Feasibility Study of Starting a New Business

Feasibility Study of Starting a New Business
This investigation will carry out a study to see if it would be
feasible to open a new nightclub, ?Sinners? in Maidenhead town centre.
Maidenhead is a small town in the southeast of England, located in the
county Berkshire. The nearest major city is London, which is located
twenty-five miles east of the town.
The reason I have chose to investigate this type of business venture
is because I take an interest in this type of business as I would like
to look into it in the future, and also feel Maidenhead possesses the
qualities, and provides a great opportunity to start up a business of
this nature and for it to be successful.

To find out whether this business venture would be feasible, a
feasibility study needs to be carried out covering all aspects
relating to starting up a new business. Several tools will have to
implemented to do so.

There are two main types of tools that will be used; these include
research tools and analysis tools. Firstly the primary research will
include interviews and questionnaires, and from this the information
needed such as demand levels and financial information will be
analysed to help with the final decision of the study. For secondary
research company account will be used, along with books, maps, and
Internet sites. All these sources will allow me to find out about the
local area of Maidenhead such as demographic information and
statistics. All this research will aid me in being able to make my
location decision.

There are several analytical tools that will be implemented, and these
will be marketing tools such as pest analysis and swot analysis,
financial tools such as cash flow forecast and break-even analysis.
Then the final part of the report will be the analysis and conclusion,
to actually see if it is viable to open a nightclub as a business
venture in Maidenhead.

Secondary Research Objectives and methodology

Objective 1

The first is to decide where in Maidenhead Sinners is going to be
located. Research on the infrastructure and rent values in maidenhead
needs to be carried out so information can be gained on some of my
start up costs. Locations of direct competition (other nightclubs),
and indirect competitors (public houses/bars), which are located in
the area will be researched, so the best possible location can be
chosen in Maidenhead for Sinners.

Method

To find out information on land values in and around Maidenhead I will
visit the local town hall and pick up some local information booklets.
To find out about the local infrastructure and competitors of
Maidenhead, I will use the local Windsor and Maidenhead borough
website. By carrying out a swot and maybe a possible pest analysis, I
can decide on the best location for my nightclub.

Objective 2

To find out the number of economically active 20-39 year olds in
Maidenhead and the borough and to find out if the disposable incomes
of this age group are high enough for me to stay in business. This
will allow me to discover whether there are the sufficient number of
people in this age group to target, and will interlink with my primary
research to show whether there is sufficient demand for the nightclub
that is being proposed.

Method:

The information can be achieved from the local borough through the
www.rbwm.co.uk website. There is a section that focuses on the local
demographics of the area including population, house prices, socio
economic factors, type of employment, car ownership and incomes per
household.

Objective 3

To find out all health and safety requirements about running a
nightclub. These include how many people per square feet can be in the
building.

Method:

I will use the Internet to find this information, if not I will have
to use primary research and ask an owner of a nightclub the rules and
regulations.

Objective 4:

To find out how many staff will be required on a Friday and Saturday
night, and the costs for employing them in terms of wages and
training.

Method:

I will look on the borough website at local wage rates and compare
this with costs of living in Maidenhead and decide on a suitable wage
rate for employees.

Objective 5

To discover the fixed and variable costs of running the nightclub.
This will deal with rent, equipment, staffing, supplies, registration
and marketing.

Method:

I will use the Internet to find out information on prices. Local
borough and property websites will be used to find out rent and
business rates, and specific bars and clubs websites will be used to
find out information on equipment, supplies and training courses.

Primary Research Objectives and methodology

Objective 1:

To discover the likely demand for a new nightclub in Maidenhead. This
includes whether people would welcome a new nightclub and how often
they would visit it. From this information it can be decided what
opening times will be and when to open the club.

Method

After researching various methods of research and considering the time
limitation in which it must be brought together, I have decided that a
questionnaire is to be conducted in Maidenhead using a stratified
quota sample of 30 males and 30 females within the specific age group
of 20-39. I have decided to use this type of sample because I am
targeting a market around what I have stated, because that age group
tend to be the most popular customers of public houses and nightclubs.
There is no point carrying out a random sample when not all ages are
associated with nightclubs. Concentrating on the rough age group will
give me a much better idea on the demand for my new business. See
appendix 1.6 for the sample questionnaire.

Objective 2:

To discover the tastes of consumers in terms of music and beverages,
so the needs of customers can be met as this nightclub follows a more
market led approach.

Method:

Same method as objective 1.

Objective 3:

To find out how many staff will be required on a Friday and Saturday
night, and the costs for employing them in terms of wages and
training.

Objective 4:

To discover the fixed and variable costs of running the nightclub.
This will deal with equipment, supplies and rates.

Method:

Devise a questionnaire for Smokey Joes (competitor of proposed
nightclub), and find out how much their costs amount to.

