My business has aims and objectives. My first aim is to get my business up and running and making sure it survives in this competitive market. I intent to break even and generate an adequate
Business Idea
All business has aims and objectives. Some more than others. My business has aims and objectives. My first aim is to get my business up and running and making sure it survives in this competitive market. I intent to break even and generate an adequate level of sales for me to make a certain amount of profit. My objective is to let my business generate enough sales so I'll be able to repay my debts in little instalments. If I don not generate enough sales to repay my debts (survive) then my business might go bankrupt and I don not have limited liability (partnership) so I would lose more than I would gain. Therefore I need to ensure that I can generate a good level of sales. It is critical that my business is able to survive because this would determine whether my business successful or not.
My next objective is to increase my sales. So my next aim is to gain more customers by offering cheaper products and better services. This could be achieved by making sure staff are friendly, kind etc toward customers and use different promotion to attract more people. The product should be at a high standard and affordable so this encourages custom. I could offer special deals and offers to tempt the customers to want to spend more. I will be using psychological pricing to make it seem like that they are saving money instead they are increasing my sales. Which should result in me having a larger market sale. It important for my business to increase sales so I can repay my entire debts and bills etc. After this the amount of profit that I will make will be retained profit. After my initial business start up if my sales do not increase it could mean that my business is just coming on steadily but not making much profit.
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Aim 3 is to maximise my profits. In order for to do this I have to lower the prices of my products so more potential customers would come to my cafe. If I decide to sell my products at a high price there would be less demand. I intend to sell them at a low price, which will increase demand, which is beneficial. So instead of selling my products at a high price and having a low level of demand but making big profits. Which I would not be able to do because of the type of market that I am in. I will sell my products at a low price, get more of my products sold and make small, continuous levels of profits. Eventually I will get a higher profit margin. This has mass appeal and is good for people who have a lower income. By maximising my sales/profits this means that my business is doing well and it is a successful business. If my sales were continuing to increase in size because of better custom then this would lead to growth.
So my next aim is to expansion and growth. I can do this by setting up my business in different places in London. So I have subsidiaries in different areas. From then onwards I should receive a larger market share. And if the business is doing extremely well it can become an Ltd and will be a franchisor. But there is the risk of failing and it is expensive so I will set up each subsidiary individually to make sure their doing well. I should have enough money to pay back all the expenses. And if I fail I will lose everything. If I don't expand my business my business will continue to do well but will never live up to its full potential. Growth and expansions are not always good because if you expand/grow too quickly you can not retain control.
So with good quality products and good service this should lead to customer satisfaction. Which means I would have good custom and a good reputation. It is good to have a niche market because you can target specific markets and gain profit easily. There is no competition and there is not a lot of niche markets in the world. The more rare something is the more people are willing to pay for it that is how they make so much profits. Even though they have fewer customers, they still make big profits because they offer a special product. I can not target a niche market because nearly all types of foods are sold everywhere and even the need for different ethnic food is being met.
This coursework that I intend on completing will be based around setting up a business as part of my business studies coursework. I will complete it using the knowledge and information that I gain form my business lessons, and implement them to develop a business studies project. For the coursework I will cover a number of areas in business. Below are a few topics that I intend to look at:
* Market Research
* Pricing And marking strategies
* Operating costs of a business
* Factors affecting demand
* Location
* Potential cash flow
* Competition
* Possibly advertising ideas
To aid me in my coursework I will look at various and suitable texts and material. I will be using the Internet as part of my secondary research as well as books in order to gain information.
The business that I have chosen for my assignment is mobile phones retailer. My ...
This is a preview of the whole essay
* Market Research
* Pricing And marking strategies
* Operating costs of a business
* Factors affecting demand
* Location
* Potential cash flow
* Competition
* Possibly advertising ideas
To aid me in my coursework I will look at various and suitable texts and material. I will be using the Internet as part of my secondary research as well as books in order to gain information.
