4000302260center8/1/201833000950008/1/2018420003175000880009408795Azeem PataClass: 11b1450000Azeem PataClass: 11b1420003175000175001870710VR COREYear 11 Preliminary Business Studies: Business Plan450000VR COREYear 11 Preliminary Business Studies: Business Planright257748000ContentsElement Page NumberBusiness Overview Page 2Marketing Plan Page 5Financial Plan Page 6Appendices Page 9Business OverviewNameThe name “VR CORE” was chosen as the business is the crux of all virtual reality gaming or functions. It is the place where everyone can have a chance to use the newest technology in virtual reality and experience new programs which are not available to others.Logo (Refer to Figure 1 in Appendices)The logo was chosen as it conveys someone using a virtual reality headset whilst being happy and actively communicating to others through a microphone. This logo was chosen to set standards for the company and display the general review of the enterprise.SloganThe slogan “Immersive Encounters” was chosen as its small and easy to remember whilst conveying a wide range of meanings.
The experiences that are had at VR CORE will be different from others as they will be purely crafted for VR CORE and its customers. Prime FunctionVR CORE is a hub where consumers can come to experience the world of virtual reality without having to purchase their own device. Consumers can come to the business which is set in a large building. This amount of space offers many rooms where consumers can use virtual reality devices. There are a variety of rooms which range from simple, member, VIP, and group sessions along with an increase in quality respectively:The Simple Room is a small room which only includes a VR device with seats for the non-players.
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This room is priced at $20 per hour, that may suit the needs of a single consumer. The Complex Room is a medium-sized room that contains a VR headset with a couch for the non-players. This room is worth $50 per hour, being a decent value room that may suit the needs of a family or small group.The VIP Room is a fully disclosed, high quality large room which inhabits a VR device along with a table, couch, and a small kitchen with necessities for non-players. This room costs $100 per hour, which may suit the needs of professional gamers or gaming enthusiasts. The business also has a Group Sessions Room which is a wide, open room which has many VR devices based on the number of individuals present. The sessions usually include wide multiplayer games or offer niche services such as a VR wedding. This room has all the necessities such as tables, couches and even room order from catering services.
However, the usage of the room determines the price. The price can range from $60 to $700 per head, depending on the function that is requested. The factor which differentiates this establishment from others is that this business will outsource its programs (i.e. the games or requested functions) to be uniquely and specifically tailored for VR CORE. Obviously, VR CORE will allow consumers to use their own programs, however, if they want to experience better quality, they can use the business’s programs. These programs will not be available to the public and will be undergoing continuous change under popular request by consumers. This guarantees loyal customers as some customers may find liking to a specific program which is found nowhere other than at VR CORE.
Thus, the prime function of VR CORE is to provide unique services in VR technology which is not given by other enterprises. To see a few VR devices, please refer to Figure 2 in Appendices.LocationThe location of this business will have to be close to Sydney CBD as that is where the most activity occurs. The chosen address of the business is 18-26 Dickson Avenue, Artarmon NSW.
This is a good location as it is only 8 minutes of a drive from Sydney CBD and 4 minutes from North Sydney. The building has true street presence and exposure, along with proximity to an enviable number of amenities including bus transport, northern rail network, Bunnings and the Home Maker Centre. The cost to lease the building is very high as the building is exposed to the freeway and it is in an easily reachable area. However, VR CORE is confident in generating enough profits to justify the higher costs. To see the map of the location, please check Figure 3 in Appendices.
Legal StructureThe legal structure of VR CORE is a private company. Virtual reality is on a rise, with many new products being released and new experiences that everyone wants to have. There is a big chance of this company succeeding without fault. However, since there will be a large amount of money invested into establishing this business such as the cost for the VR devices, paying back loans, and high-level computers, there needs to be a safe space for the owners. Thus, by choosing private company, the owners only have limited liabilities which save them from losing their personal assets. Also, to be a well-known and more global company, the business needs to sell shares to large-scale investors.
These shares allow the business to raise necessary funds to expand and grow the business as it can be eligible to apply for larger loans which can in-turn lead to huge profits. Also, this way there can be more investors and hence more ideas that will circulate in the business rather than complete loss of decision making. For example, being a private company can help the business please as many interests of the stakeholders by becoming more open to the world around them. Therefore, the legal structure being private company is very advantageous for the owners. Mission StatementTo put it briefly, the total price to run a VR device is too high. The aim of VR CORE is to provide VR technology for consumers to use on an hourly rate rather than full purchase of the items. It aims to accomplish the goal of being a globally known virtual reality centre that receives all the new technology as well as being able to hold competitions in virtual reality.
