The Candy Capsule Company by Amy Parker

BUSINESS PLAN NOVEMBER 2015

SM0375 / IS0619 / DE0926 GRADUATE ENTERPRISE

EXECUTIVE SUMMARY Company Name The Candy Capsule Company

Current Position The Candy Capsule Company is a new business start-up working under the Young Enterprise umbrella. We provide unique, nostalgic sweet jars with a focus on seasonal gift-giving that seek to immerse customers in their childhood memories. We have carried out extensive market research to ensure that this new business is feasible and relevant within today’s market. With our first batch of product at completion stage, we will begin trading in November 2015.

Business Concept Since 2009, the confectionary market has seen a growth in market value of 4.5% (Mintel, 2015), with nostalgic sweets being one of the biggest trends in this sector (Forecourt Trader, 2015). Looking at the existing retro sweet offerings, we have identified a gap in the market for higher quality, design-led nostalgic sweet jars with a unique selection of sweets inside. Our competitors tend to have a similar selection of sweets, low-quality packaging and do not cater to specific gifting markets. The Candy Capsule Company offers retro sweet jars that appeal to the contemporary gift-giver, providing them with a flavour of the past whilst providing a beautiful home accessory to stay with their loved ones for years to come. We target our product towards those who are old enough to feel a sense of nostalgia, particularly those who are interested in affordable seasonal gifting. Our market research concluded that the most popular gifting seasons are Christmas, Valentine’s Day and Birthdays, with females being the most popular recipient, although the market for male gifting remains significant. The Candy Capsule Company is proud of its following three unique selling points, and will market these to its target audience to promote our product. They are: A Unique and Coveted Product Offering In-depth market research has revealed which sweets are most likely to create a sense of nostalgia in the minds of our customer. With this in mind, we have devised an exclusive list of confectionary products that cannot be found combined anywhere else in the world, making our product offering unique. Limited Edition Seasonal Packaging Designs Although the confectionary market is saturated, there is a lack of beautifully designed, quality products at a low cost to the British consumer. We utilise an in-house design team to create packaging that runs through single seasonal holidays such as Christmas and Valentine’s Day, as well as non-seasonal designs, perfect for birthday gifting, which too run in limited quantities.

A Gift That Keeps On Giving Whilst there are competitors also producing similar jars, The Candy Capsule Company product is designed with longevity in mind. We offer quality; medium-sized glass jars with packaging designs that transform the product from a simple sweet container into an individual home accessory.

Marketing Adopting the 4 P’s marketing mix, The Candy Capsule Company will base its strategy on making lives easier for everyday consumers by selling face-to-face in accessible locations on a regular basis, as well as offering a convenient online pre-order service. This will in turn establish a constant revenue base to ensure stability, growth and success. We will use a range of platforms such as Facebook, Instagram and a company website to target our key consumer with a big focus on word of mouth promotion and a visible presence at trade fairs and markets.

Finance / Capital Investment The Candy Capsule Company is 100% funded by the 6 company directors, with a total start up cost of £308.71. We plan to charge £5 per jar and predict that by the end of the first year of trading, our projected net assets will be £2080.74.

Mission Statement Providing nostalgic sweet jars with a focus on seasonal gift-giving that immerse customers in their childhood memories.

Vision Statement Injecting a new lease of life into confectionary gifting with a unique product offering and superior product design at an affordable price. Presenting the contemporary gift-giver with a flavour of the past whilst providing a beautiful home accessory to stay with their loved one for years to come.

Objectives -Offer the finest selection of sweets from the nation’s favourite brands of yesteryear -Design attractive, seasonally-appropriate packaging that is ideal for gift-giving -Produce a quality product that provides value for money for our customers -Evoke a positive sense of nostalgia in the minds of our customers -Create our product with the intention that it lives on as a household accessory after initial consumption

