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VIDEO RENTAL BUSINESS.   Term Paper ID:18475 Click to get this paper

Essay Subject: Develops plan for starting business based on vending machines.... More...

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Paper Abstract: Develops plan for starting business based on vending machines. Paper Introduction: Introduction This research develops a business plan for a prerecorded video cassette vending rental business. The elements of the plan are (a) a statement of the reasons for starting the proposed business, (b) a description of the business concept, (c) an identification of the target market, (d) a description of the business to be started, (e) a promotional plan for the proposed business, and (f) a personnel plan for the proposed business. Additionally, an estimate is presented of the start-up cash which will be required. Reasons for Starting a Business The motivations of the entrepreneur for starting the proposed business are a personal interest in prerecorded video cassettes, and the relatively low barriers to entry which Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. The video cassettetapes are distributed to home viewers through both the sale of the tapesand through rental of the tapes. Bymaking the rental and return of tapes easier for the consumer, the vendingmachine concept is expected to draw consumers away from the standardprerecorded video tape rental stores. (1987, October). High levels of motivation, however, are also required.This motivation will be developed, in part, through the incentivecompensation programs. Thus, in-house training will be moreeffective. The loweroperational costs result from (a) the elimination of human processing ofrentals and returns, and (b) lower site location costs. Video vendingmachines cost from $12, -to-$15, , depending upon the quantity in whichthey are acquired. With respect to video tape vending machines, the acquisitionquestion concerns the decision between leasing and buying. McKenna, D.J. Consumer Description The attraction of the vending machine concept for consumers iscentered in convenience (Reeves, 1987). The elements of the plan are (a) astatement of the reasons for starting the proposed business, (b) adescription of the business concept, (c) an identification of the targetmarket, (d) a description of the business to be started, (e) a promotionalplan for the proposed business, and (f) a personnel plan for the proposedbusiness. These goals will be monitored monthly.Failure to attain established goals will result in a review of bothperformance and goals, and necessary corrective actions will beimplemented. In part, this requirement exists because relatively fewpersonnel are required. Savitz, E.J. Growthfaces obstacles at Blockbuster Entertainment. Sales goals with respect to both consumer rentals and siteacquisitions will be established. Start-up capital estimates for the proposed prerecorded video tapevending rental business are presented in Table 1. Video vending machines must function efficiently on a continuousbasis, if this venture is to be successful. Table 1 Estimate of Business Start-up RequirementsOne-time Start-up Costs AmountFixtures & equipment (initial lease costs) $ 7,5 Installation costs of above 1,5 Remodeling & decorating 1 , Deposits with utilities 2 Legal & professional fees 1,5 Licenses & permits 2,5 Start-up inventory (downpayment) 28,8 Advertising & promotional expense 3, Cash 17,5 Misc. Savings in theseareas are partially offset by (a) vending machine acquisition costs, and(b) machine maintenance costs. per each 24-hourperiod (Newcomb, 199 ). Comparison of operating costs.Chalfont, PA: Audio Video World. Summary and Recommendation This research developed a business plan for a prerecorded videocassette vending rental business. Vending machines may be located ina wide variety of site types, such as places of work, apartment complexes,within other retail establishments, such as grocery stores or conveniencestores, and even in retail video cassette tape sales and rental stores. Business Concept Feature length films, musical presentations, and other performancesare prerecorded on video cassette tapes for viewing on home television setsthrough the use of a video cassette recorder (VCR). The tape holding capacity, however,is not synonymous with the title holding capacity, because up to five tapesof the most popular titles must often be carried in each vending machine tosatisfy consumer demand (Martin, 1987). With respect toequipment (video vending machines) maintenance and repair personnel, itwill be desirable to recruit fully trained individuals. Under the vending machine concept, all rentaltransactions are processed by a vending machine. Remote site locations must be able to generate approximately 8 rentals per day, at a per tape rental of $1.5 , in order to produce anoperating income of 5 . Direct mail andpersonal selling will be employed in promoting the venture to the owners ofpotential vending machine sites. Stanford: Stanford University.----------------------- 1 Thus, consumer preferences with respect to a number offactors have contributed to the development of a strong and growing marketfor the rental of prerecorded video cassette tapes. The depreciation or leasecosts on the vending machine, along with sales and administrative expenses,interest, and taxes, must be deducted from the operating income. Personnel involved in sales will be paid acompetitive salary plus an incentive payment based on attaining presetgoals. There are also other reasons,such as an absenceof a desire to build up and maintain a bulky and expensive video cassettetape library. Video Store, 5, 36-37. The maximum number of video cassette tapes which can be stocked in avending machine is 384 (Lazare, 1987). Bally, partner hope to click in videovending venture. All equipment maintenance and repair personnel, and all salespersonnel will be compensated on a salary or wage plus incentive basis.All other personnel will be paid on a straight salary or wage basis.Personnel involved in equipment (video vending machines) maintenance andrepair will be paid a competitive wage plus an incentive payment, whichwill be based on machine downtime, to the extent that such downtime iscontrollable by maintenance. Prerecorded video cassette tapes range in price from $19.95 for veryold motion pictures, to $129.95 for new and highly regarded motionpictures. (1989). Distributors, in turn, sell the prerecorded video cassettesto retailers, who both sell and rent the cassettes to consumers. Thus, with respect to video vendingmachines, the strategy will provide for leasing the machines, as opposed tobuying them. Most