Business Plan for BareBeer Partnership

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Section 1: Executive Summary

1.1 Business idea and goals

The main goal is to establish a small partnership company that specializes in alcohol-free beer. The services to be provided will include supplying our alcohol-free beer to other businesses such as café and we also have our own shop that selling alcohol-free beer as well.

The owners plan to begin this business with another two shareholders and gradually grow up the business. The business intends to generate sales revenue of about RM503,792 and to make RM352,655 profit by the end of its first year of trading.

1.2 Marketing

BareBeer Partnership will have two key target markets: small businesses such as café and those alcohol lovers. Since our product is alcohol-free and yet it contained the flavour of beer, it will surely attract many alcohol lovers that love to drink beer but not dare to drink a lot that kind of alcohol drinkers. Other from that, we also supply our product to another outlet, from here we can earn profit and increase our product popularity from the third party.

1.3 Operations

The business will be operating with three employees (Ong Pek Mun – Managing Director, Wong Yik Kai – Engineer, Lim Zhi Shan – Accountant) at start-up and be based from office at the shop. Most necessary equipment has already been obtained.

1.4 Finance

The business will be self-funding. All the shareholders will provide an initial capital injection of RM200,000 (Managing Director: Ong Pek Mun – RM100,000, Engineer: Wong Yik Kai – RM50,000, Accountant: Lim Zhi Shan – RM50,000) and it is envisaged that the company will generate enough funds from subsequent operations to allow it to operate on a ‘no borrowing’ policy unless there is a major change in focus.

Section 2: Background

2.1 Mission statement

BareBeer Partnership is a medium-sized organization exists to provide an alcohol-free beer business and encourage people to reduce the assumption of alcohol in Malaysia.

Many foreign country’s alcohol-free products were not approved by our Malaysian government because of the halal issue. Our company’s products intend to become the first alcohol-free beer in Malaysia. Drunk driving has been an issue in Malaysia and we intend to reduce that statistic. There are a lot of people in Malaysia who like to drink alcohol and number of accidents caused by being drunk.

In this way, BareBeer Partnership seeks to promote the interests of the following:

Customers. By introducing this product to the market, we can help our customer to satisfy their desires of having beer.
Community. Our business can improve our community’s safety by reducing the risk of car accidents, raping case, etc.
Owners of the company. We can achieve our company’s mission by increasing our company’s profit. Our company provides a fair return on effort and investment by the owners on a long-term basis.

2.2 Company history

This is a new business in Malaysia based on the existing beer companies like Guinness, Carlsberg, Heineken and Tiger. This idea was founded in April 2019. We have produced alcoholic beverages to the market before and based on the issues stated above, we decided to come out this idea of non-alcoholic beverages.

2.3 Business goals

The business’s goal for the short-term (next 12 months) is to promote this product to the society to make it more familiar to the public. At this period of time, we aim to earn a profit of at least RM12, 600 for future investment. The long-term goal (next 2 – 3 years) is establishing our business and exporting our product to foreign countries.

A future exit strategy has been agreed to by the three foundation shareholders/founders, should any of them wish to quit the business at the later stage. The founders have agreed to that if any of the shareholders wants to quit the business, must have at least a year later from the day of the product launched. Any shareholders from the company have the rights to decline the outsiders from reselling our product to an outside party.

Section 3: Marketing

3.1 Market Analysis

Rivalry among the existing firm

There are numbers of firms in the market which have tried to introduce zero-alcohol beer to the market, these firms include: Asahi, Bavaria and Heineken. These 3 big companies are founded in foreign countries and beer was introduced in Malaysia in 1968. In December 2011, Asahi has experienced strong double-digit growth in Malaysia since its launch and it is stated that they are the fastest growing premium beer. It is popularly known for its “Super Dry” beer. On the other hand, a Malaysian businessman tried to produce “Bavaria 0.0%” malt beverage and JAKIM refused the businessman’s request because the malt beverage was produced in the same facilities as Bavaria beer, and claimed the production process was similar to that of alcoholic beverages. Heineken Malaysia has also introduced an alcohol-free beverage which is known as “Tiger Zero” in Malaysia. Based on the article written in 2017, the Heineken Malaysia Director said the company is exploring opportunities with regards to low alcoholic or non-alcoholic beverages due to the revised excise tax.

