Professional Documents
Culture Documents
Small Business
Management
KHOO YU TING
921227015896
200080
OCTOBER 2013
TABLE OF CONTENT
TOPIC PAGES
1 Contents 2
8 References 24
9 Coursework 25-34
In order to determine if the new venture has the potential to become a viable business
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evaluation process. The screening involves answering a series of questions that shed light
on the potential for the idea to actually become a product or service upon which a
business can be created. Entrepreneurs who fail to evaluate their venture often discover,
after they have invested a great deal of time and money, the answers to the questions that
the opportunity evaluation process would have revealed. When the idea becomes reality
in the form of a product or service, how will this new product or service differ from what
the market already has? Second, how will the product create value for the buyer or end
user? What, exactly, do we know about the buying behaviors of the marketplace?
The evaluation of an opportunity always begins with the basic questions whose answers
help the entrepreneur determine the magnitude of the opportunity. The search hopefully
reveals that the product or service is dramatically superior to existing offerings in the
market in ways that create value for the buyer and do not require a significant alternation
of use patterns by the consumer. If the new product or service achieves these outcomes,
the entrepreneur has a product or service with exceptional promise. This part of the
analysis involves asking a series of questions about the idea. First, how is it different
from the existing products or services presently being offered in the market. If the answer
exist. If there is little new about the product or service, it will be difficult to convince
existing buyers to switch from what they are presently purchasing. If the product or
service is dramatically different from what the market is presently using, there may
different from what is now in use. The analysis needs to uncover the sources of resistance
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to change and attempt to quantify the degree of difficulty anticipated in overcoming the
Assessing the market potential of your new venture concept is a critical component of
any feasibility study. A serious miscalculation many entrepreneurs make is to assume that
because their idea appeals to themselves and their family that other consumers will also
like their product/service and therefore purchase it. Comprehensive, unbiased market
research will assist you in determining the true viability of your of your new venture idea.
Through market research, you will gather and refine information about:
Customers
Market size
Industry
Competition
Customer profiles
new venture. When defining who your customers are, you may be tempted to describe
them in the broadest terms as all individuals who might use your product/service. By
doing this it gives you the impression you have an exceptionally large market when in
reality you may only have a niche market. Since the success of your new venture depends
upon your ability to meet your customer's needs and wants you must clearly define your
target market.
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What are their needs and tastes?
Market Opportunity - most early stage venture investors look for companies addressing
large markets. The venture capital metric is return on investment, or dollars invested to
reach a liquidity event (IPO, Acquisition) versus dollars the investor receives at the
liquidity event. As such, the companies must be equity based, and the addressed market
must be large enough to justify the millions or tens of millions of investment dollars
Challenges
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Setting up a business presents obstacles that you would not otherwise face if you
continued working for someone else. These include keeping track of your finances, hiring
In order to overcome the challenges you will be presented with in your business venture,
and numeracy, giving presentations, business planning, developing a brand, and website
design.
its your business, so whatever you say, goes! Some people dont like working for others
because they dont agree with their bosses decisions or just dont like the feeling of
Its true that most entrepreneurs will tell you that they could never go back to working for
someone else!
Being in charge means you can get things done your way. This means doing what you
want with your business on a daily basis, and knowing that your actions have achieved
avoiding your constantly complaining boss, doing something you love every day seems
If you have a well-constructed business plan and think there is a gap in the market you
can plug with something you enjoy doing, then its worth taking the leap.
Efficiency
Running your own business means you get to lay down the deadlines.
Youre on your own, so its up to you to be self-disciplined enough to get things done on
Your idea is your business, so its entirely up to you what your business is about.
Its success will also depend on how you develop your concept, allowing you to express
Variety
These include: accountant, marketer, manager, writer, pitcher, designer and researcher.
Experiencing this sort of variation in your job every day can be very fulfilling as long as
youre prepared to learn all the skills and knowledge required to perform these roles.
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No more commuting
if your journey to work each day takes 45 minutes or more, thats an hour and a half each
Although you may have to move your business to a small office once it has grown
sufficiently, starting out by working at home is a great way to save money on costs.
If youre someone who has to endure a long commute to work and back each day, this
Money
Dont make the mistake of thinking only big companies can make big bucks. There are
many entrepreneurs who have made millions on their own through hard work and lots of
determination.
Second career
If you still enjoy your day job but want to set up a business, or just want the security of a
regular income until your venture becomes established, you can always juggle the two.
