Institute of management sciences

Business Plan

Red ol’ Fun – Ice cream Parlor

Submitted by:Aqeel Khan

Submitted to:

Sir Nadir Magsi

Business Plan for Red ol’ Fun

Introduction

Red ol’ FunBomanji SquareCantt, Multan

0300-7648748

Description of venture

The venture is called Red ol’ Fun and it is an ice cream parlor that will serve ice cream and ice cream desserts in a range of flavors. It is a medium sized business that will provide not only delicious desserts but will also serve as an entertainment spot for incoming customers by providing them a spacious and nicely decorated sitting space.

Financing

The intial budget required is 21 lakhs, out of which 5 lakhs are being borrowed from a bank and two investors are investing 5 lakhs each into the business. The rest of the budget is being financed through personal savings with each owner bringing in 1 lakh.

Executive Summary

Red ol’ Fun is an ice cream parlor that aims to be the next hot spot in the city of Multan. The basic concept is simple and it is so serve the best quality ice cream to the citizens of Multan. Although the idea may seem like an old and rusty one, but we strongly believe that this venture could be a huge success in this particular city if we properly position it on some key strategic factors.

There are many outlets serving ice creams in Multan at this moment but none are exactly like Red ol’ Fun. If you ever want to go out and have ice cream, the only option u have is to either buy ice cream form some retail shop or from other ice cream making spots and eat it either in your car or while standing on the road. The old names like Chaman or Baba offer you only a limited number of chairs in a congested environment which is not suitable for females or for families. The other option is to go to the big brand name restaurants like Zanzibar or Bundu Khan but again people do not prefer doing that unless they are also ordering a complete meal.

Hence to fulfill this gap of providing ice cream in a unique and welcoming environment that is suitable to teens and even families with young kids we are launching the ice cream parlor with the name Red ol’ Fun.

Another gap created in the ice cream industry in Multan is through the quality factor. For those who have consumed some top quality ice cream brands would know that there are almost no spots that serve top quality ice cream that are rich in flavor and taste. Moreover ice cream desserts are also lacking with only few spots serving combination of ice cream and brownies like Pizza Hut or Indulge. Not a lot of ice cream desserts are available. Hence we wish to exploit this gap as well through Red ol’ Fun by hiring some professional chefs and investing in good quality machines and content and in the end offering a range of flavors and ice cream desserts to our customers.

Red ol’ Fun can be a great investment opportunity because any restaurant that has good food and good environment to offer has rarely failed to this date in Multan. Red ol’ Fun can capture a significant market

share in a relatively short period of time if we continue to aim for excellence in food quality and service quality.

The entrepreneurs who came up with this idea are six students who are fresh graduates and are motivated to start their own venture and make use of the skills they learned during their four year business administration bachelors. Due to the fact that they lack practical skills, a manager with significant work experience in this line of business is being hired to ensure smooth and successful running of the business.

The capital is being financed through three sources; bank loan, investors and personal savings. Each owner is investing one lakh of personal savings and two investors are investing a total of 10 lakh. The bank loan is for a total of 5 lakhs. This makes a total of 21 lakhs of initial budget and it can cover all the major initial investment as well as running expenses for the first year of the venture. Our projected income statement shows that the venture will be going into profit from the very first year, although the cash flows may be negative. With this bright projection, we believe that the payback period for the initial investment will be no longer than a few years and the venture will soon be going into positive net cash flows.

Environmental and Industry Analysis

Environmental Analysis

Environmental analysis is basically conducted to identify the trends and changes occurring on domestic and international level that may impact the new venture. The factors which are the part of environmental analysis are generally not under the control of an entrepreneur but their consideration is altogether is very important for the success of a business idea.

Main factors of an environmental analysis are as follow:

Economy

GDP: Trends in national GDP (Gross domestic product) is the primary indicator used to gauge the country’s overall economy and Pakistan’s GDP has increased a little even after it failed to achieve the target of 4.7% during fiscal year 2011-2012 and stood at 3.7%. But this is not very discouraging as a recent survey showed that the GDP was higher than last year. The figure below proves this statement:

This trend shows that the overall condition of the economy is somewhat improving and the idea of an Ice-cream parlor will contribute to its betterment as the overall economy is inclined towards new experiences.

Culture

Culture determines the interests of society and the culture around is rapidly changing because more modernization is in focus now. The idea of an ice-cream parlor is basically the result of changing needs and habits of our youth as they are always in search of something new and vibrant. The trend is to be classier and be identified with some known brand. This attitude was more found in college and university students so there was a need to provide them with something that matches their personalities as well as a proper setting for this. This radical change became a driving force for us to introduce the idea of an ice-cream parlor.

