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Faculty of Business
1.0 Executive summary
The purpose of this report is about the consultant having found the most appropriate concept for the business venture. In the report, the consultant discussed about the nature, number and characteristics of Australian SMEs. Factors that contribute to its success and failure are also mentioned.
The report highlighted some of the characteristics of successful entrepreneurship and analyse Janine Allis against this profile which through this the consultant has developed opportunities and a framework for the courier service business.
The business consultant examined on the nature of business that had been chosen and upon having explained the business nature, the consultant then examined the viability of this business and discussed on the legal structure.
Having identified the business that the consultant has chosen, it then proceeds to discuss on the market size and the research for this report which primarily focus on the Target market: segmentation, Nature of product, and Competitive edge / USP.
The final part of this report list out the financial requirements for this business proposal to commence.
Letter of Transmittal
D&S Management Consultants
Level 32, 580 George Street
Sydney NSW 2000,
St, Sydney NSW 2000,
15th August 2010
Dear Mr Lee Gend,
Please accept the accompanying Appointment of D&S Management Consultants to prepare a brief report and outlining the aspects of setting up a new business in Australia. This report is the result of the work completed from a theoretical and practical research carried out at your request dated 21th July 2010. We have found as per the report enclosed several issues that require your immediate attention pertaining to workplace problems following the regarding activity carried out in your organization.
As per your request, this research and report was and will be held in the strictest of confidence and names of the organization have been changed to protect from any unforeseen leakage of this report.
We trust that this report meets with your satisfaction and are looking forward to serve your once again in the future.
Ezra Toh Lit Meng
3. The nature, number (staff size) and characteristics of Australian SMEs
According to Schaper and Volery (2007), "A small scale, independent firm usually managed, funded and operated by its owners, and whose staff size, financial resources and assets are comparatively limited in scale."
Gardiner (2010) states the size of a business in Australia is determined by the number of employees. An enterprise is considered small when having less than 20 employees. As for the medium sized enterprise, the number of employees is from 21 to 199 people and a large firm will have over 200 employees." (Gardiner 2010).
According to the Australian Bureau of Statistics, ABS (2007), there were just over 2 million actively trading businesses (2,011,770). The entry rate for new businesses during 2006-2007 was 17%, up from the 16.2% recorded in 2005-2006 - roughly 340,000 new businesses. The exit rate for businesses during 2006-2007 was 14.6%, down from the 14.9% recorded in 2005-2006 - roughly 291,000 businesses (the lowest recorded exit rate for the four year period to June 2007).
In conclusion, Gardiner (2010) emphasises each year in Australia, there are new businesses coming into Australia. But four out of ten businesses which were operating in June 2003 no longer existed by June 2007 (Gardiner 2010).
4. Factors influencing success and failure
These five factors can influence the success or failure for the business. "The five are finance, marketing, production, personnel, and personal." (Schaper & Volery 2007, p.79).
According to Schaper and Volery (2007), the most important for finance, is the aspect of cash flow, revenue and profitability that will influence the success or failure for the business. For production, the most important aspect is the quantity of product to produce. For personnel, the most important aspect is selecting the employee. And for personal, the important aspect is handling personal matters. There are three important keys to entrepreneur success: age, experience, and education.
These are some reason that a business failure will happen. The first reason of the business failure is becoming bankrupt. "Bankrupt meaning a legal process to distribute among the creditors the property of a person or firm who will not or cannot pay their debts." (Reynolds, Williams & Savage 2000, p.28) or close the business down due to being insolvent. Meaning the company is unable to trade profitably, or facing financial difficulties.
In conclusion, Reynolds, Williams and Savage (2000) emphasises that by not facing a failure, the company needs to avoid failure and head towards success. By having a successful business, there are some keys towards success. The first key of success is having a vision and goals. Every business must have a purpose (Reynolds, Williams & Savage 2000, p.35). Without having a vision or goal, the company can't grow and will be the same or worst. By having a vision or goal, the company has a clear view where the company will lead. Not just having a clear view, it's also helping the employee to be motivated and aim for the goal. The second key is known what are the customers' needs and wants. The company needs to know are what the needs or wants in order to stay in business (Reynolds, Williams & Savage 2000, p.38). In order to do so, the company need to do a research by getting a solution for their business.
