Business Plan

“The Small Theatre”

Av. Francis Tonner
Cannes La Bocca, FR 06150

Azeem Coiffure

1 Avenue Francis Tonner

Cannes La Bocca, FR 06150

Phone: +33 34 74 83 20
Email: TheSmallTheatreCLB@gmail.com
Table of Contents

1 Introduction....................................................................................3
1.1 The Quick Pitch.....................................................................................................................3
1.2 The Problem..........................................................................................................................3
1.3 The Solution..........................................................................................................................3

2 Aims and Objectives.......................................................................5

2.1 Mission Statement................................................................................................................5
2.2 Company Goals and Objectives: SMART...............................................................................5

3 The Competitive Environment.......................................................6

3.1 Market Summary..................................................................................................................6
3.2 Customers.............................................................................................................................6

4 A new marketing strategy..............................................................7

4.1 Current offers vs new proposals...........................................................................................7

5 Financial Plan & Projections (Forecast Project & Loss Account). .8

6 Ownership and organization........................................................12
6.1 Ownership...........................................................................................................................12
6.2 Organization........................................................................................................................12

7 New cashflow and forecast and recommendation.....................14

7.1 Cashflow..............................................................................................................................14
7.2 Recommendations for the future........................................................................................15

8 Evaluation:....................................................................................17
1 Introduction

1.1 The Quick Pitch

The small Theatre is a family oriented movie theatre located in a small neighborhood in a city in the
south of France. That provides services, such as events and movies and entertainment for the public.
The Small Theatre allows family and friends to engage during events.

The aim of the movie theatre is not only financial but also tries to help the community by providing
them activities and entertainment for all.

1.2 The Problem

As a business the small theatre faces several problems such as:

1. Lack of public transport after 20.00.
2. Hygienic issue with the facilities.
3. Limited catering services and products. It does not have an alcohol license.
4. Poor management
5. Small profit which may lead to selling the theatre.
6. Possible competition due to expansion.

The most difficult problems to solve are the lack of public transport, the hygienic issues, poor
management and lack of profit that, which may lead the owner to sell it.
The catering services and possible competition are smaller problems as a compromise could be
made.

1.3 The Solution

In terms of poor management, we have given the staff another opportunity. We believe that they are
great assets given their track record and their knowledge of the small theatre. They will receive
proper training in order to fully maximize their abilities.

Lack of profit, this can be changed by adding more appealing events to a wider variety of possible
customers. This means that they may need to invest and change certain aspects of the theatre such
as new and interesting movies and the overall presentation.

The limited catering services can be fixed by adding a wider variety of likable products, and adapting
the times open to the events and movies happening at the theatre, this means that they may gather
more customers as they may want their services until late.

For the lack of public transport is doesn’t seem to be too much of a problem as the majority of the
customers are located in Cannes near The Small Theatre and are walking distance from it. Another
possibility is to use up the open space surrounding the small theatre to open up a parking lot
specifically for the theatre. This would allow customers to avoid the parking issues around Cannes, as
well as profit from the parking spaces and possibly spaces for other transportation such as bicycles.

One possible method is to invest more money into the business, this means the design, catering
services, facilities and overall comfort within the small theatre.
For the facilities this may be quite complicated as the bathrooms are not connected to the main
drains. This may mean that they should invest in a facility is more hygienic for example, a Saniflo
toilet system that allows for waste to be stored further away preventing the unpleasant odor.
(https://www.blockbusters.co.uk/blog/saniflo-toilets-need-know/)
By investing in the overall design of the theatre, this may attract and please loyal customers. It may
feel more welcoming and pleasant to be in.
By working on the catering services in the café they may gain more profit as customers may be more
pleased with the products and purchase more.

To conclude all the problems listed above can be addressed by the proposition included in this
business plan.
2 Aims and Objectives

2.1 Mission Statement

To successfully entertain the general public as well as allow their creativity to shine.

2.2 Company Goals and Objectives: SMART

When setting up goals and objectives it is helpful to follow a simple rule. Keep goals specific,
measurable, agreed, realistic and within a timeframe.

 Specific: Help the small theatre survive.

 Measurable: increase profits by eight.
 Agreed: This plan has been presented and the owner has agreed to it and staff seem
motivated about the changes.
 Realistic: By using the current resources they have (human resources, the infrastructure,
partnership).
 Time: One year for implementation of the partnership. Training staff, cutting costs,
restructuring the building and see some financial results. 2 years to increase profits and sales.
And 3rd year to stabilize the business.
3 The Competitive Environment

3.1 Market Summary

Even though Cannes la bocca is small community it faces strong competition due to its proximity to
well-known places such as Cannes, Nice, and Monaco. Competition from other movie theatres but
also other entertainment places. Below is a list with the main direct and indirect competition faced
by small theatre.

