Relation between the Networking Activities of an Entrepreneur and the Success of a Start-Up - Assignment Example

Entrepreneurship of Gloucestershire Dr. Paul L. Reynolds BABS602 Assignment BackgroundInformation Due to the busyness of most families nowadays, time taken at home has been greatly reduced. Most families rarely have time at home to meet for all the meals of the day. This is contributed to the level of commitment that most families currently involve in offices and outside homes. To its critical analysis, Zeneca Restaurant has found a gap in the market that requires preparation and delivery of food to where it is most convenient to its consumers. It would be a great idea if there were restaurants that can prepare good and healthy meals and supply them to the customers exactly to where they need them at. In this case, it would be very easy for people to have their lunches, breakfast and even dinners whenever they are without having to take long breaks to fetch it. With this idea, Zeneca restaurant will be created to be at its customers service to prepare, good and healthy meals, and deliver them to customers. Zeneca will get into the market knowing very well that there are already very many restaurants that are preparing food to their already established customer base. However, with its strategy to prepare only healthy meals and to deliver them to the customers, Zeneca stands to face less stiff competition as there are not many ventures in this direction. In as much as there will not be too much profit in the venture when it will start due to its new idea that has to be introduced to the customers, the business intends to win a large customer base loyalty to major on its durability. With durability, more and more profits will be realized in the future after the business shall have formed a stronger customer base. Objectives The startup venture will be guided by the following objectives for the next five years to help it construe its idea: i. To prepare healthy and affordable meals in good and clean manner that promotes good health in individuals. ii. To deliver quality meals at the right time and place to the customers. Capital Requirement The restaurant is a very involving business that requires proper planning of logistics and resources for its success. It will, therefore, require a good base of financial stance that will help in establishing or renting a small store in town, securing supplies and paying wages for few assistants that will be required. The capital requirement will, therefore, be a bit large according to the desirable size of the restaurant. However, since the restaurant will startup as a small store, not much capital will be required (Hansen, 2005). The investment capital will include my personal savings and contribution from my friends and family. The capital will majorly go into setting up a small kiosk where all the operations will be conducted. In this kiosk, food preparation will be done, apart from packaging and receiving of supplies. Sales will also take place in the kiosk as some customers who can make it to the kiosk will take their meals from there (Moore, 1991). The operating capital will include the capital that will be used in the day-to-day operation of the restaurant. Risk Analysis The restaurant business is one that is surrounded by a lot of risks. The risks include the possibility of failing to sell hence pouring spoilt food away, losing customers to many reasons and risk of not making any or enough profits. The business will, therefore, invest a lot into marketing and promotion of the restaurants products and services to help in curbing the risk possibility of not selling (Phadke, 2011). Vision statement The vision statement of Zeneca restaurant will be, ‘to become the best and the biggest home delivery restaurant in the nation.’’ The vision of the restaurant will make it be able to aim higher in its operations day by day. Mission Statement The mission of Zeneca restaurant will be to be the provider of choice of healthy meals without compromising on quality and at affordable prices. The mission will be like the driver of the restaurant in its attempts to fulfill its objectives. Gant Chart Year/Activity Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Year 1 Startup Year 2 Survival Year 3 Expansion Year 4 Maturity Year 5 Diversification Growing the Business: Scott and Bruce Five Stage Growth Model In most cases, it is an attitude and the motivation the entrepreneur and the management team that decide whether growth will take place in a business or not. It is a suggestion of Bruce and Scott that not all businesses that survive will grow to make the large businesses. The reason here is attributed to the nature of the industry to which the business belong or even the personal ambitions and desires of the owners. Due to that, Scott and Bruce proposed a five stage growth model which illustrates the lifecycle of most of the businesses. The stages being the inception stage, survival stage, growth, expansion and maturity stage (Mark & Vyakarnam, 2012). Zeneca is seen to follow a similar growth model as evidenced