Cameron Balloons Ltd - Business Plan Outline

I. STARTING AND ORGANISING A SMALL BUSINESS

Cameron Balloons Ltd. is a private limited company as many businesses of its size are. The essential characteristic of this category of companies is that they are owned by shareholders who receive dividends, parts of the profit. These shareholders have attained this status by purchasing a number of shares when the company was founded. A limited company such as Cameron Balloons is not allowed to advertise the sale of its stocks nor can it register its shares at the Stock Exchange, which means that they are all sold to family members, friends, business partners. This is the advantage of owning a private limited company, the fact that it maintains the business “in the family” and does not allow for outside interference. This is the means through which the owner, Don Cameron in this case, has almost full control over the company without actually owning 100% of the business like in the case of the sole trader. The fact that the stockholders are all hand-picked by the owner ensures stability and better coordination at the top level. Moreover, it seems that further advantages related to limited companies are the reduced financial risk and lower tax rates at least where the U.K. is concerned.

However, if a private limited company wants to expand and needs financing, it can decide to go public through “flotation”- issuing a number of shares with a larger value than £50,000. This is the minimum limit in order to register the business at the Stock Exchange where the company’s shares can be sold to anyone that pays the price. This is an important source of income and is generally used for increasing production capabilities, starting-up new operations or financing similar long-term projects. Cameron Balloons still remains a private limited company probably because Don Cameron does not feel the need for expanding through flotation given the company’s world-wide performance and the more stable manner of conducting a business. The start-up operations initiated by the company such as taking over a smaller competitor (e.g. Thunder Colt in 1995) are probably financed from the annual profits and not the issuance of shares.

FRANCHISING

This is a form of organization that helps established companies increase both their global network and profits. They offer the franchisee the right to sell its goods in exchange for a fixed fee and a periodical percentage of their sales turnover (royalties). This is quite a profitable arrangement for franchisors considering that they only get involved at the beginning and then register a constant revenue without any further effort. When the franchise is established, the franchisor agrees to train the franchisee, to offer him a space and the required equipment and stock. Hence, the franchisor plays a major role at the start-up of the new business and co-finances it with the owner but it is generally money soon recovered. The main risk involved is that even though the owner also has a financial interest in the business, it may manage it badly and therefore, damage the image of the whole brand influencing sales for both original company and fellow-franchises.

Considering the case of Cameron Balloons, franchises seem to be an option when there is extra demand to be covered, which does not really seem to be the case for this company. For example, in 2004 , 141 balloons were sold, which is a quantity easily covered by the production capacity at the Bristol headquarters. The fact that the company has 75 representatives in the US and another 80 in 45 different other countries ensures a broad distribution of their hot-air balloons and a complete coverage of the market. Consequently, even if Cameron Balloons did decide to create franchises there would not be a real place in the market for them.

Another reason against Cameron Balloons using franchises is the relatively complicated production process as well as the high costs involved in purchasing all the production facilities. It is an intricate process that requires skills and a very special attention to detail and quality. Therefore, trusting new businesses with the responsibility of complying to the high standards of the company is much too risky. Even if the need for extra capacity will arise, franchises will still remain an uninspired choice for Cameron Balloons.

II. MANAGING A BUSINESS

Cameron Balloons follows a simple yet powerful life principle: to serve the customer. This is the core idea behind their entire activity. It is a motto that underlies all business decisions as well as their organizational strategy. It’s a guideline, a principle which the company chose to put at the basis of achieving their practical goal, making money. The difference between businesses is the means through which they succeed in achieving profit. According to Cameron Balloons’ mission statement, they identify their client and its satisfaction as the best means to an end. They are, therefore, more customer- oriented rather than product oriented. This is how the mission statement represents the entire business, by summarizing both their present strategy and future development plan. All other aims are subordinated to this motto and each decision is first judged according to it. After making sure this principle of customer satisfaction is fully fulfilled come all other factors influencing the process of decision-making. Serving the customer is simple yet broad since it encompasses a full range of other implications. Bottom line is that by ensuring customer satisfaction, you also ensure high level of sales and profits.