New Venture Creation and Network Tie Formation - Case Study Example

NEW ADVENTURE CREATION By Location New Adventure Creation Introduction Opening a car body and paint shop in the country can be a very lucrative business idea and opportunity for a person who enjoys helping his/her friends repairs their vehicles or is currently working in an automobile repair shop. Starting up a car body and paint shop will be a beneficial opportunity since this is one of the potential businesses in the world with a large number of people nowadays buying cars every now and then. However, how to replace a worn-out car body or paint a damaged car body to look like a new one is not all required to ensure business success: as an entrepreneur, I will have to seek to sound advices on how to start the car body and paint shop (Chorley, Miller & Jacob 2008, p. 146). The following new adventure creation ideas will be necessary to ensure success of the business as well as making it profitable. The name of the business will be XYZ car body and paint shop. Summary of the business idea The present paper discuses the venture of a new business idea starting a car body and paint shop. The business will be engaged in repairing and painting car bodies of all models. This is a good business idea for the type of business seems not to be affected, by any economic changes since everybody currently seems to own his or her own car. The idea of the business is to provide high quality products and services to the potential customers (Grossman 2005, p. 150). Being the owner of the business, I will ensure that the business keeps every kind of current technique, products, and services to enable it to offer quality services and products, which is the most customers’ demand in todays world. The business and the workers will be dedicated to carrying out all services on time and sustaining every car owner to be a long-term customer of the shop. Products and services XYZ car body and paint shop will be selling and replacing worn-out car bodies and offering painting services to the damaged car bodies. This will involve complete restoration of car frames for all types and makes of cars, body repairs, and paints including electrical repair, rust repair, custom engine building, and metal fabrication and paint. The business will specialize in all the current Spain cars and trucks makes. The average body repair and painting will take a minimum of two days, therefore the average labour for repairing and painting one car will cost an approximation of $100. The customers will also incur extra cost for any other extra part that we will buy for the purpose of the car repair. The XYZ car body and paint shop will also carry out any other relevant car services for all current makes including, and its products and services will not be limited to only car body repair and paint. The car body and paint shop will engage in business that will provide automobile bodies and other vehicle repair service to the entire public. The shop will have the ability of servicing any make of domestic cars including foreign cars. The business will accrue revenues from car painting and aftermarket body replacement or other automobile parts replacement. After bringing the car body and paint shop into profitability, the accumulated revenues will be used to further expand the business by opening other body and paint centres in order to attract a large number of customers (Grossman 2005, p. 153). The business will offer its products and services at reasonable prices that will enable it venture into the market without the risk of stiff competition (Chorley, Miller & Jacob 2008, p. 148). Unique Selling Proposition (USP) Before starting selling any of the shop’s product and services it will be essential to sell myself on it. This will be especially important because there is much similar kind of businesses offering the same products and services. In such situations, what really makes a business successful is the kind of USP used. The key to successful business in such kind of market situation is using unique marketing and advertising professionals, which are different from the ones used by the competitors. In order to come up with a successful USP, it will’ be essential to analyse the USP modes used by the competitors. This will involve careful analysis of the competitors’ ads and marketing strategies. The business will mainly intend on selling friendly and on-time services and products. This USP strategy will attract many customers since most of the competitors accumulate huge workload hence forcing customers to wait for many days before their cars are fully repaired. Unlike other competitors who set fixed prices for their products and services, XYZ car body and paint shop will be allowing customers a chance to bargain. This will enable the business to attract and sustain a large number of customers. In terms advertisement, the business will distribute business cards and flyers in traffic jam areas (Chorley, Miller & Jacob 2008, p. 151). This will be a unique form of business advertisement since the business competitors only use other advertisement methods such as billboards hence not reaching a large customer population. Additionally, other competing automobile shops do not see the necessity of advertising their business. Again, this unique method of advertisement will enable the business to attract a large population of customers, hence guaranteeing the business’s success and progression (Grossman 2005, p. 185). Strategic