Technology

As there is a change in cultural aspects of our society, this change has led us to use newer technologies and leave behind the m and this is leading them to conventional ways of doing things. As one of our potential competitors stated that they are still using the old wooden machine for making ice-cream and this is leading them to decreased sales so this shows the importance of technology. As stated in production plan, we plan to use latest machines (purchased from Shangai Lisong Cold Machines Co.) for providing quality to our customers.

Legal concerns

Our legal advisor Mr. Naveed Iqbal Rana (advocate) has helped us in acquiring design patent which has protected our company’s theme of colors and arrangement from being copied. He has also helped us in getting our trade mark registered. Our terms with suppliers are also regulated by law. The legal advisor will be paid Rs.40, 000 per month.

Industry Analysis

Industry analysis basically comprises of those factors which are generally under control of the inventor and focuses on specific industry trends. They are:

Industry demand: During our visit of ice-cream market, we identified that although there is a large market that can be captured for ice-cream lovers but our competitors are somewhat neglecting important factors like proper sitting arrangement which is entirely dedicated for ice-cream lovers. Our direct competitor, Baba Ice-cream, is providing sitting arrangement but that is at the back of main outlet and mostly customers don’t get to know about that. So there is a need of a full fledge ice-cream parlor which can provide the customers with a free and relaxing atmosphere to enjoy what they want.

Competitors

In Multan, we are already faced with number of direct and indirect competitors. Our nearest competitors are Baba and Chaman ice-cream and in indirect competitors we have Shapes, Zanzibar, Bundu khan, LFC and Eat on. Baba and Chaman ice-cream have a lead in all because they have ice-cream as their core product and also providing the sitting arrangements. But their sitting arrangements do not match with the rapidly changing trends in society and are somewhat conventional.

The indirect competitors are providing good sitting arrangements but they are costly for the students or they provide very formal atmosphere where students, or rightly called the youth, don’t feel comfortable for their fun adventures. Keeping all these factors in mind, we have designed something lively for our target market and we aim to provide such arrangement and color theme which can rightly define their ambitions into physical outlook.

Description of venture

Red ol’ Fun is an ice cream parlor that aims to cater to the needs of all types of ice cream lovers. The business aims to provide its customers high quality ice cream in a range of different flavors. Red ol’ Fun will set itself apart from all of its competitors by offering not just the best quality of ice cream that the citizens of Multan city have ever tasted but by also offering its customers a rich dine in experience by creating a sophisticatedly designed and decorated restaurant.

Red ol’ Fun is targeting mostly the youth of Multan from the age group of teens and 20 to 35. The youth mostly comprise the single male and female who enjoy hanging out in groups and for whom eating out is one of the major sources of entertainment. As ice cream is a product that mostly individuals of all age groups prefer except the above 70 age group; we believe that families will also be attracted to Red ol’ Fun. For families, Red ol’ Fun will be a place where they can have some quality family time without needing to spend a lot of money on buying a heavy meal.

Mission

The mission of Red ol’ Fun is to become the symbol of top quality ice cream in the city of Multan and be the number one choice of all ice cream lovers. Our finely decorated ice cream parlor aims to be an

attraction for anyone who is looking to spend some quality time outdoors and at the same time enjoy a sweet dessert in the form of ice cream. Red ol’ Fun will not just be the place for eating ice cream but will also be a spot for entertainment as it will offer an entire experience to its customers. In the long term we plan to extend our business by including more bakery items to our menu and by adding shakes, coffee and drinks as well. However, our core product and the main specialty will always remain ice creams.

Products

Red ol’ Fun is offering ice cream in a variety of different flavors. These flavors will range from the simple flavors served with no additional toppings such as vanilla, chocolate, mango etc to more different and unique flavors such as blueberry, cherries, mint chocolate chip and watermelon chocolate chip. We will also serve ice cream by combining scoops of different flavors as per the customers’ choice. Moreover, our ice creams will also be served with additional topics to make the dessert more delicious, such as by serving it with cake pieces, syrup, waffles and wafers. The customers have the choice of eating either simple ice cream or purchasing the more fulfilling ice cream desserts.