5.1 Characteristics of successful entrepreneurs
According to Schaper and Volery (2000), an entrepreneur is someone who notices opportunities and takes responsibility for mobilizing the resources necessary to produce new and improved goods and services. He or she creates an enterprise that becomes a new entry to a market. "The most common characteristics to be a successful entrepreneur are the need for achievement, risk-taking propensity, and internal locus of control" (Schaper & Volery 2000, p.35). Successful entrepreneurs must know what their goals to achieve are. They also must be motivated in what they do. They tend to have a high need for achievement. That is, they have a strong desire to solve problems on their own, enjoy setting goals and achieving them through their own efforts, and like receiving lots of feedback on how they are doing. Additionally, entrepreneurs are likely to have an internal locus of control.
5.2 Analyse Janine Allis against this profile
The Saxton Speakers Bureau website has details of Janine Allis. Janine Allis is a successful entrepreneur and she's a working mother of three. She discovered her new business in the last 1990s in California name Boost Juice. She loves the concept and the business continues to grow (Saxton.com, 2010). Janine Allis is a risk taker because she dares to create a new product in the market and expand her business around the world. The phenomenal success of Boost owes more to a combination of elements than any one secret. "It's not just the juices, the groovy stores, or the staff; it's a combination that makes Boost Juice what it is." (Saxton.com, 2010) She creates needs for the customer through living a healthy lifestyle.
6.1 The nature of your chosen business
The researcher's proposed business is that of a courier services. The nature of the service is to deliver documents and light parcels to customers. This then feeds into the USP which is the next section.Â The services that the author to provide his customers a solution in delivering their documents and parcels in time.
As for the short term objective, it is our intention to launch the business in the most cost effective way but achieving the greatest market penetration. This is to be achieved initially through partnering a large company by being their agent to deliver documents and parcels on their behalf.
When this business has become fully established, we will be looking for a much larger potential company to buy over so as to penetrate throughout Australia. As a small company, we will position the establishment to demonstrate a successful method of running and controlling the business that can be utilize in the setting up and managing it in any part of the country with equal success. This will be achieved by constantly monitoring and adapting our advertising and marketing strategies in order to develop such a system.
6.2.1 Legal structure: analyse options and justify choice
According to Schaper and Volery (2007), "Company is a separate legal entity which has an existence of its owner and managers." (Schaper & Volery 2007, p.181) In a company, the ownership is based on the shareholder. They can select who to be the director to lead the company towards success. "In Australia, the Corporation Act contains replaceable rules is governing the internal affairs of a company, but a company can setup its own constitution if it wishes to adopt different rules" (Schaper & Volery 2007, p.181)
According to Schaper and Volery (2007), private companies has a limited number of shareholders with 50 people being the maximum, but with public companies, there is no limit because shares can be bought and sold on the stock exchange by anyone. In Australia, private companies will be designed by the term proprietary limited (Pty Ltd) (Schaper & Volery 2007, p.181).
Key items to include in a company agreement:
A memorandum and articles of association or a constitution must be drawn up for the purposes of registration( in Australia, a company can adopt the standard replaceable rules of the Corporations Act or draw up its own constitution)
An application must be made for approval of the name of the company; an existing firm's name cannot be used
The requisite fee must be paid
The company is incorporated when, on registration, a certificate of registration is issued
"The authority for registering private limited companies in Australia will be the Australian securities and investments commission" (Schaper & Volery 2007, p.181)
6.2.2 Market size: market research
It has been argue that Schaper and Volery (2007) "Market research refers to the use of information to identify and define marketing opportunities and problems." (Schaper & Volery 2007, p.181). The research is to help the company to focus on what are the strategies that the company needs to achieve their goals. The market research that the researcher uses is on the secondary research. In the secondary information, the researcher will use some methods such as statistics from the ABS (demographics etc) and/or the yellow pages to draw some conclusions about the size of the overall market for courier services.
In conclusion, Gardiner emphasises for further analysis, it may be necessary to investigate some issues in more detail by undertaking original research from primary sources such as observation, experimentation, surveys (telephone, personal, email), in-depth interviews and focus groups. (Gardiner 2010).