The business that I have chosen for my assignment is mobile phones retailer. My mobile phone shop will be based in the city centre, were this will attract variety of different types of customers. People from all over United Kingdom come to visit one of the main shopping centres in the UK which is the Bullring, and also I would get different cultured people from all the UK taking out a mobile phone contract. My mobile phone shop would have one large room for serving customers and another private office at the back was financial department takes care of. I would provide chairs and tables for customers who wish to go further with the product and discuss any issues that may occur during the service for example, customer wants to take out a contract and would like to know full detail information about the mobile phone contract service provided. My work shop would regularly be checked, information updated every week, advertisements, health and safety procedures and etc.
My business idea location will be in the city centre, where most attractions and most people intend to be and therefore more likely for more business. My business will located in the central of Birmingham were this will be easier for people to get to and also transport on buses, trains and etc would be easier for people because they travel through the centre of Birmingham which is the city centre making it a easier location for customers.
I have chosen this business idea because I believe it is simple and the quickest way in making good money. As it is any business mans aim to make as much money as they could and also this business involves a lot of money but easier than any other business. I have also chosen my own business idea because I would like to achieve my own aims and objectives, being dependant on my own, take care of my own responsibilities, self success, being head at all times no one is superior then me and especially which I will enjoy doing is being in charge of team work and etc. Being in control of the business would make me proud; my esteem will eventually build up and become highly respected from the community and members of staff.
In competition of my business idea I think it would be successful because working constantly towards identifying and satisfying customers needs. In order to satisfy my customers I would influence and convince that my product is worthy of purchase. My success is based on research on a wide range of needs for customers. The knowledge I gain from customers is translated into quality products which satisfy my customers and that I am better then my competitors. My aim is to provide a variety of different types of mobile phones contracts or on pay-as-u-go to my customers in order for them to take interest and carry out a further my unbeatable deals. My main target is to aim for business men which have more likely interest in having a reliable and worthy mobile phone.
Ten reasons for failure
Lack of Skills
Many business people have a great idea, but they lack the skills necessary to see things through. This applies to a combination of things:
* Technical skills, such as accounting
* Management skills, including dealing with staff
* Marketing skills, such as not being able to sell the product or service you are basing your business on
This is why preparation is so important, taking the time to acquire as many of the skills necessary to running your businesses before you set it up is as important as hitting the ground running. The worst thing that can happen to me is not to be prepared.
Poor sales
I can have the greatest idea in the world and I may be the most motivated sales person in the world, but if nobody wants what I'm selling, I am on the way to nothing. Before I actually set up my business, I have to carry out enough market research to know whether what I have to offer is what people will want. More importantly, I have to be brutally honest with myself. I will need to keep In mind these questions:
Do people really want it?
Is it priced correctly?
How will I sell it to them?
Unless I can answer these questions honestly and accurately, I will be on the way to success.
Lack of financial controls
I may have the right product and can sell it successfully, but if my accounting practices are in disorder, I will eventually find myself in a mess. Lack of financial control will cause cashflow problems and my business will suffer as a result. If I'm weak in this area, I must hire a good bookkeeper to manage my accounts. That person should be able to do my accounts both for external use, such as tax, but also for internal purposes, so that I can forecast your cashflow needs effectively.
Lack of funds
This can clarify itself in a number of ways:
* I did not forecast accurately how much money I might need when I first started up
* I did not set aside enough to pay bills as they became due, including the taxman and other creditors
* I were forced to compete more than expected with others in the same market and had to cut my prices, reducing my own profit margin.
Again, the solution involves realistic research before starting up, setting money aside to pay bills and calculating what may happen, in terms of the likely competition, when I set up my shop.
High cost of borrowing
If I have done my homework correctly, I should have identified how much money I will need to power up my business. The problems come when I have to borrow that money. Here, one of two things can happen, either the money I borrow at the outset involves high rates of interest, perhaps because traditional sources of funding were unavailable, or run out of money part way through the start-up and are forced to borrow more, at much higher rates of interest than I originally expected. This is why an accurate estimate not just of how much I may need, but also a detailed assessment of the credit options available to me and how much interest am I going to pay must be an integral pat of my business plan.