by the five-year Gant chart above. During the first stage of startup or inception, the business will devolve most of its efforts and resources in looking for the customers and managing economic production. During this stage, there will be a likelihood of crisis to arise on demand on finances and energy to find customers. During the survival stage, the key events that are anticipated to take place in the business include managing the revenues and too much expenses. This is the point where the business can close down if the owners make no effort to cross the bridge. At this time, the expenses are still slightly more than the revenue collected. Again, the revenue collected is used to facilitate growth. During this stage, the business will be faced with the pressure for information, attempt to change the basis of competition and overtrading. During the third stage, expansion, there will be a managed kind of growth. This is the stage where the business will ensure that resources collected are well managed and accumulated for further growth. The business will, therefore, try to have the demand to expand into new markets. The customer base shall also have increased. During the maturity stage which is the fourth stage, the business will be financing more growth as it controls its resources. The business has accumulated a lot of revenue at this point and would like to show it by financing other branches within the nation. At this stage, I as the top management, shall have distanced myself from the store operations and embark on the job of overseeing the operations. The last stage, the diversification stage, is where Zeneca will start expanding its niche and go national and even international if possible. At this moment, it will try to incorporate other services and products in the stores apart from just preparation of meals. Stage I: Inception This is the stage where both the idea and the initial start-up of Zeneca will take place. During this stage, there are several activities that will take place, and the stage will last for around one year. The business will just be emerging from scratch. Therefore, this will be the most risky stage of this restaurant as it is not easy to accumulate all the resources required and acquire a premise, set to start-up a business. At this stage, the business will not be grounded and it will still be very weak. It will therefore require a lot of patience to start-up and grow. Here is where our main work in the business will be to fetch and obtain customers for the business. There will also be a need for economic production for the business. All resources shall be put in the inception stage, therefore, there would be little expectation of making any profits since we will still be striving to get back the initial capital. The top management that will be me in this case, will be charged with the power of direct supervision of all the operations taking place in the restaurant. This is the point where all the entrepreneurial skills will be showcased, therefore, there will be the need of professional and analytical mind in the business. Individualistic kind of management style will major the better part of this stage (Hansen, 2000). The business will only use simple bookkeeping skills at this stage as there will be no cash generation expected. Major source of funding will majorly come from friends, personal and family contributions. Stage II: Survival When the business shall reach the second stage of survival, it will be in a level where the key issues to manage will be majorly expenses and revenues. At this stage, there would be a call of extra supervision to help in management. Still, entrepreneurial skills will be required, but more focus will be given to administration. At this stage, the restaurant will have at least a small structured organization where I will be the manager, with a different supervisor and other workers. There would be little market research carried out at this stage. The systems and controls will be made up of simple bookkeeping and personal control will be justified. The sources of funds will still be those contributions from the owners, but suppliers and small bank loans will also be used to boost operations. This is the stage where the business will require to at least break-even so that it can begin receiving positive cash flow. The business will majorly invest in working capital to boost its operations (Ahuja, 2000). Stage III: Growth During this stage, the business will begin experiencing some growth in various perspectives. There would also be other new restaurants that will begin opening up with a similar idea as that of Zeneca. This will lead to some form of competition in the market. At this stage, however, there will be a well-managed growth exhibited by the restaurant. Resources put in the business will be well managed since each will have a positive cash flow return to the business. Here, there will be increased level of activities due to growth of the business, therefore, delegation of duties and coordination will be the form of management role that I will apply as the top management. Entrepreneurial