A Feasibility Study, Testing The Overall Viability Of Fit And Health

Question

Task:
An individual Feasibility study, testing the overall financial viability of One of new venture idea selected by student. Produce a written feasibility study, describing and analysing the feasibility and sensitivity of your key operational and financial business drivers, with reference to the business model and context within which it operates.

Answer

1 Executive Summary/ Introduction
To develop this feasibility study, a detailed research on the eating habits and food habits of Hong Kong People has revealed fast lifestyle coupled by intense work-pressure leading to intense eating out. Along with that, the Department of Health of Hong Kong Published a report on the physical activity of people in this place in 2019. This report has revealed that 83.2% of people go through regular and sufficient physical activity; hence, it is essential for this company to provide personalised and preferred food for every type of customer. The company’s products will be showcased in a unique manner by stating calorie values against each order and food items, enabling customers to make their selection with ease.

Starting up a business comes with different aspects of planning and management that help in reaching potential consumers and meeting the needs and target consumers. In this case, the present company that is Fit and Health has focused on providing healthy and tailor-made food that tastes like homemade food to people of Hong Kong. Hence, this report focuses on illustrating every aspect of this start-up business along with the financial projection in minute detail. It is worth noting that COVID-19 has changed the scenario in the field of food and hospitality business entirely. At the same time, people of Hong Kong are also taking an active part in showing interest in-home eating, however the usp of the current business will be to provide food similar to homemade ones.

The negative impact of COVID-19 has affected the cost bearing capacity of people due to massive job loss. In such a situation, this company will provide people of Hong Kong with the concept of cloud kitchen that delivers best quality and hygienic food at a reasonable price. Hence, this report is going to provide a detailed description of the service and food that will help the people of Hong Kong to live a better life at a low cost. The organization will make use of technology in an extensive manner to extend its outreach. Also, the latest business facility will employ as much as possible minimum staffs so as to operate a low-cost and serve to customers. Focus of the business will be to spread out and set-up at least 5 kitchens across the city such to make outreach better. The business will make tie-up with food-delivery apps to deliver products and services to its customers. Marketing strategy will entirely be focussed on social media and online promotions. The business will also maintain covid protocols by continuing with no-touch delivery, safety protocols for its employees such as temperature checks and proper packaging to prevent contamination.

2. Description Of Product/Service
Detailed research on the eating habits and food habits of Hong Kong People has revealed fast lifestyle coupled by intense work pressure leading to intense eating out (Aaltola, 2018). Along with that, the Department of Health of Hong Kong Published a report on the physical activity of people in this place in 2019. This report has revealed that 83.2% of people go through regular and sufficient physical activity, hence, it is essential for this company to provide personalised and preferred food for every type of customer. In such a condition, this organisation has the opportunity to promote and market the business product to a large number of consumers. Most importantly, this initiative will provide help to a large number of people when it comes to managing high-quality daily routines with proper dietary food and drinks. With increasing demand on nutrition and fitness amongst the new generation, frequency of gym goers has increased considerably. Hence there exists immense opportunity to set-up business that can meet such healthy lifestyles and values of customers by providing tailor-made meals. The company’s products will be showcased in a unique manner by stating calorie values against each order and food items, enabling customers to make their selection with ease.

Fit and Health, a food service providing company have focused on providing healthy foods to people concerned with nutrition and food for their foods. Primarily, it is quite undeniable that Hong Kong has numerous numbers of such shops that provide similar services to Fit and Health. However, Fit and Health can earn competitive advantages by reaching a large number of people within a limited time along with providing personalised products and foods to people less than one roof (Archibald et al. 2018). It is quite profitable for this company to provide food for people and their pets that make it one step ahead of other competitors.

Nutrition is a key factor in daily life that can be reached easily with the help of experts in this company. In this busy world, most people need help from professionals to give the best food and care to during their gym regime. In such a condition, this organisation will provide the best services regarding food delivery meeting nutritional requirements. Hence, personalised food and services are one of the crucial benefits for the customers. The company will be employing technologically versed personnel, nutritionist, dietician and chef for smooth functioning of the business.

