Unit 8: Business Development
1. The Business Idea
During our A2 Applied business course we have been told to compile an extensive plan for
a small business we are intending to set up. This plan contains details of the business idea,
issues surrounding business resources and quality issues, financial resources and the
feasibility and evaluation on the venture.
Small businesses hold roles and responsibilities within the market. It is the job of small
businesses to bring out new products and develop ideas within an industry. A study in the
US on innovation showed that, over 121 industries, it is the smaller firms that are
producing 40 percent of all new products that are being introduced onto the markets and
are available for consumers. This figure shows that smaller business have a large impact
on the state of a particular market and contribute to the development of the industry the
new products are in.
It is also the role of small businesses to create new jobs. Although it may not be a large
number of jobs that are being made, as there would be if a large international company
decided to expand, it is enough to boost the local economy as new jobs and careers are
being offered to community within the given area. As most new business start of relatively
small, there is regularly lots of new jobs being created. This is serving the industry and
market well, particularly in the current economic climate where the UK is in a recession
and has a concerning level of unemployed citizens. Since 2010 youth employment has
been heavily focused on as figures show that millions of youths, people aged 16-24, do not
have any form of employment. This raises fears for the future and the ‘uneducated’
generation, however by creating new jobs in local areas, this is giving unemployed youth
an opportunity to work and therefore small businesses are largely contributing to helping
the national economy survive the recession.
Small businesses also hold the responsibility of serving larger corporations. Particularly
where smaller companies begin as product outlets and stores, they act as product
distributers for much larger companies such as Coca Cola or Nestle for example. As it is
unlikely small business will be creating brand new products for themselves, they will
begin by gaining company contracts and selling them in their own outlets, thus creating
profits for themselves and for the larger companies. By doing this, the small business are
responsible for the increase of the market they are based within, helping to sustain the
market shares of larger companies and also increasing their own market share by stocking
popular products within the industry.
Another way in which small businesses contribute to the market is by providing
specialized products that meet the particular needs of customers. Larger internationally
companies, cater for a large consumer audience and therefore have to generalize the needs
of their customers whereas when smaller businesses first start out they will have a more
precise au dience and can adapt their products to the exact needs of customers without
having to generalize. Smaller businesses find niches within the market and use this to
appeal to their target audiences. The role of a small business win the market is to create
niche products that will develop the industry and potentially create a new market
altogether.
As a business it is important for them to take risks within an industry instead of playing it
safe to prevent failure. Business aim to create and develop solutions to current industry and
market problems by thinking outside of the box, and in doing this, will succeed as they are
offering consumers something completely new. This idea of being innovative and original
is known as enterprise culture and it refers to organizations being imaginative and creative.
Culture refers to the typical way of behaving within a community, and when associated
with enterprise, ways of behaving within a company. An organization with enterprise
culture uses there products and the services that they offer to challenge existing ways of
doing things within their market.
Particularly in the current economic climate of a recession, it has become increasingly
difficult to start a business. It is common for those that are intending to start a business, a
bank loan is needed. If this was before the turn of the millennium, it would have been a
simpler process. However before the recession hit a few years following 2000, the process
of receiving financial help from banks has become much more difficult and it is not
uncommon to be denied a loan if your business idea has been deemed too niche or banks
do not see it as being potentially successfully. This has put a strain on the developing
economy as fewer businesses have been set-up which has resulted in less economic profit
and more people becoming unemployed.
It is also more difficult to start a business as the owners will now be exposure to legal
problems and issues that they would not face as an employee of business, working for
somebody else. This could potentially make the process of starting a business more
difficult as issues regarding taxable incomes and liability for example could prevent the
company from being successful.
Starting a business also holds a large financial risk, particularly in the case of a sole trader
or partnership status as they are liable for all debts that occur within a business which
means that personal assests such as property and vehicles are used to cover debt costs. The
financial implications could also leave business owners bankrupt so therefore starting a
business may prove difficult if it is unsuccessful in the first few years of business and
could potentially leave owners with nothing, it is essential costs are worked out before
opening a business to ensure that all suppliers costs will be met to prevent debt.
The first business plan option I explored was setting up a pet grooming company. The
company offers consumers the service of pet-sitting, walking and grooming and this will
be available to customers willing to bring pets over to my own home property but for an
extra charge to cover transportation costs and convenience, the service will also be made
mobile to pet owners that are unable to bring their animals to me for reasons such as lack
of vehicle, time etc.
An advantage of setting up the pet grooming service is that there is no need for another
property for the time being, this will keep my costs down to a minimum as I will not be
required to pay out for rental, electricity, phone lines, water, gas etc. other than my own
household bills. As the main base for the service to take place will be my own home to
begin with, and the property itself is relatively small, it would be important that I do not
over-commit to having more animals in my home than capable because this could
potentially incur health and safety issues. A benefit of having the company set up within
my home is that it is more unlikely I will fall into debt than I would do if I had rented or
bought a property specifically for the business. As I will be liable for all debts which will
put my personal assets at risk including my home, it is more appropriate that I set it up in
my home to begin with so that my debts will only be minute if the company is not
particularly successful.
Another advantage of the business option is that the nature of the business requires little
expenditure on supplies. The needs of a pet are low-maintenance compared to fulfilling the
needs of a direct customer, the required supplies for offering the animal service is not an
extensive list and can be reused until they are unfit for purpose. This keeps my costs down
to a minimum as I will not be paying out each week or month through a supplier except for
animal food as the majority of all resources I used such as equipment can be used regularly
without having to be repurchased.
Researching other businesses of a similar type in the area where I will be setting up,
Coventry, I am aware that there are not many that offer a mobile service. This is because it
is inconvenient as it involves travelling, which includes extra costs, but it also means that
you can only attend to one animal at a time, whereas if the business was just at one
property and not mobile then a large number of animals can be cared for at the same time.
However, I would personally offer my services as mobile as well as just at my own
property as to begin with, in the first few months of opening, my regular customer
numbers will be small. Therefore I can afford to take the risk of travelling to customers’
homes and caring for animals there, charging extra for the service to cover necessary costs
such as fuel and time. This will put me in a good position as I am offering a service that
