SOYMILK FEASIBILITY STUDY
SOYMILK FEASIBILITY STUDY
SOYMILK FEASIBILITY STUDY
The City and State where it is located
The feasibility study describes a startup for a soymilk shop on the busy London’s central street. The shop targets the students and businesspeople across the street who are looking for an alternative beverage to quench their thirst. Soymilk not only gives the customers’ a new taste but also a healthy organic experience that quenches their pain for health beverage. The primary research along the busy street shows that 85% of the people are willing to reconsider healthier soymilk while 70% are ready for the soymilk. In addition, the city’s beverage market has also risen steadily over the years thereby raising more income and competition in the market. The PEST analysis highlights a socio-political and economic challenge imposed by BREXIT. Coupled with other issues like technological advancement, the industry is ready for more innovative ways to expand customer satisfaction. The critical success factor analysis identifies quality service and alternatively safe food as prime factors for the feasibility. The consideration of the position would absolutely give the shop a competitive advantage. Lastly, a critical financial prediction ascertains the shop’s viability with a 6 month payback period.
The Business Opportunity
The safety of beverages like coffee and tea continue to raise concerns about the health implication of their consumers. There are numerous campaigns and warnings against the caffeinated beverages on health grounds. Coffee and tea’s franchises of black, brewed, filter and instant are the most common caffeinated drinks in the market. An infographic analysis by Gordon (2015) indicates a competing level of caffeine in both tea and coffee, which makes them substitute for another health deficiency (Figure 1 & 2). The beverages also contain acrylamide, a chemical produced during temperature heating of the beverages. Health practitioners believe that such chemicals have a considerable level of damage to human health, which is mostly associated with cancerous infections. The health concerns raised have left many coffee and tea lovers indifferent about their love for the beverages and health implication of their consumption. In addition, a study by Davies et al. (2012) found that consumption of coffee and tea contributes to Parkinson’s disease. The study monitored its participants over a 12-year base study and discovered that 200 participants tested positive of Parkinson’s disease. In reaction, health promoters have advised against too much intake of coffee and tea, which directly harms the pleasures of the consumers. However, there is still great concern about the health standards of the beverages and the mode of protection against more health hazards to its consumers. For instance, advising people to take less of coffee and tea is not a solution to the problem. Consumers need to have a beverage substitute that is healthy and permanent. The demand purposes the proposal for introducing soymilk in the British beverage market. In addition, the product will be organics, which necessitates more consumption safety with regard to production inputs. Thus, the health gap already created in the market about coffee/tea drinks gives the feasibility study purpose and applicability of the product.
Figure 1: Proportional level of caffeine (in mg) per cup of coffee
Figure 2: The level of caffeine (in mg) per cup of Tea
Figure 3: Combined Chart for Beverages with highest level of Caffeine (in mg)
Although there are upcoming alternative beverages to coffee and tea, the market is still large and desires a long term solution to the health allegations associated with current beverages. Some existing alternatives in the market are rebranding tea/coffee using generative process that tries to eliminate unhealthy substances in the beverages. However, the production process and preservation involved are likely to introduce more health impurities. The situation purposes the need for the group to come up with a permanent alternative to current brewed impurities in beverages. Thus, organic soymilk targets to replace the coffee shops on five benefits (Figure 4). Primary observation indicates an attractive market already experiencing beverage shortage, in exclusion of health concerns. In addition, the product is reintroduced into the market at a time when the industry is experiencing food safety campaigns, which has left many customers unsatisfied. A study by Transparency Market Research (2017) projects improved customers’ awareness on food safety owing to soymilk health focus. Soymilk will give customers choice of safer nutritious choice and great customer experience in its taste and presentation (Nagdeve, 2019). Therefore, the team is taking note of the urge and huge expectation of customers. It considers customization of the soymilk in the best barristers’ presentation to raise their service quality and competitiveness in the industry. The customers will also have access to free home delivery, full menu options, and promotions across the market. Therefore, the feasibility study sets a new brand of soymilk based on food safety, quality service, and great customer experience.
Figure 4: Image on the Benefits of Soymilk
Source: Nagdeve, M., 2019. 5 Impressive Health Benefits of Soymilk. Organic Facts, Unbiased Information on Health.
