Entrepreneurship, Innovation and Growth in the Business - Essay Example

ENTREPRENEURSHIP AND VENTURE CREATION ASSESSMENT Table of Contents Business plan 3 Introduction 3The theoretical background of the business idea 3 Research and the target Market 5 Success of the business 7 Financial planning 8 Conclusion 9 A Case study of an Entrepreneur 9 Introduction 10 The motivation and believes 10 Entrepreneurship, Innovation and growth in the business 13 Consultancy Advice – Future Expectations and growth plans 14 References 16 Business plan Introduction The current world is largely under technology. Technology plays a critical role in connecting people and business. In fact, many entrepreneurial ideas with the potential of growing are based on ideas that use technology to add value in service delivery or production of goods (Read et al., 2009). With the improvement in technology, it is easier to share information and utilise the shared information than before technology came into existence. An online business idea that forms the interface between the buyers and the sellers is likely to flourish given that it is possible to carryout transactions online. The business idea is to develop a business that connects buyers and sellers of any product, from clothing, kitchenware, electronic, cars, household items, and any other items that have market value. The idea aims to capitalise of individuals who have used items and hopes to make quick cash out of the sale. Unlike existing ideas that champions the capability of the seller has to meet the potential buyer, this idea will ensure both option of the two meeting or the seller decides to use the organisation’s sale representative to do the transaction on their behalf. The theoretical background of the business idea The use of technology has made it possible to make online transactions. People can make secure purchase of items by just keying the details of their credit cards and select the mode of delivery and the destination to receive what they have purchased. The model will utilise these technological provisions to connect buyers and sellers of different items from different geographical locations. Other than making use of technology for efficient implementation of the model, the main source of this motivation is the strong marketing strategy, which will enable the idea get the wide coverage (Cromie, 2000). Besides, the realisation that most homes have used items that other people may find useful at a reduced pricing is the motivation guiding these ideas. In every household, there are items ranging from clothing to other assets that the owner can generate some quick cash by selling them using a platform that will not cost them lots of money. These ideas are realistic because the less fortunate community values second hand goods. For instance, charity organisations and other humanitarian organisations may wish to purchase less expensive goods but find it difficult to outsource for such items. The example given above is not the main source of the customers, but just a perspective to illustrate how realistic nature of the model. The main customer targeted by this model is anyone with a product at home, which is not in use but still in good condition to generate some revenues for the individual. The idea involves development of an online platform that provides a stage for the interaction between a buyer and the seller. The seller will have to put the pictures of the product intended for sale on the platform. The pictures will have different dimension of the product as well as the model and the duration it has been in service and the proposed pricing range. It is from this price range that the buyers and the sellers must negotiate and make agreement. Unlike most competitors using a model that is almost similar to this replica, it will involve provision of a section that enables buyers and the sellers to negotiate the price online before the two coming into agreement. Besides, the platform makes it easier for a seller to carry out multiple negotiations and select a buyer that suits the pricing model of the product. Therefore, the model provides an interactive platform for the seller and the buyers when making agreement for the product. The idea conforms to economic model previously described by Cromie, (2000) that highlighted the need for entrepreneurial ideas that champion change, through utilisation of technology and other infrastructures for easy access to services. Besides, it captures the innovative theory opined by Schumpeter (1949). Schumpeter highlighted the need for the buyer selects the location and the mode of delivery before making the online payment. The system will function in such a way that it captures the additional payments that the organisation gets from the each transaction depending on the value of the product, the mode of delivery selected, the duration, and the location of the buyer. The organisation will have sales representatives to act as an intermediary that connects the buyer and the seller so that upon agreeing, the two parties sign an online form to ratify the agreement. Research and the target Market The business model aims at targeting the households that have properties and assets of multifaceted dimensions. The assets include both the second hand items as well as the new items. In every household, it is estimated that there are goods and items that are not used by the family members despite the fact that such items may still have value that can generate additional income for the family. Establishing a business venture that connects one family with another family based on their shared cultural values is a paramount consideration when starting an emerging venture. The social aspects will be captured because of the dimensions of items that the two parties would be undertaking. The model requires an effective marketing strategy that creates awareness for the services. The current social platforms make it easy to market a model of business on the major social platforms like Twitter, Facebook, LinkedIn, and Instagram (Read et al., 2009). The current trend in online transactions is marred with suspicion and uncertainties of safe online transactions and the validity of the product sold. Building the