Terry intend to start a grass cutting company and here is the strategic and tactical plan he used to achieve the intended goals and objectives.
- To create a company with a primary goal is to offer exceptional services that exceed the customer's expectation
- To offer grass cutting services to more than 30 different residential homes.
- To ensure that the number of clients served to increase by 25% per annum.
- To develop a sustainable business that creates endless cash flow.
Terry lawn limited aim at providing professional grass cutting services. We only exist to pursue the market, attract and retain the customers. Adhering to these maxims enable us to maintain the operation and offer exceptional services to our clients.
The expected business returns are depicted by the table below By Lumholdt, (2018)
The projected sales of the company are expected to increase concurrently with the gross margin. Though the net profit will tend to increase as there is a lot of operation cost during the first and second year slightly. However, these will not limit us from succeeding as we intend to formulate a strategy that will help us cut the operation cost and maximize the profit.
Terry lawn service business is located in Levis apartment, and we offer grass cutting services in different residential. Our service package includes trimming of the fence, edging, cutting of grass, and removal of the clippings.
Terry Lawns Company is solely owned by Terry Megan, a sole entrepreneur.
The Startup Summary
- The startup cost of the company include;
- The vehicle, Toyota truck for transportation of equipment's
- The office equipment includes a file cabinet, scanner, printer, computer system, desk, and chair.
Three commercial mowers, trimmer which is used around trees adjacent fence in the driveway
Blowers and hedge trimming equipment for clipping the litters.
Safety steel-toed shoes, four rakes and gloves plus goggles.
The startup expense, assets, and investments may be depicted by the chart below. (Lumholdt, 2018)
There are no previous expenses incurred before the beginning of the business. For this reason, the acquire capital is pumped into the market. At this point, the assets are high in terms of loans, and the return on investment is nil.
The startup expenses of the business are estimated to have an initial fee of up to $ 500, where the legal cost is $150, the stationery $50, insurance $140, brochures for marketing the startup $160. The other incurring expenses may derive from cash required in terms of loans from the financial institution to boost the business operation. These may add up to $20,000. Therefore, the total funding needed for the business is $25,000. In this case, the total assets for the company are derived from the funding as we start from zero. We have no money at hand that can propel the business, but in case there are overhead expenses, we can sell some of the personal items to fund the project.
Market Analysis Summary
Terry lawn services target two population segments, which include the middle-class suburban families and homeowners with more extensive lawns with few occupants. These two groups are more likely to require our services. In the meantime, we will be developing a client list by monitoring the neighborhood and promoting the services through advertisement.
Terry grass cutting services will be concentrated in the lawn care industry, where we intend to offer our services to the residential apartments. We will expand our services to schools, business parks, and sophisticated homes within our reach. In this case, the residential hustle will be serviced by the landscaping companies and other lawn care entities within the region.
However, the lawn care business is comprised of small enterprises with extensive labor requirements. The laborers tend to get relatively low wages as the nature of the services to dictate. For this reason, there is low expenditure incurred in terms of wages and salaries to the workers. Consequently, the industry is prone to suffer recession as the services are considered to be luxury as many people can do the job for themselves. Winter also tends to attract little activity, and during this period, the business is likely to go down.
High barriers to entry make the company unique as the market could not be crowded, provided that there are strict regulations that restrict entry. That is advantageous to Terry lawn service as we can enjoy a little of monopoly. Also, the owner experience in the field is an added advantage as there is limited competition in the industry. These are summed up with limited start-up risk in the industry with a high gross margin on the investment.
Even though there is a high restriction to entry, a competitor may decide to offer similar services at a lower cost, thus diminishing our competitive advantage in the market. Also, the transportation cost tends to be high, thus limiting the mobility of our services, thus affecting the pricing strategy.
Our ability to develop additional store and expansion through online advertisement ensure that we have a different market for our services. Another opportunity lies in affiliate relationships with other vendors, and the development of other service offers to customers.
There are some of the changes in services that can impact the business negatively, and these tend to serve as a weakness. There is a continuous insurance cost that increases the input costs through upward pricing.
Target Market Segment Strategy
The service segment is targeted to converse the apartments in the neighborhood by offering free estimates based on home pricing of the services. Terry will base the business out of his apartment, and initially, he will serve the immediate neighborhood before expanding to other territories. The relationship will determine the business success one has with the community, and the relation built by neighbors The leverage in the relationship tend to create a foothold of the steady business customers where the business will start the services. More customers can be gained through advertisement and sufficient promotion in the neighborhood.
The implementation of the strategy will be enhanced through aggressive marketing and delivery of quality services to customers. The competitive advantage will be achieved through leveraging of the status in the neighborhood and marketing strategies to generate the necessary capital. The competitive edge of the business squarely lies in the professionalism and service quality of the company, which is enhanced through creating superb control and supervision on employees.
The management will ensure that customers are served to their satisfaction, and there is no overpricing of the services to maintain trust and good business relations. Moreover, interaction built between the employees, management, and customers is achieved through a controlled business plan.
Sales Strategy Forecast
The strategy is based on personal communication with the clients where the promoting team engages in a one-on-one conversation with the client. They negotiate the deal and sign the contract without involving a middle man. In this case, trust is easily built between the parties, and it can lead to a long-lasting business relationship. The connection created with the neighbors will lead to referrals by the satisfied clients, thus ensuring that there is a continuous flow of customers for the business. Also, offering free estimates of the services will attract more clients to the enterprise, thus creating confidentiality while creating a competitive price in the market.
Human Resource Control
The sales of the business depends on the capital input, employees, and the customers. In this case, the business has to control both the employees and customers through providing a conducive business deals that meet their satisfaction. For that reason, Terry lawn services is willing to create a criteria through which employees are paid based on their performance. No binding contract, but high remuneration for the faithful employees who can meet their target and perform their work without being followed. The expected monthly sales is likely to rise when there is good customer care and employee consideration.
This is the backbone of every business and in this case, we intend to illustrate the general overview of our financial status. Though there are some of the assumptions which must be taken into consideration like the monthly plan on current interest rate, long-term interest rate which tend to be 10% in this industry. The only thing which is prone to change is the tax rate which is determined by the federal government.
Break-even analysis of Terry lawns service indicates that it need to generate a monthly revenue of $4,000 to break even. And the projected cash flow of the business illustrated by the table below.
Created by Lumholdt, (2018)
The cash flow depict that, the initial month of operation, there will be high income due to excitement and business penetration strategy in the market. The following month there will be a decrease in the sales till it reach the fifth month when the strategy has been exhausted. At this point, there is an influence of competitor's services in the market.
Illustrated by Timmerman & Lovvorn, (2018)
The strategic and tactical plan of Terry lawn service is feasible and when put in practice, it can generate good return on investment. The only thing remaining is to acquire the capital and get things moving.
Lumholdt, H. (2018). undefined. Strategic and Tactical Asset Allocation, 47-59. doi:10.1007/978-3-319-89554-3_3
Timmerman, J. E., & Lovvorn, A. (2018). undefined. The CASE Journal, 14(4), 378-393. doi:10.1108/tcj-03-2018-0039
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