Size of Business

Initially Red ol’ Fun will be a medium size business that offers an extensive range of ice cream flavors. However, the business requires some heavy investment for start up in the form of rent of building, equipment and interior decoration. The numbers of employees needed are few as only three waiters are initially hired and two chefs who specialize in making ice creams and can handle the kitchen work. One person will be hired to work as a manager of the restaurant and to handle day to day activities of the venture. The inflow of customers is expected to be heavy as Multan does not yet have any ice cream parlor similar to Red ol’ Fun. Most ice cream serving spots are take away; they do not offer an upscale and refreshing environment where the customers can enjoy the ice creams. Those restaurant that do offer ice creams such as Bundu Khan or Zanzibar focus more open the main meals than on their dessert menu and offer only a limited flavors of ice cream. Customers do not usually visit these restaurants to eat just ice creams.

Location

Red ol’ Fun will be set up in the Bomanji Square being constructed in the Bomanji Chowk in the Cantonment Area. This particular location was chosen because it is predicted to have a huge number of customers coming in on daily basis for shopping. Even if customers do not spend a lot on shopping they still prefer to go to such huge shopping malls just for window shopping and during that trip they could easily stop at Red ol’ Fun for a sweet treat. Such shopping trips are always an excuse to grab something delicious to eat along the way and Red ol’ Fun will be able to cater to all customers coming in the Bomanji Square for shopping by offering them a place to rest, eat and enjoy.

Equipment

The equipment needs majorly includes machinery for making ice creams in large quantities and freezer space for storing that ice cream. Cutlery is also needed for serving ice cream such as spoons and ice cream cups made of glass.

Personnel

A total of 6 employees are needed for running the venture. Three employees are required to serve as waiters and two chefs are required for ice cream making and decorating. One personal will be needed to act as manager and who has the skills and expertise to successfully manage an ice cream parlor. Someone with a strong educational and career background will be preferred for the job of a manager. The chefs are also required to have a strong CV demonstrating their skills at ice cream making so that they are able to make top quality ice cream.

History of the venture

Red ol’ Fun is being started to cater to those customers who want to eat ice cream but would also prefer to have a proper place and environment where they could eat and enjoy ice cream. For those who want to have ice cream they have the option of Baba or Chaman or various other spots but what these ice cream outlets lacks is a luxurious place where customers can relax and enjoy the surrounding environment. Red ol’ Fun will fulfill this gap. Moreover, anyone who has consumed world class ice cream for instance of Moven’ Pick or Baskin and Robbins would know that very few ice cream sellers in Multan are able to touch that level of quality. Red ol’ Fun wishes to provide world class quality to its customers.

Production Plan

Ice Cream Manufacture

The basic steps in the manufacturing of ice cream are generally as follows:

blending of the mix ingredients pasteurization homogenization aging the mix freezing packaging hardening

Blending

First the ingredients are selected based on the desired formulation and the calculation of the recipe from the formulation and the ingredients chosen, and then the ingredients are weighed and blended together to produce what is known as the "ice-cream mix".

Pasteurization

The mix is then pasteurized. Pasteurization is the biological control point in the system, designed for the destruction of pathogenic bacteria. In addition to this very important function, pasteurization also reduces the number of spoilage organisms such as psychrotrophs, and helps to hydrate some of the components (proteins, stabilizers).

Homogenization

The mix is also homogenized which forms the fat emulsion by breaking down or reducing the size of the fat globules found in milk or cream to less than 1 µ m. Two stage homogenization is usually preferred for ice-cream mix. Clumping or clustering of the fat is reduced thereby producing a thinner, more rapidly

whipped mix. Melt-down is also improved. Homogenization provides the following functions in ice-cream manufacture:

Reduces size of fat globules

Increases surface area

Forms membrane

Makes possible the use of butter, frozen cream, etc

Ageing

The mix is then aged for at least four hours and usually overnight. This allows time for the fat to cool down and crystallize, and for the proteins and polysaccharides to fully hydrate. Aging provides the following functions:

Improves whipping qualities of mix and body and texture of ice-cream.

Providing time for fat crystallization

Allowing time for full protein and stabilizer hydration and a resulting slight viscosity increase

Allowing time for membrane rearrangement and protein/emulsifier interaction, as emulsifiers displace proteins from the fat globule surface, which allows for a reduction in stabilization of the fat globules and enhanced partial coalescence

Freezing

Following mix processing, the mix is drawn into a flavor tank where any liquid flavors, fruit purees, or colors are added. The mix then enters the dynamic freezing process which both freezes a portion of the water and whips air into the frozen mix. The “barrel" freezer is a scraped-surface, tubular heat exchanger, which is jacketed with a boiling refrigerant such as ammonia or Freon. Mix is pumped through this freezer and is drawn off the other end in a matter of 30 seconds, (or 10 to 15 minutes in the case of batch freezers with about 50% of its water frozen. There are rotating blades inside the barrel that keep the ice scraped off the surface of the freezer and also dashers inside the machine which help to whip the mix and incorporate air.