Since Malaysia has a few producers of alcohol-free beer, we can conclude that the rivalry among firm is quite low.

Bargaining power of supplier

To brew our alcohol-free beer, the main ingredients include water, grain and hops. Other common ingredients are sugar, carbon dioxide, natural flavorings, ascorbic acid and coloring. These ingredients can be obtained easily as they are common products. Based on statistics of the Malaysia Consumer Price Index in February 2019, it is shown that the CPI was 120.8 compared to January which was 120.5. This means that the suppliers can increase their price moderately over the month. For the main ingredients, we found that our grains can be bought from one of the largest Malaysia’s grain companies which is “Cargill”. They have 150 years of business experience and served customers in 70 countries. Hops play an important role in giving our beer its bitterness. We use hop extract and we have to get the ingredient from the foreign countries as it majorly grows in western countries like South of England and the United State. One of suppliers of hop extract is “Barth-Hass Group”. Other common ingredients like natural flavorings and sugar can be obtained locally so we can bargain the price.

Barriers to entry

Beer production has always been improving in industries over the decades. The beer brewing processes became more efficient and able to take advantage of larger batch sizes. It will require more labor per barrel produced if it is equipped with a 5-barrel brewing system than a 30-barrel brewing system. Furthermore, if we purchase raw materials for multiple large breweries across the country or even the world, we will have better-negotiating power against our supplier and get favorable pricing terms. The only significant difference of our product among our rivals is that our product is alcohol-free. It costs not much difference when customers switch from our product to the others.

Bargaining power of buyers

Based on the research on the average amount of alcoholic drinks Malaysians consumed in a week in 2018, it is shown that 11.39 percent of Malaysians had 1 – 3 drinks. The pubs and bars opened in Malaysia usually having promotions on beer to attract night customers. They have various kind of promotions like 3 pints of beer for a price, beer tower or lady’s night. So, it is easy for the buyers to drive the prices down as they usually buy in large amount at once. In Malaysia especially states like Kuala Lumpur and Malacca, there are a number of clubs and pubs to attract foreign and local customers. For foreigners, they usually order a tower so that they can share with friends.

If the customers want to switch from our product to another product, it won’t cost them much difference because our price is almost the same as the alcohol beverage. The only matter that concerns is the customer’s choice.

Threat of substitutes

Among all the alcohol beverage producing companies like Heineken, Asahi and Guinness, there are a wide range of choice for the customers to choose from. As seen in Jaya Grocery, there appears to sell alcohol-free beer form the “Asahi” company. Therefore, the threat of substitutes is high. Since we are a new company, it is quite hard for us to let public recognize our brand without advertising. Some customers are having alcoholism and they persist to get alcoholic drinks. So, they might skip our brand and choose the significant brands since we are the few of the non-alcoholic brands.

The threat of new entrants

As Malaysia refused alcohol-free beverages from foreign countries due to the Halal problem, the existence of non-alcoholic beverages in Malaysia is low. This is the reason we create our company locally and try to promote healthy drinking although it may take little money and effort to enter the market and compete among the rivals effectively.

Section 5: Operation

5.1 Legal and Licensing requirements

(a) Business name and legal structure

BareBeer Partnership is a business with multiple owners which whom has invested in the business.

The company structure has already been registered and established with three shareholders:

Wong Yik Kai (30% shareholding)
Ong Pek Mun (40% shareholding)
Lim Zhi Shan (30% shareholding)

(b) Operating laws and licences

After checking with DBKL or MMP of Malaysia it appeared that we will need to apply for liquor licence or business license that show that our employee s vaccinated with Thyroid injection and rental agreements. Other from that we also need to apply for a Signboard license since we have a signboard on our shop. Since we will play music in our shop, we also need to concern about the music license.

