Fundamentals of Entrepreneurship - Essay Example

To begin with my marketing feasibility analysis, we need to go for the Market Analysis, one of the essentials’ in feasibility test. Hence, the major point of concern in market analysis, is the fact that economy is in a sluggish mode, that means its’ stilling bearing with the aftermath of 2007 economic meltdown. Such a situation is a critical factor in assessing the feasibility of an entrepreneurial venture, based on product, which is a luxury item for majority of the world’s population. I’ll take an example to establish this point; a middle class family with two kids, a house of two bed rooms, with an annual income of lets’ assume $30,000, and a car, if faces some sort of financial crisis, the first and the foremost option to raise money would be to sell their car. Reason being, that one can always survive without a car considering the good road and railways infrastructure in Colorado, and intercity connectivity is adequate too. Target audience for my car dealership company could roughly be the earning youngsters, middle sized family with average incomes and typical lifestyle. This is a very vague statement so we’ll go deeper into the analysis and figure out our target audience in complete detail. Colorado’s population demographics consists of 50% men and 50% women, median household income $55,430 as of year 2009, Denver, Co is dominated by 52.2% of whites and followed by 31.8% Hispanics, sale of houses was showing a very dawdling trend with sales at 4000 houses till the second quarter of 2012, priced on a average at $260,000 which had touched an all time high peak since 2007. According to the statistics provided by Denver, Co city government there is 43.2% married population, 5.7% unemployed ones which is a very ideal rate of unemployment, and a total of 78.9% population with an age of 25 years and plus, which clearly reflects a very decent and smart spread of earning class, leading us to the conclusion that velocity is high, which means that the number of transactions taking place upon number of times money changes hands. In August 2012 unemployment had touched a level of 8.3% in Denver which is 1.3% above the desired level of unemployment defined by the US government yet of not much concern when considering the prospects of our car dealership business. So with the demographic data available we can easily assess that a large target audience is present in Denver, Co who wishes to purchase a car but cannot afford a brand new one and hence a second hand car dealership company shall perform good in such an environment. Target market can be the entire population of Denver Colorado, the ones who are rich enough and intend to purchase a second or third car for their household, or the wholesale market, which includes car driving companies who deliver car driving services to general publics’, or the taxi liberation of Denver, they may purchase second hand cars from some local car dealership at a relatively lesser price to increase the number of taxis in city or to replace the ones who’s useful life is over. Also, not to forget the ‘rent a car’ companies operating, they can also become potential customers. Besides, all the above potential customers, companies operating in Colorado who give out cars to their employees according to their needs can also turn out to be potential customers because they may plan to give out second hand cars to lower level employees. One of the best ways to conduct a comprehensive feasibility analysis of any business is through SWOT analysis. To start off with strengths of the business, since the business is new it stands on a back foot when compared with rest of the market, so its major strength could be the fact that it is self financed for now and owes nothing to any bank or to any other source of external financing. This means that business has no liability towards any third party except the employees it’ll hire in future, so whatever the company earns from business shall be nothing else but pure profit, which will help in rapid and easy growth over time. Secondly, the company is expanding exponentially with the appropriate amount of financial planning being done by the owner. Every business has weaknesses which it has to cover up with time to make sure competition does not take advantage of it to snatch one’s share of pie. The major weakness with this business is that it’s a very small company and lacks funding to start functioning on a sustainably larger scale with by default means that carrying out proper business tasks shall be difficult. Secondly, to become renowned in the marketplace company needs to start on a relatively larger scale as compared to its present capital base and business strength, under present circumstances its’ clear that expansion is a rather very slow process as compared to other direct and indirect competitors growth rate in industry. Thirdly, for any business to grow it needs to have some personal or professional contacts to start off well in the industry, unfortunately this business lacks any such contacts which could be off help in starting well. Opportunities are available everywhere, and the companies high on wisdom go to such an extent that they create opportunities for themselves at times by changing the canvas or increasing the size of pie. The car dealership industry is filled with vast opportunities; firstly, the company is new in industry and can plan for itself in the best possible way by learning from the experiences, failures, strategies, successes, innovations, investments and of other companies competing in the industry at present. Secondly, past trends and a good know how of changing demographic and economic trends can help the company to strategize for itself before hand and capitalize on the opportunity provided. Thirdly, the weather of Denver Colorado is very moderate throughout the year, with a moderate temperature of 60 Fahrenheit in summers with good windy days and evenings all around the year, makes travelling by road easy and a very enjoyable experience. Fourthly, not to forget travelling by road is cheaper as compared to other modes of transportation. Fifthly, self reliance is an added advantage of owning ones’ own car which instills in you a feeling of independence and elevates the feeling of following ones’ own instinct and travelling the way which comforts ones’ own self. Sixth, there are only six renowned car dealership companies, ‘Used Cars Denver Colorado’, ‘Used Cars Eaglewood Colorado’, ‘Used Cars Boulder Colorado’, ‘Used Cars Littleton Colorado’, ‘Used Cars Thornton Colorado’, ‘Used Cars Colorado Springs’, which means that there’s a space for expansion and industry needs more competitors to drive the market into positive competitive