6.2.3 Target market: segmentation
According to Hatten (2006) "Market segmentation is the process if dividing the total market for a product into identifiable group, or target market, with a common want or needs that your business can satisfy." (Hatten 2006, p.309) The target market that the consultant aims is of every business that uses courier services in Sydney. The company will segment the customers according to their needs or wants. For example, the company will have express, economy and special services to provide for the customers. In knowing what are the customer needs and wants, the company has the propensity to grow.
6.2.4 Nature of product
Kotler (2004) argue that "Core product is referring to the problem-solving services or core benefits that consumers are really buying when they obtain a product. (Kotler et al, 2004, pp.389) So with the courier service example, the benefit is the services that the company provides by sending the documents or light parcels to the receivers. By using Express or Economy Express.
Actual product refers to a product's parts, styling, features, brand name, packaging, and other attributes that combine to deliver core product benefits. (Kotler et al, 2004, pp.389) You can get some use out of it. Again with the courier service example, it is the boxes that we provide for the customers.
Augmented product is an additional consumer services and benefits built around the core and actual products" (Kotler et al, 2004, pp.389-390).So when the documents and parcels are received by the receivers, it is the satisfaction from the entrepreneur and the customer gets, and part of the augmented product would be the enchanted liability (insurance), the customer service support offered by the company, and any after-sales service.
6.2.5 Competitive edge / USP
"A Unique Selling Point (sometimes called a Unique Sales Proposition) is a feature or benefit that separates your product from its competitors." (Zimmerer & Scarborough 2007, p.284) This could be a lower price, a smaller version of the product, offering extra functions, or even simply producing a standard product in a range of colours or designs.
According to Zimmerer & Scarborough (2007) The company needs to look at the unique selling points compared to your competitors, if you do not have any; you will probably struggle to make your product seem attractive to customers. A successful USP answers the critical question every customer asks: "what's in it for me?" (Zimmerer & Scarborough 2007, p.284). The first USP for the business is One Country One Rate. There will be not hidden charge in the airway bill. Being honest to customer is very importation because they're the ones who pay us. Price also plays an important role too. The company provides a price that is affordable to all customers. Not just the price we are focusing, but also the quality that we provide to the customer.
In conclusion, Zimmerer & Scarborough (2007) emphasises "Customer feel good about doing business with companies that support environmental causes, donate a portion of their pre-tax earnings to philanthropic organization, and operate with a clear sense of fulfilling their social responsibility". (Zimmerer & Scarborough 2007, p.285)
6.2.6 Amount of finance required to get started
The amount of finance required to get started is about AUD$ 500,000. There are several aspects we should consider doing: Getting a business number and registration. Checking your government listings for the correct number, checking with your local accountant to see what needs to be done in relation to taxes, etc.
After setting up the initial structure of your business, you'll need a couple of materials to begin with. Those of which include:
* Vehicles (bike, van, truck) with GPS
* Computer, scanner, GPS & stationary
* Boxes, paper, plastic bag
* Warehouse & office
List of Reference
Australian Bureau of Statistics 2007, 8165.0 - Counts of Australian Businesses, including Entries and Exits, Jun 2003 to Jun 2007, viewed 26 July 2010, <http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/8165.0Main%20Features2Jun%202003%20to%20Jun%202007?opendocument&tabname=Summary&prodno=8165.0&issue=Jun%202003%20to%20Jun%202007&num=&view=>.
Gardiner, M 2010, Small and medium size enterprise development, module 1, Microsoft Corporation.
Hatten, T 2006, Small business management, Houghton Mifflin.
Learning marketing.net n.d., Three levels of a product (augmented product, onion diagram), viewed 25 August 2009, <http://www.learnmarketing.net/threelevelsofaproduct.htm>.
Reynolds,W, Williams,A & Savage, W 2000, Your own business: A practical guide to success, 3rd edn, Nelson Thomson Learning.
Saxton.com 2010, Janine Allis - Saxton Speakers Bureau, viewed 24 July 2010, <http://www.saxton.com.au/default.asp?sd8=2343>.
Schaper, M & Volery, T 2004, Entrepreneurship and Small Business, Wiley, Australia.
Summer, J & Smith, B 2006, Communication Skills Handbook, 2nd edn, Wiley, Australia.
Zimmerer, T.W. & Scarborough, N.M. 2007, Essentials of entrepreneurship and small business management, 5th edn, Pearson, New Jersey.