Business Plan Evaluation

3487 Words Nov 1st, 2008 14 Pages
Business Plan Evaluation: Zara Restaurant & Lounge (Revision)
After completing my first evaluation of Zara’s business plan I could not help but feel that I had missed something in my analysis. It was over the next week that I realized that I had failed to thoroughly evaluate the plan. At a glance, I thought the Zara concept was intriguing and as a bonus, aligned with my own dream to open a restaurant. I wanted to believe in the plan so much that I missed its weaknesses. Having time to review discussions from class and more resources and opinions of what effective business plans should contain, I now see there are glaring deficiencies in this plan.
Zara’s business plan was written to secure sufficient finances to open a multi-use
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Revenues are projected to increase by 6% in year two, 5% in year three, and 4% in years four and five. (sec. 8.2) Barriers to this projected growth may include but are not limited to: cost mismanagement, failures in marketing strategy, and failure to meet sales projections. Collection of cash following sales is immediate. Credit receipts are typically collected in a weekly batch.
Key expenses/Cost Drivers – There are fixed, semi-variable, and variable costs in the Zara business model. Fixed costs are the first major expenses in the business plan including: design and building lease. The major semi-variable cost driver affecting the plan is labor costs. The major variable costs are food and alcohol expenses. Non-recurring costs for equipment purchase and construction are also major expenses in the first year of opening. These cost drivers are unlikely to change with the current model. The cost structure of Zara is based on the dominant cost driver of the business model – food and drink. Therefore an inventory structure combined with a payroll-centered structure best describes Zara. The primary cost center at Zara’s will be its marketing and promotions department. This is an extremely important aspect of Zara’s overall strategy. The owners intend to draw-in patrons from outside their local neighborhood, without a penetrating and successful marketing strategy Zara’s customer
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