framework, hence when talking in terms of marketing, there is still a vast blue ocean present in Denver, Colorado to absorb new competitors and there are still huge margins for market penetration. Seventh, Denver being a huge city has a lot of recreational locations, like malls, museums, parks, hotels, clubs etc, which makes Denver a good tourist attraction and the inflow of tourists will indirectly flourish the car dealership business too. Eighth, we can take help of E-commerce, this means that we can market ourselves through internet which is a good way of getting in contact with potential customers and can maintain an long term relationship as well .Finally, the corporations or companies operating in Denver, Colorado can act as potential suppliers to your business in a way that the cars companies give out to employees and are taken back if an employee leaves the company before the tenure is over; such cars are auctioned out by the company at a very less price than its market value, hence we can buy such cars which are in premium condition and resell them to our retail consumers. This is an opportunity to increase the profit margins and grow faster. Finally, comes’ the aspect of Threats a business faces whenever operating in a certain environment. These threats vary with the society, country or region a company is situated in. Along with that economic factors also play a major role in setting out threats for the companies functioning in a particular economy. First and foremost threat faced by this new car retail business is that of repulsion from entry in the market, the old and established players usually form an oligopoly and don’t let any new entrants in the market. In case of a new entrant they form cartel of prices and drives prices so low that a new comer can merely cope up with such low prices and goes out of business soon. Other, potential threats to the company could be of continued lack of funds in future as well which will restrain the business activities to a very large extend and may affect the day to day dealings as well, along with that may add to reduced efficiency of business. To device a good marketing strategy one needs to have a good understanding of the budget available to carry out marketing tasks. Budget constraints add to difficulty while designing an effective marketing campaign to market your company and products. The marketing strategy to be adopted by this company should be such that it does not require huge amount of budget allocation since its visible that company plans to earn a profit of $1000 from its first sale to pay for the expenses incurred and all to crack the first deal. This means that when planning for a marketing strategy company should focus primarily on reaching out for customers through internet because this is the cheapest way to mass market yourself. What the company can do is, create a website which carries all the details regarding the company, the contact number, charges (should be kept low, to attract more customers in the beginning), provide some extra services too like that of repair if problem occurs within two months after the purchase. This will help attract customers all over to at least once switch to a new dealer and try out the services etc. Also, company can create a page on social networking sites like, Facebook, twitter, MySpace etc for further promotion. Besides this, mass emailing can be done to all the residents of Denver, Colorado, to inform them about the new company and attach in mail the details of company, and offer some sort of an attractive package so that people are inclined to give dealer some consideration and time. An expensive method as compared to e-commerce, is marketing through print ads. Publishing pamphlets and spreading them out in towns and distributing it outside malls or on signals. Also, if invested a little more these pamphlets can be given out to local area hawkers, who can insert them inside the newspapers and deliver them to people’s houses so that they may learn about it through print media just in case they were left unreached through mail. These techniques though not very technical and over creative in nature, still will manage to attract ample attention of customers towards the new business. Simultaneously, we need to extrapolate the financial status of company to draw guesstimates about its performance in the next two years or so. Break-even point where the company manages to earn enough profit to cover all its costs, to attain a point where revenue is equal to costs incurred, they’ll have to continue to grow at least at the present stagnant rate, so that they could break-even after 2 years if the company continues to double the number of cars it’ll sell every six months. Once, the company attains break-even status it can ask for further investment from some relatives or friends who may not charge or minimally charge for the money borrowed from them. Once, the company starts earning profits on this investment it can pay the relatives or friends back. This process might take a year since the business shall be picking up well due to sluggish economic conditions restricting customers from going for new cars. After some profit is accumulated around $4000, company can approach some local bank for a loan to invest in business expansion by opening up of new branches or expanding upon the quality and quantity of cars being sold. Loan can be obtained by keeping the company collateral with bank; a total of $10,000 can be obtained in loan, the total value of company than would be worth $20,000. The money granted by bank can also be invested in labor and purchase of latest machinery to increase the efficiency of repair work being carried out by the mechanic or the people in concerned field. The loan can be returned by annual payments of principal amount and quarterly interest payments being done to the bank upon the loan borrowed. Profit and loss both shall be borne by the company solely and if it fails to pay back the loan then only all the savings as well as the ownership of the business shall be transferred to bank. Thus, if the calculations made above are followed in appropriate manner then it may lead to growth and strong establishment of the company. Work Cited Ronald C. Rice, New and Used Automotive Industry: An Industry Profile, sic#511, Retrieved from Sunrise Signs, Retrieved from Suttle, Rick, A SWOT analysis of car dealers, Retrieved from Denver, Colorado, Online posting, City-data.com, Retrieved from Colorado Automobiles Dealer Association, Retrieved from Homepage, Cars.com, Retrieved from Used Cars Denver, CO, Car Sales, Retrieved from Intact Auto, Retrieved from Online Posting, Zeromillion.com, Retrieved from Homepage, Denver Auto Body Repair since 1955, Retrieved from Read More