Starting up a business - Essay Example

?Starting Up a Business Table of Contents Table of Contents 2 0.Introduction 3 1.Business Opportunity 3 2.Aim of the study 4 2.0.Literature Review 4 3.0.Research Methodology 7 4.0.Findings 8 4.1.Local/National Competition 8 4.2.Potential Customers 8 4.3.Marketing and Pricing Strategy 9 4.4.Start Up and Operational Costs 10 4.5.Financial Aspects 11 12 5.0.Conclusion 13 1.0. Introduction 1.1. Business Opportunity This particular report proposes a business plan for starting-up of a business of computer sales and services in the national market of UK. The main aim of the business will be to attract customers by providing quality services as per the need and demand of the customers along with delivering latest computer technology spare-parts to deliver the customers with quality assistance. Undoubtedly, the task of rendering computer sales and services to a diverse client base as can be observed in the current demographic features of UK, will be a tricky strategic initiation (Anderson Computer Sales & Service, 2009). Further reports have also revealed a fall in the selling prices and a consequence fall in the profit margin enjoyed by organisations in the computer sales and service marketing industry. Apparently this indicates towards an increasingly challenging market structure owing to which the planned business will have to be quite focused with respect to quality and customer services through effective supply chain management (IBIS World, 2013; Keeble & Athreye, n.d.). For instance, where on one hand the resource requirement can be observed as low during the time of initiation as no requirement of large sophisticated office spaces and other obligatory assets will be required apart from skilled human resources; on the other hand, over the long run, significant costs for availing innovative technology assistances and increasing the dais for serving the customers may be incurred and thus, the business might require continuous inflow of cash and apparently at an increasing rate for its continuation (Curators of the University of Missouri, 2010). Notably, the business is planned to be instigated as a sole-proprietorship based small business concern which will have minimum responsibilities in terms of legal obligations and therefore, will have to witness minimum intervention from external parties. 1.2. Aim of the study Setting-up of a business is often signified as a complex procedure which requires considerable knowledge base of the entrepreneur which can only be sufficed with ample information related with the motive obtainable through a formal research process (Bergstrom, 2012). Based on this notion, this particular study will aim at: Identifying the business opportunities, market competition trends and required resources to instigate the business Devising proper marketing strategies for the targeted potential customers Forecasting the capital requirements and costs to be incurred during the instigation of the business and within a one year financial period Concluding if the business plan is viable and should be proceeded with on the basis of the obtained information and forecast reports 2.0. Literature Review Business start-ups are considered as a significant contributor towards the economic development process owing to which, governmental bodies have been observed to decipher a supportive approach to assist the small and medium sized business organisations. It is worth mentioning in this context that majority of the economic structure of UK constitute of small and medium sized organisations and set-up firms which have further created a substantial pressure to facilitate this particular dimension with ample scope for future development (European Union, 2011). In the similar context, Mahdjoubi (2004) affirmed that business plan is considered to be the important source of evidences required for decisions in investment screening. Scholars have provided various frameworks to structure the process of setting-up of an organisation which is often characterised as a complex phenomenon. As stated by Carter & et. al. (1996), although the develop frameworks represent diverse notions and concerns behind setting up of a business, most of the attributes can be identified as common in the process. Accordingly, most of these attributes can be identified as market competition, consumer buying behaviour trends, socio-economic effects likely to be witnessed on the business along with the resources which will be required essentially when instigating the planned business operations (Carter & et. al., 1996). According to Van de Ven and et. al (1989) formulation of strategy for developing business over a considerable period of time is also attributable as a significant aspect. The creation of functional competencies for development and marketing of the services and/or products is another significant strategy required to be performed by entrepreneurs when intending to set up a business. According to Vesper (1990) it can be stated that a new organisation essentially comprises of five ingredients including physical resources, technical know-how skills of the entrepreneur, service or product ideas, personal contacts and initial orders from customers (Carter & et. al., 1996). Notably, in relation to an entrepreneurial project, there are various reasons