3 Technology Considerations
Technological consideration will be the primary driving feature of this business. Not only it will partner with other apps for distribution of its food products, but it will also have its own app that user can download and use for ordering. It will have features of designing dietary choices according to nutritional needs and calorie values, also taste and preference of customers. This organisation will use technology for packaging and processing food that will maintain the safety of food. At the same time, affordability and quality of food will be maintained through technological usage. At the same time, advanced technology will help in maintaining websites and online pages to maintain the flow of orders (Chen et al. 2021). Automation in ordering food and confirmation of delivery will help in improving the experience of consumers. Websites and official pages are critical tools related to technology that will help in improving overall conditions regarding working effectively by improving the consumer experience. Most importantly, 56% of people in Hong Kong order food from online delivery applications. In such a situation, it is quite effective to implement this approach to work in this place. Usage of mobile applications has also increased with passing time along with the help of advanced technology (Duan et al. 2017). Due to this reason, this organisation will get help from the automotive technology and the application to take orders and place them appropriately within minimum times.

Inventory management will be done in this company manually to employ people in this time of joblessness. Automation in the ordering platform of this company will help in staying connected with consumers along with increasing the rate of user engagement (Escribá et al. 2020). It is an undeniable fact that engagement of consumers can only help in improving overall conditions regarding selecting the menu and placing orders along with reaching the consumers within a limited time. Payment system will be provided by the company for securing online payments in safe manner for customers.

4 Product/Service Marketplace
Existing marketplace
Hong Kong is the target marketplace for this product with the target consumers with the interest in having healthy foods. Most importantly, this organisation will work to meet the needs and requirements gym goers as well as health-conscious people. With almost 56% people already ordering food online in Hong-Kong, there is already an existing marketplace for the organization however the competition is intense in this place.

Target market
Most importantly, this organisation will hire nutritionists and health experts to prepare diet charts for every customer (Goddard et al. 2018). Target market consumers includes those consumers that orders online, hence the focus will be to transfer them to make heathy choice for their different meals.

Market segment
Geographic: The business will be offering its products and services to people residing in and near Hong Kong’s city centre.

Demographics: The business will primarily target gym goers however healthy eating will remain a priority for all customers opting for products and services of the business.

Behaviours: Targeted consumers will be those who care eating right with appropriate choice of nutrition.

Competitors
Food delivery services are critical competitors of this organisation; however, this organisation has the opportunity to work effectively by providing the best services to consumers based on its new idea. People can buy their required food based on nutrition by buying healthy and beneficial food.

Product distribution
Direct selling is the most important product distribution process within this organisation. Primarily, Fit and Health will not include any third-party logistics to deliver food. In the primary days of this organisation, F&H will employ delivery boys to work in this place to deliver goods and services on time. Most importantly, this company will use a personal website and application to take orders. However, the organization also aims at making tie-up with apps for generating more customers orders as during initial days direct orders with the organization will be less.

Reason for choosing the product for consumers
The primary concern of this organisation is to help people to manage their regular dietary requirements without facing any issues (Hendrix et al. 2021). This company will provide food as per the order of daily, weekly, and monthly along with one-time orders. Most importantly, expert advice and help from every dietitian and health experts will also help in attracting consumers more efficiently.

One of the most important reasons for which consumers will select this product is the quality and maintaining the quality of the food. At the same time, this organisation will provide on-time delivery to the customers. However, the following graph shows the intention and trend of home eating in Hong Kong after the occurrence of COVID-19.

Figure 1: Home eating market
(Source: Dinerstalk.com, 2020)

Moreover, with the high-quality food, this organisation will provide support to people of Hong Kong to stay fit and healthy along with having delicious food that will taste the same as homemade food. Talented and experienced chefs of this organisation will provide the most healthy and tasty food that will increase the interest of consumers to buy food and services for themselves and their pets.

5 Marketing Strategy
Product differentiation
Products and services of the business are unique from the aspect of providing help to consumers by providing them with a diet chart along with delivering the food to the homes. Analysing the 4Ps of marketing can help analyse the uniqueness of the product.

