- Create documents that would be required for the business to be established
This list of objectives also acts as a makeshift “checklist” for the tasks that need to be carried out. By completing all of these objectives, the aims will also have been completed. However, the objectives can be further divided into a specific methodology – the actual details of how the objectives will be completed. By following these guidelines, the objectives will be completed, and therefore the aims will be completed, in effect carrying out the entire task successfully.
Methodology
Upon completion of the write-up of the aims, objectives, and methodology of the project, the first task to be completed will be to find information on business sites. This can be done by going into an urban area such as a local town, and searching for business premises with estate agent signs. Most towns also contain the estate agents premises themselves, and these can be visited for further information. In addition, pictures can also be taken. The vacant premises must be analysed for significant information.
After this has been done, a decision must be made and justified relating to which of these premises will be most suited to the needs of the project. This can be done with graphs, tables, diagrams, and logical write-ups. Next, information must be found out about local shopping trends. This can be achieved mainly with the use of questionnaires. All of the information gathered thus far can then be used to write in detail about the ways in which the business should operate. Justifying this can also be helped along with the aid of graphs, tables, etc.
After all of these tasks have been completed, depending on the conclusions made during the bulk of the project, certain types of business documents may need to be produced. This could include anything from deeds of partnership to cash flow forecasts.
The Possible premises
In Hersden, near Canterbury, in a business park called “Lakesview Business Park”, there are 2 units available through the estate agent RSWhites, called simply “unit 2” and “unit 3”. The immediate impression that these units give off is that of a stark, bland, sterile factory feel.
In Deal, on numbers 70 and 72 of Deal high street, there is a moderately small office-type locale, undoubtedly more suited to consumer-based commercial businesses.
Also in Deal, on number 42, Mill Hill, there is a very small, but also very well placed and attractive business premises with a shop and workshop area.
Finally, again in Deal, on number 7, Stanhope Road, there is a slightly larger building with both retail and office sections. It has 3 rooms, plus kitchen, utility, and WC rooms. All 3 of these premises are available through the estate agent Abbey Direct.
In addition to these, there are 4 more premises in Deal and Walmer, offered by the estate agent Bright & Bright;
The first of these is located on 12-16 Victoria road in Deal, and features a large sales area and 2 offices. This location is extremely well suited to commercial businesses in the tertiary sector.
In 4 Cambridge Road, Walmer, there is a reasonably sized retail location with an office and storeroom. The location is not particularly aesthetically pleasing, but it is moderately well positioned in a residential area.
There is a very small store on 142, High street, Deal, with a small flat in addition to the business premises. The living quarters could easily be converted in order to make this location into a prime business site.
Although the majority of businesses operating in the Deal area are commercial, retail-based businesses, operating primarily in the tertiary sector, there is indeed one location being offered by Bright and Bright which appears to be well suited to office-dominated businesses. It can be found in Suite 1, Grosvenor Mansions, Queen Street, Deal.
The locations of the premises
As this map shows, Lakesview Business Park is just off the A28. This opens up a large amount of possibilities for transportation, making this location very good for industrial, wholesale, factory, etc, business’. However, due to the fact that it does not seem to be near any residential areas, most retail and service industry businesses would have difficulty finding great success in this location. However, specialist retailers, such as computer outlets, may be able to establish themselves here.
This map shows that the only real place of public interest nearby - and therefore the only source of customers for a possible retail business - is that of the bus stop on Island road.
This map shows the location of numbers 70-72 of Deal high street. The map shows that there are a number of general shops, and a huge number of restaurants, as well as tourist attractions, in the nearby area.
Also nearby are Marks & Spencer, HSBC, Laughtons, and Holland & Barrett. There is a bus stop near the beach. From the information on this map, it can be derived that the ideal business for this location would be a form of retailer or a provider of a service whose primary target market would be that of tourists visiting the area. This excludes eateries, chemists, general stores and general clothes and food shops.
The local businesses include many well known names; this means that new, unknown business offering similar services would be in a difficult position. For this reason, the aforementioned types of businesses should not be introduced into the area.
This map shows Mill Hill. It is part of a large residential area with few businesses other than the neighbouring Peking Palace take-away restaurant. There is also a bus station very nearby. This would be an ideal location for a “convenience” store, as many local residents would benefit from not having to travel as far in order to purchase everyday goods.