contributing to the success of the set-up business that includes adequate capital, management and industry experiences, timing of product services, staffing and marketing among others. It has further been argued by Lahm & Little (2005) that the best chance of instigating a business is when the initiators are familiar with the conditions prevailing in the market and possess the capabilities of effective decision making in a focused manner. However, there are various challenges which an entrepreneur needs to witness when setting up of a firm such as quality demands of the targeted customers, competitive influences from the existing players and imbibing changes which are necessary to keep pace with the external environmental alterations (Lahm & Little, 2005). With the intention to instigate a new business it can be stated that careful preparation in regard to business plan provides entrepreneurs with ample opportunities to gather all the requisites related to new business set up as well as examining the consequences of various tactics and strategies. It can be stated that determination of financial and human requirements for launching and constructing a strategy for viable start up business is quite significant in any kind of entrepreneurial projects (Lange & et. al., 2007). It has often been argued in this context that increase in the income structure with the incorporation of new technology would assist in building new business setup for the organisation in the markets of UK (Tsai & Lan, 2013). It can be stated that for organisational set up, it is necessary to maintain the four important aspects of business that seems to be significant including production, marketing and sales and research and development process. It can also be stated that matrix organisation provides better solutions for capturing best features for functional organisations and thereby maintaining efficiency in the organisational context wherein better marketing strategies with the virtues of skilled manpower would help in generating greater efficiency in the work process (Lager, 2012; Wyckham & Wedley, 1990). 3.0. Research Methodology The research methodology used in this study has been based on a qualitative analysis. A preliminary literature review including industrial reports, academic journals, peer-reviewed articles and others has been carried out in order to identify the various attributes which must be considered when planning for a set-up business. It is worth mentioning in this context that literature review process of collecting qualitative data is often regarded to offer descriptive understanding regarding the research issue in concern and therefore, can be quite beneficial in developing a primary understanding of the research subject (Dahlqvist & Davidsson, 2000). Based on the identified process and attributes, informal interviews with expert entrepreneurs and other marketers operating in the computer sales and service industry were conducted. These interview sessions were further organised on various social website networks, offering a global idea regarding the business opportunities and the concerned areas which must be assessed efficiently prior to the instigation of the business. Additionally, the benefits of personal social circle including friends and relatives were also used for the data collection process which assisted in obtaining adequate data with respect to the ‘do’s and don’ts’ for the particular business plan (Turner, III, 2010). The obtained data was further analysed on the basis of qualitative data analysis method, i.e. in a narrative method to determine the marketing strategies and other requisite measures when instigating the business plan. 4.0. Findings 4.1. Local/National Competition Over the past few decades, the computer sales and services industry has developed significantly within the UK industry context. In the national context of the UK, majority of its service industry is captured by computer service delivering organisations and IT service providers. Greater availability of resources, lower switching cost of customers and higher degree of new entrant threats facilitate by less capital intensive also constitute the dimension of computer sales and service industry within UK. Accumulatively, these factors present a highly competitive business environment for the planned entrepreneurial venture (Crespi & et. al., 2006). In other words, the venture shall have to face significant competition in the market wherein only differentiation strategies can prove to be highly beneficial. Therefore, the business will focus on differentiating its services in terms of prices charged and the time efficiency as well as quality effectiveness in compliance with the customers’ needs and demands. Contextually, owing to the fact that consumer satisfaction is the only key to attain long run sustainability and growth, the business will focus on complying with the varying need of the customers serving them with latest technology but at a competitive price. 