skills will still be required in this stage, but coordination will be the driving factor here. The structure will change to a centralized structure where at least each employee will find someone to report to. At this stage, at least the business will begin introducing some new meals that were not in the menu initially to spice it up. Accounting systems will then be adopted with simple control reports to management the restaurant’s accounting. The main sources of finance in this stage will be the borrowings from the bank, contributions from new partners if there’ll be some, and the retained earnings of the business. The business will begin receiving positive cash flows that will be reinvested in it. The business will, majorly invest in working capital and resources to extend the restaurant. Stage IV: Expansion During the expansion stage, Zeneca will majorly experience growth in its finances as it works out control for its resources. The top management here might become decentralized as there might be new partners who might enter the business. Therefore, the management at this particular stage will evolve to being professional in their administrative functions. A functional and a decentralized organizational structure will therefore come up where there will be distinct levels of management and leadership in the structure. The business will embark on introducing new products according to the researches that will be carried out to support the necessity of such products. The business will begin using monthly budgets to control its operations. There will also be the production of monthly sales and production reports with clear delegated control. The major sources of funds will include retained earnings, contributions from new partners and long-term bank borrowings. The will be positive cash flows received in the business with small dividends for the partners. Zeneca will at this point invest on new operating units that will rise from various points in the nation (Jarillo, 2009). Stage V: Maturity At this stage, the business will undergo higher growth and maturity, and maybe begin declining. The main issues here will be to control the expenses, productivity and marketing niche of the business. The top management will be decentralized due to several operation units that will come up. The best management style that will be applied at this stage will be that of a watchdog where the top management will be responsible of overseeing the operation of various operation units from the headquarters. The organizational structure will then be that of a functional or decentralized structure. Each operation unit will have its own organizational structure. The business will get into innovating new products peculiar to its own brand. Formal control systems will be applied where management by objectives will be used to schedule events. The major sources of funds at this stage will include retained earnings, and long-term borrowings from the banks. The business will majorly invest in maintaining its operation units and strengthening its market position. Conclusion Zeneca will start-up as a simple business by just a single owner. However, it will go through several investment and organizational changes to ensure it achieves its vision. The restaurant will use the Scott and Bruce growth model to ensure that it reaches its predetermined diversification stage by the fifth year. Bibliography Ahuja, G., 2000. Collaboration network, structural holes, and innovation: A longitudinal study. Administrative Science Quarterly, 453(3), pp. 425-55. Hansen, E., 2000. Resource acquisitions as a start-up process: initial stocks of social capital and organizational foundings. Wellesley, MA: Babson College. Jarillo, J., 2009. Entrepreneurship and growth: the strategic use of external resources,. Journal of Business Venturing, Volume 4, pp. 133-147 Mark, D. & Vyakarnam, D., 2012. Growing Your Venture. Center for Entrepreneural Learning: University of Cambridge, Judge School Business, pp. 4-6. Moore, G., 1991. Crossing the Chasm. New York: Harper Collins. Phadke, U., 2011. Tripple Chasm Concept: How to Build a Senior Team at the Center for Entrepreneurial Learning. Cambrigde Judge Business School, I(3), p. 34. Assignment 2: There is an assumed positive relation between the networking activities of an entrepreneur and the success of a start-up. Personal contact networking will be used in the business for the first five years to allow us acquire resources cheaply, gain growth in customer base as well as achieve growth in sales levels in the restaurant. The personal contact networking will be exercised in various ways where social places such as churches, school, offices and social networks will be sued at the meeting and socializing places (Baoshan, et al., 2009). Reputation For a business to grow well and very fast, there is a hard task to build its reputation. However, through personal contact networking, I will ensure that the business gains its reputation within the first year of operation. Reputation is also gained through the good work or good delivery of services (Watson, 2007). The