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In this assignment I am looking at profitable organizations which have main objective is profit maximization. I am going to look at this in the context of starting a small firm. I will be looking at the problems and requirements when aiming to begin a business either in manufacturing or in the tertiary sector. I will future explain that why plan is important for baseness? Also I will right about types of businesses, sectors, of businesses and I will talk about some businesses. Market analyzing mission and vision statement also are very important for a success business.
In this assignment I am going to write about the business plan. What are the important factors for a new business? I will write about the requirement of the business, types of the business, business sector and then I will explain each business sector advantages and disadvantages.
2. Business Definition
Business is an economic or financial activity, which is associated with permanent and regular production and sharing of goods and services for fulfilling human needs .Stephenson defines business as, "The regular production or purchase and sale of goods undertaken with an objective of earning profit and acquiring wealth through the satisfaction of human wants." According to Dicksee, "Business refers to a form of activity conducted with an objective of earning profits for the benefit of those on whose behalf the activity is conducted." (KALYAN CITY LIFE, 2011)
A business plan is the arrangement for the business, clarifying that what it exists, for and what products, services it provides to society." Rebecca Jones wrote in Information Outlook. "A business plan is a roadmap for the organization, showing the destination it seeks, the path it will follow to get there, and the supplies and wherewithal required to complete the journey." almost every succeed company needs a business plan. Due to Lack or upland of proper planning is one of the most frequently cited reasons for business failures. So business plans helpful for companies identify their goals and objectives also provide them with channels and strategies to reach those goals. (Reference for Business, 2012)
There are main three types of business one primary, secondary and Tertiary.
â€¢ Extractive (primary)
â€¢ Manufacturing (secondary)
â€¢ Services (tertiary
3. Deferent Types of Businesses Sectors
We have three type of businesses sectors one is public sector 2nd is private sector and 3rd is voluntary sector/ non profitable but I will discuss about private sector.
3.1 Public Sector
Public sector can be defined in the different way, Public sector in owned and run by the Government for the people. Government collect money by taxes and this money are used to finance most of the public sector.
Central or local government or public corporations are Involves. The government makes all decisions in this sector Shareholders have LIMITED LIABILITY. A board of directors run the business and must have the words public limited with the company name or letters "PLC". Accounts must be published.
Main aims of public are to use recourses well for the benefit of the community. Some example is royal mail in the UK and BBC TV channel.
3.2 Private Sector
A company owned by at least 2 shareholders and shares are sold privately. Profits are shared with shareholders dividends and Shareholders have LIMITED LIABILITY. Private sector has a board of directors to run the business. Name must be end with the word "Limited" or letters "Ltd". Private sector business are owned and run by private individual.
3.2.0 Types of Private Sector:
We have many types of private business but the most common are bellow.
Business of this sector has owned and controlled by one person Money is usually provided by the owner. This means that legally the owner and the business are the same. Sole trader has unlimited liability. There is not much legal paper work. Funding for business will be from owner side, banks, credit card, and bank overdraft. Power and right will be on one hand, profit will on one share low VAT and tax.
When 2 or more than 2 people running a business which aims to make a profit is called partnership. The maximum number of partners is usually 20. Money is provided by partners. They are easy to set up but may have a Deed of Partnership and will share their profit and loss according to their agreement. They are unincorporated. Easy to start, funding is same like sole trader also from partners.
It is an agreement between a franchisor and a franchisee and allows the use of a business name to franchise. Franchisee must provide the money to start their business and franchisor provides materials, training and advice. Franchisee must make regular payments to the franchisor. Main aims of private sector are profit, growth, increased market share and maximize sales.
4. Legal requirement
For a new business you should know the legal requirement of the business and must register the company companies' act 2006 in the UK. For example the business should be legal and register with company registrar. If the business is partnership then must submit partners all agreement paper with registrar without registration of the company no one can start the business in the UK.4. Legal requirement
For a new business you should know the legal requirement of the business and must register the company companies' act 2006 in the UK. For example the business should be legal and register with company registrar. If the business is partnership then must submit partners all agreement paper with registrar without registration of the company no one can start the business in the UK.
5. Funding Options
For business funding is the most important fact without money no one can start business and fund will never have enough, so shortage can be serious at firs stage. Depending on the structure of Business, business will have different sources of funding or finance.
Some resources are:
â€¢ Loans from Banks and Financial Institutions
â€¢ Some banks provide our draft
â€¢ Some time government provide loans for some business such in Pakistan for agriculture
â€¢ Sale shares
Some other resources are shareholders and partners, depending on the organization legal structure of firm.
7. Protecting your Intellectual Property
IPR main benefits are to save the company products and services from your Oppositions or competitors and prevent unauthorized users and action. If you have branded a only one of its kind product then you must patent it. This means registering the manufactured goods and its design to put a stop to others from doubling it. If don't, then the competition can just 'steal' the product design from you, and will cost you a lot.