Hardening

After the particulates have been added, the ice-cream is packaged and is placed into a blast freezer at -30° to -40° C where most of the remainder of the water is frozen. Below about -25° C, ice-cream is stable for indefinite periods without danger of ice crystal growth; however, above this temperature, ice crystal growth is possible and the rate of crystal growth is dependent upon the temperature of storage. This limits the shelf life of the ice-cream.

Life time

The most frequently occurring textural defect in ice-cream is the development of a coarse, icy texture. Iciness is also the primary limitation to the shelf life of ice-cream and probably also accounts for countless lost sales through customer dissatisfaction with quality. There is no answer to the question "What is the shelf-life of ice-cream?” it depends entirely on its conditions of storage. It might be one year, or it might be two weeks or less. Although the source of and the contributing factors to the problem of iciness are well known, it is also one of the defects about which I am most often asked. Processors have known for a long time how to prevent iciness and the answer is still the same: formulate the ice-cream properly to begin with, freeze the ice-cream quickly in a well-maintained barrel freezer, harden the ice-cream rapidly, and avoid as much as possible temperature fluctuations during storage and distribution. Ice crystals need to be numerous and of small, uniform size so they are not detected when eaten. It is heat shock, large temperature fluctuations, which is the greatest culprit to the loss of these small, uniform ice crystal size distributions and resulting coarse, icy texture. Perhaps it is time another message was added to the prevention of iciness and that is to educate the retailer's and the consumer about the causes of iciness and preventative action to maintain a smooth-textured ice-cream

Equipment Used for the Production for Ice Cream

Pasteurizer Homogenizer Ageing VAT Batch freezer Continuous Ice Cream freezer

Pasteurizer

The cost of pasteurizer is Rs. 95000/Unit.

Homogenizer

The cost of homogenizer is Rs. 85000/Unit.

Ageing VAT

The cost of ageing VAT is Rs. 150000/Unit.

Batch Freezer

The cost of batch freezer is Rs.75000/Unit.

Continuous Ice cream Freezer

The cost of continuous ice cream freezer is Rs.115000/unit.

Suppliers of Machinery

All the machinery has been purchased from Shangai Lisong Cold Machines Co. whose distributors are based in Lahore, Hall Road.

Suppliers for ice cream ingredients

For the milk, we have a supplier from “Shahrukn-e-Alam Milk Shop.” He will provide us the milk on daily basis to our employee. We will also check the quality of the milk. Other than this another basic ingredient of ice cream is sugar, which we will buy from a Utility store. For vegetable fat, essence, syrups, powdered milk, butter, cream we will buy itfrom the Company FIMCO (Frozen Ice cream Manufacturing Company)based in Karachi which also provide ingredients to Mc Donalds as well.

Operations plan

Red ol’ Fun operations will start from its purchase of raw material from its suppliers. The raw material will include not just the ingredients required for making ice creams but will also include items like napkins, table mats and new glassware from time to time. For those items that can be stored for longer duration will be purchased in bulk but for items like milk which perish soon, will be purchased on regular basis. Since the location and space of Red ol’ Fun is not extensive enough to provide a huge area for storage, supplies will be purchased in small quantities and when needed. For this we will develop strong ties with our selected suppliers and a just-in-time inventory system will be preferred. Close check on demand and inventory will be needed to make sure that timely orders are placed and received.

Ice creams will be made in the kitchen of Red ol’ Fun. However, ingredients like cake pieces or waffles will be purchased from our suppliers and served with ice cream. Once made and placed in serving cups, the waiters of Red ol’ Fun will serve them to the customers. The waiters are responsible for taking the orders of the customers and serving it to them on their tables. Lastly, the waiters will collect the bill form the customers at their tables.

When customers enter into the parlor, it is the waiters’ job to find them the right table and to provide them top notch customer service. And when they leave, the waiters are required to immediately clean the table and prep it for new customers.

For the operations of Red ol’ Fun, the technology requirement is first and foremost in the equipment section as the most efficient and up to date machinery will be needed to make good quality ice cream. The machinery also has to be big enough to cater to the needs of all customers that come into the ice cream parlor in one day so that ice cream does not have to be made repeatedly.

A good freezer section is also needed for storing ice cream. The freezer section should be efficient enough to be able to maintain temperature at the required settings in order to make sure that the ice cream does not melt or get too stiff.

