Business Plan of Develop a Successful Business

Question:

 

Answer:

Background

Mission statement

A successful employer is always in a hunt of new business venture that can help in to develop a successful business, or increase the growth of the already established organization. One of the top-most fast-food restaurants of the world ‘McDonalds’ has also decided to enter in a new product line for making a growth in the company. McDonalds has decided to start with the organic food bar section in the outlets of McDonalds, to cover the market of people those who are health conscious and prefer to eat healthy and nutritious food in place of junk food (Anisimova, 2016).

Clients

The investors or the clients of those who are investing in a company always wanted that company to show a profit. McDonalds have come up with a fresh and innovative idea of adding an organic food bar section to its outlets. Clients have to see the potential of success in this idea, as there is no other restaurant serving organic food in an affordable price range (Anisimova & Sultan, 2014).

Today the community consists of three categories out of which one demands the fast-food and other who want healthy food and the third is uncertain of its own preferences. McDonalds has already captured one of the categories of people those who prefer to eat the fast-food. Now, it is entering the market to conquer the other category of health conscious people, who prefer to eat only healthy food (Aslihan Nasir & Karakaya, 2014).

Every organization runs with the collaboration of employer and employees. When an innovative business plan is developed, then it includes the setup of employees that will be required in all the stages of the development of the company. In the present stage of proposal drafting the employees required by the organization are managers, lawyers, accountant, dietician, and off-course a cook (Cook, Reed, & Twiner, 2009).

In the year 1955 businessman Ray Kroc purchased a hamburger joint call McDonalds that was owned and run by two brothers Richard and Maurice McDonald since 1940. A McDonald’s restaurant can be owned through franchisee or through affiliation, and company runs outlets (Gad Mohsen & Dacko, 2013).

Company History

Ray Kroc was a franchisee agent who sold the franchisee of McDonalds throughout the world and saw it growing globally. At present, there are about 36000 outlets of McDonalds in 119 countries across the globe (Gould, 2010).

Business Goals

McDonalds has the aim to be the world’s largest fast-food restaurant. McDonalds is trying very hard and leaving no stone un-turned to become the world’s largest fast-food chain of restaurant. The management of the McDonalds has decided to enter into a new business venture, and that is starting an organic food bar outlet in the current fast-food outlets (Groeppel-Klein & Kamm, 2014).

Short-Term Goals

At present the short-term goals of the company are:-

  • Create an awareness about the new section that is being added to the outlets of the McDonalds
  • Selling at least ten million food items from the organic food menu across the world in a year
  • Creating a market share in the healthy food industry

Long-Term Goals

At present the long term goals of the company are:-

  • In five years cover at least twenty-five percent of the health food industry
  • Be the largest fast-food selling restaurant in the world.
  • Increasing the company’s profit ratio by five percent (Isariyawongse, Kudo, & Tremblay, 2009)

Marketing

 The marketing strategy is decided with the help of marketing research and various analyses under the heading market research

Market Research

For the market research of the Organic Food Bar the marketing mix of the four P’s will be used here: –

Four P’s

Targets

Market Strategy

Product

Organic Food Bar

It is a unique product that is going to provide health conscious people a tasty and healthy food to devour.

People

Health Conscious

Nowadays people have become health conscious and prefer organic food.

Place

Public places and health centers

McDonalds has already established outlets, and the new section of organic food bar will be included in the same outlets.

Promotion

Sustainable product

Every outlet will have a different menu that will also give away the nutritious values of each item displayed on the menu.

Market Analysis

Bargaining power of the supplier-The power of bargaining is in the hand of the suppliers that has to be completed by the entrepreneur to get the required product in the best quality needed by them. Thus, the power of bargaining of suppliers is quite high.

 

The intensity of competitive rivalry– Once this idea becomes a success, all the global competitors will start searching for the counter idea so they can save their market share. Thus, the intensity of competitive rivalry is medium for the business (Kareklas, Carlson, & Muehling, 2014).

 

The bargaining power of the customer-The customer becomes loyal to the outlet and don’t prefer to switch from it. Thus, the customer’s bargaining power is also low.

 

The threat of the new entrant- the threat of the new entrant in the organic food bar business is quite low, as the entry barriers are quite high.