The main point of existence of the business is to help consumers fulfil their desires without having to spend too much of their income. Staffing RequirementsElement ActivitiesAcquisition Staffing Content: There are only 20 members of staff required to run this business. The working hours will be from 9am to 5pm and then from 5pm to 11pm.
Each member of staff is required to know how to assist in the usage of virtual reality devices as well as how to work in the canteen. Other jobs, such as an electrician or food catering, will be outsourced. Staffing Requirements: Staff will not be required to be qualified to work as a member of the VR CORE team.
However, they should have experience in customer service so that VR CORE consumers can be fully satisfied. Staff will need to have personal qualities such as confidence, integrity, humility, kindness, and generosity. Staffing Recruitments: All staff will be recruited externally through advertisements in media, and online services such as SEEK.
Recruitment will not be outsourced to an employment agency as the jobs required do not need high qualifications. Training and Development Staff will require training in the usage of virtual reality devices as well as assistance of a consumer. Staff will be trained on how to work at the canteen as well. There will be no managers in the beginning stages of the business.
However, once managers have been employed, they will undergo an intensive training course. Moreover, staff will be developed in customer service to provide the best satisfaction to VR CORE’s customers. Maintenance Employees will have to sign an employment contract with the business that will usually only last up to one year. Employees will only be on the modern award for the beginning stages of the business.
However, once the business has become more successful, it will adopt a unique enterprise agreement. Employees will be retained with the promise of being given more flexible and negotiable agreements in their contract, after one year of employment with VR CORE.Marketing PlanTarget MarketThe target market for VR CORE is very wide as virtual reality is enjoyed by all people.
A survey conducted asked people of different ages if they would purchase a session at VR CORE. To see the results of this survey, please check Figure 4 in Appendices. The main age demographic that VR CORE will target is 16-34 years of age, as that group has substantial disposable income to afford the services at the business. Also, the people in this range are shown to enjoy and participate in games more often than others. The business will not target any other demographics as age is the only one that matters as they are the highest percentage of users of virtual reality devices. The 4 P’s of MarketingProduct: VR CORE provides rooms where customers can experience virtual reality with their friends or family. The functions they will partake in (i.
e. games, conference call etc.) are unique to the business as they are outsourced from development companies purely for VR CORE’s use.
Price: Since the functions of the VR devices are unique to the business, the pricing is higher than usual. The pricing can vary from simple activities at $20 to complex activities which can go to $700. The usage of the device is a large determining factor of the price. As customer requests get harder to fulfil, the price starts to lift in sync. Mainly, the price of certain ventures is predetermined, however, the business is open to new ideas which can cost more.Promotion: The company will promote its service on social media such as Facebook as well as print an advertisement on a billboard of a busy road. Also, the business can use word of mouth to make certain that people know about the business.
This will ensure exposure of the business at minimal costs. Place: The business’ location is set carefully to be close to Sydney CBD, but not in it. This is because the business needs to have an approachable environment in which private transport is not troubled with traffic or congestion and the business needs a large building to conduct its tasks in. The building fees in CBD are too expensive and are almost impossible to acquire as many small firms have much more returns than one large firm in a single location. Therefore, situating outside of but close to CBD is wise. CompetitionCompetition for VR CORE is mainly VR Corner as it is the most prominent in this market.
VR Corner is a small virtual reality café based in CBD. It offers an array of virtual reality experience for up to 7 players. Participants can choose from a selection of games featuring genres such as horror, FPS and action.
VR CORE can surpass the competition with an advantage of providing unique programs as VR Corner only provides publicly available programs. This is good for the business as customers will be more intrigued towards unique private software which they can only experience at a single location. Also, the competition only attends to customers who have booked a session beforehand. VR CORE can counteract this feature by allowing walk-in customers to purchase a session.
Moreover, the competition closes at 5pm. To counteract this, VR CORE will intend to close at 9pm on weekdays and 11pm on weekends. Furthermore, the price of the competition’s service is $39 for 30 minutes. That is double the price and half the time than VR CORE. This will be a big determining factor for the consumer’s choice on which company provides better service for their money.