Product: Unique diet plans will attract people to stay engaged in the online app. At the same time, the automotive approach of the apps will help in staying connected and plan for ahead for the days. The product design plans such as food choices with dietary, nutritional requirements along with their calorie values will woo online customers, especially the gym goers to make purchase from this app. It will not only provide options of home cooked meals but also range of salads, protein mixes, protein bars and other healthy alternatives to select from.

Price: The product will be priced according to standard pricing strategy.

Place: The products of the business will be delivered to the customers homes.

Promotion: All promotions for the product will be conducted online as well as over social media. There will be app-based promotions for the products as well.

Marketing type
Product differentiation is the selected marketing strategy that will help this organisation to reach consumers by creating an encouraging brand image by providing high-quality services. For example, in the first section, the organisation will provide healthy food full of nutrition that will make people more active regarding their physical approach (Karpets et al. 2021). At the same time, this company will provide high-quality services by including highly talented and experienced people to help consumers regarding their diet charts.

Focus of the organisation
This organisation will focus on the people with a need for better dietary plans and nutritious food live better with good food. Most importantly, delivery boys will work effectively on providing high-quality services to people within a limited period. For example, this organisation is not focused on only providing help to people to get the best quality food (Lipowska et al. 2018). At the same time, it is focused on making positive changes in the lifestyle and the process of consuming food. It has also been identified that the present organisation will focus on providing high-quality food to people of central Hong Kong in the beginning days. With time, it will think about expanding the business in other cities along with using third-party logistics.

6 Organisation And Staffing
Additional staff
This company requires employing delivery persons to deliver food on time along with providing high quality and standard food that will meet the craving of people for high-quality food. Nutrition is another critical concern of the people that will be maintained all through the journey of providing food. Most importantly, nutritionists and veterinarians will be hired in this company to help the people to get food as per their requirements along with developing a dietary chart (Malm et al. 2020). No person can work effectively without having sufficient support from the human resources team in an organisation. Due to this reason, the operations management team and financial management teams will include employees to help the company to provide high-quality services and food for a long period to its people.

Organisation structure
A hierarchical structure will be implemented in this company with managers in different departments who will help employees in that department to work along with managing functions in every area of this company. For example, the operations manager and finance manager will analyse every aspect of business that will help in identifying profit and loss (Norris & Ciesielska, 2019). At the same time, the simplistic approach of this company will help the delivery persons to work together along with supporting staff to maintain the quality of food.

New organisation structure
Following is the new structure for this company that will help in working efficiently that can improve the process of work.

Figure 2: New organisation structure
(Source: Created by author)

7 SCHEDULE
The following Gantt chart will depict a detailed timeline of all activities that will be performed for implementation of the new business plan. The following table is presenting the schedule of the work:

Table 1: Gantt Chart
(Source: Created by author)

8 Financial Projections
An initial investment of $ 10,00,000 will be made by the owner. The business will focus on growing the business from the retained profits/ earnings.

The business will aim at growing sales by 10% each year

• The continued growth of the service will be the trend in the business.
• Operating costs will be aimed at being stable.
• Interest rates will be maintained at similar rates.

Cash Flow statement and analysis
The following is expected to be the anticipated cash flow for the next 12 months;

Detailed cash flow for 2022, monthly basis
In the first year, the cash flow statement reflects that this organisation has the opportunity to secure cash flow for keeping the organisation smoothly functioning. At the same time, it has also been identified that operating activities related to cash flow, net cash flow, and less cash flow have also been mentioned. Along with that, receipts of customers, inventory-related purchase in cash that has also worked in managing the financial statement of the organisation. The statement of cash flow depicts there is a gradual increase in cash inflows when compared against the cash outflows.

Balance sheet and analysis

The balance sheet of this organisation is that total assets of this company are 24,715 as per the current assets of 8000 along with cash in hand of the chief financial officer and requirements for inventories. It has also been identified that total long-term liability of the organization need to be gradually paid-off by retained earnings.

Break-even Analysis

This organisation has the opportunity to gain a profit of $60 to work more efficiently in the food market of Hong Kong to gain competitive advantages. It is crucial to mention in this place that this organisation has the opportunity to gain profit from this business and to gain competitive advantages. Most importantly, this organisation has worked efficiently on finding out the most effective process of marketing to reach the wide business market.