 

The threat of the substitute product– the only substitute or an alternative to organic food products is cooking at home. Hence, the threat of substitute or an alternative is quite low (Kim, 2014).

 

Industry Analysis

Here the PESTEL Analysis of Organic food industry is being given to explain the external factors.

Political-Government should help in creating awareness regarding the healthy and organic food as it will give growth to the agriculture sector as it will be encouraged to grow healthy food products. Organic food industry comes under a free-trade agreement and follows regulations of it.

Economical Factors– If a country is economically stable then the sale of products will increase but then the government has to increase the labour cost, and other factors for the betterment of working class which will lead to increasing in supply cost, labour cost, wages, and because of all theses the selling price of the product will also increase (Lee, 2016).

Social Factors- people are highly impacted by their social sectors in their food habits. The company has to make sure that it is covering the local interest under consideration before planning the menu of that region.

Technological factor- Technology is used in everything, for cooking also a lot of technological products are required, especially when organic products are used then the cooking equipment should be such that the maximum amount of nutrition could be saved in the food during the process of cooking.

Environmental factor– organic food is the purest form of agriculture that is grown in the natural environment without any artificial fertilizers, chemicals, and pesticides.

Legal factors-. To introduce organic food, the focus has to be on environmental law, company law, and investment regulations and follow them strictly (Mujtaba & Patel, 2011).

Business Seasonality

McDonalds serves a menu that goes for all seasons, but when organic food enters the scenario, then McDonalds has to promote its new product to the customer when there is a lean season. Offers like getting a drink free with a full meal, discount coupons could be distributed in colleges and offices to increase the foot-fall during the lean season.

Competitors

Competitors are present in every field of business. In organic food, there are very few restaurants that serve the organic food to its customers, and mostly they are dine-in restaurants, not fast-food restaurants. Also the price range McDonalds will be keeping for its product is very difficult to be matched. McDonalds has a narrow segment of food thus it can focus on what it is serving to its guests (Polder et al., 2010).

  • Potential Strategic Alliances

Organic food is grown in much less quantity than inorganic food. When running a restaurant one need to have a regular supply of the ingredients and as the suppliers of organic food are very limited, so it is always better to be in a strategic alliance with a supplier of the organic food of that area. This will provide regular delivery of ingredients to the restaurant (Qin, Leung, Leung, Zheng, & Wong, 2011).

SWOT Analysis help to recognize the strengths, weaknesses, opportunities and threats to the business.

Strengths

  • Brand Value- McDonalds has a high brand value which will help in promoting the new organic food bar section.
  • Strong network of suppliers- McDonalds has a very strong network suppliers that help in providing ingredients to the restaurant

Weaknesses

Limited Suppliers- the number of suppliers of organic ingredients is very less. Thus, it very necessary for the company to get into strategic alliance with the suppliers to get a continued supply of ingredients

Subsidies- no subsidies are given by the government on the organic food whereas other agriculture sectors get it. This increases the costing of the product (Qureshi & Hassan, 2013).

Opportunities

Health Awareness- slowly and steadily people are getting aware of their health and getting conscious of what they are eating. With time more people will demand for organic food. The company should aim at creating more awareness about the product in the market to attract targeted customers.

Price- people are ready to pay any price for healthy and tasty organic food, and when they get the food at an affordable price then they will be more than ready to purchase it.

Threats

Demand- there is a steady rise in the ratio of people preferring organic food over fast-food. But there are chances that the rise in the ratio and the requirement of customers to a company is not equal. This will affect the profit target of the company.

The recession and weak economies- Some countries are facing recession and few countries have unstable economies. Such countries do not show potential for being a good place to introduce a new product.

Government Regulations- there are a number of laws and regulations one needs to follow to work with the organic food items. The company has to make sure that it is following all of them for a smooth running of a restaurant (Rodrigues, Nikhil, & Jacob, 2016).

Marketing Plan

A management plan is a proposal that gives the brief of the actual plan of the business venture. The management plan of the organic food bar is being given here: –

Product/Services and Target Market

Nowadays most of the population is getting very health conscious. Therefore, rather than eating outside food they prefer eating a home-cooked meal. An organic bar in McDonalds will add a new health factor to its food section. The organic food will give a chance to health conscious people to explore the health in the nutritious, tasty, and most importantly delicious, healthy organic food served by the McDonalds (Sawyer, Kerr, & Hobbs, 2008).

