Established in 2020, Aromium Pty Ltd is an Australian Small Enterprise that is dedicated on providing consumers an innovative technological diffuser that will create a pleasant and comfortable environment through the sense of smell. Aromium’s Ultrasonic Candle Diffuser, the first official innovative candle diffuser within the technological industry, focuses on aromatherapeutic purposes, as well as the significant health risks associated with burning candles for long periods of time. Through this business plan, which outlines various fundamental business decisions and strategies, such as Aromium’s marketing plan, financial plan as well as human resources, this business plan provides Aromium with the primary vision and concept of the business, which can then be utilised when considering and evaluating potential weaknesses within the business, as well as implement various goals and strategies to achieve long-term success.
Name of business
Aromium is centred around creating a distinctive and pleasant environment through the sense of smell. As a business, Aromium is dedicated to producing the highest quality automatic diffusers in pursuit of enhancing both physical and emotional health. The business aims to provide consumers with a comforting experience and retreat from the hassles of everyday life. Moreover, the name ‘Aromium’ is minimalistic and appealing, promoting the business to have distinguished brand recognition.
Aromium’s business logo (refer to Appendix I) is minimalistic and clear, which symbolizes a healthy and enhanced lifestyle. This is to appeal to customers as a marketing ploy where the business promotes a minimalistic lifestyle that will improve customers quality of life, in which the business advertises.
Prime function of business
Aromium provides an ultrasonic candle diffuser that can improve people’s quality of life and indoor environments. This product uses electricity to burn candles and release safe amounts of aroma at once, ensuring that indoor environments do not become toxic and allow people to burn candles without the fear of using a real fire. Trading hours will be from 8:00am to 5:00pm from Monday to Saturday and consumers can also shop on Aromium’s website after closing hours.
Aromium’s mission is to make an ultrasonic candle diffuser that enhances consumers physical and emotional health by assuring customers a healthy lifestyle and a pleasant environment with aromatherapeutic fragrance, while ensuring that indoor environments do not become toxic.
- To establish policies to treat employees fairly and motivate staff to achieve employee satisfaction.
- To maximise profits to ensure that the business can invest more into the business, such as renovating the store, expanding to new locations as well as hire more staff.
- To adopt sustainable strategies to support environmental concerns, such as reducing plastic in packaging as well as making the diffuser’s eco-friendlier (e.g. minimise energy consumption).
- To achieve business growth internally and externally by increasing sales and establishing competitive advantage over competitors.
Aromium will be located on the first floor of the Queen Victoria Building (refer to Appendix II), a busy business and shopping district where products can appeal to a wider target market. The Queen Victoria Building is easily accessible as it is located in the central business district, surrounded by; hotels, cafes, bookstores and near Town Hall train station where there is generally a large crowd of consumers. As the building is famed for its architecture and the dark historic interior design, locating Aromium’s shop in this building will create an ambiance atmosphere that will suggest high class and elegance upon the retail’s store image.
This business will be a proprietary (private) company with limited liability to ensure that additional funds can be invested in all the key business functions; operations, marketing, human resources, finance, as well as in the production process. With limited liability, the business restricts each shareholder’s financial liability to the amount they have invested, ensuring the business will have separate legal identities from the shareholders, which will protect their personal assets and funds.
Production process: Diffuser
- a. Inputs: Aromium offers an innovative ceramic diffuser that is plastic free. To manufacture this product, Aromium to purchase raw materials needed for the production process, such as: ceramic, electricity and water.
- b. Transformation process: The ultrasonic diffuser will be outsourced directly from a wholesaler overseas such as in China. The product will be outsourced to Shenzhen Zhuo Sheng Jia Tai Tech Co. Ltd., which is an aroma and ultrasonic diffuser manufacturer, with several experiences working with clients in ensuring top quality ceramic products. In the transformation process, Aromium’s diffusers will undergo thorough design, manufacturing and quality control to ensure that the tangible product will be high quality and complies with the business’ mission.
- c. Outputs: The finish output of this production process will be a ceramic ultrasonic candle diffuser. By using safe-certified ceramic, an environmentally friendly alternative material which is more durable than other materials such as: plastic, wood and bamboo, Aromium ensures that chemicals will not affect the fragrances and effectiveness of the diffuser.
Quality management – Quality Assurance
By adopting a system that ensures that the diffusers will achieve set standards in ensuring customers a safe and reliable product, Aromium will be utilising the ISO 9000, which provides guidelines and requirements for the manufacturing process to aim to achieve. This will prevent defects in the product, such as failure in electrical wires which could potentially lead to hazards and complaints by consumers. By utilising this effective system, Aromium can assure and deliver customers high quality diffusers which are safe and comply with the business’s prime function.
