- If answer to question 5 is no will you consider buying one?
Yes No
- Do you use computers at your work place?
Yes No
- Would you or your company consider upgrading your computer?
Yes No
- How much would you pay for a new, top of the range computer?
800-900 901-1000 1001-1100 1101-1200
- How often would you upgrade your computer system? Every;
1year 2years 3years 4years 5years+
- What would/do you use your computer for?
Games Word processing internet watching DVD’s office work
- Should we provide extra software with the system to suit your needs?
Yes No
- Would you want software upgrades (e.g. windows + office)?
Yes No
- If you bought a new computer system would you want a set system (costs more) or would you want one to suit your needs (costs less)?
Set system suit your needs
Report
To: mr Brown of Barclays bank
Title: I am requesting a small business grant.
Brief: I have held some market research in the field of computer sales and found there is a need for what I have to offer so I have decided to request a loan.
Introduction: the small business I have decided to set up is called RCS which is short for regenalds computer systems. My name is samuel and I have been able to build computers since I was 12 and have currently dicided to create a business selling computers to companies and home users, I will also sell upgrades to people who already own computers this way I will provide for a larger segment of the marklet. I produced a questionnaire, and handed it out to people in my local town which is leicester. I got positive results back from the questionnare.
The questions:
- Are you male or female?
- I asked this question to find out the people I should target when I promote and advertise the product.
- Which age group do you come into?
- I asked this question to find out the people I should target when I promote and advertise the product.
- What is your current income bracket per annum?
- I asked this question to find out the people I should target when I promote and advertise the product.
- Do you currently own a personal computer?
- I asked this question to find out if I should start up this business because if every on I questioned already had a computer there would be no point selling computers in this area
- If answer above is yes how old is it?
- I asked this question to find out how old the computer is so I may be able to find a patern in how often people upgrade there computers.
- If answer to question 4 No would you consider buying one?
- I asked this question because I needed to know if enough people would buy computers to keep my business running
- Do you use computers at your work place?
- I needed to find out how many work places had computers so I knew whether to just sell to the public or whether to sell to companies as well.
- Would you or your company consider upgrading your computer?
- i asked this question to find out how many people would upgrade there computers, in case there was a large amount of people who already had computers I needed to find out if any of them would upgrade their system so I knew whether to branch out into upgrades to.
- How much would you pay for a new, top of the range computer?
- This is a very important question I needed to base my prices on the answer to this question and may be able to atract more people by selling my computers below the price suggested and still making a large profit I can also do extra research and find out what I should set my profit margin at.
- How often would you upgrade your computer system?
- I needed to find this out so I could determin how often people would come back for upgrades and whether I would get a peak of sales every few years or every one year or every five years.
- What would/do you use your computer for?
- I need to find this out so I can make my business sound better by saying we will provide the software/hardware for the most popular things the computer would be used for, and a can make specialist computers. And charge more for these.
- Should we provide extra software with the system to suit your needs?
- I asked this question to determin whether I should sell extra software or provide it with the computer system
- Would you want software upgrades (e.g. windows + office)?
- This question is asked to find out if people would want this service if they did I could provide it automaticaly this would make my business seem like I know what people want so they would buy from us. If only half the people a questioned said they did I could ask each costomer if they want the service or not. This would save me wasting profit if they didn’t want it.
- If you bought a new computer system would you want a set system (costs more) or would you want one to suit your needs (costs less)?
- I asked this system to find out which type I need to sell or if I need to sell both types.
Results and analysis of questionnaire:I found that 100% of people who didn’t have a computer would consider perchasing one. this is 23% of the total questionnaire.
Here is some more information I found in graph form all graphs explained in the columns below
This graph shows me that people will pay any thing in the region of £1001-1100 this means this if seven people would buy a new computer this will mean I earn at least £7000, and that is out of thirty people seven out of thirty is 23% nearly 25% of the population of leicester may buy a compueter system. This is an average so it could be lower or higher.
This graph shows me the majority of people would want computer systems to suit their needs, this is a service that most companies don’t provide encouraging more people to chose my business over others. This also means I can sell people more expensive computers because if they choose to go for that option I can sell them a computer that is over what they need.
This graph tells me that a large proportion of people and companies will upgrade there computers in the near future. Infact 83% will upgrade their computer systems, this means that I will offer another service were by I upgrade a ones computer for a price no matter who they buy them from, I will gain a large prifit from this.