and market analysis Target market The type of XYZ business customers who will be attracted by the business’s products and services will include both male and women who own vehicles. The majority will be those who have a monthly income of $100,000. For those customers who are in the range of low incomes will be interested in the minor services such as buying spare parts and painting among others (Sahay 2008, p. 76). The type of customers that the business will target should be the ones interested in quality body repair, painting, and other custom automobile services such as engine replacement and repairs. The customers should also want on-time completion of their car services, competitive charge rates, commitment to quality and attention to details, and be able to give new ideas or alternative to their vehicles’ services. The business will have the ability to meet and ensure all these customers’ demands. I will ensure that I will employ workers who have quality skills, experience, and have long working periods in a similar field (Sahay 2008, p. 79). The employees should also have high standards regarding the products and services that the automobile shop will be offering. As the business owner together with the supervisor, we will ensure that all employed workers are able to meet all these standards. This is because not only quality products and services that will enable the business to become successful, but also the care and attention bestowed to the customers as well as their vehicles (Sahay 2008, p. 81). Location There is no exact geographical location in Spain for potential car body and paint customers. This is because such customers are scattered all over the country. Customers take their cars to dealer whom they prefer will give them better service based on the business’s reputation. This reputation comes because of “word of mouth”, that is a car owner seeing the quality of products and services of another vehicle that was repaired by the XYZ car body and paint shop. Industry trends, which the business will operate in Automobile body and paint services have a large market that investors have seen a big opportunity for the last years. All the indications in this industry portray that this type of business will be potential for many decades and at a time in the future it will double or triple entire existing market. Most of the shops in this industry have a waiting list of more than half a year and they are not accepting any new job to enable them to finish the current workload. As the owner of the shop, I am well-acquainted to ensure quality products and services to customers and I will be referring to any individual inquiring for a new body and paint service to the XYZ car body and paint shop. This will not only enable the business to increase the customers’ population, but also ensure a quality “word of mouth” reputation to the customers. Competition landscape The key to ensure that the business has a strong competition analysis is through doing research about the local competitors (Chorley, Miller & Jacob 2008, p. 150). I will find out what the main competitors are doing and who the major competitors. I will only achieve this by searching on my local Yellow Pages or online directories. If the market has many competitors, then it will necessary to implement strategies that will make the business’s products and services be of high quality and less costly than those offered by the competitors. By ensuring high quality products and services and low costs, this will enable the business to achieve a market share of more than 50% of the total market location. Several automobile shops in the area offer body and paint services that are similar to services that the business will be offering. Some of these competitors have been operating in the same field for more than 40 years and they have an extremely high rate of reputation for the customers (Petersen & Scheepers 2008, p. 58). These competitors currently have a list of cars to be repaired, making them has a workload that is more than the handling capability of the shops. Some of the shops have a workload that can last for more than half a year hence forcing them not to take any new body and paint job. This advantage and opportunity will make XYZ body and paint shop progress in the market, hence achieving a higher and profitable market share. Other businesses have been operating in this industry for less than 15 years. Most of their customers are the new customers in the market since they do not have a good customer reputation. Due to their poor products and services, they rarely receive repeat business. This will highly enable XYZ business to easily venture its new products and services into the market, attracting a large number of potential customers and achieve a higher market share. The universal nature of the business competition and how to influence customer buy products and services from a particular shop over others, is measured by “word of mouth” (Meyer, Crane & Meyer 2014, p. 45). The loyalty of customers and shop preferences results from ensuring trust between the business and the customers. To ensure for business success, the workers must truly have an interest towards both the current and old car models. The customers should feel cared and welcomed. Developing such trust between the customers and the workers will enable the XYZ shop to enjoy high sales volumes and maintain a large customer population. This strategy will also ease the competition posed by other shops. I