5.2 Management Details

The managing director of the company will be:

Ong Pek Mun

Home Address : 135, Central Blvd, Malaysia NSW 2000
Ph: (06) 1234 7059 Fax: (06)9997 5322
Date of Birth: 18 May 1980
Qualification: Bachelor of Business
Experience : Owner of the café, 2002 – 2009
Manager of Heineken, 2009 – 2018

The Engineer of the company will be:

Wong Yik Kai

Home Address : 125, Central Blvd, Malaysia NSW 2000
Ph: (06) 1234 8766 Fax: (06)9997 2365
Date of Birth: 10 February 1980
Qualification: Bachelor of Mechanic Engineer
Experience: Owner of café, 2002 – 2009
Mechanic Engineer of Heineken, 2006 – 2016

The Engineer of the company will be:

Lim Zhi Shan

Home Address: 137, Central Blvd, Malaysia NSW 2000
Ph: (06) 5688 8766 Fax: (06)7563 2365
Date of Birth: 27 September 1980
Qualification: Bachelor of Finance and Accounting
Experience : Owner of the café, 2002 – 2009
Auditor of Heineken, 2007 – 2015

5.3 Organisational structure and Staffing

• Managing Director – business consultancy

Duties: Provide business plan; undertake marketing of the business; provide administrative services and strategic development of the firm.
Salary: Profit will be provided every early of the month depends on our shareholding.
This role will be filled by Ong Pek Mun.

• Consultant – training on activities

Duties: Train staff to operate all the machine on production of beer.
Salary: Profit will be provided every early of the month depending on our shareholding.
This role will be filled by Lim Zhi Shan.

• Technician – repair all the machines

Duties: Responsible for technical issues of the machines.
Salary: Profit will be provided every early of the month depends on our shareholding.
This role will be filled by Wong Yik Kai.

• Shop Assistant – take care the shop

Duties: Responsible to open and close the shop, serve customers.
Salary: Profit will be provided every early of the month depending on our shareholding.
This role will be filled by Wong Yik Kai.

Our shop operated from afternoon 6 pm until midnight 2 am.

• Shop staff

Qualification required: at least SPM level graduated, fluent in English and Mandarin, prefer those who like to drink beer. A training will be provided to all the new staff. A minimum of 20 hours of professional development must be undertaken by each employee each year.

5.4 Professional Advisers

Brewer

HELMS BREWING COMPANY LLC

1525, Jalan Newton, 47830

Petaling Jaya, Selangor.

Ph: (06) 8569 8754 Fax: (06)4536 2365

E-mail: brewer@gmail.com

Insurances broker

To be determined

Bank Account

Public Bank Malaysia

1 & 3, Jalan Solaris 1, Solaris Mont Kiara, 50480 Kuala Lumpur,

Wilayah Persekutuan Kuala Lumpur

Ph: (06) 5698 8754 Fax: (06)2354 2365

E-mail: publicbank@gmail.com

5.5 Insurances and Security issues

The following insurance will be required for the business:

Boiler/machinery liability
Liquor liability
Intellectual property risk
Theft

It is estimated that the combined cost for these insurances will be approximately RM2500 a year. Necessary security precautions for the business property and equipment include the machine of beer production.

5.6 Business Premises

• Location

25008, Jalan 6/37a, Taman Bukit Maluri, 52100 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur. This location is an industrial area and based on our research this area is a crowded area. Nearby this location have a very popular Western Restaurant and this restaurant will close shop earlier than us, so if the remains customer tends to continue to stay, they can visit our shop.

• Council and government rules

A liquor license will have to be obtained from DBKL government Malaysia.

• Ability to access target market

Since most of the beer contains alcohol in the current market, this kind of beer will affect our health if drink frequently. So, our alcohol-free beer is suitable for those who like to drink beer.

5.7 Equipment Required

The equipment required for the business will be:

Telephone
Cash drawer
Receipt printer
High-speed internet access
Table
Chair
Cabinet
Beer Fermentador
Beer glass

5.8 Production Processes

An operational manual, updated every six months, will explain procedures and processes to managing director. It will also allow the company to apply for quality assurances certification at a later stage, if it wishes to do so.

5.9 Critical Risks

The critical risks facing this business and contingencies to deal with them are:

Liability – to be covered by professional indemnity insurance
Injury to all workers – to be covered by workers compensation

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