Competition: There is some competition in the area. None of the competition provides the services RCS will provide. This will set RCS above all other competition, because people will see RCS as being user friendly and personalised, the services we provide makes us seem like we want to help the individual and people like that this si shown by the questionnaire because people want personalised computers and computers are still in need people are still buying computers, and if there not buying them the customers are upgrading. There is new hardware coming out all the time and people want and need the best systems out. Computer sales and upgrades are still a high profit business.
Conclusion: I conclude that RCS will be a high profit business, and will continue for many centuries to come, and the services I provide will immediately put me ahead of the competition, this is shown indirectly by the questionnaire, is shows what people want and I am doing what they want, “the customer is always right”.
Brainstorm ideas to raise capital
- New business loan from the bank
- Small business grant from local council
- Loan from parents
- Sell a small amount of computers to get myself on my feet
- Grant from small business association
Making a profit
If I was to make a profit and be able to make this business work I will need to set this business of through the phone and on the internet. if I was to rent a retail property in Leicester I would have to pay £17,500 a year which I can’t afford even with a loan the loan repayments would be too high. To break even I would need to sell 40 computers, my business may not succeed and I would be in debt. So I will set up my business from home, and work from home this means, the telephone bill, electricity and rent are all free.
Capital costs
To form my business my capital costs will be:
Transport (van) £600
Equipment £30
Components £1000
Fixed costs
To run my business I will need fixed costs like
Wages £1200 pa £23.07 pw
Loan re-payments £1630 pa
Advertisement £1200 pa £23.07 pw
Web page £50 pa £0.96 pw
Small business rate £300 pa £6.00 pw
Total ----------- £84.44 pw
Variable costs
To run my business I will need variable costs like (averages)
Components £600
Delivery cost e.g. petrol £20
Total cost
Total variable cost + total fixed cost = total cost
£620 + £1630 = £2250
Break even
Fixed cost (pa) / price – variable cost per unit = break even quantity of output
£4,380 / £620 = 7
For my cash flow chart I worked out my variable and fixed costs per week, then added them into the chart.
To work the chart out I multiplied the amount of customers by my average rate (£750) then I subtracted from it my fixed and variable costs. I was then left with an amount that tells me if I am making a profit or loss.
Problems
I have identified the following potential problems:
- If less than 7 people buy my product I will not break even this means I will be making a loss, and if I only sell 7 products I won’t be making a profit and this is most important so I can expand.
- My business will not be well know this means people may go to more well known businesses despite the low prices and friendly customer help.
- Prices of computer systems are always fluctuating this means that if I keep my price low I may be making a loss at one point or I may be making a huge profit this could tip my business one way or the other.
- I may run out of stock
If I import my components this may cost a lot or may take time to much time people would lose faith in my business.
Business types
There are many different types of business I can set up and run my business as, but not all will suit my business I have to concider the choicesso I know which is the best for my business and which I will not only succed with but which one I will make the largest prifit as here are the choices and some benefits and disadvantages.
Sole trader, owned by one person, and that one person has full control over the business. One person recives all the profits, although has unlimited liability.
Partnership, partner ships are 2-20 people who own the business and run it, this may cause arguments, although this means more suggestions on how to run the business can be thought up, therefor the best choice can be made profits are shared equally so you get less money, than if you were in a sole trader business. Each partner puts capital into the business so the business can start off bigger. You need to fill in a deed of partnership to run the business in a partnership.
Franchising, this is less risky than the normal way to set up business but it is more expensive. This is where a large business helps the small business to set up in rsturn for payment.
Cooperatives, there are three types of cooperatives, worker cooperative, consumer cooperative and marketing cooperative.
A worker cooperative is where the owrkers own the besiness and they all share the profits equally instead of being ona payrole.
A consumer cooperative is where some of the consumers own and run the business so they get some form of discount.
A marketing cooperative is where a number of small firms own the cooperative and share its services to each other.
Anlysis
This is where I will anylise the business types I can use or can’t use for my business and choose the best one for my business and give a reason.
I think the best choice for my busines is the sole trader because my business will only be a small business, I don’t want it to be too big. if I set my business up as a sole trader business I will get all the profits I would only need to set up my business as a partner ship if I couldn’t raise the capital but I can, and I know how to run it I don’t need any help. I couldn’t set up my business as a franchisee because there are no computer businesses that sell franchises in this area of business. I could not use any of the cooperatives because then I wouldn’t get much of the profit and this is not the type of business to use when setting up my business because I want to own and run it.