will ensure that all the workers have the ability to bestow a higher level of care and attention to all customers. This will set the business far above the competition line. I will also ensure that there are extremely high professional standards in the shop. Workers will also be required to maintain cleanliness, adhere to all shop’s rules and regulations, and apply efficiency constantly. Prices will be reasonable and the customers will perceive them as being exceptional values compared to those set by other shops (Meyer, Crane & Meyer 2014, p. 48). The shop will be offering the highest quality of body and paint products and services currently available and that most customers demands. Advertising Implementing an effective mode of advertising will enable the business get its products and services to the customers. XYZ will implement a modest program to advertise and market its products and services that includes discounts, flyers, magazines and newspaper ads, car shows, local radio stations, articles and press releases, calendars, and websites. All these advertising and marketing approaches are beneficial since they are less costly and they will create the business’s products and services awareness to the customers. The automobile shop will also consider the possibility of ensuring a grand opening approach that will feature things like discounts, free repair and paint services, and other promotional techniques. I think issuing flyers and business cards will be the most appropriate marketing and advertising strategy that will enable the shop to attract many customers, hence making the business profitable (Meyer, Crane & Meyer 2014, p. 49). The flyers will contain information about the type of products and services the business will be offering as well as their prices and contacts. This will enable the business reach out to many customers over a wide geographical area. This will make the entire process of getting the business’s products and services to the customers easier. Pricing The business will set its products and services prices that will relatively lower than those of the competitors. The price for repairing and painting will be $100 per car. Most of the other competitors charge prices that are extremely higher than$100. I feel that this price is a competitive one and will not cause negative impact on the bottom line. Setting prices, which are slightly lower than those of other competitors will enable the business attract and sustain many customers. However, setting low prices only is not the key to attracting and sustaining large customers’ population, but also ensuring quality product and services to the customers (Petersen & Scheepers 2008, p. 56). Financial implications Underlying assumptions The start-up capital of the business will funded by a 5-year loan and the owner’s personal saving investments. The most underlying assumptions of the shop are that (1) the shop will have a 15% revenue growth rate per annum; (2) I will acquire debt funds totaling $50, 000 to start the body and paint business, and (3) the borrowed loan will be payable within duration of five years with an interest rate of 7%. As the owner of the business, I will also use my own personal savings and help from friends and relatives to develop this business idea. The revenues will only be moderately sensitive to general economic changes. This is because, car body and paint services are highly essential since many car owners do not have the skills and ability to repair and paint their cars on their own. Therefore, due to such situation, the business will not anticipate any negative impacts from economical changes (Meyer, Crane & Meyer 2014, p. 51). The car body and painting is a potential business, XYZ shop will accrue revenues at a faster rate, hence enabling the business to pay back the bank, and lenders loan with no challenges. Table1. Sources of funds Financing Equity Contributions Management investments $5,000 Total equity financing $5,000 Bank and Lenders Bank and lenders $50,000 Total debt financing $50,000 Total financing $55,000 Conclusion In conclusion, it is not a difficult task to establish a variety of new business ideas. However, it is actually difficult to implement these new business ideas. A business concept refers to a bridge between business plan and business idea (Sahay 2008, p. 76). This focuses on an individual’s strategic thinking to enable an entrepreneur identify the requirements of the proposed business venture. The conversion of an idea into a business concept needs strategic thinking on the ways in which the business will sell its products and services and who will be its customers, the products and services, benefits, and how these commodities differ from those of other sellers (Petersen & Scheepers 2008, p. 56). A quality business concept also enables an entrepreneur to describe the market and industry nature in which the business will operate. Bibliography Chorley, S., Miller, K., & Jacob, L 2008, New venture creation. Cape Town, Pearson Education South Africa. Grossman, E. B 2005, New venture creation and network tie formation: A longitudinal study of nascent entrepreneurs efforts in business-building. Meyer, M. H., Crane, F. G., & Meyer, MH 2014, New venture creation: an innovators guide to entrepreneurship. Thousand Oaks, Calif, SAGE. Petersen, A.-E., & Scheepers, R 2008, New venture creation. Cape Town, Pearson Education South Africa. Sahay, A 2008, Entrepreneurship and new venture creation. New Delhi, Excel books. Read More