Set yourself strict hours in your spare time when you will work on your business it may
seem tricky at first, but works once you get yourself into the habit.
After all, your health is more important than anything and you dont want to burn
yourself out!
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Despite what the papers say, the government isnt completely useless at supporting the
Theyve made it easier in recent years to set up a company and secure funding by cutting
Organizations such as the Princes Trust and Angels Den also offer funds for business
start-ups.
With the right attitude, your business venture can go a long way and make substantial
profits.
Check out our Startup Success Stories to be inspired by those who have already achieved
their dreams.
Type A ideas are startup ideas concerned with providing customers with a product
that does not exist in their market but already exists somewhere else.
Type B ideas are startup ideas that involve a new or relatively new technology in
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Type C ideas are startup ideas that perform old functions in new and improved
ways.
Where does an entrepreneur come up with the idea for his/her business? In practice there
are many ways in which the business opportunity and idea is first spotted. As we shall
see, sometimes luck plays a big part; at other times there is a role for approaches which
Here are some of the main sources of business ideas for start-ups:
Business experience
Many ideas for successful businesses come from people who have experience of working
in a particular market or industry. For the start-up, there are several advantages of
Entrepreneur is able to make more realistic assumptions in the business plan about
Industry contacts, who might then become the first customers of the start-up!
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All of the above help the business planning process and you could argue that they reduce
On the other hand, you might argue that familiarity breeds contempt. In other words,
detailed experience of an industry means that the budding entrepreneur doesnt have a
fresh perspective. Someone who is new to a market may be able to exploit approaches
that have worked in other industries to make an impact with the start-up.
Personal experience
Many ideas come to entrepreneurs from their day-to-day dealings in life, or from their
hobbies and interests. For some of us, frustrating or bad experiences are a source of
It is often said that one of the best ways to spot a business opportunity is to look for
examples of poor customer service (complaints, product returns, persistent queues etc).
Hobbies and interests are also a rich source of business ideas, although you have to be
careful to avoid assuming that, just because you have a passion for collecting rare tin
openers, there is a ready market from people with similar interests! Many people have
tried to turn their hobby into a business and found that generates only a small
Observation
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Simply observing what goes on around you can be a good way of spotting an idea. Often
an idea will be launched in another country and has not yet been tried in other, similar
economies. When Stephen Waring was in the USA attending a wedding, by luck he sat
next to someone who ran a household service business (treating lawns). After some brief
market research, Stephen found out that there was no similar business in the UK, so he
launched one. It has since become a hugely successful franchise business Green
Thumb.
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The Internal Analysis of strengths and weaknesses focuses on internal factors that give an
organization certain advantages and disadvantages in meeting the needs of its target
market.
Core competencies that give the firm an advantage in meeting the needs of its
target markets.
because strengths are only meaningful when they assist the firm in meeting
customer needs.
strategy.
The External Analysis examines opportunities and threats that exist in the environment.
Both opportunities and threats exist independently of the firm. The way to differentiate
between a strength or weakness from an opportunity or threat is to ask: Would this issue
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exist if the company did not exist? If the answer is yes, it should be considered external to
the firm.
Opportunities are situations that exist but must be acted on if the business is to benefit
from them.
Threats refer to external conditions or barriers that may prevent the firms from reaching
its objectives.
The manager's starting point will be to analyses the industry that the business operates in.
There are various factors within the industry that may pose as opportunities or threats to
your business. Porter's Five Forces Model identifies five industry factors that may present
The risk of entry by potential competitors: new competitors in the industry may
lead to your business losing some of its market share, which will result in a loss of
profit. Therefore, new entrants pose a threat to your business. On the other hand, if there
is a minimal risk of new entrants into the market, this may present your business with
new opportunities.
Competing with other businesses to gain a market share may involve tactics that require
your business to either increase costs or lower prices, which will affect profitability.
This poses a threat to your business. However, minimal competition may also provide
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The bargaining power of buyers: If your buyers have the power to bargain
prices or demand higher quality products and services, this will pose a threat to your
business and it will result in a decrease in profits. However, if buyers have little power,
if suppliers have the power to demand higher input prices; this poses a threat to your
business' profits. Conversely, if suppliers have little power, your business may have the
in the market that can substitute your product, by satisfying the customers' needs and
wants, then this is a threat to your business, as your sales may potentially decrease, and
so will profits.
