Business Idea Assignment: Plan Selection For Business Venture

Question

Task:
Develop a business idea assignment comparing the four business ideas and selecting the best business idea for business venture with highest potential to be successful.

Answer

Introduction
The following report is an idea selection and business pitch which will compare the four business ideas developed by the group members. The idea which has the highest potential to be successful in the market will be selected for pitching to the investors. All the ideas will be evaluated and one idea will be selected along with proper justification for choosing the idea. Furthermore, the business model developed for the idea will be amended to make it more successful and lastly, a cash flow projection for the first two of the business will be discussed.

Idea Evaluation
The different business ideas that were developed in Assessment 2 are-

• A mobile application- Farm Machinery Services will be developed to help the farmers in India get the required machinery at a much lower amount and on a lease. The machines will be available to the farmer based on their locations so they do not have travel to get the machines.
• Home delivery service of frozen vegan food which is healthy and gluten-free
• Password identification marker which will be a mobile application as well as it can be used on the windows platform.
• Underwater drone for researching marine life by the marine biologists and researchers.

To assess and evaluate the business ideas, an evaluation framework has been developed to compare the business ideas and choose the best option for starting a new business venture. This framework helps in outlining the different factors and opportunities in the market related to the new product or service idea. Five factors have been incorporated into this framework

• Customer segments- The targeted potential customer base for each of the business ideas will be compared to understand which segment has the most potential to quickly accept the new product and use it easily. It will also help in identifying the potential returns from each customer segment and the segment with the most returns will be chosen (Yang & Danes, 2015).
• Benefits and opportunities in the market- The opportunities available in the market for the growth of the product and the benefits it will yield for the business in the initial years will be evaluated for each of the business ideas.
• The initial capital required for starting the business- Every business requires some amount of financing and capital to start and depending on the funding opportunities, a business idea will be chosen (Lund, Byrge & Nielsen, 2017).
• Competition in the market- The competition for the chosen business or the extent of availability of similar products in the market will help in deciding which business venture will prove to be the most successful in the market.
• Market size- The market size for the new product will also be a factor as it will help in identifying the saturation in the market and the availability for market growth.

Idea selection
The chosen business idea among all the business ideas was the development of a home delivery service of vegan frozen food. The demand for vegan food has been increasing across the globe and people are switching their normal diets to vegan diets. Australia has been the 3rd largest market for increasing demand for vegan food options (livekindly.co, 2018). The best idea for the new business venture was chosen on the selected variables discussed above. The above factors are deemed to be the essentials before starting any business as it will help in identifying the success or failure scope for the business. Firstly, any new business is developed keeping in mind the demand of the customers (Schmutz & Foresi, 2016). The customers are the most essential factors for a business as they will only lead to the growth and increased revenues for the business (ibisworld.com, 2020). The sale of vegan food products has been increasing at a fast pace in Australia which means that there is high demand. After comparing the demand for all the other businesses, the customer segment and demand for this business idea seemed to be the most viable option as the customers can be easily reached and the potential target market for this is huge.

Secondly, the vegan market has huge growth opportunity as many major takeaway chains and food manufacturers in Australia have started to introduce many new products to satisfy the growing demand of the customers (foodnavigator-asia.com, 2019). Therefore, by comparing all the opportunities in the market for the different business ideas, the vegan food business has been considered having the most opportunities and therefore, this idea has been chosen. The cost for acquiring the raw materials for production of vegan food products and then delivering it to the consumers is affordable and not too huge. Compared to other businesses, vegan food production and delivery are very cost-effective (Kneebone, 2020). As the demand for vegan food has been increasing but it is still very novice, therefore, the competition is not that stringent. Although there are many food manufacturers and restaurants that have started to sell vegan food, very few deliver frozen vegan food products to the doorstep of the consumers. Therefore, it can be said that the competition is not very much and there are huge opportunities for growth in the market. Lastly, the market for vegan food products is growing and therefore, it can be predicted that the market size will grow gradually in the future (Herlevi, 2019).

Moreover, many consumers nowadays are preferring to get their products home-delivered rather than going out. Due to the COVID-19 pandemic, the demand for home delivery has increased. Therefore, combining these two factors; demand for frozen vegan food products and home delivery has led to the opportunity for developing the home delivery service of vegan food products for the customers.

Improvements
There can be some improvements made in the idea before it is being pitched to the investors. Having a proper online payment method and accurately designing the website and the mobile application is very necessary. Although vegan food will be frozen, it must be ensured that the products are sold within two days after making it. It should not be kept in the storage for more than two days. The customer segment must be extended and their marketing channels must be omnichannel. This will help in connecting with a larger number of the target audience and turning them into loyal customers. The relationships with customers can be maintained by offering discounts or loyalty bonuses and referral opportunities. This will aid in attracting and retaining more customers.