credibility of the platform to win the hearts of the buyers and the sellers will help boast the business frontier. In fact, the current social platforms that helps people to engage, share, and exchange ideas are marred with insecurities owing to possible engagement with fraudsters and other malicious individuals that may aim to swindle either of the parties involved in the transaction. Therefore, the platforms will seek to ensure the parties have a guarantee for the money by introducing a service charge that is refundable after successful transaction for both parties. This will be achieved when a party creates an account on the platform, they will be requested to accept a deduction of certain amount of funds from their credit card, which will be refunded upon successful completion of the transaction. The aim of the strategy is to verify the authenticity of the both parties taking part in the business. The realisation that markets are shifting from the conventional ways of doing business by the involvement of the consumers in making the purchases is one fundamental aspects that this model hopes to leverage upon (Bonnett and Furnham, 1991). For instance, the existing online models do not provide a platform that allows interaction of the consumer and the seller at a personal level in deciding the mutual pricing. These limitations create the problem in reaching a mutual agreement between the parties. However, this model will hope to put in place measures that resolve the challenge. Innovative ideas must ensure the two parties have a platform that connects the two. Besides, the model hopes to add value by offering an option to allow the two parties to select whether to have the organisation as the middle part or the interface that connects the transaction. This will require that the organisation have a warehousing for storing the items. In such a situation, the model has an advantage over its competitors because with time and growth, the venture will take precedence in buying most of the items from the online platform and keep them for their potential customers. Unlike the existing business models that only act as platforms that do not offer courier services, the proposed business plan aims to have sales representatives and marketers who would be in a position to connect the parties involved in the transactions. Success of the business The business hope to draw most of its success from the trust it will build between the seller and the buyers. Most online transactions raise many questions of authenticities. It is from this context that the business will aim to build the confidence of the parties by ensuring that the details of the persons taking part in the activities are captured and stored to make it easy to trace the malicious party. All parties must give their consent to the requirement. The storage of confidential information is to discourage the fraudsters form taking part in such business. These successes will be attained when the parties creates an account they authorise the deduction of some refundable funds from their accounts. The first time a person is making transaction of participating in the business, the system will capture all their details as entered and verified through a mobile text message. The funds shall be deducted from their bank accounts but will be refunded upon completion of the transaction. Besides, these efforts are meant to discourage individuals from taking part in business when they nothing to sell. The utilisation of effective marketing strategy that involves utilisation of social platforms and the connection of the people with similar or different cultural values will play a significant role in the success of the business (Read et al., 2009). Besides, it offers a platform that the consumer and the seller can interact. The involvement of the consumer and the seller into an active negotiation utilising chat platform of the model will make it a unique business platform that attracts many people in take part. Besides, given that the business aims at ensuring family members have an additional method of generating funds, the model will gain the attention of many households that have many items that could generate extra money. The other success relates to easy transportation system that exists between countries. The existing connection between nations will ensure effective delivery of goods at a reduced cost. The model aims to entice the consumers by providing incentives on the purchases that require long distance transport to encourage participation of people from different regions to make purchase (Aldrich and Cliff, 2003). Financial planning forecast profit and loss account of the business Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Sales 50000 70000 90000 100000 120000 cost of sales (net) (10000) (15000) (17000) (20000) (25000) salaries (sales representatives and marketers (5000) (5000) (5000) (5000) (5000) warehouse hire (5000) (5000) (5000) (5000) (5000) transport services (2500) (2500) (2600) (2800) (3000) miscellaneous expense (1000) (1500) (1500) (2000) (2500) net profit 26000 41500 58900 65200 79000 Breakeven point = fixed cost / (unit selling price – variable cost) = the stage at which the business does not make either loss or the profit (sales equals the total revenue) Fixed cost = costing that do not change even when sales change = salaries of the sales representatives and the hire of warehousing =5000 + 5000 =10,000 Variable costs = changes when the volume of sales change E.g. cost of sales, transportation services hire, and miscellaneous costs Break even analysis BEP Year1 BEP Year2 BEP Year3 BEP Year4 BEP Year5 0 1.66667 2.04082 4.16667 4.0000 Conclusion The proposed business model is appropriate considering the fact that most business are going online hence driving most consumers to abort the conventional approaches of face-to-face interaction between the seller and the buyer. However, the existing online platforms have limited capacity to attract a huge following for the changing trend because such models do not have measures of securing and increased interaction between the parties involved in the negotiation. In fact, most consumers have little if no chance of interacting and negotiating prices online prior to making