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Cost-based strategies relate to the business decision to base the price of a product on the
costs of production rather than external factors such as competition or the economic
Ultimately the price of a product must exceed its cost or the firm will make a loss.
There are three overall types of cost-saving opportunities. The first form deals with
obtaining better prices due to high bargaining power. In general, large retailers with
number of SKUs are best able to secure the lowest prices. Retailers with strong private
label brands are also able to use these as means of negotiating better prices for
manufacturer-branded merchandise.
A second form of cost-based strategy is through a retailers reducing bad costs. Some bad
costs are incurred by chains that overly centralize strategies across the United States, or
changes in consumer behavior. In other cases, low-cost retailers incur bad costs through
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Include exciting departments in the store such as coffee bars, fresh pasta bars,
Show how fresh food is made. Let customers observe bread being baked, fresh
pasta being prepared, beef being cut and aged, coffee being roasted, and so forth.
Plan a series of events throughout the year, such as wine and cheese tastings,
demonstrations by local chefs, book signings, trunk shows, and so on, to generate
continuous excitement.
Generate a fun atmosphere for all age groups through product samplings, a petting
zoo, and events based on local holidays (for example, Celtic dancers on St.
Patricks Day, hayrides for children, and fresh-dipped chocolate on St. Valentines
Day).
Encourage staff to provide food samples for young children (based on a parents
approval).
Use sampling stations to show off fresh vegetables, special cuts of meat, and
Display fruits and vegetables in an artistic manner showing their diverse colors.
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Differentiation based on merchandise:
Develop private label products that are distinctive based on recipe, contents,
Edit merchandise offerings of vendors to items with high quality, ease of use, and
distinctive features.
products by telling a story about the products on the products label, on store
signage, or on the Web. Tell customers what is so special about these products in
Provide free samples of private label and national brands for cooking at home.
Have store personnel help customers load heavy packages into their vehicles. A
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Allow customers to order merchandise using the Web, or to verify that a local
Train employees to take customers to the exact aisle location, not shelf aisle,
Hire employees that have a passion for being with people, love to help others, and
Hire employees with a passion for the products you are selling (foodies for a
supermarket, tennis buffs for a sporting goods store, and techies for a
computer/electronics store).
Educate employees through special classes, field trips to vendors, or free samples
to take home.
Employ a staff dietician that can help customers with special food needs.
Pretest and pretaste all products offered for sale. Refuse to sell poor-quality
guarantee.
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Specify a written policy relating to no preservatives, no artificial ingredients for
Employ well-informed sales personnel trained to offer the most suitable goods for
audience.
Develop safety standards that are higher than Food and Drug Administration and
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7.0 Conclusion
A business plan is not just a lengthy document that helps you obtain financing. It's truly a
thorough examination of whether your business idea is viable. Preparing your business
plan in the early stages of developing your business can save you a great deal of time,
money and heartache by showing you where the weaknesses in your idea lie and giving
you a chance to correct them before you make any serious mistakes.
For example, in the process of putting together your business plan, you might discover
that you haven't really thought enough about your marketing budget or you haven't done
enough research on government regulations that will affect your business. In putting
together your plan, you will be forced to examine your business from the viewpoint of the
skeptical potential investor and the skeptical potential consumer, not just from the
Once you've completed your initial plan and, hopefully, obtained the investment or loan
you were seeking, keep in mind that your business plan should be a living document.
Don't just store your business plan on a shelf and never look at it again, thinking that it
has served its purpose. You will want to revisit your plan from time to time, dropping
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some components and adding others as you learn what works for your business and what
doesn't. As your business evolves, you'll find that older versions of your plan provide a
helpful reminder of how far you've come. As a bonus, continually updating your plan will
put you ahead of the game if you later need to secure additional financing.
Step 1
Write with an optimistic tone. If you sound like you dont believe in your company, the
reader wont either. Say, By following this plan, ABC Company will meet its financial
goals, rather than, If we are fortunate, ABC Company can gain success.
Step 2
Summarize the opportunity. A detailed business plan provides a great deal of information
like start-up capital, projections and target demographics. Summarize and remind the
Step 3
Outline where you expect to be in the next three to five years. Show the reader that he
will benefit from investing in your company. For example, Following projections, ABC
Step 4
Emphasize what sets you above your competitors. To convince a reader to invest, you
with cutting-edge technology has ABC company poised to claim the top spot in the
market.
