Printer Friendly

Putting it in writing.

Two Diverse Entrepreneurs Share the Secrets Of Crafting A Solid Business Plan

It's this simple: The successful businessman is the man with a plan.

A budding entrepreneur can scrap any chance of success if he or she isn't willing to pour sweat and blood into a thorough business plan.

For the last two weeks, Arkansas Business has provided a basic guideline for starting a business and talked with entrepreneurs who have survived their first grueling year.

This week, the focus is on planning a business from the front end.

Arkansas Business went looking for two excellent business planners just beginning to crank up operations and found Robin Ring and Richard Plezia -- two diverse and energetic entrepreneurs who might be in the right place at the right time.

Plezia is the founder of Dave's DeLite, a corporation that produces fat-free, cholesterol-free yogurt and dessert mixes for restaurants and other markets.

Several years ago, Plezia's brother-in-law developed a dry, non-fat powdered mix for frozen dessert machines but did not make an effort to market it.

With his extensive background in finance and accounting, Plezia thought he might carve a niche in the restaurant soft-serve ice cream market by offering a product low in fat and cholesterol and better tasting than the mixes commonly found.

"Do you have any idea how big the yogurt market is?" Plezia asks a dumfounded interviewer. "Neither does anybody else."

When Plezia asked that question of himself, he made an amazing discovery: Soft-serve products, which held only 25 percent of the total ice cream market only a few years ago, have since ballooned to a 45-percent market share.

Baptist Medical System alone buys 18,000 gallons of yogurt mix a year, Plezia said. Soft-serve is a $4.8 billion business in the U.S., and the fastest growing products are the health-oriented, low-calorie, no-cholesterol desserts that Plezia is peddling.

Quality In A Junk Market

Many in the ice cream industry write off the restaurants, calling it a junk market because the dessert is given away free.

"We're trying to go into the junk market with quality products," Plezia says.

With the basic product in hand, Plezia decided to run a simple taste test last March.

He had the dessert mix loaded into the ice cream machine at the Systematics Inc. employee cafeteria, and stood back to gauge the reaction.

It was horrible. People just didn't like the taste.

So he fiddled with the formula that night and tried it again the next day to greatly improved reviews. When the positive reaction was repeated at the "Taste of Arkansas" trade show, Dave's DeLite was on its way.

In his business plan, Plezia notes that Bonanza Restaurants' 625 stores use about 2.9 million gallons of soft-serve per year, amounting to $4.9 million in annual purchases. That's why he is going after Bonanza with a polite vengeance.

Other likely targets include Ponderosa, Western Sizzlin Steak Houses, Choice Smorgasbord, Sizzler, Ryan's Family Steak Houses, Duff's and Shoney's.

As Plezia points out, even a small penetration of the restaurant market would be substantial. But why stop there? He is aggressively targeting other markets, including hospitals, grocery stores, health clubs and weight loss groups, making small alterations to the product and the packaging to fit the customer.

All of this is included in his written business plan.

Plezia's sweet-tooth repertoire includes no-fat yogurt and dessert mix, low-fat dairy product, home yogurt mix to be made in an ice cream churn and blender mix to be sold to convenience stores, health clubs and weight-loss groups.

The key for Plezia is minimizing overhead while his product is in the early stages and sales are slow. He rents only 900 SF of inexpensive office and warehouse space on Barrow Road for Dave's DeLite. Plezia is the only employee, and he hires ConAgra to blend and package his product.

But that will change if the money starts rolling. In a cluttered room in the back, Plezia is designing a valve-operated bagging system prototype that could save the company money. And if you'd read his business plan, you'd see that he knows precisely how much it will save.

Conservative Approach

Plezia has been so restrained in his spending, he doesn't even own an ice cream freezer to test his products.

He has invested about $8,000 in starting the business and has another $3,000 socked away in case it is needed before the company becomes known.

He invested about $1,500 to purchase a mailing list of potential customers. But he has found it to be unproductive and must resist the urge to make follow-up sales calls on all his letters, because the resulting telephone bill would be astronomical.

