What Is The Role Of An Entrepreneur Information Technology Essay
During this module I hope to gain a better understanding about how to start up a business and produce a projected cash flow. This module will hopefully encourage me to find my creative flare as well as motivation for learning and developing new skills for after university. Currently if I were to have a good business idea I wouldn't know where to begin or have the confidence to pursue it. I am to reduce this lack of confidence by being able to follow a simple business idea through to a final, excellent quality business plan ready for an investor for example, a bank, to see it and take me seriously as an entrepreneur.
Throughout this module I expect to see a lot of step-by-step guides on how to plan a business and the different elements contained within the area such as main idea, key milestones and financial topics. I believe we will be provided with all of the background knowledge available in order for us to build our business plans in the most effect way possible.
I expect some of the lectures to be very interesting such as learning about idea collating techniques as well as listening to potential visitors who are experts in the field. However I also expect some of the lectures and tasks to be information heavy yet still compulsory to know if we are to succeed in producing a business plan.
Description of self and any experience working in a business
At this point in time I have no experience whatsoever in terms starting and running a business. I don't have any idea on how one would even start thinking about a business. I have never studied business before this module therefore my base knowledge is almost none existent.
On the plus side I do work for a global enterprise working on multiple projects throughout any given year. I realise how much work goes into running a business and the different teams it takes to keep said business running. Within our company we have no less than seven teams throughout each individual business account ranging from design, build and test all the way to Live support. These teams allow for mostly smooth running of the business and each team are able to concentrate on their own task. This is very important and I must be aware of this when planning my own business.
What is the role of an entrepreneur?
The role of an entrepreneur to me is somebody with an eye for business. This person will have creative flare as well as showing a good knack for spotting a gap in a specific area where others can't. I believe that the entrepreneur can have many variants, ranging from someone being very hands on with a business and always taking a front seat in how it is run, all the way to someone who provides the business idea yet hires somebody else to do all of the project management work for them whilst sitting back and getting paid for it. I believe the strongest asset an entrepreneur has is the ability to take a risk especially when not knowing how successful they might end up being.
Challenges facing me over this module
The biggest challenge for me over the module will be embracing my potential creative mind as it has been inactive for a very long time. I may not be able to think of a business idea for the assessment is my main fear for the module.
B. Business Plan
Marking Scheme for this part of the PAC (50% of total Module Marks)
Initial document presentation features including: Title page with proposed business name/corporate identity, document contents page, with required business plan sections in a clear structure (10%)
Executive Summary and Vision (including Milestones) (5%)
Market Analysis including competition, marketing strategy and plans (10%)
Products and Services details (5%)
Business Operations and Organisation (5%)
Financials: including projected Cash Flow, Profit and Loss, Break Even (10%)
Supporting information about the proposed business (appendices) (5%)
CM617- Entrepreneurship and Small Business Startup
"webTight- a controlling organization for web developers"
Hand-in: 14th May 2010
Table of contents
Executive summary 1
Section1: Concept 2-4
Section2: Strategic Positioning 5-6
Section3: Cost Overview 7
Section4: Finances 8
Section5: Marketing Plan 9
Section6: Production Plan 10
Appendix 1: Monthly Cash Flow 12
Appendix 2: Cost Breakdown 13
Appendix 3: Key Milestones 14
To create a web design brand that customers recognise as delivering a professional level of quality and support at acceptable prices. This is achieved by means of creating a controlling organization working with a franchising model to control quality and support.
If you ask anybody: who would you go to for your website, the answer will usually be "oh, I know somebody" or "my friend's cousin is good with computers." There are only a few known brands that you will sometimes hear, such as Fusebox Design in the United Kingdom. The market is currently fragmented between the amateurs, the start-up companies and the big players.
Amateurs: usually the quality of the work is so low that the website can actually work against you, also there is no support. Build quality is absolutely neglected; the aim is a 'sufficient' end-result.
Start-up companies: Usually cheap, but because they are small, they cannot always guarantee on time delivery and support. For instance, if they get a big project, they will not have the resources to finish all the other projects on time, or if a server crashes, it can take time before everything is replaced and up and running again.
Big players: Usually design companies who have done work for some major brands. Because this has earned them some form of brand recognition in the market, they can ask high prices, without having to prove their technical quality.
My goal is to create a company that will be positioned in such a way that when people think of web design they will think of my company. For instance, if you think of printers, you will think Hewlett Packard or Epson for instance. I want to create a similar association for my brand.
At the same time I will be outsourcing certain activities to headquarters for every affiliate to reduce overhead and increase quality. This way affiliates will be able to focus on their core business, and it will be possible to create a high level of quality for these services. Some examples are:
Development of Content Management System
The general structure of the organization could resemble something similar to the diagram below.
The 'main office' would take care of accountancy, main marketing, sales and research and development. The franchises would benefit from the brand of my organization, adhere to our quality standards, use certain prescribed planning and control software, but furthermore have full autonomy.
1.2. Specific components
Some of the specific things in the proposed business idea which set it apart from other companies are outlined here.