CONTENTS

Executive Summary ………………………………………………………………...…….1 Vision Statement ………………………………………………………………….…..……2 Mission Statement ……………………………………………………………………..….2 Objectives……………………………………………………………………………………2 Market Analysis……………………………………………………………………..….....3 Economy and National Trends ………………………………………………….….…….3 Barriers to Entry…………………………………………………………………….………3 Primary Research…………………………………………………………………….…….4 Key Findings………………………………………………………………………………...4 Customer Typology…………………………………………………………………….…..4 Competitor Analysis…………………………………………………………………..……5 Competitive Analysis Table………………………………………………………………..5 SWOT Analysis……………………………………………………………………………..6 Marketing Strategy…………………………………………………………………..…...7 The Four P’s………………………………………………………………………………...7 Sales Forecast ……………………………………………………………………………..8 Product and Services……………………………………………………………………..10 Growth and Exit……………………………………………………………………………11 Operations and Logistics………………………………………………………....……12 Management and Organisational Structure…………………………………………….12 Human Resources………………………………………………………………………...12 Methods of Communication………………………………………………………………12 Suppliers……………………………………………………………………………………13 Distribution………………………………………..………………………………………..13 Stock………………………………………………………………………………………..14 Production………………………………………………………………………………….14 Customer Service………………………………………………………………………….14 Finances……………………………………………………………………………….......15 Start up Expenses…………………………………………………………………………15 Inapplicable Costs…………………………………………………………………………15 Opening Day Balance Sheet……………………………………………………………...16 Notes on opening day balance sheet…………………………………………………….16 Projected Balance Sheet…………………………………………………………………..16 Notes on projected balance sheet………………………………………………………..16 Projected Cash Flow Statement………………………………………………………….17 Notes on projected cash flow statement…………………………………………………18 Projected Profit and Loss Account………………………………………………………..18 Notes on projected profit and loss account……………………………………………...18 Ratios………………………………………………………………………………………..19 Break Even Analysis……………………………………………………………………….19 References………………………………………………………………………………....20

Appendices............................................................................................................21 Appendix A…………………………………………………………………………..……21 Appendix B…………………………………………………………………………..……23 Appendix C…………………………………………………………………………..……23 Appendix D…………………………………………………………………………..……24 Appendix E…………………………………………………………………………..……24 Appendix F…………………………………………………………………………..……25 Appendix G…………………………………………………………………………..……25 Appendix H…………………………………………………………………………..……26 Appendix I…………………………………………………………………………..……..26 Appendix J…………………………………………………………………………..…….27 Appendix K…………………………………………………………………………..….…27 Appendix L…………………………………………………………………………..….…27 Appendix M…………………………………………………………………………..……28 Appendix N…………………………………………………………………………..……28 Appendix O…………………………………………………………………………..……28 Appendix P…………………………………………………………………………..……30 Appendix Q…………………………………………………………………………..……30 Appendix R…………………………………………………………………………..……31 Appendix S…………………………………………………………………………..……43 Appendix T…………………………………………………………………………..……45 Appendix U…………………………………………………………………………..……45 Appendix V…………………………………………………………………………..……46 Appendix W…………………………………………………………………………..…...47

MARKET ANALYSIS Economy + National Trends Since 2009 the sugar confectionery market has seen a growth not only in retail sales but also market value. Market value has risen by 4.5% (Mintel, 2015) and confectionery sales online are also rapidly growing with consumers spending £101.1m on sweets in 2014 (Rob Brown, 2014). However the greatest growth and biggest current trend lies within retro sweets, with more and more people wanting to immerse themselves into their childhood memories through confectionery. In the six months leading up to September 2014, it has been proven that four in five adults ate sweets (Mintel 2015). Furthermore, according to Mintel there is a notable gap in the market for sweets that are differentiated from mainstream children’s sweets (Mintel, 2014). This suggests that if we create a fresh product designed to appeal to adults, and market it towards this older consumer as a form of reminiscence and nostalgia, we have a strong chance of success. Another notable point is that there has been a huge increase sales of sweets in tubes, clear bags, sweet jars or cone bags because with larger quantities of sweets on offer, it’s easier to achieve margins of 50%-70% and makes trading in sweets more worthwhile. (Forecourt Trader, 2015). Design-wise, trend forecasting agency WGSN have announced that the next big graphic trend is centered around nostalgia, iconic design and a modern revival of retro classics. Powerful graphics are key, and this design style works well with the retro sweet concept, appealing to an older audience whilst remaining authentic (WGSN, 2015). This data supports the perceived demand for professionally designed nostalgic sweet jars for the slightly older consumer. Customers will love visiting ‘memory lane’, whilst enjoying a product that is still relevant to today’s market and ties in with modern trends. All the above statistics prove that if effectively marketed, our product of retro sweet jars will be highly successful. This data confirms and supports the need and demand for our retro sweet jars for adults, teens and older children; providing this unique product will inject a new lease of life into the confectionary gift market. Adults will be enticed to buy and consume retro sweets, whilst experiencing the nostalgia and satisfying their sweet tooth, by consuming a variation of retro sweets. In turn by sharing retro sweets with children, adults will create new memories for themselves and youngsters. In addition to this selling our sweets before the Christmas period will be a main driver for consumption as customers will be more likely to purchase our product with the idea of it being a present or stocking filler for their family, friends or colleagues.