Example of a patent shielding a firm from any more business copying its product was when apple clime that Samsung copy their product and the court still on process for more detail ( http://news.cnet.com ). Patenting is an expensive or valuable, though, and it must be done correctly. So IPR is very important for a company to register other hand it will cost a lot to the company.
A trademark is a brand name. A trademark includes any name, word, sign, device, or any combination, used or intended to be used to identify the organization such as MacDonald, HP computers, coca cola.
Copyright is the ownership of the of intellectual property (IP) The select right to make copies, and otherwise exploit a literary, musical, and artistic work, even audio, printed, video. It should register under copyright law act January 1, 1978, is protected for the duration of the author or inventor and for 50 years period of after his or her death. For example Adam Smith is the right person for his book Wealth of Nation no one can write this book or print it by other name.
7.3 Industrial Designs
Manufacturing Design is concerned with all the human being aspects of machine-made goods and their bond to people and the environment. The designer is responsible for these products and their impact on society and nature. Such as apple I pone 5,
The protection a person or a company a new product or way of doing something by stopping anyone else from copying or using it for a particular period of time. For example any Madison formula.
An agreement between two or more parties to avoid the future problem and it is written and enforceable by law. For new business you have to sign many corrects like with Employment, Shareholders, Agency, Vendors, with other business, banks and financial institutes. Every things should be clear and must be Confidential also it must include Term, Confidential information, representations and warranties, indemnity, limitation of liability, assignment protection of intellectual property.
10. Mission statements:
Mission statements are targeted at external and internal stakeholders its means that the statements must be suitable for a wide range of audients or readers. A mission statement is a idea or 'guiding hand', which provides a shared direction and focus for the firm internally so its mean that mission statement are meant to encourage and motivate everybody. The mission statement should:
â€¢ Show the direction and aiming that the business to head in
â€¢ Give some sort of statement of success -what the business wants to do and achieve
â€¢ Classify the way in which the business is aiming to develop over a period of time
â€¢ Allow the business to use the mission statement for the growth of specific goals and objectives to reach their aims. these should be relevant for all levels of the organization
â€¢ Provide inspiration to employees to work towards achieving the goals and objects or vision set out by the statement. (mindtools, 2012)
11. Vision statements
While a mission statement shows the way on which a business wants to head now and is of immediate relevance to all stakeholders, a vision statement is a more common statement looking at where the business or organization wants to be in the future. A vision statement essentially outlines what a company wants to be in the future and it may well be related to some sort of future outcome. (mindtools, 2012)
12. Market analyzing
Market analyzing will assist to the business and some benefits are below
â€¢ Understand the market and give you a bug picture
â€¢ Attract the customers and beat the competitors
â€¢ Market size
â€¢ Who is your customers and who is your competitors
â€¢ What customers need
Best way to understand the market is market research. Market analyzing will help to understand the market and give you a big picture to you organization by analyzing the market will understand the behavior of end users and will beat the competitors because you know that what customers wants. Market research will give lots of information about the competitors. Try to make the products different from your competitors and this different will stand the business out from crowd and for competition there are three main things are very important
1. Quality issues
2. Customer services
3. High price
12.1 Segmentation Customers
Its mean grouping of customers by their age, gander, stander, location by segmentation will easily target the customers so we can segment it by
1. Demographic ( how old they are)
2. Socio-Economical (who much they want to spend )
3. Geographic ( where the live )
13 PEST Analysis
14. Planning a new business
For this section I have a profitable business plan and I will recommend a Dominos franchise which is much better than other businesses. If we start a sole trade business or partnership business it is very difficult for as to competition with big business. So there is a big chance to failure of the business. We will run business under the banner of an already established business I mean Domino's Pizza. We also take advantages of their brand, ideas, operating techniques and much more which already tested and tried. Brand name we can use Domino's pizza is well know brand in the market and have much demand in the all over the globe.
14.1 Capital investment
For Domino's pizza franchise total investment is £290000 + (VAT approx £49000. VAT will claim back/
Constriction cost (shop fitting and project management fee) approx £130000
Equipment cost approx £ 80000
Legal/ Planning / Architects approx £17000
Opening cost approx £ 25000
Fees (training fees approx £ 45000
Total approx £ 290000 + VAT
More detail available in appendix
In assignment question the say that don't worry about money but any way in case we face to the shortage of funding we can use alternative way like loan from banks, bank overdraft, credit card, and loan from financial institute.
14.3 HR and Training
In one franchise approximately 25 jobs we can create so we will advertise it in local news paper and we will select right candidate for training. After the selection we have to do contract with our employees for minimum 2 years.
From above discussion it is clearer that planning is very fore a business. Without planning no one can achieve their goals effectively. Also invest the capital on the right business because everyone wants to invest their money for profit and other important thing is we should do business on legal way. If you want to be a success business man you have to create image in the society like Apple, MacDonald and, Dominos. Policies and procedure should clear to employees and customer and Health and safety environment provide to employees and customer. Franchise is more profitable the other business because we can use their logo, trademark also it is well known in the market,.