major aim of Zeneca will be to ensure that all customers leave the restaurant saying theyll come back and refer friends. This would mean that, the dishes must be nice in taste, clean in preparation and served and delivered at the required time. The business will employ a technique that deals specifically with customer satisfaction (Wang & Bao, 2007). All customers will be required to give their feedback continually as time goes by and propose some suggestions on what they would want to be changed or adjusted, and how. In this manner, the business will be able to collect the various suggestions of the customers. The management will then take time to go through the customers suggestions through sampling method and find out the areas where the customers want adjusted (Stevenson & Lundstrom, 2001). The management team will then sit down once every month to take keen note of all the necessary adjustment as discussed. After proper evaluation, all the proposed action plans will be implemented and keen control taken to ensure all is operating well (Rickne, 2000). With the adjustment in the business following the customers suggestions, the business will be able to grow faster in name and brand. This will, therefore, increase the reputation of the business. The reputation of the business will then work for the business as a strategy to market itself. In the hotel industry, there is much about referrals from friends as long as the services and quality meals are prepared by the restaurant (Bygrave & Minniti, 2000). This will go a long way to improving sales growth of the restaurant within its first five years of operation. Customer Contact It is very advisable for all business owners to maintain customer contacts for the good of their businesses. Maintaining customer contact is just equivalent to keeping the customer closer to the business or simply winning the loyalty of the customers (Batjargal, 2006). Having a customer visit your store or restaurant for that matter is a very hard task. Any business out there is working very hard, day and night, just to win more customers to their stores. However, it becomes of no use to employ resources towards attracting customers whom you will not be able to maintain for a long time. Successes of most businesses are mainly by their loyal customers who already have recognized the brand of the business. Such customers normally play a bigger role in informing other new customers about the business and its products. Zeneca, therefore, gets to enjoy more new customers, courtesy of its old loyal customers (Zahra & Bogner, 2000). To keep or maintain customer contact, therefore, entails much to do with treating the customers right to make them want to come back. To the customers right is not through any miracle, but through offering favorable and good services to impress the customers just from their first day they visit the restaurant. Apart from offering good services and meals, Zeneca will also maintain customers contact through introduction of membership cards (Peter, 2004). These cards will allow the customers to earn points every time they buy their meals from our restaurant, or we supply them with our meals. The points will be redeemable after they reach a certain amount. The customers will, therefore, be able to use their redeemed points to pay for meals instead of using money. This will look like a promotion since many customers will maintain using our services to make their points grow even faster (Witt, 1999). Again, they will even refer friends to visit our restaurant or use our services through their cards to increase their points. Once the new customers also learn about the point issue, they will also want to apply for their cards to accumulate their points (Uzzi, 1999). This networking strategy will help increase both the sales of the restaurant as well as our customer base. Professional Qualification As an entrepreneurship student, I will also use my professional qualification and those of my assistants to network and avail more customers to the business. In this case, with the knowledge on marketing, promotion and sales, I will be able to handle the game of customer hunting very professionally, hence, having to reduce the cost of doing so through hiring professionals. I will, therefore, create a link with fellow entrepreneurs who have been in the market to consult and ask them how they have been able to make it (Littunen, 2000). Using good tips on marketing and sales from such already established entrepreneurs, I will be able to make a very informed plan on what to implement at Zeneca. My other assistants who will also be having a rich background in meal preparation and professional cooking, will also use their professional knowledge to make the best out of the meals in this restaurant to make everything be pleasant to the customers (Lee & Tsang, 2001). Family members My good relationship with my family members will not only see me receive a capital contribution for start-up of the business, but also become fundamental in improving the sales on the restaurant. To begin with, several family members either work