Customers unable to pay
I have a great product and I sell loads of it. But when it comes to getting the money for what I supplied, my customer doesn't pay you for months, and then goes bust himself.
Poor payers can cause large cashflow problems at the best of time. Matters become even worse if they become insolvent. Before I agree to provide any service or product, I should always carry out due diligence inquiries in relation to any prospective customer. I should check how they intend to pay, when and if any other suppliers have ever had problems with that company. The other thing to bear in mind is that a good customer can become a bad one, even if I have a good relationship with someone, I should still carry out periodic checks on their credit worthiness. If I can, don't place all my eggs in one basket. A customer who takes 90% of what I sell may be worse than 10 who each take 10%.
Overtrading
I may be ticking along nicely, meeting demand adequately. Suddenly a prospective customer comes in and asks for three times what you can reasonably deliver. I see pound signs in front of my eyes and agree to the deal, only to find I can't meet up on that promise. Overtrading not only damages my relationship with customers, it also leaves me open to potential business failure. This is because to supply that much more, my business may need to borrow more money to compensate for the increased costs for example, extra staff, materials, etc, of meeting the increased demand. While I am waiting for payment, I have to pay interest on the new sum I have borrowed. One solution may be agree to increased demand only if my customers pays in cash. An alternative is to budget for enough time between receipt of an order and the payment received in your bank, known as "lead time". I will to borrow enough to cover that gap.
Poor marketing
Successful marketing is, above all, about good management, testing and measuring my product. It is about finding ways of tailoring what I offer to customers needs and letting them know that I have what I want. Many business owners often ignore marketing because they do not have experience in it, they feel they do not have sufficient time to do it, or it feels like a costly exercise for limited return. As if to prove them right, when they do market themselves and their products or services, they get no response. Yet successful marketing can do wonders for a business. Before I start up, work out an affordable marketing strategy. It may be as basic as having the right calling cards and letter-headed notepaper. But I may want to progress to promoting myself through effective advertising. The simplest way is to research other successes in my field, learn the lessons and apply them myself.
Failure to deal with red tape
Every year, businesses are forced to devote extraordinary amounts of their time to filling in a range of government-inspired paperwork and procedures, including VAT and tax forms, National Insurance and so on. It can all seem very burdensome, particularly if all I want to do is concentrate on the business of selling what I offer and then delivering to my customers. The reality, is that there is no way round this problem, I have to do the paperwork. So I had better be aware at the earliest stage that it will be demanded of me and set aside a reasonable amount of time each week or month to do it. Factor it into my working time. If I am unwilling to do the work, make sure I have professionals to hand who can. I will make sure that any business plan I set up takes into account this hateful side of running a firm.
Lack of development planning
I start up successfully and manage to avoid the many traps lying in wait for small businesses in their early years. There are three main stages to setting up a business:
* Starting up
* Becoming established
* Expanding
Each stage needs a different approach and so it is important that I change my business plan at each stage. Many businesses fail because they move onto the next stage too early and consequently any actions they make all contribute to business failure. Alternatively, they fail to move on to the next stage, preferring to remain in their existing comfort zone for too long. I should be updating my business plan regularly throughout each stage to compensate for any issues that may threaten the rate of development and success in my business.
Make sure that my business plan addresses three areas of concern:
* Assessment: how far have I got and where do I want to go next?
* Planning: how will I deliver what is needed?
* Implementation: actually delivering on the plan
My business should acknowledge the above in each stage of development, by not doing so, problems may occur that could result in business failure.
Market Segment
Market segment will give me a firm idea if my products and services are actually needed and type of community who would be interested in buying what I have to offer. However, my customers more than a group of people depending on which I hope to sell to, by examining my research results I will be able to separate my one large group into segments depending on similarities between the groups, this will help me to decide on whether what should I be concentrating on more for example if teenagers are more interested and more likely to match a teenager in buying a mobile phone then adults I wouldn't concentrate much on adults then I would with teenagers.