Placement

A whole new section demands a whole new work process. The management needs to appoint participants and personnel to look after the new section effectively. The role of this personnel and participants in the new venture should be clear from the starting. Also, company should make participant aware that hard work will bring change in the positions (Shanahan & Hooker, 2015).

Promotions and Advertising

To introduce the new product company has to undertake various promotion and advertising methods. For examples: –

  • Giving discount on the new product
  • Giving organic food items as a complimentary item with the usual McDonalds menu items
  • Using various medias to advertise the addition of new organic food bar in the McDonalds outlets (van Doorn & Verhoef, 2011)

ICT marketing strategy

The ICT market strategy can be defined in a very short way. McDonalds Company does not run on people calling and giving an order. The customer comes to McDonald sit down and enjoys the food. Websites and telecommunication can be used to advertise the new product.

Pricing Policy

McDonalds has an established pricing policy of giving the best quality at the best price possible. This is true that people are ready to pay anything for healthy and tasty organic food, but following its USP McDonald’s pricing for the organic food, menu will also be to give the best quality at the best price (Vega-Zamora, Torres-Ruiz, Murgado-Armenteros, & Parras-Rosa, 2014).

Evaluation of Marketing

Key Resources

Consistency– McDonalds gives the same experience of service in its all the 35,000 outlets placed anywhere in the world as McDonalds believes in consistency and train its employees accordingly.

Innovation– the consistency of its old menu items and innovative new organic food bar will take McDonalds to success.

Resiliency-There had been numerous issues which gathered a large amount of negative promotion for the company but the company stood on its ground and worked harder to produce a positive outlook for the McDonalds to gain customers loyalty (Yüksel, 2012).

Operations

Legal and licensing requirements

McDonalds is an established fast-food chain of restaurants that has already fulfilled all the legal and licensing requirements needed by a restaurant to serve in a country. A clause has to be added to the company’s legal paper saying that now McDonalds will also serve organic food items in its menu. This is required because the government has different regulation for organic food (Dimitri & Mirsch, 2012).

Business name and legal structure

Organic food bar will be an added section in the fast-food section of McDonalds. Thus it will follow the same name and also same legal structure.

Operating law and licenses

The law of the country where the outlet is serving will be followed by the outlet. All the licenses will be taken as per the country the outlet is situated in (Gottschalk & Leistner, 2012).

Management details

The same management will be handling the new section working along with the old outlet’s work. New employees will be required to take care of the increased burden of the outlet due to the addition of the new section.

Organizational structure and staffing

The organizational structure will consist of a General Manager, Restaurant Manager, 1st Assistant Manager, 2nd Assistant Manager, Shift Running Manager, Floor Manager, Staff Training Crew and Crew Members (Nielsen, 2012).

Professional advisers

Accountant

An accountant helps in accounting the full details of all the transactions that take place in the outlets. In the starting, a department with few people can be formed to manage the accounts, and later when the sales increase the department could also be adjusted as according.

Lawyer

A lawyer is required to look into the matter that requires a legal aspect in starting the new venture. McDonalds has already a legal department to look into the legal matters of the company. That department could take care of the legal matters of the new business venture (Salisbury, 2013).

Insurance Broker     

Insurance provides an assurance to the company owners that if a project fails or any unwanted circumstances then also it will some of its invested capital back. An insurance broker will help the company to get the best insurance policy for the company.

Bank Account

A new bank account needs to be open to execute the financial transactions required to take place to introduce the new venture and running it further.

Bookkeeper

A book keeper maintains the books of the whole money expenditure. This will help in knowing the exact picture of the company’s position of expenses and other money transactions (Sawyer, Kerr, & Hobbs, 2008).

Insurance and Security Issues

Insurance broker hired by the company will take care of taking the correct insurance policy for the company’s new venture to save it from any unwanted and uncertain issue. Security measures are already established in the outlets; as a new section will be add in the old outlets of McDonalds.

Business Premises

Location

There are about 36000 outlets of McDonalds throughout the world, and they are the location of the new section of the organic food bar. The company saves a lot of time and money in that process (Shanahan & Hooker, 2015).