Barriers to Entry The main barriers below are analysed in more detail throughout the document. Capital Cost - Design of a dynamic website (web design fees, web hosting costs, domain-name registration) - Shipping costs dependent on quantity and regularity of orders Access to distribution - The fact that improving health and cutting down on sugar is promoted as a positive lifestyle choice, may result in less sales. - Large firms with brand loyalty already in the market may make it harder for smaller brands to achieve brand recognition

Primary Research The primary target market for retro sweet jars are those who are old enough to feel a hint of nostalgia and who would buy sweets as a gift for seasonal occasions, celebrations or merely to indulge themselves. Primary market research for retro sweet jars has been carried out through online surveys to a wide range of ages. This method of research was chosen in order to: - Save time and money - Target a large number of our wide audience, quickly - Increase reliability of information gathered through specific, fully automated questions to avoid risk of human error (Marketest.co.uk, 2015) - Enable quick analysis (Smartsurvey.co.uk, 2015) - Be easy to use for respondents (Smartsurvey.co.uk, 2015) In total 75 people from different age ranges completed our online survey. The survey was made up of specific open and closed questions as well as multiple-choice questions, to make sure that the information received would be useful in finalising our product before we brought it into the market. A copy of the survey can be found in Appendix A

Key Findings: - One very encouraging finding was that 92% of people said they would rather buy sweets in person than online. This clarifies that our main method of sales should be done face to face at trade events around Newcastle (See Appendix B). - In addition 88% of people said they would buy sweets as a gift for someone. This strengthens our conviction that we need to market our Retro Sweet Jars as celebratory and season gifts in order to gain the most sales (See Appendix C). - We asked through the survey whether people think that packaging makes a gift mores desirable. 96% responded that yes it does make it more desirable. This reinforces our belief that our packaging has to stand out, reflect our brand and appear high quality, but affordable to maximize sales for our company (See Appendix D). - From our survey we identified the three main seasonal celebrations as birthdays, Christmas and Valentineâ&#x20AC;&#x2122;s Day (See Appendix E) and the three main gift recipients as friends, mothers and colleagues (See Appendix F). This reinforces the need to create packaging that compliments and targets these seasonal celebrations and audiences.

Customer Typology - Age: 19 - 25 - Gender: Female - Occupation: Student - Location: Newcastle Upon Tyne A typical example of our core customer would be a twenty year old female living in Newcastle Upon Tyne. With an appreciation for quality packaging and nostalgic confectionary, she is most likely to be purchasing one of our jars for a friend, family member or colleague, or for herself with the intention of re-using the jar.

5 Competitive Analysis The Competitive Analysis table compares Retro Sweet Jars with 2 key online sites providing similar services: Factor

Weakness

Bay Sweets & Gifts

Karin’s Kandy Store

Not an established brand yet

Sells retro and traditional sweets individually, in jars and boxed

Sells old fashioned sweets and gifts from home

Low price may infer poor quality

£5.99 for medium jar

£9.99 for medium jar

New brand competing with more established brands

Wide range of sweets at affordable price

Supplies an extensive range

Quality range of sweets

Creates hampers, jars and boxes filled with retro sweets or sells them individually

Small individual risk

Limited work force

Individual lady running the business

Low overheads

All locations are in different areas in Newcastle

Leading sweet shop in Whitley Bay

Online and In-Store Whitley Bay, NE26 3QN

From home in Gosforth NE3 2DZ

Appearance Seasonal theme jars Unique selling Unknown (birthdays, point, brand name Christmas, seasonal Valentines) that have theme jars that a retro edge to them no other competitors offer

Lesser quality design, with cheap packaging.

Unknown as she sells from home

In-store and online

PayPal or cash when sweets are delivered

Products

Price

Retro Sweet Jars

Retro Sweet jars which are filled with sweets that remind consumers of their childhood or evoke new memories.

Strength

Ideal gift for seasonal holidays and occasions. Christmas, birthdays and Valentine’s Day.

£5.00

Lower than competitors

Quality

Very high quality

Desirable product

Service

Provides nostalgic sweet jars with a focus on seasonal gift-giving that create childhood memories

Company

6 students

Location

Operating from 4 different bases in Newcastle

Sales Method

Online website trade fairs markets cash.

Offering Will need sweets that to offer a aren’t readily large range available in all of sweets sweet shops: as each limited editions customer ‘making the has a type unaffordable of sweet affordable’ that reminds them of their childhood

Majority of No facility people will for card purchase payments sweets face to face

1=Importance critical 5 = little importance 1

SWOT Analysis To analyse the strengths, weaknesses, opportunities and threats to our company and product we undertook a SWOT analysis. It was shown below that although we are an unknown brand with some big confectionary competitors in the market with our competitive prices, low overheads and the demand for retro sweet gifts increasing the strengths and opportunities to come from our new product and company outweigh the weaknesses and threats.