Step 5
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Tell the reader what you expect from him. The plan itself may interest him, but his idea of
a contribution may differ from what you need. If you are looking for a $20,000
Step 6
Finish with a call to action. If youve done your job, the reader is interested and knows
what is expected of him. A final push may well seal the deal. For example, Take this
exciting opportunity to get in on the ground floor of a company with unlimited growth
potential.
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8.0 References
1. text book
2. http://www.google.com/
3. http://en.wikiversity.org/wiki/
4. http://startups.co.uk
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9.0 Coursework
The creative process has four commonly agreed phases, shown in Figure 1.2. There is
wide agreement on their general nature and the relationship between them, although
and ways of doing things through reading and travelling widely, talking with different
people with different views about the world. You may, for example, see demands being
met in one country that are not met in others. You may read about products made in one
country that are not yet available in another. This is, of course, to be placed in the
context of the issue being addressed. So, in these examples of demand and supply, the
opportunities you have spotted in other countries arc very relevant to your desire to set
up your own business. It is not just about being aware of different approaches or
perspectives on the problem, but also about getting the brain to accept that there are
different ways of doing things developing both an open and an enquiring mind Many
unthinkable. Carrying a notebook and recording ideas and information can be useful. So
too can developing a small library. Look how far Lego, LG and Hallmark went in order
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to expose their staff to new ideas. Some sources of commercial new ideas are shown in
Figure
People need time to mull over the tremendous amounts of information they generate in
Phase i. This incubation period happens when people are engaged in other activities (the
best are those instinctive activities that do not require left brain dominance) and they can
let their subconscious mind work on the problem. Interestingly, sleep happens when the
left brain gets tired or bored and during this time the right brain has dominance.
Incubation therefore often needs sleep. The old adage, 'sleep on the problem, has its
origins in an understanding of how the brain works. It is little wonder that so many
people have creative ideas when they are asleep the problem is trying to remember
them. Creativity, therefore, can take time and needs 'sleeping on.'
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Ideas can come up unexpectedly during the incubation period, sometimes while you are
asleep. However, often they need encouragement and there are a number of techniques
that can help to encourage idea generation. Some of the more widely used ones arc
The next stage is to select which ideas are the most promising. This is the convergent
stage of the process involving discussion and analysis, possibly voting. Some ideas
generated in Phase 3 might be easy to discard because they are unrealistic but others
Sometimes a return to Phase 3 is required to do this. We shall look at how you might
Roger von Oech (1986) has a slightly different view of the creative process,
focusing on the changing role of the individual as it takes its course. He outlines four
sequential roles:
The artist turning information and resources into new ideas by imagining,
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The judge evaluating and assessing the merits of a concept and incorporating
timing.
project.
In a start-up the entrepreneur may have to fulfil all four of these roles a
considerable achievement, not least because they require different types of left and
stages of the creative process. The Royal Mail Group has its own Creativity
forming, breaking up and coming together again all with very informal seating
well as toys, drinks and other distractions for the left brain. All the walls are 'white
walls' which can be written on with felt tip pens when ideas are in free flow. Pens are
everywhere. There are computer systems that allow ideas to be posted and voted on
anonymously. And records are kept of the whole process even the white walls are
workplace.
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2. Sustainability and corporate social responsibility
Before moving on to consider this process in more detail it is worth introducing the
concept of sustainability for both the business and society as a whole. It is not just
social entrepreneurs who have a role within society and, as with social enterprises,
now widely accepted that many business practices have negative social and
environmental side effects. Growing pressures are leading firms to give careful
come from:
Environmentalists who see companies rapidly using up the valuable but limited
resources of the planet and at the same time contributing to global warming,
which may ultimately cause the destruction of the planet Green issues and the
corporate 'carbon footprint' are rapidly becoming the most important issues
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Social reformers who see companies behaving in ways that they object to, for
working conditions. Trade unions and consumer groups have both focused on
social issues in the past, often with the result that legislation limiting the activity
Social activists who see companies as having a broader social role in the
community, for example, have become a trendy outlet for many companies,
whilst others like Body Shop and Timberland have practised this for years.