Research results and analysis

After conducting secondary research of looking on the Maidenhead and
Windsor Borough website looking at the social demographics for
Maidenhead the following information was found:

Population, Incomes and possible demand.

The graph on the previous page shows that the age profile 25- 64 is
the most prominent in Maidenhead and the borough with 56 per cent of
the total population being within this age group. Although only 20-39
year olds are being targeted, it is evident that via a simple
calculation that 28 per cent of the population fall into this age
group. By referring to the table ?Population Census 2001 Maidenhead
and the borough? appendix 1.0 it is evident that out of 133,606 people
37,113 are in the age segment I would be targeting most, and it is not
to say the nightclub will not attract person?s older than 39 and so it
is felt that there are enough people to target for the new nightclub.

From the two tables appendix 1.1 and 1.2 ?Housing Tenure and Car
Ownership?

it is evident that of the borough?s total households, 82 per cent have
access to a car compared to 66 per cent in Great Britain as a whole.
Also 74 per cent of the borough?s households are owner occupied,
compared to only 66 per cent in Great Britain as a whole. This means
that people in Maidenhead are very wealthy because 82 per cent car
ownership is far higher than the national average. This suggests that
people in Maidenhead have high disposable incomes, and so proving
Maidenhead is a very good area to highly focus advertising upon.

By referring to table appendix 1.3 and graphs 1.1 and 1.2, it is
evident that more people own houses in Maidenhead than the national
average, as it is 74 per cent against the Great Britain average of 66
per cent. Table 1.3 shows that in Maidenhead house prices are far
higher than the national average, as detached houses are almost
£250,000 more expensive in Maidenhead. This itself shows that people
who live in Maidenhead must have exceptionally high incomes because 74
per cent of them actually own their houses even though the house
prices are much higher than the national average. The fact that 28 per
cent of the total population fall into the 20-39 age segment means
that about one in every three owner occupied there is someone between
the age of 20-39, which is extremely high and shows that their income
must be high.

In the business world the highest paid jobs in most cases are usually
professional or managerial jobs. By referring to appendix table 1.4 it
is evident that in the borough that 10.9 per cent of households work
in professional roles. Compare this to the Great Britain average of
6.8 per cent, and then look at the borough?s staggering 44.4 per cent
percentage for managerial/technical jobs, and compare that to the
Great Britain average of 31.1 per cent, it is evident that Maidenhead
and Windsor house people with very high incomes. If there people did
not have the high incomes then they would not be able to afford to
live in the borough because of the extremely high house prices.

From analysing all of the tables it is clearly evident that people in
Maidenhead do have the sufficient income?s for the business to
survive, because Maidenhead is such an expensive area to live in the
UK, and if people can afford to live here with such high house prices
compared to the rest of the UK then their incomes must be high.

However there are some issues that need to be considered before a
decision can be made just from local residents incomes. Who is to say
that everyone who owns a house or a car in Maidenhead wants to go to a
nightclub at the weekend? People may have different leisure desires
and prefer to indulge in alternative leisure activities such as the
cinema, bowling, eating out or even sport. This issue of demand, and
who would want to use the nightclub is a very significant factor. The
following Primary Research results provide an insight into the desires
and wants of the people of Maidenhead.

Based on the "consumer questionnaire " (see appendix 1.6), the
following results were found.

Question 1).

For this question people were asked which bars/nightclubs they drink
in most often. More than one option could be chosen.

From the 12 options possible the results show that the most popular
bars that people drink in are firstly Heroes with 17 per cent, Bar 38
with 14 per cent, Whetherspoons with 13 per cent, The Bear with 12 per
cent and The Toad with 11 per cent. These are the most popular bars
according to the questionnaire results. The location of Sinners needs
to be considered based on this information, as it needs to be as near
to as many ?feeder? bars as possible to capitalise on custom. There is
also only a percentage of 1 for the number of people who did not drink
in any of the bars, and so can be assumed there is an extremely large
market of people who visit bars in Maidenhead.

Question 2)

This question asked the days on which people go out drinking most
often. More than one option could be chosen.

The results show that Friday with 33 per cent and Saturday with 26 per
cent are by far the most popular days when people visit the bars in
Maidenhead. 15 per cent of people asked said they visit on a Wednesday
and 9 per cent on a Thursday, but Monday, Tuesdays and Sundays are
un-popular, as only a total of 17 per cent of people in total said
they visit on the three days. This would mean that it would be in the
nightclubs best interests to definitely open on Friday?s and
Saturday?s, and possibly on Wednesday?s. These are the days when there
will be most custom because less people work on Saturday and Sunday
day?s meaning they will not have to worry about getting up in the
morning for work. There is no point the nightclub being open on
weeknights such as Monday?s because there will not be the demand due
to people having to get up for work the next morning.

Question 3).

This question asked whether people would welcome another nightclub in
Maidenhead?