Revised business model
Key partners

• Ingredient supplier
• Cooking materials
• Freezing equipment
• Investors
• Technology partners
• Legal associates
• Payment processors

Key activities

• Developing vegan food products
• Home delivery
• Processing the orders
• Managing payments
• Customer service

Value proposition

• Healthy vegan food products
• Ready to eat meals
• Any time delivery
• Helps in eliminating the task for deciding on food options
• New and innovative food products
• No preservatives

Customer segments

• Busy professionals
• People who have switched to a vegan diet
• Students
• Business executives
• Independent business and delivery services

Customer relationships

• Building trust in quality food product
• Efficient product and quality delivery service
• Offers and promotions
• Referral programme
• Reviews and feedback
• Gift coupons
• Email
• Live chat and SMS
• Social media

Key resources

• Cooking staffs
• Freezing production staffs
• Delivery staffs
• Capital
• Physical resources

Channels

• Advertisement and social media platforms
• Website
• Mobile application
• Delivery vehicles

Cost structure

• Salary for staffs
• Cost of ingredients
• Service charges
• Employee training costs
• Advertisement
• Maintenance
• Procurement of raw materials

Revenue structure

• Sale from the meals
• Revenues from sales of frozen vegan food products
• Delivery charges

Cash flow projections
Best case scenario

Table 1: Cash flow projections for the business for the first two years
(Source: Created by the learner)

Worst case scenario

Table 2: Cash flow projections for the business for the first two years
(Source: Created by the learner)

The key drivers of cash flow for the business include sales of the products, payment to suppliers, labour costs, rent and taxes, insurance, marketing and advertisement, income tax, electricity for the office, travelling charges. All these factors attract cash flow into the business. The best-case scenario in the cash flow is the ideal projected scenario for the business. For instance, here the possible growth rate will be the highest, the discount rate will be the lowest as well as the possible tax rate. On the other hand, the worst-case scenario identified the most severe negative outcomes that might happen in each situation. For example, the possible cash flow growth is the lowest and the possible discount rate is the highest.

Conclusion
The above report identified the best business opportunity that can be undertaken by the group. The innovative idea of home delivering frozen vegan food has been chosen as the best business venture as it will help in satisfying the growing demand for vegan food products in the Australian market. The factors that have led to the selection of this business idea have been discussed in the report. Furthermore, the business model canvas of the new business idea was developed after identifying the improvement opportunities. It can be concluded that developing a home delivery service for vegan food products is a viable business opportunity as there is huge scope for growth and earning many loyal customers.

References
Australia is the 3rd Fastest Growing Vegan Market in the World. (2018). Retrieved 29 September 2020, from https://www.livekindly.co/australia-vegan-market-growth/

Herlevi, E. (2019). Brand Development of Vegan Food Brands: Identity, values, Consumer–Brand Identification and the effects of culture on international brand development.

Kneebone, S. (2020). FMCG trends: adapting to plant-based consumer demand. Retrieved 29 September 2020, from https://www.playmr.com.au/blog/fmcg-trends-adapting-to-plant-based-consumer-demand#:~:text=A%20healthy%2Dlooking%20market.,reach%20%24215%20million%20by%202020.

Lund, M., Byrge, C., & Nielsen, C. (2017). From creativity to new venture creation: A conceptual model of training for original and useful business modelling. Journal of Creativity and Business Innovation, 3(1), 65-88.

Rising Veganism Threatens Demand For Australian Meat And Dairy | IBISWorld Industry Insider. (2020). Retrieved 29 September 2020, from https://www.ibisworld.com/industry-insider/press-releases/rising-veganism-threatens-local-demand-for-australian-meat-and-dairy/

Schmutz, U., & Foresi, L. (2016, April). Vegan organic horticulture-standards, challenges, socio-economics and impact on global food security. In III International Symposium on Organic Greenhouse Horticulture 1164 (pp. 475-484).

Vegan expansion: Australia’s Woolworths and Coles striving to meet soaring consumer demand . (2019). Retrieved 29 September 2020, from https://www.foodnavigator-asia.com/Article/2019/02/26/Vegan-expansion-Australia-s-Woolworths-and-Coles-striving-to-meet-soaring-consumer-demand

Yang, Y., & Danes, S. M. (2015). Resiliency and resilience process of entrepreneurs in new venture creation. Entrepreneurship Research Journal, 5(1), 1-30.