Strengths

Weaknesses

Opportunities

Threats

· · · · ·

Multiple selling options Competitive Price Low overheads Easily adaptable according to demand Broad skill set

· Seasonal high demand for unique gifts · Growing market for the demand of retro sweets · Due to increase demand could mean high revenue if the business was to continue to trade · Opportunity to expand products and services into corporate products for events

· · · · ·

Unknown brand Oversaturated market Limitation in product due to YE guidelines Group timescales No established relationships with suppliers for jars and sweets

· More established brands and competitors in the market already · Weather permitted for selling. Impact on footfall · Price fluctuation for jars and sweets

MARKETING STRATEGY

We have adopted the Four P’s Marketing Mix of product, price, place and promotion (BBC, 2015) to create a detailed marketing strategy for our business that incorporates our primary research findings. As we are a B2C enterprise (Marketing Terms, 2015), each aspect of our strategy is focused on making the lives of every day consumers easier and more fulfilled.

Product The Candy Capsule Company is proud of its following three unique selling points, and will market these to its target audience to promote our product. They are: A Unique and Coveted Product Offering We have carried out in-depth market research to uncover the sweets that are most likely to create a sense of nostalgia in the minds of our consumer. Using our research, we have devised an exclusive list of confectionary products (See Apendix M) that cannot be found combined anywhere else in the world, making our product offering unique. Many of the products on our list are difficult to come by in today’s market, therefore our provision of these covetable sweets together in an accessible place makes our customer’s life much easier. Limited Edition Seasonal Packaging Designs Whilst the confectionary market is saturated, there are a lack of beautifully designed, quality products at a low cost to the British consumer (Appendix H). Our research told us that packaging is important to our target market (Appendix D) therefore The Candy Capsule Company utilises an in-house design team to create packaging that runs through single seasonal holidays such as Christmas and Valentine’s Day. Our product offering also includes a selection of non-seasonal designs, perfect for birthday gifting, which too run in limited quantities. Each design provides a modern take on retro graphic trends and aims to be humorous and eye-catching. (Appendix I). A Gift That Keeps On Giving Whilst there are competitors also producing nostalgic sweet jars, The Candy Capsule Company product is designed with longevity in mind. Instead of throwaway plastic containers with unimaginative labelling, we offer quality mediumsized glass jars with packaging design that transforms the product from a simple sweet container into an individual home accessory. Alternative uses for our jars include candle holders, vases, pencil pots and dressing table tidies.

Price Excellent Value For Money Based on market research and exploration into the confectionary and gifting industries, we have established that the optimum retail price for a medium-sized jar of nostalgic confectionary lies between £4-£8 (Appendix J). Whilst we feel we offer superior quality over our competitors, who sell similar products for around £5.99 (Appendix H), we pride ourselves on providing excellent value for money and have therefore priced our product at a competitive £5.00. This figure provides our company with a good profit margin for each product sold, and we will not offer any discounts.

Place The Candy Capsule Company has identified that some of our closest competitors retail online, however given our current position as a small start-up enterprise, we do not have the resources to make online selling profitable. Our market research has indicated that 92% of consumers in our market would prefer to buy our product in a physical space (Appendix B), therefore we do not consider the threat of online retailers to be substantial. Personal Selling As a minimum, we will attend the Graduate Enterprise market at Northumbria Business School in December and the Young Enterprise Trade Fair at the Intu Metrocentre in February to sell our product. We also plan to attend some of the many regular local markets as well as seasonal markets to gain more selling opportunities. Face to face selling is our primary sales technique, therefore we will set up an appealing, fully-branded stall that will be staffed by team members and offer fantastic customer service to promote our product in the best way. Online Online marketing tools are vital for modern brands, as it makes them visible to and easily accessed by a large number of consumers (Williams, 2011). We have created a website – www.thecandycapsulecompany.co.uk - to promote our brand and offer product information (Appendix K). Furthermore, we have set up Facebook and Instagram accounts after discovering that our key market, 18-54 year olds, make up around 78% of Facebook’s users and 55% of Instagram’s users (Jetscram, 2014). Both the Facebook page and the company website will offer consumers the chance to pre-order jars to be collected or delivered before Christmas, Valentine’s Day and other major holidays. We will also operate a company email address for pre-orders, queries and complaints.

Promotion The Candy Capsule Company will not pay for any advertising, but will instead utilise the following strategy to earn publicity. Physical & Word Of Mouth An excellently branded and inviting stall with an array of quality products and nostalgic touches such as an EtchA-Sketch on which customers can leave messages. Top level customer service that customers can shout about to friends and family. Social Media Marketing Connecting to our customers by creating brand-appropriate content on our Facebook and Instagram accounts. Examples of this would be posting market stall dates, providing information on products and pre-ordering, engaging with followers, sharing humorous quotes, hosting competitions, utilising #throwbackthursday and #flashbackfriday and creating a hashtag - #CandyCapsule. Public Relations Securing PR coverage upon the launch of our enterprise by sending out a press release to the region’s local newspapers and magazines. This will include information of our upcoming market stalls which could drive sales of our product and improve brand-awareness.

