Five Narrowed Ideas

World trade centre Calendar

Employment Website

Subway franchise

Online dating services

Indoor golf dome

 

The World Trade Centre Calendar concept would have a strong benefit of capturing the experience of September 11, 2001. The Benefit is that this could be marketed as a memorial piece and that part of the proceeds could be donated to charity, which would add goodwill and increase sales volumes. The dramatic difference is that this calendar is about a terrorist incident and the photos associated with the world trade centre collapse. The premium financial performance would be reasonable. The expenses would include the costs of getting permission to use photos taken by people on September 11, 2001. In addition costs of developing a calendar, shipping to the USA market and time sensitivity would be important. Estimate that the total fixed costs will be about $5.00 a calendar. The Revenues that could be generates are high. The possible selling price could be $10-15.00 depending on the percentage given to charity. The profit margin would be 50-100% depending on the level set. The real reason to believe this product is a viable commodity is the emotional and visceral response of the World Trade centre incident. Coupled by the need for people to remember and contribute to a charity could increase sales growth for a sustained duration. Therefore this World Trade Centre Calendar concept is feasible considering others have capitalized on this bandwagon effect via music and other media vehicles. But they have not issued a calendar yet therefore a possibility of market leadership can occur. This product is highly cyclical and could be obsolete shortly.

An employment website is a great idea because people will always need jobs and the Internet has allowed global penetration. The monster.ca concept could be adopted, however we can specialize in niche markets to allow further differentiation. " Monster, which generated sales of $112mn and operating profit of $10mn in 1999, is beginning to realize the benefits of massive brand-building efforts." (http://www.techbuddha.com/articles/monster.html). The areas of children, women, minorities or first time job applicants can be targeted. Or the higher end spectrum undergraduate, graduate and executive levels can all be encompassed into the website. Non-traditional jobs such as trades and labour could be targeted as well. The dramatic difference will be the ability to specialize or generalize the applicants. With respect to expenses they will be incurred in hiring a professional to develop and maintain website, marketing it and soliciting corporations to use or website. These expenses could be considerable for the first year between $15-20,000. The revenues can be generated by advertising, closing referrals that lead to job opportunities and obtaining contracts with some firms. Profit margins would be reasonable between 15-25% depending on the volumes. The reason to believe this project is sustainable is the increasing consolidation of human resources and applications onto the Internet. In addition the non-cyclical nature of the fact that people will always need jobs.

The subway franchise concept is an excellent opportunity for development. The primary benefit is an established business model with marketing, logistical support with a proven market. The dramatic difference is location with respect to Calgary being a growth city. Acquiring a key location for example like the University or other strategic venues would allow premium financial performance.

The expenses associated with a start up franchise would be quite considerable. Costs would be ranging from the hiring of additional personal, food supplies. Revenues and profits would be based on models exogenous to the franchise owner’s control. Therefore profit margins and revenues would be highly controlled. However the real reason to believe the success is the fact that "subway is the largest franchise operation in the world at this time is it any wonder it’s claimed the top spot on the 22nd Annual Franchise 500® list. (http://www.entrepreneur.com/Magazines/MA_SegArticle/0,1539,285124----1-,00.html). Stability and reasonable profits is key to this franchise consideration.

The dating concept can be simplified, expanded and made profitable with technology. The benefit is that you can search for potential dates and mates in a private environment. This allows pictures, profiles, preferences and compatibility to be matched up. The dramatic difference is that people can meet other from around the city to around the world on the website. A small fee is charged for setting up your profile and then you can keep it active for the duration of the year. Yearly renewal allows clients to become accustomed to this new type of system of meeting people. " Insiders say Internet dating's potential is just being tapped. About 50 percent of the population is single--never married, divorced or widowed--but only 2 percent of Internet users actually use an online dating service" (http://www.internetweek.com/netresults/net121100.htm). The expenses would include setting up and managing a website, promotion of the product in local city and abroad approximately $15-20,000. The revenues and profitability would take considerable time to build up. But considering that the business of love is not cyclical and always in demand the potential for long-term growth is excellent. Problems can include that many people prefer the old fashion method of meeting people face to face. In addition other negative connotations of people who post adds are not desirable dates or mates. The real reason to believe is that normal people now use the Internet and that it would be reasonable that you can profile a potential mate like you would shop for a car.