There are a large number of residents in the area, and if they all opted to use a newly established shop for these types of goods instead of travelling further into town, then the resulting sales figures could be enough to make the “survival” phase of the business simple, easy and short.
Because of the small size of the premises, and the lack of urban accessibility and development possibilities, this location would not be suited to rapidly growing businesses, manufacturers, or businesses that don’t cater for everyday local needs.
This map shows that the premises in Stanhope road are very similar to the premises in Deal high street, due to the fact that the 2 locations are a very short distance apart. However, due to the fact that these premises are significantly larger, it may be better suited to office-based businesses.
This map shows that Victoria road is located in a part of deal with few operating businesses, although there are many hotels in the area.
It is surrounded by a large residential area, and is also a popular tourist spot, especially considering the nearby Deal castle. Because of this, the location would be extremely well suited to tertiary sector businesses offering “general” products or services – things that are marketable to both locals and tourists.
This is an effective match-up due to the fact that the premises themselves are indeed very well suited to commercial uses. A small-sized business such as a newsagent would be able to operate extremely effectively in this region, but due to the size of the premises, a slightly larger business, such as an off-license or a small restaurant, may be able to operate nearer to full capacity.
This map shows that the location that Cambridge road is in is a combination of both commercial and residential areas. There are a fair number of houses, and only a few local businesses. There are also a few bus stops in the surrounding area. This area would be an average location for an every-day retailer, but a good location for a specialist store with a very large sphere of influence. However, this would not be very effective due to the fact that the premises are not particularly large. For this reason, this site can be considered inappropriate and deleted from the list of possible business sites.
This map shows that this part of the high street - on which number 142 can be found - is much more residential than the more southern section. It is still only a short walk from many of the local businesses, including 2 restaurants. There are bus stops both north and south of the location and the large number of houses and commercial location would make these premises ideal for the operation of a retailer or similar tertiary sector business. New restaurants are out of the question, as the local market is already saturated. Specialist shops or providers of more uncommon services would do well in this location.
This map shows that Queen Street is near a very large commercial area in Deal with a large number of businesses. There are several bus stops in the nearby area, and Queen Street connects to the centre of Victoria road, which is near the middle of Deal, and is a large hub of local commercial activity.
This location would be an excellent spot for wholesalers and similar businesses, as retailers may find difficulty in establishing themselves in this area without being overwhelmed by the local competition.
As well as being part of the outskirts of the commercial centre of Deal, Queen Street also connects onto several average-sized residential zones, as well as being moderately near some of the larger buildings in the town. This location could be ideal for an office-based business.
Research
Before It can be decided which of the premises to use, it must first be decided which type of businesses would do well in each of the locations in which the premises can be found, as each of the business sites have certain strengths and weaknesses that make them suitable for certain types of business.
In order to find out which kinds of business would be successful in each particular area, people who shop in those locations must be questioned to find out what they feel is missing in the area. Once it has been decided which businesses are missing in each particular area, it can then be decided which premises are suitable for these businesses, and from there which of the possible premises are the best.
100 questionnaires will be distributed in the local area, trying mainly to concentrate within Deal, Walmer, and Canterbury. There will only be 6 questions on the questionnaire; this will save time and make for more precise marketing. The questions will be as follows;
“Which of the following locations do you most often purchase goods or services in?” - This question will allow the database of returned questionnaires to organise the questioned into categories based on which location their answers to the questions apply to. Using this method, public opinion about each of the 3 different locations (Deal, Walmer, and Canterbury) can be isolated and therefore used more effectively. Unfortunately, due to the nature of the places in which the questionnaires will be distributed, the answers to this question may not be fairly used as evidence to suggest which of the 3 locations are the most popular as shopping spots.
“How often do you visit this location?” – This question is far more effective for the purpose of finding out how popular certain locations are for shopping. There will be 5 possible responses; “Less often than once a month”, “Once a month”, “Once a week”, “Several times per week”, and “Every day”. These 5 options will all relate to a number of “points” from 1-5. By calculating the mean average number of points (total points divided by number of questionnaires answered per location), the popularity of each town by shoppers can be effectively measured. For instance, if 5 people shop mainly in Canterbury and each of them answer this question with a different response, (1+2+3+4+5)/5 = 3. Therefore, the average Canterbury shopper shops in Canterbury once a week.
“How much money do you tend to spent on a visit to this location?” – This question also has 5 possible responses and can use exactly the same formula as the previous question in order to find out the average amount of money spent per visit by the average visitor to each location. This question can be used in conjunction with the previous question in order to find out how much income businesses in Canterbury can expect to take in.