A computer system with touch technology is also needed which will have the required software installed in it. The system should help the waiters enter the order of the customer and generate a receipt. Such software will also help the management of Red ol’ Fun to track customer records, the demand and number of customers coming into the outlet each day. It will also help in judging which ice creams flavors are most popular.

Marketing Plan

As the old saying goes, “If you don’t know where you’re going, you won’t get there.” Just as a sailor needs to use a compass to navigate his/her way, so too must entrepreneurs who must continually market their services to current and prospective clients. This is particularly important in today’s uncertain economy.

Marketing plan is an important part of the business plan since it describes how the product or services will be distributed, priced, and promoted. The entrepreneur should make every effort to prepare as comprehensive and detailed plan as possible so that investors can be clear to what goals of the venture are and what strategies are to be implemented to effectively achieve these goals. Marketing plan is an annual requirement for an entrepreneur and should be regarded as the road map for the short-term decision making. We have covered the folloeing things in the plan.

Situation Analysis

We are focusing yet only to the local market to affectively capture the local customers. Currently we are having two direct competitors (Baba ice-cream and Chamman Ice-cream parlors) and other restaurants are indirect competitors. Although Bundu-Khan is offering their own manufactured ice-cream, but their

core product is not ice-cream. So, they are too our indirect competitors. There are approximately 40-70 ice cream shops in Multan. The approximate population of Multan is 6 million.

Trends of consumption

We have visited our direct competitors and Bundu-khan, Zanzibar and Café Times who are our indirect competitors. We try to gather different require information from them. Almost 30% of the total population purchases their ice cream from the ice cream shops. They told us that major percentage of their customers is youngsters and families having small kids. From our competitors and from internet we have made a profile of ice-cream consumers which somehow lies as follows:

25% are from 5-14 years of age

40% are 15-26 years of age

20% are from 26-40 years of age

15% are from 41+

Changing needs of customers

We have asked some of our class fellows and family members about what they want to have in any ice cream parlour and they have rated quality to be on top, then service and lastly price.

So, nowadays consumer’s perspective towards a product is changed. Now consumer is more focused to factors like quality rather than the price. But still we can’t by pass the ratio of those consumers who are price conscious for all type of products or may be their price factor is restricted to few product lines. Marketing plan of “RED OL FUN” will answer to those factors which influences the consumer’s attitude towards the ice cream and the strategies to change that attitude in the favorable way as well.

The marketing strategies of “RED OL FUN” will be to:

Create awareness of the unique product and services at “RED OL FUN”

Establish “RED OL FUN” outlet is the # 1 choice of the consumers specifically teenagers and office workers

Differentiate “RED OL FUN” outlet from the competitors through aggressive integrated marketing plan

Size of market

There is a rough estimate that about 30% of the population purchases the ice cream from the ice cream parlors. But our company’s goal is to attract the other potential consumers who have the purchasing power but they surpass the idea of purchasing ice cream from the ice cream parlors. So the size of the market of “RED OL FUN” will be 30% of the population at initial stage but there exists the growth opportunity which this business will assess in the long run.

Segmentation of market

Who need our products?

Segmentation includes all those who needed our product. They are youngsters, families, small children who are having income of 50,000 above per month. The segmentation of the market for “RED OL FUN” is based on few factors like age, income, social group and occasions.

Exact profile of our customers

Targeting includes the exact profile of our customers to whom we are going to target in present. We are targeting the youngsters and young couples having children. The brief description is as follows:

Age groups: Ice cream seems to be attractive for all the age groups but mostly it targets the age group of 15-26, 26-35

Gender: Male, female

Income: Monthly income of 50000+

Social class: Upper-Upper class, Upper-Middle class and Middle-Middle class

Competitive Review

We have done the local market research and we are going to be best in two areas in which our competitors are lacking:

First one is quality factor. We have visited the outlets and eat their ice-creams. The quality of ice-cream is not at all good. They lack the good quality of flavours. At baba ice-cream shop, more quantity of milk is used while there is no cream used at all and flavours are not used in a good proportion. You feel like eating a freezed milf somehow. The same problem is with chamman. The quality of flavours is not adequate.

And other important thing is sitting arrangement. Youngsters especially group of girls are not comfortable with the sitting arrangement. They usually like to take ice-cream and eat it in their cars.

But Red Ol Fun is bringing the concept of quality and funky outlet which is totally a new concept in Multan.

