Business Entrepreneurship - Essay Example

Business Entrepreneurship Table of Contents Table of Contents 2 i) Advantages of Internet Marketing 3 ii) 4 iii) 4 2. Primary Causes of Small Business Failures 5 6. Ways to Minimize Bad Debt Losses 7 References 10 1. i) Advantages of Internet Marketing Internet marketing has a lot of significance in recent times. It is fast, attractive, influencing, and undoubtedly one of the most effective digital marketing tools to reach the targeted mass audiences. Another remarkable advantage of this technique is that it is a cost effective method (Muske & Et. Al., n.d.). It has been further revealed from several examples that internet plays a major role in creating an efficient brand image too. Additionally, ‘web logs’, better known as ‘blogs’ help to interact with the audiences directly, which encourage them to participate inherently (University of Kentucky, 2010). With all these advantages the tactic to use internet as a marketing tool shall positively be beneficial for the New Wave Youth Club. For instance, the website shall be useful to contact many donators and create an efficient impulse on them to participate with certain monetary help or donations to the club. 1. ii) Internet marketing in this phase after generating a feasible amount of donation request can again prove to be useful in many ways. For example, the website can also help to gain the support of professionals in this case without any extra cost. Precisely, the blogs creation can be useful to recognize the supportive donators and organize them ultimately. Another objective of the team was to establish a new gym in the local community. To attain this objective the team shall have to manage an adequate space within the building. The main supplies that the team should be focused on in this case are the equipments, one trainer at least, a changing and a resting room for the participants. In addition, the part of membership donations should also be considered. 1. iii) The advantages of website designing is quite remarkable in the case of New Wave Youth Club, therefore it demands a continuous development to sustain the position. To develop the website into a ‘Killer Website’ the team need to be focused on the attributes of speed, customer service and involvement of new up-graded technology as well. For instance, the team can organize awareness programs, or entertaining games which shall be effective to attract potential donators and other suppliers. 2. Primary Causes of Small Business Failures There are multifarious reasons for a small business to fail in its phase of entrepreneurship. The cause for failure basically derives from the managerial faults. A few of them can be listed as: Lack of Experience- A lot of small business entrepreneurs make a major mistake in selecting an appropriate time in order to incorporate their ideas, and thus the plan fails. These kinds of failures occur due to the lack of experience. Lack of Market Understanding- Numerous entrepreneurs, while incorporating their own business are unaware of the market perspectives and the various factors that influence a market plan largely. This results in the failure of the business. Psychological Aspects- Entrepreneurs also get highly influenced by their personal preferences and often overlook what the market is actually demanding from them. Apart from these flaws, many entrepreneurs also fail in establishing successful businesses due to the inefficient management of capital, profiling competition, and developing a strong financial framework. However to be precise, the main reason for which an idea fails is the overall lacking in generating an efficient business plan (Holland, 1998). 6. Ways to Minimize Bad Debt Losses Due to the lack of appropriate management know-how, entrepreneurs in their initial phase experience many difficulties and challenges. One of the major risks or challenges that are often faced by entrepreneurs is the chance to incur losses arising from inefficient bad debt recovery management. This risk factor can arise due to numerous reasons, such as the lack of experience, improper management of credit transactions, and over subscription of cash discounts. However, there are certain effective strategies which can assist an entrepreneur to overcome these kinds of loss. They are: Offering Cash Discounts- While entering a market, entrepreneurs often adapts a strategy to serve their products at cash discount which continuous for a long period. If this is not managed efficiently it can increase bad debt risks. Therefore, the entrepreneurs should also emphasize on anticipating an appropriate amount of discount for a certain period only (Bhattacharya, 2004). Creating a Bad Debt Reserve- Creating reserves to prevent bad debt losses is an accepted form to minimize the risk factor. In this tactic the business maintains a particular reserve system to combat any kind of inconvenience arising from bad debt (Bhattacharya, 2004). Anticipation of Future Credits- Entrepreneurs at their beginning stage make a common mistake in planning their inventory and credit ratios. This may also lead to the risk of bad debt. Another solution that an entrepreneur can implement while dealing with this kind of losses is to take sufficient preliminary measures in the working capital accounting systems. For instance, the Markov process can be used to predict the short-term receivables which the business shall come across in its near future (Bhattacharya, 2004). Calculating Bad Debt Ratio- Another major shortage of entrepreneurs that leads to raise the bad debt risk is the ignorance to calculate a bad debt ratio which can help in monitoring the frequency of bad debt occurring in the business. It can be executed through a vey simple accounting procedure, i.e. Total Credit Sales/Actual Bad Debt Losses = Bad Debt Ratio. However, in this context the entrepreneur should also be focused on maintaining a daily record of transactions in his/her business (Thomsett, 2001). Insurance- Presently, there are many financial institutions that provide insurance to the entrepreneurs based on the risk of bad debt losses as credit insurance. This may also be helpful for the entrepreneurs to deal with the risk factor in terms of bad debt (Euler Hermes, n.d.). Apart from these basic solutions the entrepreneur should also be aware of his/her targeted customers’ ability to repay the debt and accordingly identify the debtors that will probably provide rise to bad debt. Due to the fact that in real practice small business entrepreneurs often face a challenge in terms of financial attributes and management which provides rise to the risk of bad debt losses. Bad debts are a part of the business and will occur in the course of transaction. But an entrepreneur should emphasize on decreasing the value of bad debt rather than ignoring it. Conclusively, in many cases it has been studied that entrepreneurs, especially the beginners, do not have adequate knowledge to efficiently manage their credit transactions. Thus, they can opt to engage a professional for this purpose, which shall be beneficial for them. References Bhattacharya, H., (2004). Working Capital Management: Strategies and Techniques. PHI Learning Pvt. Ltd. Euler Hermes, (No Date). Cover For Bad Debt Losses. Information on Credit Insurance. Retrieved Online on December 17, 2010 from http://www.eulerhermes.ch/en/documents/credit_insurance_brochure.pdf/credit_insurance_brochure.pdf Holland, R., (1998). Planning Against a Business Failure. The University of Tennessee. Retrieved Online on December 17, 2010 from http://cpa.utk.edu/pdffiles/adc24.pdf Muske, G. & Et. Al., (No Date). The Internet as a Marketing Tool. Oklahoma State University. Retrieved Online on December 17, 2010 from http://pods.dasnr.okstate.edu/docushare/dsweb/Get/Document-2491/AGEC-566web.pdf Thomsett, M. C., (2001). Builders Guide to Accounting. Builders Guide to Accounting. Pg 64-67. University of Kentucky, (2010). Marketing Via the Internet. Marketing. Retrieved Online on December 17, 2010 from http://www.uky.edu/Ag/CDBREC/marketing/internet.pdf Read More