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This business plan provides detailed information and includes the basic business plan information that is necessary for initial establishment and operation of Tun Huang Music (THMC). With its current business location in Taipei and Taoyuan, the company is seeking for further business opportunity of continuous market growth and size.
The franchising business will focus on the musical lesson and instrument retail selling as its main business operation. Since the business is simply an extension of the head company, it requires only a moderate space for business operation. Rental costs will not be as expensive as the head company.
Several business areas are considered to ensure the success of this plan. The branching location will be picked based on the population and density of the district. Competition analysis is also been considered. As the newly established branch will has greater competitive edge in terms of product selection and professional skill support received from the head company comparing against with other local competitors. It is very likely for the branches to success and require greater local market share.
Risk factors which THMC needs to consider:
What will be the market trend in the next few years.
What are some of the possible actions that competitors will make.
What are the backup plans if the number does not turn out as planned.
Keys to success
Degree of Standardization of each every branch
Focused and well-defined long term objective of the company. Never has any company within this industry has any sort of long term plan.
Timely stock replacement plan and sufficient technical support from the head company.
Previous successful business experience to be shared with new onboard franchising owners.
Every business faces difficulties from time to time, for the status of economy, the company can only make assumptions as to what are more likely to happen during its business life period. What if the business does not turn out as planned. According to the sensitivity analysis, it is still profitable despite 30% drop in revenue income.
Based on the current pricing strategy and sales promotion, the new branch will be able to breakeven in the late Year 3 including all the Year 0 investment such as renovation costs and pre-opening stock purchase. Based on the past experience and information from other competitors, a typical musical store should have a maximum sales of $1 million per month. If the plan is deemed as a 10 years business project, the branch should at least be able to reach $1 million revenue per month in Year 10.
With all the information analyzed and gathered, it is very likely that the new branching business will be profitable. With the support from the head company, the newly established branches will benefit from customer referral and better product pricing. With an initial $2 million investment (renovation and product purchasing), the new branch owner can breakeven in three to five years of operation.
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