Human Resource Requirements
Number of Employees
At the start of the first financial year in 2020, Aromium has decided to employ 2 part-time employees to help maintain sales and provide services in Aromium’s official store in Queen Victoria Building. As Aromium is a small business, Aromium will be employing only 1 employee to supervise the store for 4 hours each. Employee training and development will focus mainly on communication skills, teamwork and critical thinking to ensure that sales associates are able to multitask under pressure and answer questions about the product to deepen consumers understanding about the purpose and prime function behind the business and product.
Number of Managers
Due to the fact that Aromium is a newly established small business, the business management role will be undertaken by the founder of the business. Managers employed into the business will be strictly interviewed, based on the requirements listed below to determine whether they possess the skills and knowledge required to efficiently operate a business. They will be expected to help assist sales associates at the official store, as well as communicate with employees about the business mission and goals to ensure that staff will gather a deeper understanding of the primary vision of the business. Overtime, as the business expands its management board, training will be provided to ensure that Aromium’s managers are able to work under pressure and make appropriate business decisions. Examples of training and development for managers would focus on strategic planning, time management, negotiation skills when dealing with suppliers, as well as creativity to ensure that Aromium is always thinking about the business’ future.
Requirement for Employees Requirement for Managers
- Good interpersonal and communication skills.
- Sales associate must be fluent in English and may be fluent in other languages as well.
- Able to use cashier and demonstrate adequate understanding of technology.
- Able to multitask and work under pressure in a fast-paced work environment.
- Must be quick-thinking to answer inquires that consumers may have.
- Must have previous sales associate experience.
- Able to follow instructions and be adaptable to challenges faced in working environment • Must have adequate interpersonal and communication skills to motivate employees and interest consumers
- Must have satisfactory time-management skills and be organised
- Must present good leadership skills
- Must be able to work under pressure and deliver on time to show that they may be trusted to operate the business efficiently
- Must be able to take initiative and establish goals (such as key performance goals and meeting deadlines)
- A bachelor or TAFE diploma in management is required
Identification of target market
Aromium conducted a survey to identify the primary target market to specifically focus the
product on. Aromium was able to establish a greater understanding of its target market by conducting a survey which listed reasons that may drive customers to purchase candles (refer to appendix VI). This information allowed Aromium to determine if the product will be popular and in high demand to the target market. The data research indicated that candles are most popular among young people aged between 16-19 with 46.9 per cent (refer to appendix III). By informing consumers of the potential risks of burning candles and how Aromium offers a product that significantly decreases these risks, Aromium found that 65.6 per cent (refer to appendix X) of customers would purchase this product. Therefore, by analysing the competed survey, Aromium has decided to primarily target this product towards young people aged between 16-22 through a niche marketing approach. Through a narrowly selected target market, Aromium will be able to direct its product to a specific target market of consumers who are mainly interested in candles with aromatherapeutic benefits and fragrances within the candle industry.
This business will face competitor brands such as Glasshouse fragrance, Dusk and Diptyque
as premium candle brands in Australia. As the candle industry is predominately monopolistic competition, where candles are differentiated through packaging, benefits and quality, Aromium’s innovative diffuser changes the candle industry to focus more on the sense of smell rather than proving an ambiance light source. Although products produced from Aromium and these companies are different, the business acknowledges that consumers may be reluctant to change to a diffuser if they are not particularly interested in the scents and fragrances of candles. To gain competitive advantage and customer attraction, Aromium’s innovative product will provide a safer alternative to burning candles, which will reduce potential health risks associated with burning candles for a long period of time.
a. Personal selling: This business will have sale representatives to promote the product. This is intended to encourage consumers to ask any queries about the product to deepen their understanding of the purposes and safety of the diffuser. To conclude any frequently asked questions about the product, Aromium will also offer business cards (appendix XVII) and brochures (appendix XVI), given to nearby consumers along Queen Victoria Building, which outlines the business goals, as well as introduces the product more thoroughly to allow consumers to read over before purchasing.
b. Advertising: Advertising the business through popular social media platforms will entice more customers, leading to an increase in sales. Through short informative video advertisements on social media platforms, such as YouTube and Instagram, Aromium can present a visually appealing video with informative information to engage viewers. Aromium will also establish an online website (refer to appendix XIX) that aims to raise product awareness and expand trading hours. As the business has insufficient funds to expand domestically, delivers will only be accepted from New South Wales in the first financial year. Moreover, the business can also determine if there is will be high demand for the product in other parts of the Australia.
- Candle diffuser is an innovative product in the technological and candle industry.
- Provides health benefits such as reducing risks of toxic close and small environments.
- Product is a safer alternative to burning scented candles.
