3. business planning - influences in establishing a small to medium enterprise Flashcards
personal qualities (GEMS - QC)
Q qualifications
S skills
M Motivation
E entrepreneurship
C cultural background
G gender
what is ‘ a business idea’
- The business idea can be:
- An original idea that is quite different from anything already on the market
- A distinct improvement on something already available
- A new product or service that is not available.
- The source of a business idea may come from a person’s own experiences, interests, abilities or imagination.
how to identify business opportunities
(GAD)
- FIND A GAP IN THE MARKET
- ANALYSE AND REVIEW THE MARKET
- IDENTIFY A DEMAND
how to consider the competitors
To become more competitive a business can:
- LOWERING COSTS AND PRICE
* A business that can produce a good or service at the lowest possible cost and thus sell at the lowest price has the greatest ability to attract market share. - DIFFERENTIATING A PRODUCT
* Differentiation is about making a product or service different, unique or better than its rivals.
sources of imformation
what are the 3 types of establishment options?
(SEF)
- setting up/starting a business from scratch
- purchasing an existing business
- purchasing a franchise
what is ‘business from scratch’
- In setting up a new business, business owners need to consider the legal structure and costs of complying with legal requirements.
- Other considerations includes location, staff, branding, marketing strategies etc.
advantages of starting up a business from scratch
- the business owner has opportunity and freedom to start up business exactly has they wish
- there is no goodwill which the owner must pay for
- the owner is able to determain he pace and growth
what is ‘purchasing an existing business’
- When purchasing a business you need to know why the business is for sale.
For example, if the business has been struggling, it may not be a very good purchase
When purchasing an existing business, you will be purchasing:
1. Stock and Equipment
2. Premises
3. Existing Customer Base
4. Staff
5. Location
6. Reputation and/or goodwill
disadvantages of starting up a business from scratch
- high risk and uncertainty especially without a business reputation
- time is needed to set up business, create procedures, develop consumer bases, employ and train staff
- if start-up time is slow, the business may not generate profit for time
advantages of ‘purchasing an existing business’
- sales to existing customers will generate instant income
- a good business history will increase the likelihood of business
- equipment is available to immediate use
disadvantages of ‘purchasing an existing business’
- The preexisting image of a business is hard to change, especially if they have a poor reputation
- the success of the business may have been built directly due to the previous owner’s personality and contacts, so may be lost when business is sold
- There may be hidden problems
what is ‘Purchasing A franchise’
- The franchiser sell the another business (the franchisee) their proven brand and business systems via a franchise agreement.
- This allows the franchisee to sell the franchiser’s product in return for an ongoing % of profits.
-When buying a Franchise, owners must review the:
1. Contract
2. Fees
3. Territory
4. Marketing
5. Long term profit to cover
ongoing fee payments
disadvantages of ‘Purchasing A franchise’
- the franchisor controls the operations with little scope for franchise individuality
-profits must be shared with the franchisor through ongoing franchise fees
- the franchisor often charges additional service fees for advice
advantages of ‘Purchasing A franchise’
- immediate benefit is derived from the franchisors goodwill because of the name is established
- a franchisee can succeed with little experience
- business plan and proven business methods already exist