Additionally, the competition offers an experience for up to 7 players. VR CORE will counter this by having a room for up to 30 individuals in a single area. Therefore, the competition is not too difficult to face as the market for this service is in very short supply and in high demand, meaning that any advantage can satisfy the customer needs and wants. SWOT AnalysisStrengthsUnique software only available to the businessLate night closing times can attract a variety of consumersLower prices than the competitionLarger space for more playersCanteen for everyone to purchase from WeaknessesLocation could be improved to be in CBD as it would attract more peopleBusiness should avoid lowering the price too much which could lead to lossCanteen could be replaced as a restaurant with a possible bar after a certain time for more consumer satisfactionOpportunitiesThe increasing innovation in virtual reality technology can provide extra additions to this businessThe growing usage of virtual reality devices can provide more interest in the business ThreatsHigh costs for running the businessHard to finance the costs as it is a small businessCompetitors are positioned in CBDCompetitors are also equipped with a small restaurant and bar. Financial PlanFinancial ObjectivesThe company aims to make large revenue within the first year.
The revenue does not have to result in profits, if the company is growing and being recognised among the market. Loans can be delayed for a short time, if the company is able to gain more customers over time. The revenue objective for the first year is $2 million. This is calculated from the hourly rates of all the services provided at VR CORE. With this amount, the business will be able to pay salaries as well as outsourcing fees.
The building cost will have to be covered over a period of years. Start-Up CostsVR Devices (75 units): Each unit costs $900. The entire set of units would cost $67,500Computers (75 units): Single unit costs $4000. Entire set will cost $300,000Building fee: $400,000Insurance (yearly, prepaid): $960Advertising (yearly, prepaid): $5200Internet Bills (yearly, prepaid): $1100Electricity Bills (yearly, prepaid): $675Outsourcing fees (per program): It cost about $200,000 to develop one game. The business will start off with 4 unique games and a variety of publicly released games. This will amount to $800,000.The total start-up cost will amount to $1,575,435.
These costs will be funded from bank commercial loan. The bank can commercially loan up to $2,000,000 at 9% p.a. which can be paid off in 5 years. This will need monthly repayments of $41,517. This is affordable for the business as it will be making sales which will just cover the loan repayments. Cash FlowSales ForecastVR CORE will expect to make $200,000 – $500,000 in the first few months of its establishment. This is due to the exposure of the business and the growing trend of virtual reality usage.
VR CORE is useful in fulfilling consumer needs in the area of virtual reality, making it the centre of attention of VR consumers. Also, the company is forecasted to make this amount due to the unique programs that are found only at this business. These programs such as games, will intrigue the consumer which will make them return to use it again. Also, as the business gains more attention it will gain more customer requests which will generate new ideas for the business to make more sales and attract a variety of people. These innovative factors mixed with the low prices ensure that the business will continue to make more sales.
The calculation of the sales forecast has to do with the services. The canteen sales are not included in the sales forecast as the main attraction will be the VR experience. As mentioned before, the Simple Room will charge $20 per hour, the Complex Room will charge $50 per hour and the VIP Room will charge $100 per hour. The Group Sessions Room is also not included due to the rarity of use. The low supply in the market matched with a high demand as well as the advantages over all competition will ensure the business is continuously making profit, and therefore will always be in use. Using that information, the business is forecasted to make $550,000 in a normal month.
These prices will fluctuate depending on the new trends such as more outdoor activity or events taking place around the time such as End of Financial Year Sale. After the first few months, the business should grow faster, making more revenue. Future ProspectsIf VR CORE can manage to pay off all loans within its first year of establishment, opportunities could open.
These opportunities include national/international expansion or diversifying into other products or services. Expansion would be easy for the business by the end of the second year as it would have paid off loans and would have enough money to start another firm in another location. This allows for national growth over the first 5 years.
International growth would present itself after 6 years of operation. This is when the business should be in maturity and would have high sales. At this point, the business can view opportunities in diverse products such as bigger developed games that can be sold on a public scale as well as extensive programs for the business itself. Furthermore, the business can collaborate with other businesses.
For example, VR CORE may collaborate with McDonald’s to create a virtual reality training experience for their employees. Moreover, VR CORE can take advertisements by other businesses to increase sales revenue. For example, VR CORE can collaborate with Coca-Cola to make a short experience in virtual reality to advertise their products to VR CORE customers. Therefore, there are many opportunities open to VR CORE as it expands due to the rising development and trends in virtual reality. Thus, this business can continue to be a successful and innovative idea that will reward high returns. AppendicesFigure 1: Figure 2:Figure 3:Figure 4: