Building a Business - Assignment Example

? Building a Business Full Introduction An entrepreneur is someone who must be willing to take risks because they have a lot to gain and nothing to lose. While many people focus on attributes such as vision or creativity, one characteristic of entrepreneurs is that they are extremely disciplined (Bram, 2008). Entrepreneurs have to be; otherwise they would not achieve the successes that they have. Mark Zuckerberg is one of the most famous entrepreneurs, but even he found a successful formula and stuck to it. This is something that many budding entrepreneurs get wrong because they change their strategic goals too often based on external circumstances. In choosing a business model, this paper will discuss the type of business, how the business will be financed, the supply and demand for the product, and the marketing strategy employed. Body The business that I have chosen to start up is a sports shoe business called Sporty Shoes. With the global appeal of sports these days, the choice of shoes is an interesting decision for many budding sport players. For the short term, this business will be run as a sole proprietorship. The benefit of this is that I can control the key business decisions over the few couple of years while trying to reach breakeven point. To expect a profit too soon would be asking for too much. Once the business reaches a level where it is sustainable, I would be open to including another partner in the business so that it can expand. Eventually, the goal would be to become a corporation, where I would turn control of the business over to a Chief Executive Officer (CEO). The risk with starting out with a sole proprietorship is that there is a strong chance that the business will fail within the first year of operation. Because only I would be involved, I would be liable for any potential debts that the business would incur (Investor Words, 2012). This is a risk that many entrepreneurs must face, yet the most committed ones often manage to find a way to get the business to a point where it can thrive. If I eventually found a partner to run the business with, my share in the business would reduce to half. However, I would also only be liable for half of the debts. The ultimate goal is to become a limited liability company or corporation, so that I would not be personally affected by any debts that the business would incur. Because the business will begin as a sole proprietorship, I would not have the ability to raise funds right away. Any money that the business would start out with would have to be personally funded by myself. This is a huge risk, especially if the business goes bust. The initial startup capital would be $50,000. This is not a huge amount, but it would get the business started at least. Because I would be running the business by myself, I would look to source sports shoes at wholesale prices and then on sell them at retail prices. Using this selling strategy would result in very little profit at first. However, it would slowly pay off my initial capital of $50,000. Obviously, if another partner joined the business, they would be able to invest some funds. This would mean that the business would reduce its debt by up to twice as fast as I could by myself. Eventually if the business gets to the stage of an organization, money could be raised through stocks and shares. Because Sporty Shoes would not gain instant market recognition, the demand would start out very low. Very few people would have heard about the brand, so customers would generally be local. Once the business gained more of a reputation, demand would increase, particularly from other states. Demand can be expected to remain high over the long term because sports shoes are needed for all types of athletic activity. For the supply side, shoes are always going to be produced so long as the demand remains high. A good relationship with a shoe supplier would result in decreased costs over the long term. Also, the key to keeping demand high is to retain a core group of loyal customers. These are the customers that contribute to the long-term success of any business. Since funds would be limited in the short term, low cost forms of advertising would be employed to begin with. Facebook advertising is increasingly popular because it reaches a wide range of people and it is cost effective. This would fit with the marketing strategy of Sporty Shoes, which is to focus on young adults aged 15-30. People of these ages often like to stay active, so there is a high demand for sports shoes from them. Additionally, people of these same ages also like to spend a lot of time on Facebook, so the advertising would be targeted at the business’s target customers. Conclusion Entrepreneurs must always be one step ahead of the consumer market in order to capture a wide customer base. Sporty Shoes will try to do this by offering a popular product at reasonable prices. To begin with, the business will be run as a sole proprietorship, but there is the potential for expanding in the long term. The business will be solely financed by me, as the business would be totally under my control. The demand and supply of sports shoes can be expected to remain high for some time yet, as exercise is a popular hobby for many young people. These young people are the main target market because they often do more exercise than older people. References Bram, T. (2008, 12 9). 5 Key Characteristics of a Successful Entreprenuer. Retrieved 04 10, 2012, from Stepcase Lifehack: http://www.lifehack.org/articles/management/5-key- characteristics-of-a-successful-entrepreneur.html Investor Words. (2012). Sole Proprietorship. Retrieved 04 10, 2012, from Investor Words: http://www.investorwords.com/4626/sole_proprietorship.html Read More