9 Sales Forecast

The Candy Capsule Company expects fluctuating sales over the next 12 months, due to the seasonal nature of our product. Sales kick off in late November, at the Northumbria Graduate Enterprise Market, where we should attract the more organised Christmas shoppers, before reaching the highest point of the year in December when we attend Christmas markets and take pre-orders from our online accounts for the primary Christmas season. January could be a slow month, with no significant holidays to market towards and a lack of disposable consumer income following on from the Christmas period. Nevertheless, the low price point of our product could award us some sales from the Birthday and general gifting consumer markets. February has a positive outlook, with Valentine’s Day and the Intu Metrocentre Young Enterprise Trade Fair both providing us with excellent selling opportunities and disposable consumer income beginning to pick up. Furthermore, two major seasonal events – Mother’s Day and Easter – fall during the month of March so we expect a successful selling period during this time. Two quieter months follow on from this busy period, with a lack of marketable holidays, but general gifting can rise during this time as people move house and get married so predicted sales are satisfactory. With Father’s Day arriving in June, we expect an increase in sales, which will fall again during July, however an increase in low-cost student/ teacher gifting ensures this has no detrimental effect. August sees a rapid increase in sales that remains steady into September and October, as these are typically the most popular birthday months (Press Association, 2014) and birthdays are our biggest target market (Appendix E). October could also pick up sales thanks to an increased demand for Halloween confectionary (Time and Date, 2015).

Product and Service Product What we are essentially offering is a 16oz (when empty) quality glass jar (Appendix L) filled with a carefully created selection of the nation’s favourite retro sweets as decided by our market research (Appendix G). The jar will be packaged with one of a number of designs unique to our business, reflecting a seasonal event, birthday or general gifting and will be fully branded (Appendix N). Service The process of purchasing from The Candy Capsule Company is a simple one, with measures being taken to ensure we always have large quantities of each design available to customers. As the majority of selling is done face-to-face, the customer is able to visit our stall and browse freely through our products before making a purchase. They will receive friendly and professional customer service from each team member, who will all have solid knowledge of the product and will be able to answer any questions. As an offshoot of our face-to-face selling, we are offering our Newcastle customers the chance to pre-order our product using our website or Facebook page for limited times during the major holidays such as Christmas, Valentine’s Day and Mother’s Day. For an extra £1, customers can place an order online to be delivered on a specific date before each holiday. For example, a customer can place an order on Facebook between 1st-19th December to be delivered for Christmas on 20th December. The value of the product plus the pre-order fee will be paid in cash upon delivery. This ensures we receive a constant source of income even when we are unable to attend regular markets and makes life easier for customers who are unable to attend our market stall. The company does not offer returns as none of our product details are misleading in any way. If a product is clearly faulty upon purchase, customers are able to recieve a refund or exchange the product.

Growth Strategy The following is the predicted growth strategy of The Candy Capsule Company across the upcoming four years trading. It is a realistic progression, which we believe our company will successfully achieve. Year One: After a successful first year trading The Candy Capsule Company will expand further into the direct retail market and broaden our product ranges into the Easter, Fathers Day and Mothers Day sectors. We will do this by adding a refined selection of designs for those specific occasions. In doing so we will further define our place in the market and aim for sales to rise by 25% within the predicted lower sales months of March to June. Year Two: In the subsequent year of trading we believe that The Candy Capsule Company will have a reputable position within its market. Our product range will therefore need to expand further and this will be done with the introduction of sweet hampers. To ensure the success of this expansion we will provide an injection of promotion online, using our website and social media pages and to generate additional interest will also look to trade from a permanent location such as a stall within Tynemouth Market, named as one of the busiest and regular markets within the North East, Tynemouth Market accommodates a variation of traders, which we believe will benefit our trade and if successful we will continue to trade from in following years.