Nutrition Facts in Organic Soymilk served in 100g (Unfortified)
|Nutritious Components in 100g organic Soymilk (original or vanilla)|
|Total Lipid (fat) [g]||1.75|
|Carbohydrate, by difference [g]||6.28|
|Fiber, total dietary [g]||0.6|
|Sugar, total [g]||3.99|
|Calcium, Ca [mg]||25|
|Iron, Fe [mg]||0.64|
Source: Appendix 2: USDA National Nutrient Database for Standard Reference 1 April 2018. Basic Report.
There is great interest in a business looking up to potential customers before settling on a chosen location. Choosing a location with proper evaluation of the clientele composition gives an opportunity to identify potential customers. For instance, a soymilk shop that targets students and business people within the city prefers central locations with high daily turn-ups (Mulligan et al. 2007). Thus, the aim is that the group will undertake preliminary test on traffic floor on the desired location within the City Centre. The pretest assessment discovered that over 30,000 people made more than a single pass across the spotted location. In addition, an interview with some potential customer confirmed the legibility of the business. The study on the coffee shops’ customers reveals that 85% of the customers yearn for an alternative beverage while 70% of them were ready to try out soya milk immediately.
The customers’ dissatisfaction with existing beverages also contributes to an important market analogy that the feasibility study greatly considered. Consumer satisfaction gives the best interpretation and view of the market. Every consumer has a rational self-satisfaction drive that determines her/his consumption of a commodity. Currently, a majority of consumers are indifferent about their love for coffee/tea and precaution on health concerns. Thus, the revelation of the 70% consumers interviewed who want alternative soymilk right away.
The macro market segment helped the feasibility study understand the inter-company or shops competitive relationship in the market. The laxity in the market shows trend and contributory factors in aiding the market. The factors can be best explained using the PEST analysis.
PEST Factors Analysis
The PEST factors exhibit the external risks and opportunity available to the business.
- Political: The BREXIT is the source of the most evident political factors affecting operations of the soymilk shops. With an exogenous affiliation of soymilk, there is a great threat that soy lovers like the Asians may be affected by the new BREXIT policies hence undermining the new venture’s performance. The BREXIT also impacts the value of the British pound, which will negatively affect foreign soya suppliers.
- Economical: The economic position of Britain has changed in the recent time caused by factors like BREXIT and internationalization of trade. BREXIT guarantees the nation new economic alignments in terms of economic agreements, which will affect goods, labor, and strength of the pound. In addition, increased globalization of business in London city brings new customers on various visas. Thus, the team has taken precaution to ensure that it runs on the safe side of BREXIT and international trade.
- Social: The market’s customization and campaign for safe food also affect trends in beverages’ consumption (Lule, Garg, Pophaly, and Tomar, 2015). The promotion of organic food by lobby groups shifts the beverage market rightly hence a good laying ground for the soymilk shop.
- Technological: The modern business operations like apps and online bookings have eased operations of businesses. The trend will give our business an opportunity to reach out to many clients and cut production cost, more so on overhead expenses.
Critical Success Factors (CSF)
The CSF gives an overview of market competitiveness in the view of existing competitors. The segment gives the team an opportunity to assess soymilks relevance and competitive response in the market, hence presenting an advantageous position (Mulligan et al. 2007). The factors are as discussed in the table below (Table 1).
|Critical Success Factors||Description|
|Health Benefits||Soymilk’s primary position of strength is a healthy organic alternative to beverages. The team will ensure creation of variety dietary options of the brand within its health parameter to the interest of deserving customers. That will help solve the riddle of caffeinated beverages.|
|Home Delivery and Location||The shop will take advantage of customary home delivery service in the city. In addition, the urban location of the shop gives it accessibility to various customer destinations. Thus, the team will take advantage of centralization of the shop and indoor service to reach all customers regardless of place, weather and time.|
|Fast Service||Serving customers without a wait will be an objective hence gives them enough time to experience the taste of soymilk.|
|High Quality||The shop guarantees its customers’ value in standards of soymilk served. That will be accomplished by attaining all legal, customary, and safety standards provided in the industry.|
|Loyalty Scheme||The shop will offer special treatments, discounts, and promotions to first and revisit customers, hence giving them a reason for repeat purchases.|
The campaign for safety beverages gives the city all reasons to be prepared for a healthy alternative. The solution requires something permanent and healthy like soymilk for the thirsty market. Stationed at a corner opened to businesspeople, professionals and students, the team of four senior officials will oversee the daily business operations of the shop (McCue, and Shetty, 2005). The service process will include taking orders and passing to support staffs in a well-coordinated process. The top organ of the shop and service line is as indicated in Figure 5.