Government Regulations

Each country follows its own laws and regulations for the business running there. Company lawyers have to look into each and every country’s regulation before introducing the venture in it.

Ability to Access Target Market

McDonalds has a huge market share as compared to the other competitors, so it becomes easy for McDonalds to use its brand value and customer loyalty to access the targeted market for the new venture (Shiowatana, Purawatt, Sottimai, Taebunpakul, & Siripinyanond, 2006).

Equipments Required

McDonald’s outlets are well equipped with all the equipment required for all kind of cooking. But adding a new section will need a few more burners and microwave to overcome the extra burden for the outlet.

Production Process

Training for the cooking techniques and recipes need to be given to the employees to make them comfortable with the new menu of food they are going to serve the customers (van Doorn & Verhoef, 2011).

ICT requirement

An internet connection to be in regular touch with the company’s priors along with a landline connection for calling purpose is required by the restaurant.

Critical risks/contingency plans

In the case of emergency a doctor, neighboring police station, and fire station number need to be displayed clearly in the outlet. Also other necessary required things like a fire extinguisher and a first-aid box (Vega-Zamora, Torres-Ruiz, Murgado-Armenteros, & Parras-Rosa, 2014).

Financial Projections

Basic of income and expenses

Calculations of Income and Expenses                                          (in dollars)

Start-Up Funding Start-Up assets Cash and cash equivalents                 52,089.00

Leasehold improvements                                                                                4,000.00

Equipment                                                                                                       60,050.00

 Fixtures                                                                                                          11,748.00

24V Sunwize wind turbine                                                                             734.00

Website (flash website)                                                                                   2,500.00

Total Start-Up Assets                                                                        1,30,851

  • Financing of the Business

Financing of the business will be taken up by the person who has taken the franchisee of the outlet and the company owned outlets will be financed by the company.

The distribution of profits will be as per the pre-decided franchisee contract agreed between the franchise and the company (Wadsworth & Coyle, 2007).

5.1.4    Goods and Services Tax

All the produce will be taken from the local market hence the goods and services tax will be as per the tax decided by the country in which outlet is situated.

The company has decided to use the cash flow from the company itself, and the rest will be bear by the franchisers. No loans in the company name need to be taken (Wang et al., 2015).

Analysis of Financial Forecasts

Net Profit Margin

Expected net profit margin for the first two years is round about five percent with a subsequent raise of about four percent in coming three years. The company targets for fifteen percent of net profit by the end of ten years.

Break-Even Point

When a company is neither at a loss nor on profit then is that situation known as break-even point of the company.

The total expenses for the company (average)                                                            40,000

Expected profit for year (2017-2018)                                                                         10,000

Expected profit for year (2018-2019)                                                                         10.000

Expected profit for year (2019-2020)                                                                         15,000

Expected profit for year (2020-2021)                                                                         18,000

So by the year 2021 company will come at the break-even point for the proposed venture (Yüksel, 2012).

  • Market-Based and Earned Based Valuation

Market-based valuation of the business venture is about 5,00,000$ an d earned based value of the business venture is expected to be around 6,50,000$.

The expected sales of the year 2017 could be around 1, 00,000$

The cash flow expected could be around 5, 000$

  • Projected Profit and Loss Statement

Profit and loss statement for the business venture is as follows:-

Total sales                                                                               1,00,000

Other operating income

Birthday parties                                                                      30,000

Expenses        

            Rent                                                                                                    1,000

            Maintenance                                                                                        2,000

            Payroll                                                                                                 40,000

            Purchases                                                                                            38,000

P& L                                                                                                               49,000

Total                                                                                        1,30,000          1,30,000

Action Plan

The company has planned to start this project by the end of September 2016, first of all, the renovation required in the outlets need to take care of. All the required equipment could be installed while the renovation part is going on. Recruitment of the new staff and it training process will be the next step. Once everything is ready, then the promotion and advertising of the product will be started to the product in customer’s notice. It is expected that from January 2017 the organic food bar will be an important part of the McDonalds (Anisimova, 2016).