1.2.1. Brick and Mortar stores in city centres
By creating stores that people can actually walk into, and that people who are shopping in the city will walk by, I jump-start our brand building. People usually want to see who is working for them to build trust. They will always visit a company before approving a project; with our brick and mortar stores we have already immediately established a form of trust and openness, showing our faith in our own competences. An open store in the city also enables impulse shopping, customers who have been thinking about getting a website, but do not really know where to do it yet. Representatives from these companies could be out shopping and walk by our store, become curious, and walk in. Immediately somebody will be there to discuss the company's ideas with and come up with visualizations and even a proposal.
1.2.2. One-day websites
Picture this: A person or company wants a new website, they walk into one of our stores and sit down with a designer, with whom they collaboratively create a design. After approving this, they sit down for a nice lunch while a programmer implements the design on the content management system and activates your web hosting. Afterwards a workshop is provided about the content management system which simultaneously allows the customer to enter the first content into their website. The new customer leave the store after one day and the website is up and running, and this for only around 1000 pounds.
1.2.3. Start-up incubator
The concept also facilitates a quick start for future entrepreneurs, such as students who have just graduated. Because all the boring facets that have to be taken care of are already organized at headquarters, such as accounting or web hosting, starters can focus on building their own company/franchise. There is also a network of other franchises and headquarters in place, to help and support them. I want to position our franchises in such a way, that owners still feel like they are running their own company with their own culture, while simultaneously having the power and experience of a big brand behind them to back them up, NOT to control them.
1.2.4. Guarantees of quality
Because of the way the company is organized, it will be possible to guarantee high levels of quality.
Web hosting will be outsourced to a division at headquarters. Because of this it will be professionally organized, with backup equipment ready. This way there is no overhead of unused resources, abundant backup or time spent getting things setup. The most important aspect is that we are able to offer a very high uptime guarantee. Franchises then don't have to worry about this facet of web development, and the customer does not have to seek endlessly for a good hosting provider.
If a franchise does not have enough man power available, they can count on the organization to help them out with these needs. They will be able to maximize their human resources without using expensive freelancers, or delaying projects.
Even if one franchise ceases to exist, the customer's website will still keep running, and customers will be able to get the support they need at another franchise. The proposed business will take care of passing on the work to another franchise, to keep the customer satisfied at all times.
The content management system is developed at headquarters according to the input and demands from the various franchises, it will be aimed at usability, security issues will be addressed immediately and updates will be automatically pushed from this division to hosting. There are experts available who can help the franchises get familiar with it.
2. Strategic Positioning
2.1. SWOT analysis
Internal web development professionals for solid core-products and support
Business professionals for strategic positioning and contract management
Innovative atmosphere due to constantly embedding new, innovative starter companies into the corporation
Physical stores to provide superior customer satisfaction and quality
Quality-of-work standards development
Operating costs - higher than individual small web development companies
Restrictions based on franchise law
Danger of inflexibility leading to partner/franchise companies leaving
Increasing number of small, amateur, one-man web development starter companies
Increasing demand for quality web services
Increased use of the internet as a value-adding facility for businesses
Communication methods development allowing easier cooperation with involved franchises and partners
The bigger web development organizations taking on their own franchising with smaller businesses
In-house training of web developers, reducing overall demand for professionals
Although the operating costs will be higher to begin with, we hope to overshadow these with big income revenues combined with that of the franchise companies in our brand. Franchises with our brand will be 'stamped' with our logo which will market our own individual company, in turn making more money for us.
There are restrictions with franchising a company and these can affect my own business in terms of potential income expectations of franchisees and how much they will earn. Another restriction could potentially be the ability to make strategic decisions due to the tightly bound contracts and agreements. We could get around this by offering a contract which allows negotiating by the franchisee to amend said agreements.
Bigger web development companies may pose a threat to my company if they follow our strategy and franchise their own company as well. These companies will have a bigger pond of money to back their market position and will most likely look more appealing to small starter companies. However our company could counteract this potential issue due to the fact that we offer unique services such as high street stores and face-to-face interaction with clients rather than through emails, although obviously that is also a route we can take for the business.
2.2. Market analysis
Currently, the market is being flooded with new "web design" or "web development" companies, usually founded by (pre)university students with a study in computer science or a related topic. These companies can deliver good work in small tasks, due to the fact that they are often sole proprietorship companies with good and up-to-date technological knowledge. On a larger case scale, IT and design graduates and professionals are starting the same kind of companies with a more solid foundation and being able to handle larger cases.
With both these groups inundating the market, it is difficult for customers of such services to find a suitable service provider. The high rate at which these companies come and go (as students graduate and give up the business) makes it even more difficult to keep a correct database of active web developers and to make sure delivered products can and will be supported for longer than a few years by the developers.
The market of customers for such services ranges from sole proprietorship companies seeking simple web-presence to middle-sized and large companies. The middle-sized companies often want more complex and dynamic websites as an extension of some business operation, whereas larger companies want the 'full monty'; aligning their corporate style, processes, image and products with their web-presence.