“How would you rate the variety of businesses in the area?” – This question having only 4 possible responses, it is asked specifically to find out whether new businesses in the area can be expected to benefit from a lot of positive attention or not. Using the “scoring” formula again, the area with the score closest to “Many important types of businesses missing” being the area in which new businesses can expect the best initial influx of customers.
“How would you rate the overall quality of these businesses?” – Once more using the formula as with the other questions, the answers to this question can help to measure the level of competition a new business can expect to encounter in each area. An area with an overall rating of “average” would be ideal, as if public opinion on the quality of businesses in the local area is too low, then the lack of popularity in the area may cause all businesses to be somewhat disliked, and this effect could possibly even transfer onto new businesses in the area.
“What kinds of businesses do you think the area is missing?” – The most important of all of the questions, the answers here reflect the type of business that should be established in the area. 3 decisions can be made from this question; an ideal business to be established in each of the 3 possible towns, and of these 3 possibilities, 2 will be eliminated, leaving one ideal type of business to be established in one particular location.
After the location and type of business has been decided, the next step is to choose which premises to pick. This can be decided by first eliminating the possible premises in the wrong locations, then eliminating the premises that are not ideally placed or set up for the chosen type of business, and finally picking the best choice from the possibilities that remain.
The results of the questionnaires show that the average shopper in all 3 locations goes shopping in the area once per week. In Deal, the average money spent is £10-£20, but in Walmer and Canterbury, the average money spent is £20-£50. Shoppers think that there are enough businesses operating in Canterbury of good quality overall, but there are some missing in Deal and Walmer, of average quality overall. Shoppers feel the need for a men’s clothing shop in Deal, a pub in Walmer, and a computer shop in Canterbury. Almost 50% of those who shop most often in Deal list a men’s clothing shop as a necessary business. From these results, it can be concluded that Deal is the ideal location to set up a business, and a men’s clothing shop is the ideal business to set up there.
Business premises in Walmer and Canterbury may now be eliminated. This includes the premises in the Lakesview business park in Hersden, and the premises on Cambridge road in Walmer. Next, premises not suitable for retailers may be eliminated. The premises in Grosvenor Mansions are more suited to office-based businesses, and the premises on Mill Hill and Victoria road are more suited to everyday needs shops. The other premises in Deal are located on roads with many other businesses, most of which will not be in direct competition with a Men’s clothes store, making these areas much more suitable for a business of this type.
From the process of elimination, It can be concluded that the most likely premises for the business are those on the High Street (On which two possible locations are situated), and Stanhope Road. One of these three premises must be chosen in order to continue making decisions relating to the nature and conditions of the business. In order to make this decision, the advantages and disadvantages of the different premises must be analysed.
This diagram shows the qualities and drawbacks of the premises on 70-72, Deal high street. The diagram shows an analysis of the premises at a glance, with the size of the coloured shape showing the overall suitability of the premises, and specific points around the outside of the diagram to give a more specific breakdown. Each “quality” is measured from 0-5, with 5 representing an ideal quality for the premises. This diagram shows that the premises has very good customer potential (i.e.: The building is positioned such that many potential customers will be attracted), but is average in other ways.
This diagram shows the qualities and drawbacks of the premises on 142, Deal high street. It can clearly be seen that, unlike the premises on numbers 70-72, These premises have no clear stand-out qualities. Value for money and customer potential are the strongest points, but the premises are very average overall. The internal size is also particularly disappointing, and may cause these premises to be unsuitable for this business.
This Diagram shows the qualities and drawbacks of the premises on 7, Stanhope Road. It is apparent from this diagram that these premises are very good overall, with one major drawback – the cost. There are three major qualities of the premises – The external visual appeal, the internal size, and the customer potential. This is a much greater range of positive points than the other 2 possible locations. However, unlike the premises on 70-72 of Deal high street, this location doesn't have a “5/5” score in any area.
This diagram plots all of the analyses of the premises together, so an “overall picture” can be seen. By looking at this diagram, it can be established which location is the most suitable taking everything into account. Using this method, it can be concluded that the premises on 70-72 of Deal High Street are the most suitable overall. It is the only location that is not completely inferior to the other two in any particular field, and in addition it is the best or joint best in 3 of the 5 fields. It offers a huge amount of potential in terms of numbers of possible customers that will walk past the premises, and is also very visually appealing externally, in addition to being of good quality inside as well.
