Business Plan of the Startup
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Basic Description of the Business Idea
The smart cart is a contemporary idea that involves the use of custom-made smart carts to fit in the current and ever evolving business market. It is built to suit the fresh produce retail market outlets, especially supermarkets and specialized grocery stores. Shoppers just pick items from the shelves or cooling units and put them into the cart. The cart has the fitting of a bar code scanner that computes the expenses. After finishing shopping, customers just swipe their credit card and deductions are accounted. Eventually, the carts automatically send electronic receipts to the customers.
The idea is unique because it will eliminate the need to queue to be served by cashiers and make the shopping experience great. The idea is also new in the market. It will reduce the number of cashiers whom business people have to hire since carts will substitute them, hence reducing expenses on salaries. Additionally, it will save on the time the shoppers have to spend waiting to be served. The idea is viable because there are many groceries with almost every consumer shopping for fresh produce.
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The Market Size and Competitive Landscape
Currently, there are some companies devising prototypes of smart carts. A number of competitors have come up with some sophisticated features that can tell whether customers are shopping for a balanced diet. They can also maintain shopping lists. However, the competitors are at the experimental stage; thus, they have not presented the idea in the market. Therefore, there is a chance to develop smart carts that can compete effectively with the currently existing designs.
The idea fits into the market, especially for those shoppers who want to save on time shopping, control their spending while they take balanced diets regarding vegetables and fruit, and have an amazing shopping experience that smart carts offer. According to statistics, between 2010 and 2015, transactions in groceries in supermarkets and grocery shops were worth about $587 billion each year (IBISWorld, 2015). Alo, the market expanded by about 1.2 percent (IBISWorld, 2015). There are also about 42,385 grocery store businesses in the United States (IBISWorld, 2015). The market is large enough to accommodate the entry of the smart carts. Projections show that there is a 32.5 percent market share after accounting for the competitors already specializing in smart grocery carts and the ones who are in their development stages. Consequently, the market share is attractive for the startup by any means.
1. There is a high competition from other companies, especially from the brands that have already finished making prototypes and the ones that have finished experimenting with their designs.
2. There is a challenge in finding sponsors for the startup.
1. There are strategies to increase features on the carts to include interactive screens that give advice on the nutritional value of different groceries. In addition, there are provisions for special controls and seats to enable the lame to elevate the heights, something that competitors have not done to make the smart carts unique.
2. There is a participation in expositions after patenting our designs to show our ideas to potential investors. Furthermore, there are plans to enroll in crowdfunding websites such as Kickstarter.com to secure funds for the startup (Symons, 2013).
Scalability of Business
Scalable businesses can generate more revenue with an increase in the production costs. Therefore, such businesses do not necessarily have to bear the additional costs of the production of their goods or products (Miron-Shatz, Shatz, Becker, Patel, & Eysenbach, 2014). Thus, this business is scalable since the idea can run at the start of the production. Once production and marketing of the smart cart begin, the product sells to the potential markets. The expected increased demand once the production starts may cause a challenge and may need more advertising to the unreached shopping malls. The business scalability is a way of saving time for both the shopping malls and businesses and for the customers. Moreover, it is a way of cost reduction for the grocery markets since the need for attendants will reduce.
One of the strategies applied to achieve and increase scalability is the application of online marketing that allows easy marketing without much increase in cost (Jeston & Nelis, 2014). In addition, online markets are another way of increasing scalability because users of the smart carts can buy products without the need for a physical shop to sell them. Furthermore, large-scale marketing and selling presuppose that further production will again happen upon the next financing.
For the business to run successfully there will be the need for finances. The source of the funds will be from personal savings, equity, and crowdfunding donations. Since it is a startup, the business expects to receive financing from individuals who are willing to support it. Moreover, individuals will be allowed to buy shares from the business, hence allowing them to be part of the business ownership.
Apart from that, the greater portions of the capital will be from the personal savings. The main expenditure will be in the production of the smart cart and the process of marketing (Jeston & Nelis, 2014). The total production and marketing cost is $100,000. In particular, $75,000 will be used to produce the smart carts and $25,000 will be spent on marketing. Operational costs comprise the remaining amount. After that, the marketing financing of the business will be from ploughing back of the profits.
Burn Rate and Additional Financing
The burn rate for the startup is expected to be high at the starting periods of the business (Jeston & Nelis, 2014). For example, the amount used in the first month is approximate $10,000, which is to be spent on developing the basic ideas and building prototypes. Another area that leads to the high burn rate is marketing. Therefore, bearing in mind the burn rate, the next financing will be sought after three months.
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