payment upon reaching an agreement. It from this realisation that this model aims to leverage on and come up with a model targeting the household to sell some of the products found in the homes that are still in good condition yet not in use to make some cash. Household will have items at their disposal that they do not require; however, there are people around the neighbourhood and around the world who may find such items to be of great value. Therefore, the model aims to enable communities to share and interact through selling of items on an online platform that provide both parties with an opportunity to interact and negotiate the price. A Case study of an Entrepreneur A case of MARY: Started a joint that enables people to relax and connect Introduction After her training in entrepreneurship, Mary went back home and secured internship in a local auditing firm. Many people expected her to be an auditor or start her own auditing firm from the experience she gained from her internship position. Instead after the internship she went back to help her mother in running the supermarket, which had been a long time family business for the past 10 years. Her mother played a significant mentorship role in encouraging her to come up with ideas that help the business expand by identifying goods that were not in the line of business. However, Mary did not take into consideration on the expansion plan the mother had suggested, instead she realise that most locals were lacking a place they could come together with their family friends and children and have good time. Mary wanted to use a land adjacent to the supermarket that was under sale and came up with idea of setting up a joint with tents. This was a business opportunity that could also help draw many people into the part of the town especially over the weekend and holidays. The idea came into existence 15 months after interacting with many people who came shopping in the supermarket; therefore, she set up the business, which employs 15 people. The motivation and believes Mary draws most of her motivation from the people she interacts with, when she talks to the people around her and realises a gap in social need she thought of taking a risk. Although the team she works with also forms an integral role, her drive comes from doing what she enjoys (Cromie, 2000). While working in the local audit firm, she realised that people from different parts of the region and beyond would visit the area and would praise how the place was beautiful for friends’ reunion. Besides, she realised she could secure a place adjacent to the supermarket. The place was critical because she had built a strong bond with most of the frequent customers. These attempts not only solve social issues previously demonstrated by both the Shaw and Carter (2007), and Baogous et al. (2009). These authors opined that start up businesses that have a perspective aiming to solve social problems are drawn from the realisation that a social issue exist and coming up with ideas could generate some income when attempting to solve the problem. While studying for her entrepreneurship degree, Mary had the opportunity of visiting a friend during her holiday. The friend had relocated to Spain after a short stay in the UK. One of the family members of the friend was running a similar business that Mary got interest. In fact, she had learned a lot from her visit because it offered her the opportunity to be on her on and make her own decisions. The autonomy she acquired from such interaction shaped her zeal of taking risk in making decisions (Cromie, 2000). The internship opportunity she undertook, shaped her reasoning and the outlook of problems and the need to come up with resolutions. Although she got support from both parents, her father played critical role in encouraging her to obtain a full time job in the firm or its affiliates. Ensuring the daughter got a stable and well paying job was the most important thing that the father emphasized, however, the mother encouraged her to find what she enjoys doing and take it because doing what ones love is the key to success. Mary wanted to start her own ventures, because she believed she could take a risk and come up with tangible solution (Read et al., 2009; Aldrich and Cliff, 2003). She knew the best way to success is to come up with ideas that were not explored in the region, ideas that could bring people together and encourage the bonding and social aspect of the community. Although the father was not so accepting because he felt she went against his wish of securing a job, in his mind the daughter was “Risking in ventures that could not guarantee returns.” In fact, when the father wanted to know how the idea came into existence, he was very furious because “she was just a spoilt child who wished to be like others instead of being herself.” The father believed that the daughter was in a better position of securing a nice job. Mary still believed in her father and understood the fear her father had for her, in fact, it made her more determined to cherish her goal of the new venture. She saw an opportunity and could not allow any distractions pull her down (Blanchflower and Oswald, 1998). The reason she was not mad for lack of support from the father is the support he made in encouraging her during the study, the travel to Spain, and the internship program. In fact, the entire journey opened her eyes and the outlook of the opportunities around her. Subsequently, Mary believes that the role played by the family in seeing her through her studies opened her eyes to visualise the opportunities. Family members have a special role in helping entrepreneurs develop innovate ideas (Brockhaus, 1980; Cromie, 2000). Besides, the motivation she got while studying, especially from the father helped in making her focused in achieving her dream. The mother was a role model for entrepreneurship. She believed that if she could follow in the footsteps of the mother by coming up with a business she could help change the life of the community in one way or the other. In fact, the mother encouraged her to find what she enjoys doing and cherish that option. The internship program offered her the opportunity to practise her skills and learn from