Date

Event

25th September 2016

Commencement of the new venture

5th December 2016

Promotional event starts

1st January 2017

Sales strategy initiated at the outlets

Recommendations

  • Taking suggestion of a dietician while preparing the recipes of the organic food bar will help in increasing the nutritional value of the food.
  • A wall display showing the nutritious values of organic food items will increase the customer’s interest
  • Feedback from the customers will help to improve the food in a better way

Conclusion

Every new venture is planned with the same intention in a mind and that is to make it a success. Here in this report a new venture and its and the procedure of the set up of the business has been discussed and for that number of marketing research, analysis, tools, and charts are discussed and evaluated to come up with the idea of the success of the people. The organic food bar is a unique idea that can be beneficial for the company if they continued with the proposal. The market is ready for accepting everything new which is coming in its way it is just the entrepreneur’s capabilities that will design the venture in such a way that it prove to be a success (Cook, Reed, & Twiner, 2009).

References

Anisimova, T. (2016). Integrating Multiple Factors Affecting Consumer Behavior Toward Organic Foods: The Role of Healthism, Hedonism, and Trust in Consumer Purchase Intentions of Organic Foods. Journal Of Food Products Marketing, 1-15. http://dx.doi.org/10.1080/10454446.2015.1121429

Anisimova, T. & Sultan, P. (2014). The Role of Brand Communications in Consumer Purchases of Organic Foods: A Research Framework. Journal Of Food Products Marketing, 20(5), 511-532. http://dx.doi.org/10.1080/10454446.2012.728984

Aslihan Nasir, V. & Karakaya, F. (2014). Consumer segments in organic foods market. Journal Of Consumer Marketing, 31(4), 263-277. http://dx.doi.org/10.1108/jcm-01-2014-0845

Cook, G., Reed, M., & Twiner, A. (2009). “But it’s all true!”: commercialism and commitment in the discourse of organic food promotion. Text & Talk – An Interdisciplinary Journal Of Language, Discourse Communication Studies, 29(2), 151-173. http://dx.doi.org/10.1515/text.2009.007

Gad Mohsen, M. & Dacko, S. (2013). An extension of the benefit segmentation base for the consumption of organic foods: A time perspective. Journal Of Marketing Management, 29(15-16), 1701-1728. http://dx.doi.org/10.1080/0267257x.2013.800896

Gould, A. (2010). Working at McDonalds: some redeeming features of McJobs. Work, Employment & Society, 24(4), 780-802. http://dx.doi.org/10.1177/0950017010380644

Groeppel-Klein, A. & Kamm, F. (2014). Space Utilisation and Retail Store Image: How the Arrangement of Organic Foods Impacts on the Overall Image of Retail Stores. MAR, 36(2), 69-81. http://dx.doi.org/10.15358/0344-1369_2014_2_69

Isariyawongse, K., Kudo, Y., & Tremblay, V. (2009). Generic Advertising in Markets with Informative Brand Advertising. Journal Of Agricultural & Food Industrial Organization, 7(1). http://dx.doi.org/10.2202/1542-0485.1244

Kareklas, I., Carlson, J., & Muehling, D. (2014). “I Eat Organic for My Benefit and Yours”: Egoistic and Altruistic Considerations for Purchasing Organic Food and Their Implications for Advertising Strategists. Journal Of Advertising, 43(1), 18-32. http://dx.doi.org/10.1080/00913367.2013.799450

Kim, M. (2014). Study on Actual State and Importance of Selection of Healthy Korean Food Menu Items Made from Environmentally-Friendly Organic Foods – Focused on Gender-. Easdl, 24(4). http://dx.doi.org/10.17495/easdl.2014.08.24.4.488

Lee, H. (2016). Individual and Situational Determinants of U.S. Consumers’ Buying Behavior of Organic Foods. Journal Of International Food & Agribusiness Marketing, 28(2), 117-131. http://dx.doi.org/10.1080/08974438.2015.1035471

Mujtaba, B. & Patel, B. (2011). McDonalds Success Strategy And Global Expansion Through Customer And Brand Loyalty. Journal Of Business Case Studies (JBCS), 3(3), 55. http://dx.doi.org/10.19030/jbcs.v3i3.4857

Polder, A., Savinova, T., Tkachev, A., Løken, K., Odland, J., & Skaare, J. (2010). Levels and patterns of Persistent Organic Pollutants (POPS) in selected food items from Northwest Russia (1998–2002) and implications for dietary exposure. Science Of The Total Environment, 408(22), 5352-5361. http://dx.doi.org/10.1016/j.scitotenv.2010.07.036