Other Movie theatres around area:

o Olympia – (6 euros for morning and 5 for under 14 (credit card online) Movies until late.
More family friendly usually around 9ish).
o Les arcades – (multiple offers for subscriptions, different price tickets for age/ student/ under
12 etc. Movies until late, http://www.allocine.fr/salle/cinema-P0116/tarifs/ for price details
see website).

Other entertainment places and possible competitors:

o Casino (Le Barrière la Croisette.)
o Concert halls (e.g. Palais des festival Cannes)
o Museums (e.g. La Malmaison)
o Game bars/ cafes. (e.g. https://www.facebook.com/lehivebar/)

Doing this market research is of extreme importance for small theatre because they are able to
identify their target audience, what they want and what other entertainment areas lack.

The small theater has an advantage over the competition, since their product/ service range has
more variety. Olympia and Les Arcades only show movies whereas the small theatre offers
entertainment such as shows and events. Despite all that the small theatre is not doing as well due to
the fact that both movies and entertainment are very outdated. Both theaters we identified offer
more updated options of movies however installations are very similar.
This is however very easy to change.

3.2 Customers

Even though there is great competition in the region, this should not be a problem to Small Theater
since they have small venue and can survive from the local community from Cannes, Cannes la Bocca
and surrounding areas.
4 A new marketing strategy

4.1 Current offers vs new proposals

We assessed the marketing mix of the small theatre, and we proposed a new one. The table below
summarizes all current sources of income of small theatre as well as new one that we are proposing.
It also highlights the services we are keeping and the ones we are not.

Source of income Location of event Today New Proposal

Movies Screening room Yes yes
Band performance Foyer yes yes
Bingo - yes no
Over 60s morning coffee Foyer yes yes
Dominos etc. - yes no
Tech room New room no yes
Creative room New room no yes
parking Outside grounds no yes
Catering Coffee shop yes yes
   

By introducing this new offer, we are repositioning small theatre in the market, for example the tech
and the creative room may bring something new in the business as it is not a usual movie theater
offer, and as for the customers it allows friends to have fun in the tech room and develop their
imagination in the creative room.

We are keeping bands performance, however instead of spending 100 000 a year we will allow local
bands to perform and ticket sale will be split half and half between the theatre and the local band.

Given the public transportation issues, we are building a parking area on the grounds that will be a
new source of income however for customers that stay after 20.00 the parking will be free to
compensate for the lack of public transport.

We are keeping the catering services however changed will be made to offer more variety. And we
decided to apply for an alcohol license given that there may be customer who want to enjoy
themselves either during band performances or after the movie.

We decided to keep over 60s morning coffee however the prices will be adjusted. Finally, we
decided to discontinue dominos, moms and toddlers and bingo given they are not a great source of
income and do not attract a lot of customers
5 Financial Plan & Projections (Forecast Project & Loss Account)

Possible sources of income for the theater are:

a. Tickets
b. Food and drink
c. Advertising revenue

1. Expenditures are funds used by a business such as: Investments in decor,

technology(machinery), catering services, etc.
2. Fixed and Variable costs:

a. Fixed cost: are costs that stays the same despite levels of output
b. Variable cost are costs that varies on the level of output.

Fixed cost for the small theater

I. Council rent
II. Insurance
III. Water rates
IV. Heating
V. Lighting and electricity

Variable cost for the small theater

I. Salaries and wages

II. Stationary
III. Postage
IV. Telephone
V. Printing
VI. Accountancy
VII. Advertising
VIII. Printing in publicity

3. Profit = total revenue – total expenses.

Profit is the money a business makes; this means that without the sufficient amount then
consequences such as lowering or cutting expenses or maybe even close down the business.

4.

a. The theatre could improve their profitability by decreasing movie prices. Even
though this may seem counterintuitive the current price of 10.50 is above market
price, decreasing the prices to 9 euros will attract more customer that were not
coming to the high cost of ticket sales. We will also implement special prices for
 students and senior citizens. We are also implementing a new website where
customers can buy and pick out their seats in advance.
b. The catering services will be modified in order for there to be more versatility and
options to attract customers more.
c. In order to save money, the theatre will no longer pay for performers to come but,
instead will give the opportunity for new bands to present and in exchange they will
share the ticket sales with the band.