The golf craze is growing exponentially and is a market that can be capitalized on. Having an indoor golf dome is a strategic idea that allows golf fans from all levels to maintain and improve there game year round regardless of weather. The primary benefit is year round training and opens access of indoor golf. The dramatic difference will be the presences of licensed instructors of traditional golf, and also the option of mini golf as well. Given the current growing popularity of golf the financial performance looks promising. Major expenses include acquiring or leasing a property large enough to entail the area required for indoor golf. Other expenses include personal, high electricity costs and marketing. Estimates are around $30- 50,000 start-up costs. The Revenues expected to be generated by yearly memberships, corporate, group rates, family rates and lessons. The objective of profitability will be 25-35% within 2 years. The start up costs is high but the potential for long-term growth are extremely strong. In addition having youth start very early with indoor gold we feel is a strategic market that has been untapped. This will allow the parents to be more engaged and higher probability that they themselves will continue with indoor golf craze. The real reason for the success of this idea is the continued proliferation of golf and the inhospitable climate of Calgary. Strong corporate and individual interest in golf will also enhance the long-term prospect of indoor golf dome. Strong competition from private golf clubs and public courses could pose a problem.

Enti 381 l92 Winter 2002 Professor Vance Gough

Alan Dar  Final Narrowed Idea

After careful cost benefit analysis the business idea adopted will be the Subway franchise model. This model offers a balance between increased profitability and a branded image. The franchise model is safer than most start up companies and will allow for a more progressive growth. Considering food is a commodity that is always in demand, the probability of cyclical downturns is reduced. In addition there is strong technical and logistical support with respect to the business model.

The essential attributes of the idea are the desire to own a business and be reasonably profitable. Considering that almost ¾ small business fail in the first year it’s comforting to know that this franchise model has global branding and is recognized by many customers. However franchising is by no means a guaranteed success model. There are other costs and benefits associated with this business model.

The idea came from the fact that I always eat at Subway and enjoy the food there. In addition those really annoying commercials with Jared the guy who lost weight eating a sub everyday reinforced this concept into my mind. Brainstorming for this idea came when I was in Mac hall starving and was only on idea 50 of the 80 to 100 ideas required for this assignment. Now lets get to the fundamentals of this project.

How profitable is this venture likely to be? Some market research has indicated the following "Subway is the number one franchise for 2002" (1). Subway has 15945 franchises in 74 countries with strong projected growth (2). The initial capital costs are the real killer in the beginning of the operation. Expenses for a low costs subway the initial costs is $62,600 a midlevel is $104,500 and a high costs is $156,250 (3). If the initial capital investment can be achieved then profitability looks viable in the long run. If we assume two to three years to pay back loans and be totally self sufficient long term profits look very good. The initial year will be spent maintaining operating costs and paying down initial down payment of investments. Revenues that will need to be generated are at least $100,000 per year for the next 2 years assuming a low level subway before all costs can be paid off in two years. Profitability analysis is the following in USA as template. Sales in 2000 were $341,000 per unit, the prior year was $273,000 (4).

The profitability will be highly regulated by the subway franchise until all fixed costs are paid off. The prices are set by the franchise, and there is little room to maneuver. There are incentives to have coupon sales and other strategic initiatives to generate increased volume sales. These methods include frequent purchases with stamps and other promotions as well. The market research indicates that the supply chain is strong. Competition is strong as well from numerous substitutes. Substitutes include other fast food companies like McDonalds and the entire spectrum of fast food companies. In addition traditional diners and restraints will be in competition with this franchise. The key to success in this lucrative market is location and financing. A good example would be the Subway located at U of C with no major competition and high traffic location. Other examples include downtown in Eaton Center. Locations right now are a work in progress and will depend on gaining appropriate financial capital.

The resources needed to exploit the idea would involve love money, private investors and an application to the local treasury branch or bank. Financing is critical to the success of this venture. The prime rate is 3.75 lowest in many years and many financial institutions have business loans promotions on at this time.

In addition once financing is achieved manpower and additional time to allocate to this venture will be required for the first few years to succeed. Subway is attractive blue-collar investment compared to others body shop initial costs are $400,000 and Second Cup $200-240,000 (5).

After analyzing the success potential on a scale of 1 to 5 with 5 being a profitable venture I would rank this venture 4. Given the reason is the task of securing the high investment costs associated with a startup franchise. If these costs are meet and the location found is viable then this venture will be highly profitable long run operation. If the capital is not raised then it can be used for a contingency venture from the following list of 4. If the location is poor then the investment may not be reasonable. If the location is good then the probability of profits are very encouraging.

Therefore the venture I have analyzed would be reasonable to attempt is the Subway franchise.

Bibliography part 3

(Entrepreneurship 2001, Date: Feb 10/2002 <http://www.entrepreneur.com/Franchise_Zone/FZ_Special_Listing/1,4731,12-12---F5-,00.html>)

(Subway website, date Feb/11/2002 <http://www.subway.com>)

(Subway costs chart, date Feb/11/2002 http://www.subway.com/development/fsb01/allcreqs.pdf)

RDS database networks, feb/11/02," us to 17 food chains ranked" Nation’s Restaurant News 2001

Financial post v.89(47( nov 25/27, 1995 pg 6-8) "Subway bites problems of franchising" 1995-1996