Figure 5: The top organ of the shop and service line
The viability of the business can also be tested by its low capital requirement. The team needs £50000 to start up a soymilk shop. The group members will each make a contribution of £12500 towards the startup of the business. The contribution gives every member 25% in business ownership. In addition, the group employs a rule of third to project the cash flow, breakeven and payback periods (Table 2 &3). All cost in the list are assumed on highlighted market prices but under consideration of the basic equipment only. The project also considers paying a slightly higher rent to include some household and kitchen items that would be taken over together with the house. In exception of the listed items, the group will incur £4000 in long-term equipment and decoration of the soymilk shop. With a high viability chance, the calculated payback period will be 6 months. The group could as well shorten the payback period but have decided to stretch the repayment period to avoid exhaustion of resources. The breakeven analysis predicts an annual income of £1680000 before tax; meanwhile, the group will hold a contingency amount of £10000 for emergency cases if any arise. Therefore, upon consideration of the financial analysis, the business shows higher viability and performance in the market.
Table 2: Cash Flow Statement (attached in Excel File)
Table 3: Payback Period Calculation.
|Fixed Cost (3 months)||£298,186.00|
|+ Contingency (10%)||£29818.60|
|/Revenue (1 month)||£55000|
Table 4: Breakeven Calculation
|Annual Income Required to Breakeven||Projected Annual Income|
|Price Per average sale||£8 + £2 = £10||Area code population||30000|
|Raw material (40%)||-£4.00||No. of people Target market (-30%)||-9000|
|Fixed cost||£596372||Potential customers (20%)||-4200|
|Divide by contribution||/£6.00||16800|
|Annual no. of units required||99395.33||Willing buyers (-80%)||-13440|
|Divide by no. of weeks in a year||50||3360|
|Weekly production||£1987||Divide by no. times they’ll buy (7 days a week)||/7|
|Retail Price||£10||No. of people to buy daily||480|
|Weekly income||£19870||*at Retail price||£10|
|No. of weeks a year||*50||Daily revenue||£4800|
|Annual Income||£993500||Weekly revenue (7day)||33600|
|Projected Annual income||£1680000|
Recommendations and Reflections
The market and financial assessment ascertain all possibilities for the success of the business. Moreover, the existing health complaint raised against beverages like coffee and tea gives the soymilk a great opportunity to take over the market. Thus, it is recommendable that the group initiates the soymilk shop immediately after completion of assessment before the market realizes change. There is also a need for the business to create a market focus on designated customers rather than running after everyone (Tham, Gardner, and Haskell, 1998). The recommendation necessitates the business to undertake further studies that would statistically identify and classify customers based on their preference; thus giving the shop a base customer line. In addition, the shop must remain open to generative customers. The management should revise and set a full soymilk menu that will accommodate alternative customer preference (Kano et al. 2006). Hence, that will be the only recommendable way to keep it general but also remain competitive in the market.
The feasibility study gives the most explicit understanding of start-ups and market segments. Initially, I held the view that one only needs capital to plunge into a business. However, a deeper review of the process not only expands one’s understanding but also gives lifetime experience and skills that remain relevant to the future. Thus, the feasibility study has expanded my knowledge to a startup expert.
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|Source: USDA National Nutrient Database for Standard Reference 1 April 2018 Software v.184.108.40.206_2019-04-03 https://ndb.nal.usda.gov/ndb/foods/show/16120|
|Report Run at: April 22 2019 18:02 EDT|
|Nutrient data for: Soymilk, original and vanilla, unfortified|
|Nutrient||Unit||1Value per 100 g||1 cup = 243.0g||1 fl oz = 30.6g|
|Total lipid (fat)||g||1.75||4.25||0.54|
|Carbohydrate, by difference||g||6.28||15.26||1.92|
|Fiber, total dietary||g||0.6||1.5||0.2|
|Vitamin C, total ascorbic acid||mg||0||0||0|
|Vitamin A, RAE||µg||0||0||0|
|Vitamin A, IU||IU||3||7||1|
|Vitamin E (alpha-tocopherol)||mg||0.11||0.27||0.03|
|Vitamin D (D2 + D3)||µg||0||0||0|
|Vitamin K (phylloquinone)||µg||3||7.3||0.9|
|Fatty acids, total saturated||g||0.205||0.498||0.063|
|Fatty acids, total monounsaturated||g||0.401||0.974||0.123|
|Fatty acids, total polyunsaturated||g||0.961||2.335||0.294|
|Fatty acids, total trans||g||0||0||0|