An annual sales volume of $200,000 is needed to support the business, Plezia says. He expects the first six months will generate very little revenue, but thinks the next six months will allow him to break even, though he plans to reinvest early profits to create a national sales force. In striking contrast, Robin Ring is trying to make a go of it in the high-overhead, trendy world of retail clothing sales.

The winner of this year's KARN New Business Grant for her exhaustive, 30-page business plan, Ring began plans in October for her new store called R. Ring's. Located in the Bowman Curve Retail Center, the store offers clothing for independent, modern women who don't want to see their outfits on other ladies.

She plans to work at least 72 hours a week as manager, and has no hope of seeing a profit until the fourth quarter of her third year in business.

That kind of projection would send many would-be entrepreneurs scurrying.

"You have to love it," Ring said. "I'm not going into it with the idea that I'm going to get rich on this. I think it will be fun and interesting and challenging."

Ring, 27, a former television news personality in Mississippi and organizer of a few local Republican campaigns, knew her business plan must be spectacular to get the project off the ground.

"I'm young, and my credit is not that great yet," she says.

Ring knew she wanted to sell "classic clothes with a twist," and that she wished to locate in the trendy Retail Center ("In retail, apparently 90 percent of business depends on your location," she says). But the details were a mystery.

Let The Professionals Help

Like many successful entrepreneurs, Ring's research odyssey began at the Arkansas Small Business Development Center, where she learned what it would take to obtain an SBA guarantee.

Ring learned the ropes by attending several seminars on new businesses, and she gleaned important business data from the ASBCS library to use in her financial projections.

She next consulted the University of Arkansas at Little Rock's Data Research Center, which provided very specific information on specialty boutiques in Little Rock.

She went looking for a bank loan to be guaranteed by the Small Business Administration, but was turned down by every major bank in town due to insufficient collateral. Finally, the Bank of Little Rock accepted her loan application, promising to watch her business "like a hawk."

Moving closer, she received estimates on traffic flow near Bowman Curve from the state Highway and Transportation Department but needed more specific data.

"I sat out in the parking lot for two days straight, six hours one day and four hours the next," she said, counting the cars that drove through the shopping center.

This, of course, is obsessive behavior, but it is the kind of intensity that could propel Ring to success.

Her careful research predicted that 75 percent of her customers would come from the wealthy west Little Rock area, and the sight of all those cars driving through the parking lot was more than she could stand. Soon after, Ring was lucky enough to secure a small, affordable shop space at Bowman Curve.

Ring's initial expectations were so realistic, they seem abysmally pessimistic. She plans to have only 15-20 customers in the store each day, making an average of 12 purchases per week. The average purchase, she figured, would be about $120, usually involving a dress or coat.

She plans to allocate 8 percent of her total projected annual sales to advertising during the first year. Using a sliding scale, she will gradually increase advertising as a percentage of sales each month.

Research Pays Off

Ring only expects $6,240 in sales for the first month, but she has projected that sales will jump to $14,040 by the sixth month.

She has micro-managed every detail and projected cash flow and profit-loss figures for the next four years. An employee calls her a "computer nerd" for spending so much time crunching numbers at the keyboard.

"I think a lot of people will come in here and say, 'If Robin can do it, I can too.' I don't think they realized how much it takes," she says.

As for future plans, Ring has her eye on a larger storefront next door. And, if business goes according to plan, perhaps in five years she will add a store in northwest Arkansas.

If Ring and Plezia succeed, it will be largely due to their patience and research, enabling them to work through future problems before they ever occur.
COPYRIGHT 1992 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:guidelines for starting a business; part 3
Author:Haman, John
Publication:Arkansas Business
Date:Aug 24, 1992
Previous Article:Million-dollar effort.
Next Article:A clear picture: Fayetteville TV station adds new transmitter, generator to improve broadcast ability.

Related Articles
Playing to catch up: planning for your retirement when you've failed to plan early.
Starting point or finish line?
Planning your plain language project: don't forget the editor.
New recipe for the cocktail?
Time to start work on professional portfolios: as competence-based practising certificates become a reality, registered nurses need to develop their...
Seniorwriting: A Brief Guide for Seniors Who Want to Write.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters