The Perils and Payoffs of Building Your Own Company - Essay Example

The Perils and Payoffs of Building Your Own Company Introduction “Starting a new business can be exciting, but as any business owner can tell you, it can also be risky” (Hekman). Building a company is a complex task which requires lot of business idea generation, planning, resource exploration, implementation, execution etc. According to musician, programmer, and blogger Derek Sivers, no matter how great your idea, its hardly worth a dime until you prove you can build a business around it. The most brilliant idea, with no execution, is worth $20. The most brilliant idea takes great execution to be worth $20,000,000 (Inc. Staff). Many people often claim that they have great business ideas in stock, but most of them may not succeed in the current business world because of immature business ideas, failed market evaluation or failed implementation of ideas. Business ideas will become great only after it is successfully implemented. Other ideas might be great on papers only. Recently, Indian business group TATA has proposed an idea of making a passenger car worth $ 2000 only. Many people thought that the claims of TATA were a fluke. But TATA proved the critics wrong by introducing their prestigious NANO car worth $ 2000 in the market. JAMES STANFORD (2009) has mentioned that TATA has already achieved more than 1 million booking even before the introduction of the NANO and TATA has plan to export this vehicle to countries like China, US and Europe (STANFORD). The above case clearly shows that building a business or company requires great business ideas along with the determination to succeed at any cost. It is a fact that perils and pay offs needed to be expected in building a company. This paper analyses the perils (dangers) and pay offs (success) involved in building a company or business. Perils of building a company Perils can come in different forms while building a company. “Many small business owners were not ready for an economic downturn a few years ago and have since closed or filed bankruptcy. Being ready for changes in the economy, market trends, and consumer behavior can help in positioning your business for future success”(4 Steps to Create a Strategic Sales Business Position) The recent global financial crisis was an unexpected one and many big companies collapsed because of that. Even the economic gurus failed to anticipate such a crisis and even big companies like Le man Brothers, GM, AIG etc faced strong challenges because of the recession. In other words, economy plays a vital role in determining the success and failures of building a company. Even a poor business idea may succeed if the economy was good and the implementation was right. At the same time even great business ideas can fail if the economy was poor and the implementation was wrong. For example, till 2008, real estate business was a great business and many companies formed in this sector which reaped enormous profit. Deriving inspirations from such companies, consider an entrepreneur started a real estate company in 2008. Because of the unexpected entry of global recession in 2008, the real estate businesses were severely damaged and the new entrepreneur should have faced strong challenges. Thus, economic fluctuations can affect the building of a company drastically even if extreme cares taken in all the other areas of company formulation. Another threat faced by new entrepreneurs is the changing market trends. It is not necessary that a product succeeded in the past may succeed today also. Market is constantly undergoing changes and before forming a company the changes in the market should be evaluated properly in order to avoid perils. For example, radios and tape recorders were popular among the people a couple of decades before. But now such things are useless. An entrepreneur who tries build a company for selling such products now will definitely face failures because of the lack of demand for such goods in the market at present. So before forming the company, the entrepreneur should make sure that the demand for his product or service may last for a substantial period of time. Changing business concepts is another threat for forming a new company. For example, outsourcing of business is a common business strategy nowadays adopted by even big business groups in order to exploit the cheap labour markets of overseas countries. Outsourcing of jobs will help the entrepreneurs to compete effectively in the market. If a new entrepreneur without analysing such trends starts a company, he may face stiff challenges from the competitors. His product or services will always be expensive compared to the competitors because of the competitors’ abilities to reduce prices because of outsourcing. Thus lack of awareness about the market trends and the business philosophies may create troubles for the new entrepreneur. Some people start a company without proper evaluation of their customer. They don’t have any idea about the importance of niche in busyness or marketing. “A business niche is a special strategic positioning where you meet the needs of a specific target market that has not yet been addressed, or you sell a specific product that is unique and attractive to a wide customer base” (4 Steps to Create a Strategic Sales Business Position). It is impossible for the entrepreneur to device a product or service which can cater the needs of all the people. Differences in age, gender, social class, culture, and