5. New P&L below, including all the changes asked in question 7, plus changes suggested by my
new P&L. As it can be seen changes are positive, there is an increase in profit for the Small
Theater.
  €000s €000s
INCOME    
Grants and sponsorships 100,00 €  
Advertising revenue* 20,00 €  
SALES    
Box Office 357,50 €  
Foyer events (Tech, Creative room) 16,50 €  
Programmes 16,50 €  
Catering** 150,00 €  
Parking*** 15,00 €  
TOTAL INCOME   675,50 €
     
EXPENDITURE    
Cost of sales    
Consumables – sets, floral displays, tech, etc. - 20,00 €  
Hire of companies/ performers - €  
COST OF SALES   - 20,00 €
     
GROSS PROFIT   655,50 €
     
OVERHEADS    
Buildings    
Council rent - 41,00 €  
Business rates - 25,625 €  
Insurance - 10,50 €  
Water rates - 3,15 €  
Heating - 21,00 €  
Lightning and electricity - 15,75 €  
Cleaning - 5,25 €  
Repairs and maintenance - 5,25 €  
Administration    
Salaries and wages - 194,25 €  
Stationary - 2,10 €  
Postage - 3,15 €  
Telephone - 5,25 €  
Printing – tickets and programmes - 12,60 €  
Accountancy fee - 2,10 €  
Publicity    
Advertising - 21,00 €  
Printing – posters, leaflets - 10,50 €  
OVERHEADS   - 378,48 €
     
NET PROFIT BEFORE TAX   277,03 €
 6. Comments and observations related to the Profit and Loss Account:

*Advertising revenue: Amount increased due to the fact that we will be adding more adds before
movies in order to double the previous amount

**Catering: We increased catering sales from 50.000 euros to 150.000 euros, which we believe to be
reasonable given that catering usually is an important source of revenues for theaters. Market
researchers say that while concessions account for only about 20 percent of gross revenues, catering
represent some 40 percent of theaters' profits. This is according to IbisWorld, see website for more
information.
https://www.marketplace.org/2014/08/04/why-does-popcorn-movies-cost-so-much/

***Parking: for the time being this is only an estimation given we didn’t have parking before.

The exercise asks to calculate an increase in buildings and administration by 5% and rent and
rates by 2,5%. Since, there are different ways of interpreting this information, the calculation I chose
was to increase rent and rates by 2.5% and the remainder entries of business and administrations by
5%.
6 Ownership and organization.

6.1 Ownership
We are going to propose a new ownership structure and a new organizational design. After assessing
advantages and disadvantages of being a sole trader which are lister below:
1. The advantages of being a sole trader are
a. That you have full control over your business and as well all the changes are up to
the owner.
b. Keep all the profits.
c. Easier to set up

2. The disadvantages are

a. The owner is liable for any debts (unlimited liability)
b. May be difficult to secure funding

I recommend for Azeem to have a partnership in order to benefit The Small Theatre. This is because
if he were to partner up with someone who is genuinely interested in working and running a theatre,
Azeem may be able to still be an owner but focus more on his own hair salon. Azeem may allow this
partner to buy himself into the business, which may be financed for expenses. A reason to keep
Azeem rather than sell his business, is if the potential partner were to be from a foreign country,
Azeem may be the one guiding the business with the help and finance from the partner.

6.2 Organization

I’m proposing a new organizational design (chart below) that is less tall, flatter. In this new chart,
Azeem has an equal partner. A secretary that reports to both of them but also serves as liaison with
management. It was decided to split the manager position in two instead of having one. One will be
more focused on the financial side, while the other will be responsible for sales and marketing. This
way their ideas could complement each other while making decisions. Another original idea
proposed is that assistants report to both managers, the reason for that is to improve
communication, as well as because there are some activities that overlap, for example the catering
department could use some marketing or creative ideas to increase sales.
Figure 1: New organizational chart

Partnership
Azeem Owner
Owner

Secretary

Sales and
Financial marketing
manager manager

Catering Marketing and

Administration
Assistant Sales Assistant creativity
assistant
Assistant

Box Office Clerks catering

7 New cashflow and forecast and recommendation
7.1 Cashflow

1. Some sources of short-term finance are:

a. Overdraft: An extension of a credit or a loan in a bank. And overdraft facility is the
approved limit one has.
b. Selling assets
c. Trade credit

2. The importance of cashflow to a business: It allows the business cash position to be

known. In order to run the business properly, pay suppliers, employees and overheads you
need a good cash flow position.

How cash should be managed to prevent business failure: To prevent business failure the
cash should be managed through a cash flow forecast. This allows the business to predict
or anticipate the amount of cash it will gain and use for expenses. It helps prevent business
failure by being able to manage their profits and losses accurately.

The difference between cash and profit are:

 Cash is the amount of money the business has at the moment or will soon have.
 Profit is the money left over after expenses have been payed.