- Aromium has adopted sustainable and eco-friendly packaging. • Currently, the business lacks customer loyalty and product awareness
- The business has inadequate experience in the marketing and candle industry
- Outsourcing product from overseas can be more expensive and prone to issues when there are miscommunications between supplier and business.
- The business encourages consumers to consider potential health risks associated with burning candles for too long
- Expand to open new stores across Sydney and to other states within Australia • Currently, there are multiple established and high-end competitor businesses such as Dusk and Diptyque
- As the product is innovative, consumers may be reluctant to purchase the product if they are not interested in scented candles or unaware of the health risks associated with burning candles
- Due to covid-19Australia’s economy is in a recession. This will negatively impact the business as sales will decline due to lack of consumer spending.
As this product is innovative, Aromium will be adopting a cost-based method in determining
the price of the product. This is to ensure that the cost of the production process do not exceed the sales revenue of the business, as well as to reduce the business debts for the first financial year. As Aromium is a brand-new business in the candle industry, selecting the appropriate price range for this business will influence customer’s perception on whether or not the product is luxurious or cheap. As a result, the diffuser will be priced at $69.95. The survey conducted by Aromium showed that 31.3 per cent of consumers are willing to purchase this product at a price ranging from $64-70 (refer to appendix XI). Therefore, by selecting a price range between $64-70 that has been highly voted by responders, Aromium can provide customers a luxurious and affordable product which will increase potential sales and customer loyalty in the future.
List of Establishment costs
To finance the establishment costs of $32,459.95 (refer to appendix XVIII), Aromium must borrow $33,000, which will be sourced from equity and debt finance options. Most of the funds will collected from equity funds of 20,000, which will be invested into the business to pay the establishment costs that are required to start the business. To pay for the remaining 13,000, Aromium will be applying for an overdraft loan from National Australian Bank (NAB) and will intend to pay back the loan by the end of one financial year. Moreover, the remaining $540 will be invested further into the business, such as paying for small advertisements to increase business exposure (e.g. creating more posters and brochures).
Aromium sales forecast (refer to appendix XX) indicates monthly sales that the business can expect throughout the first financial year of opening the business. The data shows that that the peak season for Aromium’s products will be at the beginning of summer in December, as well as the beginning of winter in April. This could be due to the fact that, as it becomes colder or hotter, people are more likely to stay indoors and enjoy the aromatherapeutic fragrances. The estimated sales forecast indicates that the diffuser sold each month will increase towards the end of the financial year, allowing Aromium to have a thorough understanding of how many diffusers must be manufactured and whether the product is in high demand. According to the estimated sales forecast for 2020, Aromium will expect to sell exactly 3167 candle diffusers for the first financial year.
Cash flow statement
The cash flow statement (refer to appendix XXI) for Aromium Pty Ltd for 2020-2021 indicates the amount of inflows and outflows that the business can expect and how these factors will affect the net flow of the business. From the beginning of the financial year in July, Aromium’s total inflow will consist of the owner’s total capital as well as the sales that Aromium will expect to sell, generating a total inflow of $38,805.9. However, Aromium will expect to pay $59,955.3 in total expenses, causing the net flow of the business to be negative. As the financial year progresses, Aromium can expect a negative net flow for the first eight months of the year. From April, where Aromium can expect an increase in monthly sales, the business can use the idle cash to invest further into the business, such as increasing stocks as well as pay for commercials to increase business exposure and product awareness.
A break-even analysis graph (refer to appendix XXII) allows the business to determine how many units must be sold in order for the business to generate profits. By calculating the total costs that the business must pay, as well as the total revenue that the business obtains in one financial year, Aromium must sell 297 diffusers ($20,775.15) in order to break even. According to this analysis graph and Aromium’s expected sales forecast, the business will expect to break-even within the third month of the financial year.
The income statement for Aromium Pty Ltd (refer to appendix XXIII) is to determine the expenses, gross income, and net profit of the business at the end of one financial year. For period ending 30 June 2021, Aromium will expect to earn a gross profit of $41,888, indicating that the business is making high profitability as generated sales revenue is exceeding the cost of manufacturing products throughout the year. After paying fixed and variable expenses, such as operating expenses, shipping and advertisements for June 2021, Aromium will expect to make a net profit of $17,379.70, indicating that the business is financially growing and has high growth potential to achieve business success.
At the end of the financial year, Aromium will assess the financial statements and consider whether the business is capable of entering the growth stage. For the first few months in the second financial year, Aromium will focus on offering promotions and discounts which will create business exposure and establish stronger brand loyalty. In addition to this, the business will also aim to hire 2-3 more employees to help assist with sales and customers. In the future, once evaluating the strengths and weaknesses within the business plans presented above, as well as whether the business is financially capable of expanding, Aromium aims to open 2 new store locations across Sydney as well as begin shipping nationally across Australia through the Aromium official online website.