In addition to this in the later part of the trading year we will also capitalise on sales opportunities by offering an option to purchase online using our website. Although previously stated that we do not consider online retailers to be a substantial threat, with the growth of our business and increase of our product ranges over two trading years this is a natural step and we will be in a more desirable position to ensure our online selling is profitable. Year Three: In year three of trading The Candy Capsule Company will continue to trade and advertise in our fixed location of Tynemouth Market and through our online outlets. As the business grows and the companyâ&#x20AC;&#x2122;s trading volumes expand, we will consider acquiring a company van to deal with larger volumes of stock and merchandise that needs to be transported to and from venues. This will also provide an additional method of promotion, as we would include vehicle-branding costs within this growth step. We will also branch into bespoke corporate gifting, which will allow us to broaden our consumer base by targeting local businesses. Allowing companies to invest in client appreciation or a staff/customer incentive will not only help us build brand awareness and sales, but is also founded to be the most effective and adaptable corporate gift option. (Irongategroup, 2015) Year Four: In year four of trading The Candy Capsule Company will continue to trade using the stated methods. To extend our bespoke corporate gifting outlet we will introduce a personlisation option which will appear on our website. This will allow customers to upload or request their own label design, allowing customers to input in the products they buy, which is proven to encourage customer purchases and long-term loyalty (Mintel, 2015). If this option proves to be successful then The Candy Capsule Company will look to extend our in-house design team allowing for a more rapid distribution turnover, allowing us to look for permanent premises to work and trade from.

Exit Strategy The following is the chosen exit strategy put in place for The Candy Capsule Company. At the end of the trading year if our venture proves unsuccessful all members will liquidate the business. As a small start up company a voluntary liquidation (MVL) is the most beneficial option, as we do not have an extensive list of tangible or intangible assets. In the event of liquidation all shareholders of The Candy Capsule Company will consent to the process, by signing a binding contract this will ensure an amicable liquidation agreement. Trading will cease and all tangible assets will be sold off at market value; as The Candy Capsule Company has no outstanding creditor debt and as we do not qualify for VAT, the sum made will be distributed equally between each shareholder in line with agreed entitlements. As we have only been trading for a short period our intangible assets such as brand reputation and company name may not be seen as a desirable valuable asset for purchase. Therefore we will not attempt to market it and will close down our online outlets accordingly to statutory legeslation. (Appendix O)

OPERATIONS AND LOGISTICS Management and Organisational Structure The Candy Capsule Company consists of six equal business partners, each member has been allocated with an appropriate job title and will specialise in one aspect of the organisation. The six partners are equally responsible for all decisions and outcomes and all members will communicate with the team when decisions need to be made to ensure a general consensus. The job title and area in which each partner specialises is shown below: - Bethany Watson – Managing Director and Sales Director - Becky Sharp – Marketing Director - Alex Flynn – Finance Director - Amy Parker – Creative Director - Chris Shelton – IT Director - Luke Rawle – Operations and Logistics Director An illustration of the organisational hierarchy is available in (Appendix P).

Human Resources To ensure the company puts its workforce to the best use, each director role has been allocated based on results from a Belbin Personality Test and the use of each member’s CV (Appendix Q and R). - Bethany has worked in a number of team-based and autonomous roles in high pressure situations so can adapt to the changing circumstances of managing a business. She is organised and good with communication, so is the person to lead the team as management. - Becky has a wealth of experience in events, publicity and marketing and is a strong communicator so is ideal for the marketing role. - Alex has a strong background in Sports Management, covering finances and company costing as well as knowledge of company administration. - Amy regularly works in visual merchandising and interior design and has strong design skills so makes a successful creative director. - Chris possesses extensive IT and technical abilities and works with website building, graphic design and data input on a regular basis. - Luke has worked with deliveries and stock in previous roles and is highly organised and efficient with IT so will work well in operations. We also have the support of our external mentor, Sue Turner, whose experience in bookkeeping and accounts are a valuable resource.

Methods of Communication All partners are equal with shared responsibilities therefore communication will be lateral. Our communication methods must be effective to guarantee that the whole team is informed of all key developments and that the development of our business is ongoing. The team will hold a formal meeting every Thursday at 14.00 for up to 2 hours. We will discuss progress, strategy and operations and assess the success of our existing efforts to set future targets. Verbal All partners communicate verbally between 13.00 and 15.00 each Monday during an informal meeting. Mobile phones are also something used for verbal communication as a quick way to share any issues or developments. Written The company email account is accessible by all members, as is a business calendar which can be updated regularly. Each team member also uses a personal account for emergencies. Information is also shared via an online group message to allow the group to talk in real time.

