Business Plan Critique: BlueAvocado
The overview of BlueAvocado business plan discusses all major points of the business plan. However, entrepreneur may take more than 15 seconds to explain all the points covered in executive summary. The executive summary discusses establishment of the company and organizational vision. The executive summary is capable to grab the interest of the investor because it talks about the innovative products developed and offered by the BlueAvocado along with the values offered by the company to its consumers. The overview talks about benefits offered by the BlueAvocado products and specifications of the products.
An investor shows his interest in the business only when he finds that products offered by the company are: sustainable, offer value to the consumers, different from competitors, and have bright chances of success and expansion. Executive summary of BlueAvocado business plan provides investors an idea of innovative strategies such as iPhone application adopted by the company to increase awareness and usage of its products. The executive summary also talks about the business expansion plan and association with experienced and well known business partners such as distributors and retailers.
Executive summary informs investors about the success story of the company, and how company will ensure success in future as well by hiring qualified staff, launching effective marketing programs, and expanding technology ecosystem. Quantitative information not only convinces audience about good business prospects but also shows that entrepreneur has good knowledge. The executive summary could have been more impressive if it also informs about the product differentiation and sales & revenue forecast. These two points are very important for any business and investor. Product differentiation informs about how products offered by Avocado are different from its competitors, thus capable to attract customers.
BlueAvocado has large enough market for its innovative business. The concept of sustainable products is in introduction phase of product life cycle. Therefore, there are higher chances that company will enjoy tremendous success in this field through three stages of product life cycle i.e. introduction, growth and maturity. The market of green products is continuously growing and consumers in developed as well as in developing markets are changing their attitude towards un-eco-friendly products and adopting sustainable products and lifestyle. Awareness among people about environment friendly products is growing and people now understand their responsibility toward environment. The trend of environment friendly products and policies can be seen by observing CSR activities of large companies. Companies such as Wal-Mart, IKEA, Target, Nike, Levis and many more have adopted strategies to reduce their carbon foot prints.
BlueAvocado is building his team and business requires new dynamic entrepreneurs who can develop effective sales and marketing strategy for the organization. The company is operating in home segment and facing competition from other local brands. The major challenges company is facing from poly bags that are easily available everywhere at very low cost. However, all major competitors of BlueAvocado are mainly operating into grocery segment and not gone into other segments like BedBath & Beyond, and Bloomingdale’s. BlueAvocado offers wide range of products at different prices to fulfil requirements of all class of customers starting from middle class to elite customers. Company also offers designers products to encourage luxury consumers.
The marketing plan of BlueAvocado describes that resources available on the earth are limited and people across the globe understand this fact. Day by day awareness among people about clean and green earth is increasing, which results into higher usage of green products. In such environment, there is need to provide solutions that can reduce carbon foot prints of consumers. The business idea of BlueAvocado is certainly a need of the time as plastic bags are waste are filling our land, reducing the level of drinking water and damaging marine life or eco-system. The survey mentioned in business plan shows that 40 percent customers can buy green products if they are available at affordable process.
Start-up Costs and Background of Entrepreneurs
The business plan of BlueAvocado does not provide information about the cost invested in establishing the business. However, the plan does mention that the cost invested in the business will recovered in 2-3 years time and company will become profitable. The company must have invested significant amount in establishing business unit, and on marketing and promotional activities. A dedicated and visionary team looks after the brand, Blue avocado. Amy George, Paige Davis, Felix Chavez and Melissa Nathan are pillars of Blue Avocado’s management team. All of them have huge and relevant experiences that help them in managing affairs of Blue Avocado.
There are five directors in the board of Blue Avocado that guide the team and make policies for the company. Amy George, Jack Long, Paige Davis, Melissa Nathan and Lee Valkenaar have guided the Blue Avocado in different ups and downs. The directors are highly qualified experts and have spent enormous amount of time in their respective areas. There is also an advisory board that keeps watching affairs of Blue Avocado and suggests appropriate strategies in different areas including sales, manufacturing, product development, strategy, legal and advertisement. The staffing plan is reasonable and capable of taking care of all affairs of the Blue Avocado. The company does not believe in employing a huge workforce, but provides ample opportunities to its existing employees. The journey and growth of Blue Avocado suggests that company has adopted a right approach in its staffing plan.