4.2. Potential Customers For the purpose of the proposed business, the customers in the UK will be segmented on the basis of three primary categories, i.e. households, businesses, and various non-profit organisations. Contextually, the pricing and the service modes used for these three customer categories will be distinct as the IT and computing requirements of each of these groups is observed varying significantly. Age or gender shall not be quite relevant in the market segmentation process for the business plan. Thus, the potential customers for the planned business will be diversified within the UK computer service industry comprising of households, businesses and non-profit organisations (Alsos & Ljunggren, 2002). 4.3. Marketing and Pricing Strategy Based on the findings generated from the literature review and the above discussion, the below marketing mix strategies can be devised for the planned entrepreneurial venture. Price: The price charged to the customers will be based on certain criteria including the purchase cost of the computer and IT spare-parts as well as the manpower required for the service deliverance. Competitor’s pricing strategies will also be taken into account when deciding upon the pricing strategies for the intended business plan. In the initial phase, discounts will also be offered to customers on the basis of their conveniences and service requirements with the intention to gain a strong foothold within the highly competitive business environment. Products/Services: Initially, the business will be only concentrated on rendering quality services to the customers IT and computing related problems such as installation of new technologies, fragmentation of the software used along with software configuration. Mutually beneficial liaison will also be created with the wholesalers of technology gadgets which will assist in differentiating the services from that of the existing rivals. Promotion: Advertisement through print and internet media will be taken into account during the instigation of the business. Simultaneously, due significance will be rendered towards word-of-moth promotion within the customer circle with the virtues of the entrepreneur’s social network. Place: The service marketing business plan will be focused on the urban areas of the UK where technology assistance is observed to be much sought for and required by the customers. Steadily, as its corporate social responsibility initiative, the business will attempt offering services to the rural parts as well targeting the non-profit organisations such as schools, which shall not only assist in enhancing the brand value but shall also reward better competencies to the business as such rural areas are quite likely to be untapped by larger rivals and thus, are much easier to be captured. 4.4. Start Up and Operational Costs In order to instigate the business, a total of ? 100,000 will be required. 50% of the total required amount will be gathered through personal loans from relatives, friends and personal savings account, while the remaining 50% will be obtained through bank loan facilities offered by the UK government for small and medium sized organisations. The below illustrated financial forecast statement shall provide a better overview of the financial requirements of the start-up business and its initial operational costs. 4.5. Financial Aspects In relation to the business planned to be instigated, the below illustrated cash flow and break even chart shall be beneficial in understanding the financial aspects related with the venture. As can be observed from the break-even chart, the business is forecasted to reach its break-even point attaining sales of ? 29,579 5.0. Conclusion From the above analysis, it can be comprehended that formulation of business plan for any business requires necessary components such are resources, manpower, technology, exact location, analysis of markets along with competitors. Such required information can be possibly obtained by conducting primary researches such as literature review, informal descriptive interviews. To be noted, these aspects have been highly beneficial in supporting the planning of a new venture in the highly competitive market of computer services in the UK. This generally suggests that starting up a business requires adequate knowledge and possession of varied abilities by the entrepreneur to counter strategies and sustain a greater position in the targeted market place. References Anderson Computer Sales & Service, 2009. Services. Home. [Online] Available at: http://www.andersoncomputer.com/ [Accessed 19 May, 2013]. Alsos, G. A. & Ljunggren, E. 2002. Does the Business Start-Up Process Differ by Gender? A Longitudinal Study of Nascent Entrepreneurs. Introduction. [Online] Available at: http://fusionmx.babson.edu/entrep/fer/papers98/V/V_A/V_A_text.htm [Accessed 19 May, 2013]. Bergstrom, B. 2012. Business Plan for a Startup Company VRDA | HELSINKI. Hagga-Helia. University of applied Science, pp. 1-49. Curators of the University of Missouri, 2010. Starting a New Business in Missouri. Developing a Business Plan [Online] Available at: http://www.missouribusiness.net/sbtdc/docs/starting_new_business_missouri.pdf [Accessed 19 May, 2013]. 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Qualitative Interview Design: A Practical Guide for Novice Investigators. The Qualitative Report, Vol. 15, No. 3, pp. 754-760. Tsai, S. D. H. & Lan, T. L. 2013. Development of a Startup Business — A Complexity Theory Perspective. Literature Review. [Online] Available at: http://www.baf.cuhk.edu.hk/asia-aom/05_paper/10_tsai.pdf [Accessed 19 May, 2013]. Read More