Suppliers The Candy Capsule Company need to source five products to construct their final product, they are as follows: glass jars, metal lids, individually wrapped sweets, carrier bags and branded and decorative stickers. All payment will be paid in full at the time of order. The Company has chosen to source the glass jars from the online supplier, JamJarShop.com (Appendix L). This is considered the best option because: - The â&#x20AC;&#x2DC;JamJarShopâ&#x20AC;&#x2122; is a British company, ensuring that all expected deliveries will be received within 3-5 working days. - The supplier offered the lowest and competitive price without detriment to the quality of the goods. - The products offered no hidden or extra cost and were true to their description provided, unlike other suppliers considered who added extra charge for the lid to accompany the jars. The second supplier the company have chosen to source our individually wrapped sweets is Hancocks.co.uk (Appendix S). The supplier was chosen because: - The supplier offered the best value for money compared to competitors such as wholesalers Makro. - The supplier stocked all of the sweets required and all were available to order at the time of purchase. - The supplier has a physical store 10 miles from where The Candy Capsule Company carry out production dependent on stock this allowed for faster turnaround, easy access to stock and a decrease in the amount spent on delivering the products. - Hancocks is also a trusted and reliable British supplier, since establishing in 1962 they have been operating in wholesale of confectionary; they now have 20 physical stores across the UK. The company has chosen to source both the branded and decorative stickers from the online supplier, DigitalPrinting. co.uk (Appendix T). This supplier was chosen because: - They offered the specific sizes required to fit the dimensions of the glass jar. - An option to upload your own artwork was available which was verified in a PDF format before payment. Whereas other suppliers considered required payment before showing a preview of the sticker. The company has chosen to source our carrier bags from the online supplier, Alban Packaging (Appendix U). This supplier was chosen because: - The carrier bags demonstrate the consistency of our overall design aesthetic and the desired size dimensions were available. - The products provided where the best value for money.

Distribution As stated in our marketing strategy, the company will complete most of its sales in a physical selling environment following analysis of market research (Appendix B). Year-long delivery will not be an option, as it is not currently viable, but will be considered in our growth plan. Instead, the company will offer a delivery service during selected periods of high sales e.g. Christmas. Newcastle customers can pay ÂŁ1 extra on selected dates to pre-order a jar to be delivered on one specific day within that busy period. This will be delivered in person by a team member with access to a vehicle. In the first year the company will rely on the use of personal cars insured for business use from previous ventures for the transportation of team members, products and stall equipment to and from the markets. As the business grows we will consider acquiring a branded company van for larger volumes of stock.

Stock As The Candy Capsule Company plans to sell at markets and fairs not all events will require the same amount of stock, partners will collectively decide upon how much stock is required for each event dependant on factors such as footfall and proven popularity within our designs. The operations and logistics director of the company (Luke Rawle) will be responsible for making sure that the desired units of stock are made available for the day of sale. In-between markets and fairs the companyâ&#x20AC;&#x2122;s stock will be held at the Managing Directors personal storage room.

Production Production: For a batch of 120 jars, the production process is estimated to take around one hour and thirty minutes. We have allowed 5 minutes per jar, and have 6 team members taking part in this process.

Customer Services Customer services: Customer service enquiries can be made by email, and will be responded to within the hours of 9am-6pm Monday-Friday. Contact details are made available on the companyâ&#x20AC;&#x2122;s website and social media accounts, and will be free for customers. The Candy Capsule Company will accept returns or offer exchanges if a product is damaged, in line with statutory rights.

FINANCES Initial Capital Investment Start up Expenses and Capitalization As a young enterprise start-up, the first cost that directors had to account for was the Young Enterprise insurance of £100. However, due to the relatively straightforward nature of the business idea, there were only a small number of initial expenses required for company to begin trading. This included buying in £111.64 worth of stock (Appendix S) from Hancock’s wholesale in Chester-Le-Street, County Durham and an initial 120 jars costing £62.99 from an online retailer (Appendix L). Therefore, the initial capital investment in the business totalled £308.71 or £51.45 for each director. All of these costs are visible on the projected cash flow statement (Figure 3) and the projected profit and loss account (Figure 4). Product and Costing As part of creating a high quality brand, £21.96 was spent on custom designed labels for the jars and lids containing The Candy Capsule Company logo and £4.55 on the website domain - candycapsule.co.uk. As well as this, a further £7.59 was allocated to provide bags for customers, in order to improve the customer experience at the point of sale. This was an easy cost to justify, as the company’s intention is to be a purely face-to-face retailer. Furthermore, no capital was invested in any promotional or marketing activity. This increases the importance of the overall customer experience at the point of sale, as from this it is hoped they will help promote the product through word-of-mouth promotion to family and friends. In order to facilitate the cash that is coming in and out of the business, the company have opened a Young Enterprise account with HSBC (Appendix V).

Inapplicable Costs Overheads There are a number of costs that apply to many other businesses that are not applicable in the running of The Candy Capsule Company. Firstly, there are no overheads involved in running the business, as there is no private office or building required in order to run the company effectively. Therefore, there are no utility bills or rent for the business. Staff As well as this, there are no salaries or wages to be paid, as the company has no employees. Furthermore, the six directors who have already invested do not take a dividend or wage out of the business. However, if the business was to continue into a second year, the directors would have to consider taking a wage from the business. This may have an impact on selling price, but would be discussed following the first years trading. Marketing As previously mentioned in the Initial Capital Investment section, The Candy Capsule Company has no marketing or promotion budget. This will be done predominantly through word-of-mouth and social media channels, so the company will incur no costs through this promotional strategy. Insurance The Candy Capsule Companys insurance policy is priced at £100 per annum, provides the company with Public Liability Insurance and will need to be renewed in October 2016 (Appendix W). Delivery Costs Finally, the company has also avoided any delivery charges on its stock. This has been achieved by buying the sweets at the wholesale outlet in person, rather than online. If the decision had been made to purchase stock via Hancock’s website, this would have incurred a £20 delivery charge.