education etc people may have different choices while taking their purchasing decisions. For example, halal (a Muslim ritual) products may sell better in Muslim countries whereas same thing cannot be anticipated in a Christian or Hindu country. The entrepreneur before starting his company should analyze all such customer trends in the area where he is going to locate his business. Positioning your business as a cut above the competition will help your sales soar (4 Steps to Create a Strategic Sales Business Position). A right company at a wrong place may fail whereas even a wrong company at the right place may excel. For example, Americans are rich people who have lavish spending habits. On the other hand, Ethiopia is a poor country which struggle to fight against poverty. If an entrepreneur who is making expensive goods, position his company in Ethiopia, he will never succeed in selling his products or services in Ethiopia. On the other hand, he may succeed if he position his company in US, UK etc like countries. So far we have discussed the perils of making a company. We cannot conclude that making a company involves perils only. There lot of pay offs also associated with making a company which is described below. Payoffs of building a company Business is the most widely used method to earn money. The initial stages of building a company may not be smooth, but once the company established in the market, the entrepreneur has not much worries. Consider, Bill Gates and Warren Buffet like business giants. It is a fact they have faced so many challenges in establishing their company or business, but currently they are reaping the benefits of their company without much effort. Even though, many risks are associated with the construction of the company, no other profession have the potential of earning money just like the business. In all the other professions, people need to work under somebody whereas making a company will allow a person to become the boss. Some people does not like the supervising from others and such people can easily set up a company and escape from the supervising of others. The scope for business is immense and the entrepreneur has the freedom to construct any kind of company he likes. Many people forced to work in unfamiliar situations because of the circumstantial reasons; such people can avoid such professions and start their own company to work in familiar situations. For example, some organizations hire employees for the finance department and may ask them to work in the marketing department. In other words, it is difficult to work in a specific profession in the current professional world. Starting a company will help a person to avoid unfamiliar works. It is a fact that most of the professionals are getting less in return than they are giving to the organization. In other words, most of the organizations exploit the employees to make profits and pay less in return. Such exploitation can be avoided if a person starts his own company or business. In short, owing a company will help a person to get maximum out of the hard work he did. Nobody will steal the benefits of his efforts or hard work. On the other hand, he can exploit the skills and potential of other for his own advantage by starting a company or business. Providing a product or service to the society is a social activity. People will respect the entrepreneurs for the products or services they received from them. Owing a company definitely helps an entrepreneur to increase his social status and he can extend his hands widely to any segments of human life. For example, politicians normally look for the contributions from business people to execute their election campaigns and political campaigns. In return, these politicians will help the company owners immensely in making profits by making the policies liberal and helpful to the business people. Another major advantage of building a company is the huge financial assistance the company owner may get from financial institutions. Even if a person doesn’t have enough money, he can start a business with the financial assistance from the banks in the forms of loans. In other words, money is the last needed resource for starting a company. Better business plan and a strong desire to succeed can help a person to start a company even if he lacks financial shortages with the help of banks. Governments also encourage business people to build their own company as such companies may help to tackle the unemployment problems. In short, the company owner will get all assistances from the government and the financial institutions in conducting a business or a company. Conclusions Starting a company involves lot of perils and pay offs. Unexpected market fluctuations, imbalances in the economy, political and social problems; all can affect the starting of a company. At the same time once the company is established in the market, the entrepreneur has less headaches and it is easy for him to manage the company. Owing a company will help an entrepreneur to make immense money, escape from supervising, and to influence the political and social circles more effectively. Works Cited 1. “4 Steps to Create a Strategic Sales Business Position”. 2010. 25 April 2010. 2. Hekman, Ken. 2010. “Benefits of Having a Business Plan”. 25 April 2010. 3. Inc. Staff. 2010. “Blogger Logic: Whats an Idea Really Worth?”. 25 April 2010. 4. STANFORD JAMES. 2009. “World’s Cheapest Car Will be Profitable, Says Tata”. 25 April 2010. Read More