or go to school at various places. The idea will be to ask all my family members who are in colleges to sell the idea to their college contact persons who will find interest in using our services (Lechner & Dowling, 2003). Colleges and universities have a large population when students and staff are considered for this business. Therefore, if possible that we will get clients from the colleges and universities, we will find a way of putting up operating kiosks next to the colleges to reduce the cost of transport. As we know, students like fast food that is well prepared. If students can find out that the food from Zeneca restaurant is even a healthy food, in that it is well balanced and has little possibility of causing diseases such as obesity, Zeneca will definitely run the whole college as far as meals are concerned. Even at the universities and colleges, the delivery strategy will be maintained to enable the students get access to the meals at their study points or rooms without much movement (Johannisson, 2000). On the other hand, other family members who go to work will also be used to inform their work mates about Zeneca at their places of work. It is also true that sometimes workers get engrossed in work to the extent that they dont find time to go out for lunch or breakfast. Those who can go get time to leave for lunch mostly tend to use so much the unhealthy fast foods that are known to cause several diseases such as obesity and high blood pressure among others (Hite, 2000). When these workers find out that there is a restaurant that prepares healthy meals, and can supply these meals for them to their offices, this would be a great idea that would be taken up by almost all the workers in those organizations. Therefore, through my family members working in those organizations, I will be able to conquer and capture a huge number of customers to add to my already existing customer base (Hansen, 2000). Family members can also help increasing sales of the meals through informing their friends who are not particularly their schoolmates or workmates. Maybe other family friends, or just friends who find the idea a viable one and can buy it. Family members also will promote sales through family purchases. In as much as, there will be a reduction in prices because it is a family, the restaurant services that the family will require will be provided at a fee. This will go a long way to promote the business by my family purchases (Drakopoulou & Patra, 2002). There are sometimes that the family members are tired and just want ready meals. Sometimes, the family members just feel like breaking the monotony of taking their food from home. In such cases, the services of my restaurant, will be required. I will, therefore, receive market or growth in sales from my family members and other referrals from the family members (Baines & Chell, 2000). Friends Linking with friends through various media can also help promote sales growth for the business. I will, therefore, engage in promoting my restaurant idea and services to all my friends through various media. I will first take advantage of my college friends who I will convince to give me support with my restaurant through buying from there. Some friends have the tendency of taking other friends businesses as their own. Therefore, there are friends who will want to be served meals and go without paying for them (Baron & Markman, 2000). For this reasons, I will make it clear to my friends to understand that the business is a different independent entity from me. I will, therefore, not tolerate any behavior of such kind from my friends as they will also be required to take responsibility of their bills. That said and done; friends are god at marketing each others businesses (Birley, et al., 1991). They pass the information from one friend to another and to their families. Their families will also spread the same ‘gospel to their other friends at work or in colleges. This strategy will, therefore, make Zeneca build a very strong customer base within its first five years of operation. The business will be identifying, testing and entering new markets. Friends will be very useful in creating a network of good loyal customers for the business. In return, the restaurant will offer free ground for parties and come-together (Chandler & Hanks, 2003). Using social media, churches, colleges and market places, I will be able to reach more friends to whom I will market my products. Facebook, Twitter, blogs, Whatsapp, LinkedIn, Yahoo and Google, will be among some major social media communities where I will meet my friends and use to promote my restaurant and products (Chell & Braines, 2008). In churches and other social places, I will use fliers and brochures for the promotion. Business Partners Being in good terms or relationship with ones business partners is the next step that can indicate whether the start-up business will succeed or not. In most businesses, there must be suppliers, financiers, customers, competitors and other business partners whom you interact with either directly or indirectly in the business (Dubini & Aldrich, 2001). Zeneca will ensure a cordial and amicable relationship between the business and other business partners that make the business environment. Through such relationships, it will be possible for us to receive quality raw materials or supplies in time and at favorable prices. There are some suppliers who only need good relationship with the entrepreneurs to get access to other resources. There are favors or after sales services that some suppliers offer to their clients. However, in some cases, the clients may not know about the services offered. With my good networking and contacts with the suppliers, I will be able to take the advantage of the situation to ensure that I obtain goods in bulk that will, therefore, reduce my expenditure. Another advantage that comes with buying in bulk is that advantage of getting free transport and delivery at your stores. My contact with the supplier will also enable me to receive goods in credit at times and pay later. Conclusion In a nutshell, Zeneca will ensure that it uses all the avenues at its disposal to facilitate the growth of its sales and customer base. By the fifth year, the business shall have matured to the extent that it will need to diversify. The business will need to go to the extent of encroaching into other new markets and other products. Bibliography Baines, S. & Chell, E., 2000. Networking, entrepreneurship and microbusiness behaviour. Entrepreneurship & Regional Development, Volume 12, pp. 195-215. Baoshan, G., Robert, H. D. & Baobao, D., 2009. Networking, Resource Acquisition, and the Performance of Small and Medium-Sized Enterprises: An Emperical Study of Three Major Cities in China. Managing Global Transitions, 7(3), pp. 221-239. Baron, R. & Markman, G., 2000. Beyond social capital: how social skills can enhance entrepreneurs’ success. Academy of Management Executive,, Volume 14, pp. 106-116. Batjargal, B., 2006. The dynamics of entrepreneurs’ networks in a transition economy: The case of Russia.. Entrepreneurship and Regional Development, 18(4), pp. 305-20. Birley, S., Cromie, S. & Myers, A., 1991. Entrepreneurial networks: their emergence in Ireland and overseas. International Small Business Journal, Volume 9, pp. 56-73. Bygrave, W. & Minniti, M., 2000. The social dynamics of entrepreneurship.. Entrepreneurship Theory and Practice, 24(3), pp. 25-36. Chandler, G. & Hanks, S., 2003. Measuring the performance of emerging businesses: a validation study. Journal of Business Venturing, Volume 8, pp. 391-408. Chell, E. & Braines, S., 2008. Does gender affect business performance? A study of microbusinesses in business services in the UK. Entrepreneurship & Regional Development, Volume 10, pp. 117-135. Drakopoulou, D. S. & Patra, E., 2002. National differences in entrepreneurial networking,. Entrepreneurship & Regional Development, 14(3), pp. 117-134. Dubini, P. & Aldrich, H., 2001. Personal and extended networks are central to the entrepreneurial process. Journal of Business Venturing, Volume 6, pp. 305-313. Hansen, E., 2005. Entrepreneurial networks and new organization growth,. Entrepreneurship Theory & Practice, Volume 19, pp. 7-19. Hite, J., 2000. Qualities of embedded network ties of emerging entrepreneurial firms: Frontiers of Entrepreneurship Research. Wellesley, MA: Babson College. . Johannisson, B., 2000. Networking and entrepreneurial growth:The Blackwell Handbook of Entrepreneurship. Oxford: Oxford University Press. Lechner, C. & Dowling, M., 2003. Firm networks: external relationships as sources for the growth and competitiveness of entrepreneurial firms. Entrepreneurship & Regional Development, 15(3), pp. 1-26. Lee, D. & Tsang, E., 2001. The effects of entrepreneurial personality, background and network activities on venture growth. Journal of Management Studies, 38(12), pp. 583-602. Littunen, H., 2000. Networks and local environmental characteristics in the survival of new firms. Small Business Economics,, 15(6), pp. 59-71. Peter, W., 2004. Entrepreneurs Networks and the Success of Start-ups. Entrepreneurship and Regional Development, 7(3), pp. 391-412. Rickne, A., 2000. Networking and firm performance. Babson Park, MA: Babson College Press. Stevenson, L. & Lundstrom, 2001. Towards a framework for the development of entrepreneurship policy and practice. Babson Park, MA: Babson College Press. Uzzi, B., 1999. Embeddedness in the making of financial capital: how social relations and networks benefit firms seeking finance. American Sociological Review, 64(4), pp. 481-505. Wang, Q. & Bao, G., 2007. Social network, resource acquisition and the growth of smes. Proceedings of Management Engineering, pp. 4-57. Watson, J., 2007. Modeling the relationship between networking and firm performance. Journal of Business Venturing, 22(6), pp. 852-74. Witt, P., 1999. Information networks of small and medium-sized enterprises. Journal of Enterprising Culture, 7(4), pp. 213-31. Zahra, S. & Bogner, W., 2000. Technology strategy and software new ventures performance: Exploring the moderating effect of competitive environment. Journal of Business Venturing, 15(2), pp. 135-73. Read More