In conclusion to this section of the report, the ideal business to be set up in the local area would be a Men's clothing shop on numbers 70-72 of Deal High Street. This is because this kind of business in this area targets the largest gap in the local market in terms of every-day shopping. Because of the type and area, the business can expect a great deal of patronage from the residents of Deal town. The primary target markets – those who will be most likely to visit the shop – will be male local residents, consisting primarily of children aged 10+ and senior citizens aged 70+. There is also a possibility of a great deal of other age groups visiting the shop often as well.
The business can expect to be very successful if managed and run correctly, owing in part to the fact that there is very little local competition. There is one business specialising in men's clothing operating near the beach, but its prices are high and it caters for a very small sector of the teenage market, which in itself is moderately small in the local area. It must also be considered that local consumers have certain expectations of local businesses – a certain attitude and community awareness must be taken in order to breach the market successfully.
Because setting up a business such as this is based entirely around potential and possibilities – there are many varying chances of how much success it can be hoped for the business to experience. For this reason, a great deal of thought and planning must go into how the business must be run. It is these decisions that will take place during the following section of this report.
The operation of the business
1) The basics
Firstly, it is important to decide whether the business will be run as a sole proprietorship, a partnership, a private limited company, or a public limited company. Depending on the nature of the business, each of these types of ownership can completely change the course of the life of the business. Each has its own advantages and disadvantages, and the chosen ownership type must be considered carefully.
Under a sole proprietorship, setting up the business will be very simple and easy, and very little start-up capital will be required. The owner would be able to have complete control, which would mean that decision-making wouldn't be a problem in terms of conflicting ideas and opinions. No important information about the operation of the business would have to be provided to the public or anyone other than the owner. Finally, the owner would be able to keep all of the profits of the business. However, the owner would also suffer from unlimited liability – if the business faced financial difficulties, the owner would have to pay off all of the debts personally. The business may find it difficult to grow because of the difficulty to obtain a bank loan due to the risk. A sole trader may have to base their entire life around their work, and if they were unable to run the business, there may not be anyone else who could take over on a temporary basis. Finally, because under a sole proprietorship, the business would be quite small initially, it would not be able to benefit from the advantages of economies of scale.
Under a partnership, more capital can be introduced into the business because there are more people who will be able to contribute. In addition, each of the partners of the business may be able to specialise in a different area. Like a sole proprietorship, a partnership would be easy and simple to set up, and financial information would only be seen by the partners themselves. There is also the advantage of being able to introduce new partners, or involve sleeping partners to contribute more capital. Unfortunately, partnerships share many of the disadvantages of sole proprietorships as well. For instance, they also suffer from a slightly less extreme form of unlimited liability (the debts of the business are shared between the partners), and the business may initially be small and not have enough capital to benefit in the same way as limited companies. In addition to these, partnerships also suffer from having to share the profits between all of the partners, and they may disagree about the running of the business.
If a business chooses to run as a private limited company, it can sell shares in the business in order to raise capital. The business has its own identity in the eyes of the law, and is therefore separate from its owners. The owner or owners of the business could avoid getting into personal debt themselves if the business suffered from financial difficulties. The business can be sold on to others if the owner or owners decide they don't want it any more. However, private limited companies must make their financial information available to the public, and are restricted on selling shares. Because of this, even these companies may suffer from being short of capital and therefore unable to benefit from economies of scale, etc. In addition to this, the business must still pay a share of profits to the shareholders as dividends.
As a public limited company, the owners will experience the same advantages as a private limited company, but can additionally raise a much larger amount of capital by selling shares on the stock exchange, and will be able to comfortably take out large loans from banks. However, it is an expensive process to create a public limited company, financial information will be readily available to the general public, dividends must be paid to the shareholders, and it would be possible for the business to be taken over if a large proportion of the shares are bought by one shareholder.
Due to the size and type of the business when it is initially set up, it can be concluded that a partnership is the ideal ownership type. The business may later decide to become a limited company, but starting off as a partnership would be best at this point.
In terms of land, labour, capital, and enterprise, the business should start relatively small and work up gradually. The premises themselves are small, and as the business is running as a partnership, the business could operate with the partners as the workers, using their own capital to fund initial purchases and payments. One option could be to elect one or two partners as the “directors”, or to take a vote on every major business decision.