Marketing strategy of any organization informs about the actions that the organization will take in order to increase the sales of its products and to achieve desired goals. Marketing strategy generally consists of details related with product, price, place, promotion, and how organization will position its products in the market. Marketing strategy also informs about strengths and weaknesses of the organization, and how organization will improve its weaknesses while making strengths as competitive advantage. Marketing strategy should also describe the opportunities and threats available in the market, and actions to grab those opportunities.
BlueAvocado offers wide range of green products to fulfil requirements of target market. The company very clearly describes how its offerings are different from other. BlueAvocado’s products are innovative, environment friendly, and inspirational. Unique product design with greater functionality certainly encourages customers to make a purchase. The company has adopted cost based pricing strategy with sufficient margins for retailers and for the company. Therefore, it can be said that the company is not “product differentiation” strategy. The approach adopted by the company to distribute and sale its products through large and small retail outlets, e-commerce websites, discount retailers, and directly to the consumers.
In current business environment, green products are not necessity. Government regulations also do not ban hazardous products. Therefore, only those customers will purchase BlueAvocado products who understand the enormity of the issue. The advertisement and promotional strategy of the company should emphasizes on making customers aware about the benefits of using BlueAvocado’s products, and their little contribution can help in saving the planet and natural resources. The company so far has not invested much in traditional advertisement mediums such as advertisement on mass media and television, which is good. It is not possible to educate customers about such serious issue in few clips or small video.
The company should first focus on making customer aware, then need generation and sales. Healthy relationship with customers will spread positive word-of-mouth about the company and its noble goals. Social media is one of most effective and the best ways to involve customers into decision making process and sales process. A single satisfied customer can encourage several other customers to use the products. Involvement of designers, celebrities, sub brands, public relation companies, and popular magazines not only can increase the awareness among target groups but also encourage them for purchase. Therefore, it can be said that the marketing strategy adopted by the company is capable to increase the sales. However, company may not register a sudden increase in sales because the BlueAvocado’s products are not necessity and making all customers aware about benefits of the products will take some time.
BlueAvocado is continuously achieving good financial performance in year 2011 and 2012. The company registered revenue of USD 885k in 2011, which increased to USD 2 million in year 2012. The company also increased its presence from 1000 retail stores to 3,500 retail stores by 2012. Partnership with private brands such as “Princess House” contributed 45 percent of company’s revenue. In current and coming years company is expecting revenue from various private brands, which forms the base of sales forecast. The company has also negotiated better deals with the suppliers by cutting their margins. Partnership with fulfilment facility will also contribute towards an increase in the revenue. The company at various levels of supply chain tries to reduce the cost and cut down the margins of manufacturers and suppliers in order to increase its margins.
The company expects 3 times growth in year 2013 which is around USD 8 million. The base of such growth forecast is the revenue that company is expecting from 9 private brands such as Target, Safeway, Whole Foods, BedBath & Beyond, and OfficeMax etc. The sales forecast of the company seems realistic because when one private brand can contribute around USD 1 million then the target of USD 8 million seems achievable with 9 more brands. However, increase in revenue up to USD 50 million by 2015 seems unviable keeping in mind the nature of product.
The company is targeting to increase the number of retail outlets to 23,000 by 2015, which is also very aggressive target. Such aggressive targets are viable only when company is targeting mass market and its business has wide presence in multiple international markets. Green products are gaining popularity but they are not necessities. The business plan does not provide any direct chart or information on the start-up investment cost and break-even. However, the company is still seeking loan to improve its technology and marketing programs, which shows that the company has not yet recovered its cost invested in setting up the business.
Considering promising prospects of the company, I would have certainly invested in the company if I had the money. The company has a vision of green environment and this vision is getting bigger. More and more people are talking about green environment and their awareness provides opportunities for the company. The company also focuses on the women and strategically make them customers. Blue Avocado has a huge potential market that provides opportunities for investors, as well as, for investors. Both the issues that are adopted by the company are relevant issues and promising areas of business thus investing in the company would be a wise decision.
In future, it is expected that government will make some regulations to reduce the carbon foot prints of people and to protect the environment; such move will positively impact the business of the company. Awareness of consumers on environmental issues such as global warming, sudden changes in climate, depletion of natural resources, and rising pollution will benefit the business of BlueAvocado. The financial plan developed by the company provides all major and minor details related with business such as marketing strategy, sales forecast, financial planning, supply chain and factors that will ensure the success of the company in future. The business plan does not provide information on the cost invested in establishing the business, proper break-even analysis and past and forecasted balance sheet. The business plan provides some information about financial plan but it should have been more elaborated.