Notes on Opening Day Balance Sheet The opening day balance sheet highlights the expenses that The Candy Capsule Company has incurred in order to begin trading. The most significant cost to the company by far has been the acquisition of stock; sweets as well as jar and branded labels for the packaging. Other significant costs include the Young Enterprise insurance totalling £100, which is essential in order to operate as a business, as it provides the company with public liability cover. A final cost prior to the opening day of business was the purchasing of the website domain candycapule.co.uk for £4.55, which is an important asset for the company. This is because it provides a central page for The Candy Capsule Company to direct its consumers within its social media and word of mouth promotion strategies. As illustrated in Figure 1 above, the costs were paid for using capital invested into the company. This liability was split evenly between the six directors, with everyone contributing £51.45 each to prepare the company for its first day of trading.

Figure 1: Opening Day Balance Sheet for The Candy Capsule Company - November 2015

Figure 2: Projected Balance Sheet - 31st October 2016

Notes on the Projected Balance Sheet The end of the first years trading has projected it projected that the company will have net assets totalling £2080.74. This is illustrated above under ‘Cash’ as it is likely that the business will be liquidated following it first year of trading. However if the business was to continue into a second year, some of this cash will have been re-invested into ‘Stock’ so the business can continue to supply its consumers. Furthermore, this will be accounted for as invested capital in the liabilities section. The directors of the business will also have to decide whether to re-invest the remaining cash into the business, or take it out of the company entirely.

Figure 3: Projected Cash flow statement Nov 2015 to Oct 2016

17 18

17 Projected Cash Flow Statement In the main, the projected cash flow statement illustrates many of the incomes and expenditures that have already been discussed during this business plan. For example, during the month of November it shows the allocation of the £308.71 capital invested by the six directors. Furthermore, it shows that this was spent on stock, insurance and the website domain name. However, the statement also displays the sales projection for each month of the first year of trading. This includes increase in sales around particular events, such as Christmas Day in December, Valentine’s Day in February and Father’s Day in June. As a result of these sale figures, projections have been made as to the monthly and yearly income of The Candy Capsule Company. As sales are being taken into account, the purchasing of more stock has been included as well. This is slightly less than the original cost of the stock in November, as it is unlikely more bags will need to be bought. This is because they are an optional extra for customers when buying their sweet jar, so it is expected that they won’t need re-stocking as frequently as other inventory. Furthermore, the projected cash flow statement offers a breakdown of the amount of cash that the business has at the start and end of every month. During the months where £196.57 has been spent on stock, the cash balance available to the business decreases. However by this point it is expected that there will be more than enough cash available to the company to deal with this situation.

Figure 4: A projected Profit & Loss account - Nov 2015 to Oct 2016

Notes on projected Profit & Loss Account The above Profit & Loss account shows many of the same costs that have featured in a number of these financial accounts. However, here these costs are illustrated in the form of variable costs (cost of sales) and fixed costs. The cost of sales includes the costs that directly increase or decrease with sales, such as stock and packaging costs for the year. Therefore, if the projected sales are higher or lower than expected, the variable cost will follow suit. On the other hand, fixed costs are those that do not increase with output, such as insurance and the website domain name cost, so will remain the same regardless of sales figures. Furthermore, the above account demonstrates how taking away the cost of sales (variable costs) from sales will give the company’s gross profit. Then if the fixed costs are also taken from the gross profit it leaves the overall net profit for The Candy Capsule Company. If the current projections are correct, the business will end the financial year with a net profit of £1776.58.

Gross Profit Margin Ratio 2675 â&#x20AC;&#x201C; 793.87= 1881.13

1881.13/2675= 0.70= 70%

A gross profit margin of 70% is a good sign for the company, as it is high for a small start-up business such as this. This could possibly suggest that more capital should be spent on stock, to provide higher quality sweets or packaging.

Break-even analysis

Figure 5: A break-even analysis of the first 120 projected unit sales

From the break-even analysis conducted, it is evident that The Candy Capsule Company must sell 30 units of their initial stock investment (120 units) in order to breakeven. This figure could be reduced by increasing the selling price per unit, however any effects this could have on demand would have to be taken into account.

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