2) Marketing and products
As a men's clothes shop, it must be decided what products must be sold and what image the business must project in order to best reach the target market. As previously mentioned, men of all ages are possible targets, so a versatile and stable image and a very large range of products are necessary. From a stylistic perspective, the building should be modernised both internally and externally, leaving some “vintage-looking” items in place. Clothes should be bought from wholesalers in batches of approximately 50 of each separate item. Buying in the same batch again should be avoided except for in cases of very high demand for a product. The duties of at least one partner should include noticing how popular certain products are and using this information to decide which products to buy in next. Prices of products should be set at 200% of the price that each item was bought for in bulk. Products should include everything from very cheap, basic wholesale products to expensive designer labels, and include t-shits, shirts, jeans, suits, formal trousers, jumpers, shoes, socks, underpants, accessories, and more. It is vital that a large target market is reached so that the business can expand early on.
3) Aims and effects of the business
This business depends on electricity and heating, clothes wholesalers, and clothing business necessity providers. It is unlikely that any businesses will depend on this business initially. It operates within the tertiary sector, and is affected by the secondary sector. Vertical and horizontal integration are an option in the future, particularly if high-quality unique clothes can be made in-house at a lower price.
The immediate aim of the business would be to survive and reach the break even point as soon as possible. As soon as this is achieved, the business should aim to gradually grow and establish a stable presence, making improvements to the operation of the business slowly over time. Eventually, the business should be able to start to grow at a much faster rate, possibly purchasing more premises and operating in more ways, such as making clothes, or possibly expanding into women's clothing as well. After a long while, the business may be able to buy out any local competition that may have arisen.
Many of the locals may immediately see the business as providing something that the local town does not have good access to, due to the low quantity of specialist men's clothing shops in the area. This will have a positive impact on the image of the business, and on public opinion, and therefore marketing possibilities. Other than this, there are no real immediate effects the business would have on local society.
4) Organisation, expansion and employment
The business should start out operating with a flat structure, with 5 or 6 partners with roughly equal authority and responsibility. Each of these partners should have a set duty and make basic simple decisions based on these duties themselves. The partners should all vote on important major business decisions, and the value of their votes may either be equal, or be directly proportional to the amount of capital they have contributed to the business.
As the business expands, it may wish to become a private or public limited company. If this is the case, the partners should start off with a certain number of shares each, and keep their initial duties, but employ new workers in order to carry out the increasing number of duties within the growing business. Ideally, the partners who started the business should try to keep an “equilateral triangle” shaped business structure, with themselves at the top, each with a similar amount of authority, and each with a similar number of employees below them on the business structure. As the business grows, they may wish to add more and more layers to the business structure.
If the business ever reaches the point of being a multi-national household name, it may also wish to sell franchises in order to expand its influence with minimal difficulty.
5) Initial requirements
When the business is first set up, some capital will be needed to be spent in order to refurbish and equip the building to the point that it can operate effectively as a men's clothing shop. Builders and decorators can be hired in order to do most of this work, but a lot of equipment must also be bought. This includes clothing racks, changing rooms, hangers, tills, chairs, and general clothing shop furniture such as a “desk” for the till area to operate from, and racks for shoes, among other general display areas.
Electricity must be made sure to be functioning effectively within the building, with operational plug sockets, etc., as well as other essentials that the building will need in order to serve its purpose properly.
6) Formal Business production “Details”
The service of wholesale stock being “broken”, and the service of allowing the local consumer to buy these products with minimal effort is the “product being produced” - It is being “produced” within the business premises, by buying in stock and selling it to customers, and it is “produced” to make a profit and provide a service to the local community
7) Technology
Computers will be used to aid the organisation and operation of the business, therefore boosting its efficiency. Financial records should be kept on a computer and backed up (A partner should be put in charge of this initially), as well as other important information, such as the quantity of stock of each product left in-store.
In addition to this, a computer could be used for more effective communication, and if the business established an internet presence for itself, it would have a huge number of benefits. However, the partners – as well as anyone they may employ in the future – would have to be trained in order to use this technology
8) Conclusion
With these decisions in place, it is likely that the business will be a great success. Naturally, changes to this overall plan may need to take place in order to adapt to a changing situation. A successful business must always change and evolve when its environment changes.
Acknowledgements:
“Business studies for OCR GCSE” - Peter Kennerdell, Alan Williams and Mike Schofield – Hodder & Stoughton – ISBN 0-340-79052-0