Qin, Y., Leung, C., Leung, A., Zheng, J., & Wong, M. (2011). Persistent organic pollutants in food items collected in Hong Kong. Chemosphere, 82(9), 1329-1336. http://dx.doi.org/10.1016/j.chemosphere.2010.12.009

Qureshi, A. & Hassan, M. (2013). Impact of performance management on the organisational performance: An analytical investigation of the business model of McDonalds. IJAREMS, 2(5). http://dx.doi.org/10.6007/ijarems/v2-i5/299

Rodrigues, J., Nikhil, S., & Jacob, S. (2016). Promotional Strategies of McDonalds and Market Effects.Journal Of Management Research And Analysis, 3(1), 53. http://dx.doi.org/10.5958/2394-2770.2016.00007.7

Sawyer, E., Kerr, W., & Hobbs, J. (2008). International Marketing of Organic Foods: Consumers, Standards, and Harmonization. Journal Of International Food & Agribusiness Marketing, 21(1), 44-66. http://dx.doi.org/10.1080/08974430802480644

Shanahan, C. & Hooker, N. (2015). A Balancing Act: Disproportionate Sampling of Organic Foods.Journal Of Food Products Marketing, 22(3), 320-331. http://dx.doi.org/10.1080/10454446.2014.940117

van Doorn, J. & Verhoef, P. (2011). Willingness to pay for organic products: Differences between virtue and vice foods. International Journal Of Research In Marketing, 28(3), 167-180. http://dx.doi.org/10.1016/j.ijresmar.2011.02.005

Vega-Zamora, M., Torres-Ruiz, F., Murgado-Armenteros, E., & Parras-Rosa, M. (2014). Organic as a Heuristic Cue: What Spanish Consumers Mean by Organic Foods. Psychology & Marketing, 31(5), 349-359. http://dx.doi.org/10.1002/mar.20699

Yüksel, I. (2012). Developing a Multi-Criteria Decision Making Model for PESTEL Analysis. IJBM,7(24). http://dx.doi.org/10.5539/ijbm.v7n24p52

Dimitri, C. & Mirsch, L. (2012). Access to Sustainably Produced Food: An Investigation of Organic Food Availability in Manhattan, New York. Journal Of Agriculture, Food Systems, And Community Development, 193-209. http://dx.doi.org/10.5304/jafscd.2012.023.001

Gottschalk, I. & Leistner, T. (2012). Consumer reactions to the availability of organic food in discount supermarkets. International Journal Of Consumer Studies, 37(2), 136-142. http://dx.doi.org/10.1111/j.1470-6431.2012.01101.x

Nielsen, M. (2012). Requirement-Sensitive Legal Moralism: A Critical Assessment. Ratio Juris, 25(4), 527-554. http://dx.doi.org/10.1111/j.1467-9337.2012.00526.x

Salisbury, P. (2013). Green targets: people who buy organic food – a customer acquisition challenge.International Journal Of Sustainable Strategic Management, 4(2), 127. http://dx.doi.org/10.1504/ijssm.2013.058592

Shiowatana, J., Purawatt, S., Sottimai, U., Taebunpakul, S., & Siripinyanond, A. (2006). Enhancement Effect Study of Some Organic Acids on the Calcium Availability of Vegetables:  Application of the Dynamic in Vitro Simulated Gastrointestinal Digestion Method with Continuous-Flow Dialysis. J. Agric. Food Chem., 54(24), 9010-9016. http://dx.doi.org/10.1021/jf062073t

Wadsworth, L. & Coyle, L. (2007). Organic Food Availability in Antigonish County, NS: Perspectives Along the Supply Chain. Journal Of Hunger & Environmental Nutrition, 2(1), 77-95. http://dx.doi.org/10.1080/19320240802081013

Wang, Y., Almvik, M., Clarke, N., Eich-Greatorex, S., Øgaard, A., & Krogstad, T. et al. (2015). Contrasting responses of root morphology and root-exuded organic acids to low phosphorus availability in three important food crops with divergent root traits. Aob Plants, 7, plv097. http://dx.doi.org/10.1093/aobpla/plv097

 

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