Ethical activists who see companies (such as Enron) behaving in ways which
course, an overlap here with the agendas of the other groups. Nevertheless,
business ethics has risen up the agenda of society as a whole and shareholders, in
Often these issues are bundled together under the broad umbrella of corporate social
responsibility (CSR). More and more companies are engaging seriously in CSR, and
over 500 in the UI< issue annual CSR reports on their performance. Much of the CSR
literature is highly moralistic in nature, reflecting the idealism of scholars who question
the profit maximisation objective of companies (Wood, 2000). However, Burke and
Logsdon (1996) argue that there are sound business reasons for following a strong CSR
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Enhanced customer loyalty. Certainly a strong CSR profile can reinforce and
enhance brand image (see the Abel & Cole Case insight). Customers are
increasingly drawn to brands with a strong CSR profile and CSR has become an
compared to 35 per cent for branD image and just 10 per cent for financial
Increased future purchases: Whilst any product must first satisfy the customer's key
buying criteria quality, price etc. a strong CSR brand can increase sales
and customer loyalty by helping to differentiate it. On the other hand a bad CSR
image can damage sales quite severely. The Environics survey (op. cit.) showed
42 per cent of consumers in North America would punish companies for being
concerned about after the Gulf of Mexico oil spill in 2010. This fell to 25 per
cent in Europe but collapsed to 8 per cent in Asia where CSR issues are seen as
less important.
Reduced operating costs: Many environmental initiatives can reduce costs (e.g.
motivation and cut absenteeism and staff turnover, and an increasing number of
decisions.
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Improved new product development: Focus on CSR issues can lead to new product
fossil fuels, whilst developing conventional engines that are more and more
research, policy and management, and concluding that 'greater awareness and
Access to new markets: A strong CSR brand can create its own market niche for an
organisation. For example, the Co-operative Bank in the UI< has a long history
investment policy that is the most frequently cited reason that customers choose
the bank. It also has been at the forefront of social auditing practices and has
produced an independently audited 'Social Report' since 1997 that measures the
responsibility areas.
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productivity. For example, actions to improve work conditions in the supply
performance. A 2002 study showed that the overall financial performance of the 2001
Business Ethics Best Citizen companies in the USA was significantly better than that of
the remaining companies in the S&P 500 Index (Verschoor, 2002). There is growing
awareness that incorporating CSR into mainstream corporate strategy translates into
bottom-line performance. In the short term it, at least, avoids negative consumer or
activist publicity, in the medium term it delivers better performance for investors and
thecommunity, and in the long term, by encouraging consideration of abiding social and
Certainly companies like Abet A Cole have used CSR as a major plank in their
branding. But CSR predates Abel & Cole by over a century. In the UK Cadbury, Wilkin
& Sons (maker of Tiptree Jams) and the Co-op are all early examples of businesses with
a CSR dimension. Today many large organisations, like the UK retailers Marks &
Spencer (MAS) and John Lewis, and the US company IBM and outdoorware
sourcing (from humans and animals) and into environmental issues (such as M&S'
objective to become completely carbon neutral). M&S' 100-point "Plan A' is generally
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There is also growing investor pressure to implement CSR. The Environics survey
(op. cit) showed that over a quarter of US share owners bought or sold shares because of
a company's social performance and a similar pattern emerged in Britain, Canada, Italy,
Canada and France (Environics International, op. cit). There are now CSR stock market
indices, like the Dow Jones Sustainability Index and the FTSE4Good, and, increasingly,
mainstream investors see CSR as a strategic business issue and raise it in annual
meetings. Activist groups also buy shares in targeted companies to give them access to
CSR can be integrated into the strategic planning process outlined in Figure 3.2:
themselves to competitors (Epstein and Roy, 2001) and find out about the
find out the expectations of their internal stakeholders (Smith, op cit) with a view
processes (deColle and Gonella, 2002; Epstein and Roy, op cit). The firm should
then be able to assess the fit between the CSR commitments it might aspire to and
its central business objectives (Burke and Logsdon, op. cit.; Smith, op. cit.),
which may or may not result in changing the vision and mission for the business.
According to Smith (op. cit.), this should reflect "an understanding of whether
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commitment and attainment (Burke and Logsdon, op. cit.). These may have to be
Sustainability and CSR can therefore be integrated into the strategic planning process.
Indeed they should be at the heart of any growth strategy. CSR encourages a long-term
view and reflects the concerns of the society in which the company is embedded.
However, it also makes good business sense, providing market and brand opportunities
that translate into bottom-line profits. CSR is set to become more important in the future
and is likely to be an essential element of strategy for all companies of every size.
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