To cater to these different needs, different levels of developers are required, but at the moment there is no efficient manner with which to search through this jungle of web developers. This often leads to a misalignment of company services and customer wishes.
With over 1.8 billion people on the internet worldwide of which a high percentage are in areas of high consumption and production, it is crucial for companies to be online (World Internet Usage Statistics, 2010).
The conclusion of the above two concepts is that it is crucial for companies to be online, yet it is difficult for them to get online in a sufficient manner due to the lack of clarity in the market of web developers.
3. Cost overview
This section provides an overview of the areas where liabilities are sure and likely to occur. No cost estimates are given at this point. A further and more in-depth cost analysis will most likely be found in the final business plan.
The business idea can be split into three main cost pools; headquarters, the physical store locations and the member franchised/partner companies.
Rent for the premises (large)
In-house law/financing personnel
Employee services (cafeteria, etc)
Franchise management systems
Brick-and-mortar sale/support points
Rent for the required premises
Qualified sales personnel
Individual franchises or partners
Corporate management software
To view a detailed cost breakdown see Appendix 2.
The investment budget of webTight has been estimated at about £52,500. This includes the webTight headquarters building in Newcastle, a physical store near the High Street, computer hardware intake and software, marketing, training and the production of the webTight online interface.
webTight will receive income through a number of channels. To begin with, there will be a starting capital, as there is with all businesses. This will be borrowed by banks, or will be put in by the founder themselves. webTight hopes to attract organisations such as the local banks, government, to become possible investors in webTight. webTight's marketing is directed towards possible customers and starter companies wishing to be part of a franchise.
Customers of webTight pay for the services that webTight provides, this is in essence the main form of income, but by no means the largest. With the increase in customers, the time in which the investment is returned is shortened. The companies who wish to work with webTight pay a fee price for using the brand and training services that webTight provides to companies within their franchise.
webTight expect to break even after the 12th month of business as the profits earned before tax will be greater than the original startup capital. To view a monthly cash flow of the projected incomings and outgoings, see Appendix 1. The cash flow is based on the production of two websites per week and with one Starter Company within our franchise model.
5. Marketing plan
The marketing goal is to inform the rural villages about the service that AidIT provides, and how it can influence their lives and that of the village for the better. The marketing obviously stresses the positive aspects and gains. The goal is to achieve, within a year, at least 30 villagers and 10 doctors leasing an AidIT package. At this rate, in a period of 5 years, those computer leases will be paid off and owned by the customers. From that moment on their lease decreases so that they only pay for the services.
Product (or service)
The product consists of a computer and a service. The computer is a low cost but fully functional and capable of handling internet. The service consists of an internet connection, a health service, and emailing service. The services are presented on a AidIT interface, an online application developed solely for AidIT.
The price charged to the villager every year is in total 250 dollars (US). This consists of the cost of leasing the computer, the internet connection, and the services (health and email). The total price of the package is 1250 dollars over a period of 5 years. This comes down to 750 dollars a year of income for the villager, which is substantially more than average.
For the medical staff that are prepared to work along with AidIT the cost per year is 275 dollars. By definition, medical staff earns more than farmers do, so they can afford the extra 25 dollars. The extra 25 dollars makes sure AidIT covers its basic costs of providing internet and the services.
AidIT sends an employee to villages to promote AidIT. The employee that is sent is a trained local Bangladeshi employee of AidIT. He or she can make it more clear in their own language what the benefits are for the person who wishes to start up their own business with the help of AidIT. The training is done at the main office by the training faculty, who are themselves marketing experts. All material is at first provided by those experts.
6. Production plan
The AidIT software (online application) is produced modularly. Whenever a new service can be provided, it will be able to me sold as a separate module (service) to existing or new customers. This leaves the AidIT software open to future innovation concerning services. AidIT hopes to bring internet browsing as a product in the near future.
AidIT has one or two company vans or cars paid mostly by investors and donations. With these cars, the hardware is transported to the respective villages, they are also used to transport promotional employees to villages. If the infrastructure ever comes to exist, AidIT will use local transportation methods to bring hardware to the locations. In the meantime, it is less costly for AidIT to take care of logistics on their own.
The initial idea is that there is a single building where all staff manages finances, incoming hardware to be used, administration, training, and marketing. This building is also the warehouse for computers and is the center point for the internet access. Repairs are mostly done on location, but extreme repairs can be done at the main office by IT staff.
Management en personnel
The entrepreneurs of AidIT are P.R. den Oudsten and C.E. Bakker. Those who created the idea and are familiar with the mission must be responsible for the conception of AidIT, in our idea. The mental picture of how the organization should function and what it should look like lies in the minds who created them in the first place, this way the organization comes out the way it was meant; an organization based on providing basic aid and connectivity, not on profit. There is a risk of this concept being lost if leadership is passed on to an 'outsider'.
Once AidIT is up and running, it is handed over to local business men or women so that the organization can function on its own, at this point the beginning entrepreneurs can start on a new identical company elsewhere.
To view our key milestones see Appendix 3.
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