Competitive advantages

Product quality The concept of outlet as no other parlor is serving any better place to sit and enjoy Variety of products like ice cream, waffles etc Unique flavors like blueberry, cherries, mint chocolate chip and watermelon chocolate chip will

be served Friendly atmosphere of outlet

Funky colors and interior to attract the customers Advertisement

Description of products (presently)

Red ol Fun is offering ice cream in a variety of different flavors. These flavors will range from the simple flavors served with no additional toppings such as vanilla, chocolate, mango etc to more different and unique flavors such as blueberry, cherries, mint chocolate chip and watermelon chocolate chip. We will also serve ice cream by combining scoops of different flavors as per the customers’ choice.

Future scope of products

In the long term we plan to extend our business by including more bakery items to our menu and by adding shakes, coffee and drinks as well.

Sales goals and marketing objectives

We are having two goals regarding our venture.

Quantitative goal Qualitative goal

Quantitative: The first one is quantitative. We are having the goal of projected sales of R.s. 15, 00,000 in first year. We have made our projected sales very much limited to keep us on safe side. We have estimated only 50 cups to be sold per day in the start. But in actual there would be more sale of ice-cream.

Qualitative: The other one is qualitative. We are aiming at improving the quality of ice-cream standard in Multan. We are also looking for adding the more visibility of our product by making advertisement and billboards.

Brand positioning strategy

The positioning strategy of “RED OL FUN” will be that one trip to the outlet should be fun and memorable. We are positioning in the minds of consumers as eating ice-cream is fun. All communication of “RED OL FUN” will highlight this concept in this tagline “Where flavors come to you”.

By focusing on the fun element the “RED OL FUN” can create a party atmosphere which will resonate in the teenagers and college age young people. The basic positioning of our product in the minds of consumers will be joy, fun and happiness, so this will result in sales in the whole year.

Distribution Strategy

The distribution of ice cream will be directly from the outlet. The production will also be at the same place through defined ingredients and equipments.

Promotion strategy

The primary goal of the promotion is to create awareness to the target market. This is the basic and most important element of the marking plan as it includes how the consumers will know about the product and it also answers that why consumers should purchase your product- the features and benefits of the product. For “RED OL FUN” promotion is one of the competitive advantages as there are lots of direct and indirect competitors in the market which provide the low price ice cream to the consumers but they have no defined mode of promotion except the ‘word of mouth’.

Paid, non-paid and non-traditional media

Red’ol Fun will use the paid media, non-paid media and non-traditional media for the promotion of our brand.

Paid media

“RED OL FUN” promotional strategy in paid media includes the advertisement by the means of print media initially. It includes the placement of hoardings at the crucial places of Multan like Bosan road or near Flyover Cant to attract more and more consumers. Besides, the other advertisement mode is hanging panaflexex in the Cant, Gulgasht and ShahRukn-e-Alam to cater all the potential consumers from everywhere from Multan.

Non-Paid media

In the non-paid media, we are looking forward to word of mouth and promotion in the personal relations.

Non-Traditional Media

We are too going to make our website and page on Facebook for the promotion.

Marketing Budget

We are incurring the expenses as follows:

1. Promotional expense is of R.s. 43,000.

Billboard expenses are R.s 28,000 and we are using 100 panaflexex which is adding a cost of R.s. 15,000.

2. There is no expense as far as distribution is concerned.

Timing of events

We have decided to rent the shops at Bomanji square as soon as the plan is accepted. Moreover, we are going to design our billboard, panaflexex ourselves. The design will be ready within 15 days and then we’ll outsource the placement of billboard and panaflexex. The time frame in which this activity will be done is two months. Before two months, the place of billboard is not available. As we are having all our

investment, so we will start working on the interior of outlet and buying of ice-cream production machines as soon as the plan is approved. So, at start, we will be able to launch the outlet with all the promotional communication within three months after the plan is accepted.

Evaluation techniques

We are going to evaluate our results by placing comment cards in the outlet. Moreover we have a plan of conducting a survey quarterly in the start to check the ideas and recommendations of customers.

Human Resource Plan

Human resource planning is a process that identifies current and future human resources needs for an organization to achieve its goals. Human resources planning should serve as a link between human resources management and the overall strategic plan of an organization. The essence of Human Resource planning is to ensure that the human resource requirements of an organization are identified and plans are made for satisfying those requirements.

The HR planning of “RED OL FUN” includes the employees and other professional experts. At the initial level, outlet needs 2 professional expert to make the ice cream which is the very crucial chunk of HR planning because this is the main entity on which firm is serving its consumers. Then the venture requires the basic management team such as a manager, and near about 3 waiters at the initial level, it may be increased with the increase demand of the market with respect of time. A lawyer is also required to fulfill the legal requirements for the venture. The basic needs of the employees will be furnished within the range of budget and employees will also get the financial rewards and few awards like “employee of the month” to motivate the employees in order to be more productive. The recruitment of manager is very critical as the manager will be having strong interpersonal communication and others. The total budget of the HR planning is 250,000 which is distributed as: salary of manager and the chefs are 60,000 each and waiters will be paid 10,000 each monthly and the lawyer will be facilitated by salary of 40,000 each.