The primary reason for assuming the success percentage in this company includes the process of reaching a large number of people through high-quality services. It is also worth noting that this company has the opportunity to enlarge the business by motivating the people of Hong Kong to get high-quality services and products at a lower cost. It is also necessary for the management team to manage human resources patiently and tactfully by showing a high-quality leadership style. Moreover, this ratio analysis is showing possible profit in this business that is encouraging to start the business.

Ratio Analysis

1. Liquidity Ratio: Current Ratio = Current Asset / Current Liabilities

   Current Asset = 8,000

   Current Liabilities = 15,000

   Current Ratio = 8000/ 15000 = 0.53 = 53%

2. Efficiency Ratio: Inventory Turnover Ratio =COGS/ Inventory = 20% / 10% = 2%
3. Profitability Ratio: Debt to Total Assets Ratio = Total Debt / Total Assets = 15000/ 24715 =0.61 = 61%

Financial difficulties and risks and what If
Analysis of the entire financial projection informs that this business requires supporting itself through high-quality services and food to consumers (Shukur et al. 2019). This organisation can't gain competitive advantages without proper support and care from the employees. However, before getting high-quality support and expertise from employees it is essential to identify the expectations and hiring talents as per the requirements. At the same time, there are certain risks such as failure to help the consumers to get physical fitness along with helping the pets to live happily.

8.1 Funding

• Issuing equity capital is one of the most popular funding processes that come with advantages such as no repayment requirement and lower risk, and bringing equity partners. However, it also comes with some disadvantages including time and effort, higher cost, and ownership dilution in time (Yang et al. 2017).
• A loan from banks comes with advantages such as interest is tax-deductible, a bank loan is temporary, and it keeps control of the company. However, it also comes with disadvantages such as high-interest rates and toughness to qualify for the loans (Yi et al. 2019).
• External investors come with both advantages such as the lower value of funds while borrowing and secured adjustment. On the other hand, it comes with disadvantages such as the possibility of maladjustment, time-consuming, and risks of not getting funds.

However, this company will select bank loans to conduct this business approach as per the requirements. At the same time, it will help to get advantages such as tax deductibility and temporary rents.

9 Findings And Recommendations
Findings
Hence, the major findings of this study are that this company can start its business along with expanding the business in new cities in the next three years. At the same time, although this company has the risk of facing financial difficulties, it has the opportunity to overcome those risks by providing high-quality services to consumers (Yu et al. 2020). High-quality food at the lowest price along with improved services can help in gaining trust and consumer loyalty without facing any issue.

Recommendations

• Investment in growth can help this organisation to improve the process of managing financial constraints.
• This organisation can also get competitive advantages by paying taxes on time along with having a billing strategy appropriately (Yuen et al. 2019).
• Bank loans can help in managing the finance of this business. However, before that, it is essential to pay credits and interests on time.
• It is also necessary for this company to pay attention to ROI along with the expenditures. Expenditures are quite normal for a business; however, it is also crucial to consider ROIs that will help in generating revenue in future (Zhang, 2021).
• Providing salary as per expectations and talents of employees along with the services they provide.

10 Conclusion
Thus, a financial projection is an essential part of a business plan that helps in creating targets related to work along with managing every aspect of business efficiently. For example, in this case, F&H has the opportunity to spread its business without facing any hiccups by selecting target customers and the place. The selected place is central Hong Kong, and the selected customers are people with an interest in staying healthy and fit. At the same time, this company has the opportunity to go beyond financial crunches and get profits by concentrating on the quality of services.

This organisation will get structure, including human resources manager, finance manager, chefs, nutritionist, veterinarian, and delivery persons. It is a crucial aspect for this organisation to work efficiently by motivating the employees to conduct their role without any mistake. At the same time, it is also essential to work efficiently in the case of raising funds. Funding is an essential aspect of every business that helps the company to meet financial needs. In such a condition, bank loans will be the best option for this business that will help in combating any future issues.

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12 APPENDIX