering-industry-continues-to-grow-with-a-reported-worth-of-1bn// [Accessed 22/12/2021].
food.uk (2021) The Food Standards Agency [ONLINE] Available from: https://www.food.gov.uk/about-us/who-we-are [Accessed 22/12/2021].
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Isoraite, M. (2016) Marketing mix theoretical aspects. International Journal of Research-Granthaalayah, 4(6), pp.25-37.
Klein, B., Meier, L.M. and Powers, D. (2017) Selling out: Musicians, autonomy, and compromise in the digital age. Popular Music and Society, 40(2), pp.222-238.
Kowalczuk, I., Gutkowska, K., Sajdakowska, M. and Zakowska-Biemans, S. (2016) Product innovativeness and its impact on health related importance of food in the catering business. Acta Scientiarum Polonorum. Oeconomia, 15(2), pp.75-85.
Lane, J. (2018) The Exit Strategy: The difference between building a business and being an entrepreneur is what you can sell at the end of the day. Strategic Finance, 99(8), pp.23-25.
Lim, W.M. (2021) A marketing mix typology for integrated care: the 10 Ps. Journal of Strategic Marketing, 29(5), pp.453-469.
Mason, C., Botelho, T. and Harrison, R. (2016) The transformation of the business angel market: empirical evidence and research implications. Venture Capital, 18(4), pp.321-344.
Musanganya, I. and Sinumvayo, J.P. (2017) SWOT Analysis As The Decision Making Support Tool To Conduct Competitive Analysis And Strategic Planning: An Update. Scholars Journal of Economics, Business and Management, 4(8), pp.509-518.
Ogutu, V.O. and Kihonge, E. (2016) Impact of business incubators on economic growth and entrepreneurship development. International journal of science and research, 5(5), pp.231-241.
Osborne, S. and Hammoud, M.S. (2017) Effective employee engagement in the workplace. International Journal of Applied Management and Technology, 16(1), p.4.
Remisova, A., Lasakova, A. and Kirchmayer, Z. (2019) Influence of formal ethics program components on managerial ethical behavior. Journal of Business Ethics, 160(1), pp.151-166.
Sintha, L. (2020) Importance of Break-Even Analysis for the Micro, Small and Medium Enterprises. International Journal of Research-Granthaalayah, 8(6).
virtual-college.co.uk. (2018) Future of Food: Catering and Hospitality Edition [ONLINE] Available from: https://www.virtual-college.co.uk/resources/future-of-food-catering-and-hospitality-edition/ [Accessed 22/12/2021].
Young, H. (2021) Looking back: SMEs reflect on 2021 [ONLINE] Available from: https://startups.co.uk/news/looking-back-on-2021/ [Accessed 22/12/2021].
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