Organizational Plan

Red ol’ Fun is a partnership between 6 individuals with each investing Rs 100,000 at the beginning of the business.

The following are the partners of the business:

1. Afshan Qamar2. Aroub Farooq3. Saleha Ahmed4. Saba Ashraf5. Madiha Batool6. Umair Sheikh

The terms of the agreement imply that each of the partners is required to invest Rs 100,000 at the onset of the venture. They will also be required to contribute through expertise and skills. All six above listed partners will become shareholders of the business and will not be allowed to sell their share of the shares to any other individual without the consent of every other shareholder.

The board of directors will also be comprised of the above listed shareholders while the management team will consist of one more hired individual who has a strong background in managing restaurants. This person will be acting as manager of the ice cream parlor and will also be accountable to the board of directors.

The above listed shareholders who will be playing an active role in running the business are entrepreneurs who will little work experience in the line of hotel or restaurant management. Hence for that purpose a manager is being hired.

The hired individual will be working as operations manager and will be headed by Mr. Umair Sheikh. The operations department will be concerned with the day to day running of the ice cream parlor and managing activities like contacting suppliers on time, keeping check of the inventory, managing and forecasting demand, paying employees and making sure that the venture runs smoothly.

The finance department is headed by Aroub Farooq, who will be responsible for keeping a check on the cash flows of the business, managing and allocating budgets, managing books of accounts, preparing financial statements and making cash inflows forecasts. All financial analysis will be done under the finance department.

The marketing department is headed by Afshan Qamar. All activities related to managing and devising a strategy for the marketing of the ice cream parlor and spreading positive word of mouth will be the responsibility of the marketing department. This department will make sure that an effective marketing campaign is launched for Red ol’ Fun.

Saba Ashraf is managing the department of human resource and will be responsible for recruitment and hiring of skilled staff, managing the employees’ payroll, providing them training and resolving any type of conflicts that may arise.

Madiha Batool is the head of the Public Relations Department and she is responsible for creating a positive image of the venture in the eyes of the public. Any concerns that may arise in the minds of the consumers will me immediately resolved by the PR department. Projects categorized as corporate social responsibility will also be handled by this department.

Lastly, the research and development department is also created to continuously add new items to the menu after testing them for quality and taste. This department will be headed by Saleha Ahmed.

Risk assessment

Even though ice cream is the kind of food that everyone, from kids to adults, love to eat in the extreme summer temperatures of Multan, that still doesn’t guarantee the success of Red ol’ Fun. The risks that

could be faced are a byproduct of a saturated and mature market created in the ice cream industry. Although our competitive advantage is a sitting place where ice creams are served in a welcoming environment, but we are still competing with all those ice cream makers as well that are selling their ice creams through retail shops and bicycles such as Walls, Yummy and Omore. These ice cream makers continue to enjoy a large share of the market because they are selling ice creams at a low price and making them readily available on almost every small or big shop. Some consumers might prefer these low cost ice creams over ours.

Secondly Red ol’ Fun is also competing on an equal footing with those restaurants that target the upper middle class and the upper class with their expensive menus such as Zanzibar and Bundu Khan. Although these restaurants serve ice creams in only a few flavors and as a dessert, they still make a competitor of Red ol’ Fun. For those individuals who go out for a complete meal would prefer to take ice cream as dessert from the same restaurant in which they will eat their meal.

However we aim to overcome these risks by not just offering an exclusive environment to our customers but by also compelling consumers to our parlor by offering ice cream in a huge range of flavors that are bound to satisfy the flavor priority of almost every ice cream eater. Multan is yet to offer an ice cream parlor similar to Red ol’ Fun that focuses exclusively on ice creams and considering the popularity of ice cream consumption in this city, we believe that Red ol’ Fun will be a huge attraction for our target market.

Another possible risk that Red ol’ Fun could possibly face is in the form of financial risk. The initial investment required is huge mainly due to interior decoration. The payback period for the extensive initial investment could be long. However we do strongly believe that this venture will be able to recover its initial investment in a few years if it is able to create a strong appeal amongst the ice cream eaters.