the seniors. Although the opportunity was encouraging because the firm offered her probation period of six month before confirmation the terms of employment could not make her happy in the job. She was not impressed with the standards, values of the firm because she felt they were more driven to making profits, and cared less about their employees. She knew the firm would not offer an opportunity for her to enjoy her practice and wanted to explore different avenue. Going back to help the mother in running the supermarket made her believe and choice even more stronger because, she found that she could create the required standard and ethical values instead of waiting for another person to do it on her behalf (Begley and Boyd, 1987; Bonnett and Furnham, 1991). Going it alone would offer many opportunities for the realisation these goals. Therefore, she had the correct mindset and the belief that she needed to do something that would make her happy. Having interacted with a person who had been successful in a similar venture, she had all the advantage of getting it right from the start. In fact, she knew she was taking risk because businesses have dynamic perspective, but had nothing to lose by trying out. She got the contact of the friend operating in Spain to learn about a few things. The mother recommended a group that could advice her. These included accountant and the human resource. She built a team that was required to commence the idea and make it into a realisation. The team liked the idea and assured her of the success because of it feasibility and viable nature considering the fact that there were no similar ideas operating in the region. The main aspects of the business was to maintain the interaction of the people and the coming together to have good time in an open space with several amenities for children hence increasing the bond of the community. Entrepreneurship, Innovation and growth in the business She began her venture by hiring tends and plastic seats and tables because it was feasible to select this option in the beginning to avoid over expenditure and assess the return from the venture. She realised the gap in the social dynamics of the community and wanted to be the solution to the challenge by bringing together the people in place that would be more than just a restaurant, because it offered other amenities like children play ground. Given that the local area was housing an audit firm, she realised the gap while working both in firm and the supermarket that people needed such a place not just for the weekends but also for the weekdays. The realisation of these opportunities made her to develop the desire of wanting to come up with a model that resolves the challenges (Read et al., 2009). After four month, the business had expanded, that Mary was no longer hiring tends and the plastic seats. She had saved enough in buying her own. The initial number of employees was three while starting, however, after the four months she had employed two more and had the plan to add more in the coming months. Most of the customers were the local who came during lunch hours and the weekends to have good time with their family members. The venture had the attention of the local authority, especially after she got accreditation and the permit to undertake the business. These strategies motivate entrepreneurship (Aldrich and Cliff, 2003; Aldrich and Zimmer, 1986). The business was awarded as the best “Young Enterprise” of the year just in its first year of inception. These were some of the motivation that drove Mary to expand the venture into the adjacent neighbourhoods, and cities by embarking on efforts of starting up new branches. One would think that she had it all; however, Mary took part in training programs that aimed to enhance her skills by attending short courses and training on business related courses (Blanchflower and Oswald, 1998). She wanted to horn her skills of doing business by gaining knowledge and sharing with the people who have succeeded. Attending such workshops opened her eyes to come up with solutions and devise strategies of mitigating risks associated with the venture (Chwolka and Raith, 2012). Consultancy Advice – Future Expectations and growth plans The expectation of the venture was to grow beyond the region and create several replicas in areas and regions that had a potential for similar needs. These required extensive market survey and evaluation of the importance of starting the venture in other areas because of the varying dynamic business environments (Austin et al., 2006; Baker and Nelson, 2005). Different areas have different receptions to a venture. One successful venture in one part of the country may not justify a possibility of obtaining success in a different area hence the need for an extensive market evaluation prior to the commencement of the plant for rolling out the branch (Venkataraman and Sarasvathy, 2010). Therefore, she hired a consultancy firm, to assist the business by evaluating the areas earmarked for possible entry and expansion. Consultancies are important because they are independent bodies that carryout market evaluation and the assessment of the risks and the gains that a firm may have undermined or overlooks hence reverberating the likelihood of incurring losses (Barney, 1991; Brinckmann et al., 2010). Informed decisions making process helps in keeping the business and its aspirations intact, consulting based on well-structured expectations and future prospects assist the venture into putting place strategies for expansion by considering only the areas with feasible and viable option while avoiding areas with high risks of operation. The new opportunities would involve expanding on the sphere of the business to include hiring of tends and seats for events like weeding and acting as the alternative organiser of the same or similar events. The venture could also manage such events in totality just by agreeing with the planners and giving then a plan on it implementation. These are some of the new areas that are in line with this venture and may play a critical role in its expansion; however, there are challenges of other start up with similar ideas. 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