3. A big error in their calculation was their sales revenue. They have overestimated their
amount of sales which lead to a drastic change between their estimates 690 whereas in reality
it was 405. They also overestimated their expenditure on performances/events. Although not
a major problem its best to have a more accurate estimation. Expenditures were closer to his
prediction however he predicted less for performers and publicity and more for building and
administration.
They ended up using more finance for their total expenditures than their total income. This is
why their possible cash surplus did not happen the end of the year. The figures every month
may be different because of multiple variables, including the season, the events that are taking
place varies, the relationship between the variable and fixed cost etc.
A net cash flow is the difference between the business cash inflow and outflow. It is never
good to have a negative cashflow, but it’s not a problem if the following months balance out
the negative.

Other terms:
 Insolvency: When the business isn’t able to pay back the money it owes.
 Closing balance: amount in the account that a company from one month to the next. It
can be positive or negative.
 Opening balance: The amount that the business opens the month with.
 7.2 Recommendations for the future

1. In order for the business to have stable finance in the future there as lots of possibilities that
may help. The partnership Azeem may be able to fund for the future but other option such as
loans may be able to secure future finance.
a. Personal savings. This is fast and easy way to finance your business. However, as
Azeem does not seem to be very invested in the business he may not want to and
instead figure out another source of long-term finance.
b. Share capital allows shareholders to fund in return for shares in the business. The
Small Theatre does not seem to have many shareholders apart from the owner
himself which as well may be problematic.
c. Loans may be a good idea as it is guaranteed for a certain amount of time, and
although there is an interest rate that comes along with it the bank does not have
any connection to the shares in the business itself.
d. With retained profit the business may be able to finance their future with money
that has been “left over”. Although a good source of finance this may not apply well
to Azeem in the first year as the business will only start generating enough profit to
survive. Although it may be more accessible in 3 year when The Small Theatre has
kept a stable and well profit.
e. Crowdfunding, this may be a good idea as it is a small business. With cash generated
by contributors this may be rewarding. Although if many people aren’t interested
and enough cash hasn’t been saved up then it will not finance the business long
term.
f. Venture capital, this may be a good option as it may allow The Small Theatre to gain
funds that other investors may find too risky. This may come in handy given that
venture capitalists are professional managers.

2. For The Small Theatre, loans may be the best option as it is secure and guarantees stability.
Loans although the interest rate may be high will allow The Small Theatre to finance
themselves as well as be able to pay back the loan, this may be possible if The Small Theatre
follows this business plan.
 3. The cash flow below reflects all the changes made in the profit and loss account. Now the
prediction is much more realistic and closer to the actual result obtained.

Resource Sheet S Cash Flow Forecast for last year

                          Annual
All figures in €, /XI0s Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
INCOME                          
Sales Revenue  41  41  45  45  45  54 54  54   41  45  45  45  555
Other income  8  8 10  10  10  12  12  12  8  10  10 10  120
TOTAL INCOME  49  49  55  55  55  66  66  66  49  55  55  55  675
EXPENDITURE                          
Performances / event  0  0  0  0  0  0  0  0  0  0 0  0  0
Buildings  10  10 11  11  11  13 13   13   10   11   11   11   135
Administration  17  17  17.5  17.5  17.5  18.5  18.5  18.5  17  17.5  17.5  17.5 211.5
Publicity  2  2  2.5   2.5   2.5   3.5   3.5   3.5  2   2.5   2.5  2.5  31.5
TOTAL EXPENDITURE  29  29  31  31  31  35  35  35  29  31  31 31  378
Opening Balance  10  30  50  74  98  122  153  184  215  235  259  283  
Closing Balance  30  50  74  98  122  153  184  215  235  259  283  307  
8 Evaluation:

Overall this business plan may lead to the success for The Small Theatre’s future as it allows the
management team to correct their previous errors such as their outdated form of entertainment or
lack of profit gained. In terms of competition, the business will adapt to more diverse and exciting
entertainment for their customers which may then ensure that their business will stay relevant and
stand out from other form of leisure and entertainment. With this new marketing strategy, they will
secure a steady path in the right direction, meaning that their issues of poor management will be
changed in order to build a stable foundation for the business. With some changes done in income
and expenditure predictions they may gain a more accurate informational flow that will allow the
business to make more strategic decisions to the business. With the changes done to the
organizational chart, including a new partner they will acquire the necessary funds in order to allow
improvements to be done as well as a possible new owner who is very interested in The Small
Theatre. This leads to a complete improvement and new mindset for the staff in order to achieve
their goals, in this case to entertain the general public and allow them to expand their creative mind.
Therefore, The Small Theatre plan will set a new approach on how to run and handle their business.