We are positioning Red ol’ Fun on factors of high quality and environment. Quality can only be provided to our customers if we are able to hire the best and most professional ice cream makers in the market. We will not be able to occupy our competitive advantage of high quality, taste and range of flavors if we fail to hire a competent chef. Hence to overcome this risk, we need a strong human resource search strategy. If we are not able to find a competent chef within Multan, we might have to search on a national level as well, but to attract a chef from outside the city we will have to offer a good pay and incentive package.

Location of Red ol’ Fun could also pose a risk. It is more suitable to those who are resident in Cantt and nearby areas. It might not be very feasible for those who are living in distant areas, for instance in Shah Rukh e Alam. To capture that geographical market we might open a branch in another location as well but we will only be able to do so if we strongly develop our first outlet and create a positive worth of mouth.

The limited budget also puts some constraint on the marketing expenses that the venture can afford at the initial stages. Ideally, the venture could use some extensive advertising in the form of more than one billboards, advertisement and brochures distributed through newspapers. However, the limited budget has forced us to limit the marketing strategy to one billboard and a hundred panaflex. This could result

in lack of awareness and information to targeted customers that are spread across the city. The only way this risk can be overcome is that as soon as our monthly profits start increasing and we have overcome the initial investment, we can continue the marketing campaign by using different other media options as well.

Lastly, the inflationary pressures on the economy can also pose a threat to the venture. Not many individuals will be able to afford our prices and might prefer buying other cheaper ice creams available. Although we believe that our prices are quite reasonable but if the venture is not able to attract as much customers, the decreasing price strategy might have to be employed.

Financial Plan

Initially, a total of 21 lakh is being used as budget for startup costs and for some expenses for the first year duration. This total investment of 21 lakhs is being financed by each of the shareholders, bank loan, and two investors or venture capitalists.

Each partner is investing 1 lakh into the business, totally 6 lakhs. 5 lakhs are being contributed through bank loan and 10 lakhs are being invested by two venture capitalists, each contributing 5 lakhs in return for a percentage of profit.

Initial expenses

The equipment or machinery needed for icecream production purposes costs a total of Rs 520,000. One month rent for a good location in Bomanji Square on the second floor costs Rs 35000 per month. The initial marketing expenses total Rs 43,000. These marketing expenses include one billboard costing Rs 28,000 for one month and 100 panaflex banners costing Rs 15,000.

Equipment = Rs 520,000 Marketing = Rs 43,000 Rent = Rs 35,000 per month Interior decoration = Rs 500,000

Direct expenses

Almost Rs 600,000 is needed for raw materials per month.

Milk = Rs 288,000

Sugar = Rs 60,000

Rafhan Custard = Rs 60,000

Fruits = Rs 60,000

Syrups and flavors = Rs 60,000

Labor costs

The waiters will be paid Rs 10,000 per month. The manager will be paid Rs 60,000 per month and chefs will also be paid Rs 60,000 each. The lawyer will be paid Rs 40,000 per month.

Prices

A one scoop of basic ice cream flavors will cost Rs 70 and two scoops will cost Rs 130. The upscale unique flavors like mint chocolate chip or cherry flavor will cost Rs 90 for one scoop and Rs 150 for two scoops. The ice cream desserts with either cake piece or waffles will cost Rs 250.

Projected sales

If 50 cups of one scoop of basic ice cream flavors are sold in one day, then a total of Rs 750 will be earned in one day. Hence in one year Rs 127,75,00 (750 * 365) will be earned. This estimate is made using the cheapest ice cream prices. Of course the more expensive ice creams will also sell and hence revenue of Rs 1500,000 is being estimated for the first year.

Income Statement

Sales 15,00,000Cost of goods sold (600,000)Gross profit 900,000Overhead costsUtility bills 80,000Rent 35,000Labor costs 210,000Depreciation expense 71,500Marketing expense 43,000Total overhead costs (439,500)Profit before interest and taxes 460,500Interest (12%) 60,000Net profit before tax 400,500Tax (25%) 1,00,125Net profit after tax 300,375

Balance Sheet

AssetsCurrent AssetsCash 112,000Fixed AssetsEquipment 520,000Furniture 500,000Less: depreciation 71,500Total fixed assets 948,500LiabilitiesBank loan 500,000Total liabilities 620,150EquityOwner’s equity 600,000

Cash flow statement

Cash inflow 15,00,000Cash outflowEquipment 520,000Interior decoration 500,000Utility bills 80,000Rent 35,000Interest 60,000Taxes 1,00,125Marketing expenses 43,000Labor costs 210,000Total cash outflow 1,548,125Net cash flow (48,125)