The results show that 62 per cent of people would welcome a new
nightclub to the Maidenhead compared to 38 per cent who would not. The
fact that there are more people who are for the proposal than against
is very positive, especially the high number of 62 per cent. This in
turn means that in the age group of 21-39 there are a large number of
people who would use the facility rather than people would not.

Question 4).

This question asked how often people would use the new nightclub per
week?

The results show that 64 per cent of people asked would use the
nightclub once per week, and because in question 2 most people said
they go out on a Friday night or Saturday night, it would be obvious
to say that these nights would be the most popular. A moderate 33 per
cent of people said they would use the night club at least twice a
week, with only a total of 3 per cent saying they would use the
nightclub more than three times per week. The information collected
from the results suggests that it would be best to open on two nights,
preferably Friday and Saturday because this is when demand is at its
highest.

Question 5).

This question asked how much on average people spend on a Friday or
Saturday night out in Maidenhead.

From the graph, it is evident that no one I asked said they
spent below £10, only one person said they spend £10, two said they
spend £15 and three said they spent £20. On the other hand twenty people
said they spend at least £30 and twenty-six people said they spend £40.
Six people said they spend around £50 and only two people said they spend
£60 or more. On the whole three quarters of all the people asked said they
spend at least £30 ( 46 people out of 60 people).

These are quite high figures considering the average drink price for a
pint in a bar is only £2.60, but this is due to the high incomes of people
who live in the Maidenhead area, as previously discussed in my research. If the nightclub was full with its 600 capacity and roughly three quarters of the
people in there were people who spend at least £30-£40, but assuming that at
least half of what they spend on a total night out is spent in the nightclub
(i.e 450 people spending at least £17) then a total estimated income from drinks
can be calculated for one night. The estimated income for one night would be around £7650 without taking into account costs. However this estimate is only if the nightclub was full capacity, and due to the on going war in Iraq, this may not be the case.

Question 6).

This question investigated what drinks people most prefer to drink
when they are out. More than one option could be chosen.

The results show that people desired all drinks that were put down on
the questionnaire. Some were more popular than others such as
alcohpops for example. These were the most popular with 40 people
saying they drink these when they go out. Other alcoholic drinks such
as bottled beer, beer pints, gin, vodka, Bacardi and archers all had
over 20 people saying they drink them when they go out. The least
popular drinks were pints of bitter, pernod, scotch and whiskey, but
they were still desired by people who would be willing to use the
nightclub and so it is essential them as customers needs and wants are
met. All drinks mentioned on the questionnaire would be provided by
the new nightclub, but there would be less of drinks such as pints of
bitter, pernod, whiskey and scotch and more of bottled beer, beer
pints, gin, vodka, bacardi and archers, coke, lemonade, orange juice,
cocktails and water as these drinks are more popular and so more money
will be made from them.

Question 7).

This question set out to find out consumers tastes in music.

The results from this question show that the most popular consumer
taste in music was ?disco? with 58 per cent of all people asked
choosing this category of music. Second most popular was ?80?s? with
25 per cent of people asked choosing this category. Garage, Hip hop,
Drum and Bass and Rock ?n? Roll all had 3 per cent, with Jungle being
least favourite with 0 per cent. From these results it would be more
viable for the new nightclub to concentrate on playing disco and 80?s
music, also because my target market is over 20?s this music would
appeal to them more, rather than 18 -19 year olds who might prefer
Garage music.

Summary of "consumer questionnaire " (see appendix 1.6), results.

From the results gained from this research there are several
conclusions that can be drawn. Firstly, the location of Sinners would
be best situated to as near to Heroes, Bar 38, Whetherspoons and the
Bear as it can so it can capitalise on as much custom from people
leaving them bars when they close. Location options are discussed in
the Marketing section of this project.

It would be in the nightclubs best interests to open on a Friday and
Saturday night, because these two nights are by far the most popular
nights for people visiting Maidenhead.

The proposal of the nightclub is favourable with the residents of
Maidenhead. Although 38 per cent of people do not feel that the
nightclub should open, 62 per cent of people do, and so the demand is
there for a venture of this type.

If the nightclub reached full capacity every weekend and everyone
spent at least£17 average per night, then the revenue made on drinks
alone would be around £7650. On top of this would be a £5 entry fee,
meaning that revenue for one night would be very high is the club
filled out.

All drink mentioned in the questionnaire (see appendix 1.6 question
6), would be sold in the nightclub because there is demand for all of
the drinks mentioned. However, for some drinks there is a higher
demand e.g. bottled beer, pints of beer, gin, vodka, Bacardi, archers
and coke, lemonade and orange juice and so there would be more of
there drinks stocked because demand is higher and so the majority of
revenue will be made from there drinks.

The results collected from the questionnaire are first hand as they
have not been taken from a secondary source, but have been gathered
from the residents of Maidenhead themselves. However, the following
sections that deal with Health and Safety and Human Resources have
been taken from more secondary sources.

Feasibility Study of Starting a New Business 9 of 10 on the basis of 1008 Review.