I would also like to segment my market which I think will be one of the most important aims of my business idea. My main aim is to attract the expecting customers and for them to approach my offers. Market segment would be able to let me know exactly who are my main customers which going to be attracted and aimed for.
Only a percentage of general population will buy my products or use my services, the more accurately I focus on my marketing, the less my effort will be wasted. It is a good idea for me not aim too widely with my marketing, to avoid spreading my resources too thinly.
I will be concentrating on customers views and opinions on my offers and products and services, from here I will be able to pick up were my weaknesses are and need improving. I will be aiming on what my customers exactly want or prefer having, what am I able to offer them, the benefits that putting my customers into segments. This would eventually give me profitable customers.
Segmenting my customers into groups according to their needs has number of advantages:
· Identify my most and least profitable customers
· Focus on my marketing on the customers who will be most likely to buy my products or services
· Avoid the markets which will not be profitable for me
· Build loyal relationships with customers by developing and offering them the products and services they want
· Improve customer service
· Get ahead of the competition in specific parts of the market
· Use my resources wisely
· Identify new products
· Improve products to meet customer needs
· Increase profit potential by keeping costs down and in some areas enabling me to charge a higher price for my products and services
· Group my customers by factors such as geographical location, size and type of organization, type and lifestyle of consumers, attitudes and behaviour.
Because my individual customers have different needs, it will be easier to give what they want if I divide them into groups sharing similar needs, and treat each group differently. I can then customise my products and services according to the needs of each segment, aim my marketing at each group saving me time and money, and focus on my most profitable customers.
There several reasons why my business should attempt to segment the market. Different customers have different needs therefore different choices suit certain individuals. Producing different offers for each segment provides customers with a better solution. Customers have disposable income they are therefore sensitive on what price they are paying.
Factors Affecting Demand
Demand, in definition, is "the quantity of goods or services that will be bought at any given price over a period of time and supply is the willingness and ability to sell a good or service".
My business would also need a watch out for the affects on my demands which will eventually take me to a stage were it will not allow me to continue so therefore I would also need to take this as one of my main priority.
There are a range of different factors that would or can affect my business for example finance, how well am I controlling my costs, not a level were I will make a loss and not at a level were it becomes too expensive were either I will make loss of customers therefore I will make my prices competitive.
Also on the economy of my business could be an affect on me, how high are similar businesses being valued, how many potential customers are interested in my business.
As being an independent sole trader I will need to be aware of limited liabilities.
Demand could be affected by companies such as Orange which provide already a huge variety of different mobile phones and accessories, therefore as Orange already has a high reputation as well as profitable and a successful business they are more likely to take away most customers. I will need to keep steady competitive prices with my services and any other or similar businesses through out my located place. To avoid such hassle I would need to locate my business further away as possible so that I will not be interfered with any other local businesses.
People will buy my products than other similar businesses because I will be cheaper then them and I will have a better after sales service for example my offers on 2 year guarantee will cover everything , but I will not replace it if I find out it was done deliberately, if this problem does occur I will remove insurance to their mobile phone or any other product purchased from my shop.
Also grabbing customers attention I will need to but on advertisement through online internet and if customers wish to purchase a product online there is a discount price of seven percent this a way around in grabbing customers attention.
With my offers customers will be able to get free hands free kit, a free memory card, etc. This will attract customers especially teenagers because majority of teenagers intend to use these extras on their mobile phones so therefore this is one of the reason why customers would prefer my product than any other business.
Market Research Results
My market research results would come from secondary data, this is research that has already been published in the form of written reports, often on a particular market sector, and is already in the public domain is described as secondary research. These sources include library reference books, newspaper clippings, company reports, standards and online databases. This is a good place to start when looking for quick accessible information, although information from secondary sources can go out of date quickly.
GNVQ Business Unit 11- Setting Up In Business
Adeel Akhtar