of the maintenance problems encountered in the earliervideo vending have been corrected. Forbes,145, 39-41. Personnel Plan The basic choices in the area of employee recruitment and trainingconcerns the level of expertise which will be initially acquired. (1984). Direct lease costs are higher than purchase costs. Reeves, M. Martin, D.R. (1987, October 5). Thus, theremote site locations must be particularly good ones, if a video vendingventure is to succeed. Look, ma--no hands. What thecurrently available machines do not do is check for damaged returned tapesprior to acceptance and restocking. Media advertisingwill be employed in promoting the venture to consumers. item costs 5 Sub-total $ 73, ----------------------------------------------------------------- Monthly Multiplier CashItem Expense (# months) NeededSalary of owner-manager $ 2, 2 $ 4, All other wages & salaries 6, 3 18, Rent 3, 3 9, Advertising 3 3 9 Supplies 2 3 6 Telephone 5 3 15 Other utilities 15 3 45 Insurance 15 12 1,8 Taxes 5 4 2 Social security taxes 65 3 1,95 Interest 4,45 3 13,35 Maintenance 1 3 3 Professional services 5 3 15 Miscellaneous 5 3 15 Sub-total $ 52, Total estimated cash needed for start-up $ 125, References Audio Video World. At the retail level, sales of prerecorded video tapes account forapproximately 16 percent of total revenues, with the remainder derived fromtape rentals (Savitz, 1989). (1987, May). Prior to this innovation, rentals of prerecorded videocassette tapes have occurred through retail stores, with all transactionsprocessed by employees. Can video stores survive? The significant price disparity between the retail sale price and theretail rental price for prerecorded video cassette tape of feature lengthmotion pictures is often cited as the primary reason for consumerpreferences for renting (Waterman, 1984). Waterman, D. For the entrepreneur, the most significant of therelatively low barriers to entry are capital requirements, and an absenceof large firm industry dominance in most markets. In all instances, this venture requires personnel who are highlyreliable. The general target market for prerecorded video tape rentals spansall demographic characteristics. (Audio Video World, 1989). The disparity between tape sales and rentals is due primarily topricing differences. Based on the findings, it is recommendedthat the plan be implemented. The currently available machines (1)accept payment in a variety of ways, (2) accept returns, (3) restockreturned tapes automatically, (4) maintain accurate accounting records, and(5) afford operators some degree of security in (a) the prevention ofunauthorized rentals, and (b) the return of the incorrect tapes. Reliability will be instilled through competitivebase compensation. Promotional Plan The promotional effort for the video vending venture will have twoseparate and distinct functions. Thus,consumer acceptance of the vending machine rental concept is a reasonableexpectation. At theretail level, prerecorded video cassette revenues approximated $1 billionin 1989. (pp. Video rental machines: New market forvendors?" American Automatic Merchandiser, 1 , 48-54. on theone hand, the firm can recruit fully trained individuals, while, on theother hand, the firm can recruit individuals possessing basicqualifications, who will then be trained by the company. Therefore, expertise for therepair and maintenance of these machines must be available immediately.There is not the luxury of time for in-house training in this area. Under a lease agreement, the tape may bereturned for replacement. Crain's Chicago Business, 1. The vending machine rental of videocassette tapes will target the same general market, with a special emphasison those consumers who seek maximum convenience. Someadvantage does accrue from leasing, however, when a tape wears to the pointwhere it can no longer be rented. Barrons, 69, 13, 15-17, 24. Motion picture producers, recording studios, and other programproducers sell their products to distributors for further distribution tohome viewers. The retail purchase price of a prerecorded videocassette tape of a feature length motion picture ranges from $19.95 to$129.95 for the vast majority of releases, while the retail rental pricesfor the same tapes generally range from $1. When the tape is owned, however, a replacementtape must be purchased. Additionally, an estimate is presented of the start-up cashwhich will be required. -to-$3. (1989, December 11). (1987, June). The newest development in the prerecorded video cassette rentalindustry is the introduction of distribution through vending machines(Reeves, 1987). In Economic Essays on the Theatrical Motion PictureIndustry. An end to fast forward? Newcomb, P. Less capital is required, if the machines are leased.Additionally, the lease expense will exceed the depreciation under thecurrent federal income tax laws. The industry is new,and unique approaches are required. With respect toall other personnel, it will be desirable to recruit individuals possessingbasic qualifications for further training. Video Store, 6, 42-5 . Prerecorded home video and the distribution oftheatrical films. (199 , February 5). Surveys have indicated that convenience and availability are foremostamong the factors that consumers consider to be important, with respect tothe rental of prerecorded video cassette tapes (McKenna, 1987). Introduction This research develops a business plan for a prerecorded videocassette vending rental business. Lastly, the vending machines must function with little maintenance,and with efficiency, or the costs will cause the venture to becomeunprofitable. percent operatingincome; however, these projections are based on an unrealistic per dayrental price of $3. percent of revenues. The first of these functions is sellingthe vending rental concept to consumers, while the second is selling theconcept to the owners of potential vending machine site. Most published projectionsclaim that about 4 rentals per day will produce a 5 . Lazare, L. 221-243). Reasons for Starting a Business The motivations of the entrepreneur for starting the proposedbusiness are a personal interest in prerecorded video cassettes, and therelatively low barriers to entry which characterize the video cassetterental industry. In thearea of sales, However, the situation is different. Business to Be Started The attraction of the vending machine concept for the retailer liesprimarily in the lower costs of operation than those associated with theoperation of the prerecorded video cassette rental store. Overall, however, the purchase of rental tapes isthe preferred strategy. The money machine. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.