Market Conditions Affecting Business Potential

Task 1- Identification of market

Ways in which market conditions are affecting the market potential for a new business

The conditions of the adjourning market of businesses present the scenario which influences the business operation. One of the significant factor present in market conditions is the demand of demographics, which influences the market potential of business(Alt & Iversen, 2017).Market demographics consist of the group of people which is being targeted by new enterprises for addressing their demand. For example, Sainsbury has addressed the market demand for daily need essentials like groceries, home electronics and many more. However, Aldi by keeping low-profit margin in their products has over crossed the sales margin of Sainsbury, as they have addressed the market demand of low cost high-quality products(Theguardian, 2019). Entrepreneurs design their business portfolio in order to address the ever-rising market demand. Another key indicator of market condition is the Gross Domestic Product (GDP), which reflects the economic condition of the market. It reflects the financial capacity of social people and considering which business set the potential prices of their product or services. Interest and exchange rates are the significant factors which influence the trading climate of businesses and also increase the direct costs of businesses(Baucus & Mitteness, 2016). As an example, an increase in interest rates by 0.5% in the UK influences Sainsbury to increase its product prices which demotivated the customers(Theguardian, 2019). On the other hand, a higher exchange rate might not provide the opportunity for new organisations to enhance its profitability from the international arena.

The innovation of new technology is another factor which may increase or decrease the demand for existing products(Chang, 2016).In that context, new technology will be beneficial if existing customers well known about technology. On the other hand, the innovation of new technology might be harmful if the customers do not know about technology. In that context, the demand for existing products depends upon customers' requirements and knowledge of new technologies. Keeping up the competitors is another significant factor which influences marketing potentials(Stone, et al., 2017). As an example, Aldi has built a better strategy to keep tracking their competitors and they are using social media networks for monitoring their competitors(Aldi.us, 2019). Additionally, Aldi is beating Walmart by introducing low and cheap products.

Keep tracking the geographic market is also provides potentiality within a business to drive the business atthe international level(Odlin & Benson-Rea, 2017). When a business sets its goal to sell products online, then they need to monitor the situation of their prime nation where they operate their business. As an example, Walmart is using the proximity and audience-based targeting to engage their customer from their business location which helps to generate more perfect audience segments(Walmart.com, 2019). Goodwill of the company jumps to 43% from 35% by targeting their audience by introducing a high boost of in-store visitation.

Way to identify a market need and target market for the new business venture

Target market is identified with the help of a market segmentation strategy. The target market segmentation is a strategic management technique of analysing the behaviour and need of the potential market(Venter, et al., 2015). The way for identifying the need and target market follows the following steps:

Market research for identifying a market need

Market research is conducted by organising surveys and interviews with customers for understanding their brand preferences(Alt & Iversen, 2017). For example, IKEA has changed its interior design by addressing the rising market need for electronics and safety products as well, besides furniture(Dailymail, 2019). With the help of market research, the target market is identified along with the market need. It is required to check the number of business which are running with a similar business plan. This helps the potential entrepreneurs to have a pre-evaluation of the upcoming competitive threat and make contingency plans accordingly.

Compatibility of the chosen product with the demand in the market

The product which is required to be offered must satisfy the needs of customers; otherwise, the product and its adjourning business will not be able to amass a good market share.

Identifying the demographic segment

The demographic preferences of age, gender, financial status, education and occupation are required to be identifying before launching a business venture.

Evaluating psychographics

Next, comes the event of evaluating the psychographics of the potential target market. The psychographics of personality, attitude, values interests, behaviour and lifestyles are required to be identified for setting upon business. Thus helps to make the business plan feasible with the target market demographics.

Identification and justification of a new business venture

A new business venture of "Ladies Only" has been identified as a new business venture. "Ladies Only" will be designed to satisfy the psychographic `need of ladies for cosmetics. The venture will sell women cosmetic range consisting ofskin toner, moisturiser, skin conditioner, concealer and eye makeup kit. The new business venture of cosmetics is the well-justified business plan as it will satisfy the daily needs of British women for easy to use and skin-friendly cosmetics

Potential barriers, limitations and risks of a business venture

The first potential barrier of "Ladies Only" will be the market competition, technical non-flexibility and need for distribution channels. "Ladies Only" needs active salespersons for promoting and distributing cosmetic products, which is identified as a strong potential venture for the new venture. The limitation of "Ladies Only" is that it attracts only the female demographics. Since the business of "Ladies Only" will be formulating the beauty products for women demographics, it misses the male, senior and other demographics. The risks of the business venture are non-acceptance of the brand and financial overrun. The brand is a new one and hence requires active marketing still to get promoted in the target market. Thereby, the social acceptance of "Ladies Only" is identified as a significant risk associated with the said business venture. Though the business will get funding from the local authority, a large amount of investment is required for setting the stage in the areas of sales executive hiring, showroom staffs and. Hence, there lie risks of financial overrun associated with the start-up of "Ladies Only".

Task 2- Legal considerations

Description of legal and regulatory required to be considered for starting up a new business venture

The market of UK hasmultiple small and medium-sized business which are required to adhere to the business norms of the UK. It is required to understand the employment law of the region where the new business venture is going to set up. The employment laws apply to the recruitment and selection function which is the preliminary operation of every business for a good start(Hornuf & Schwienbacher, 2017).The entrepreneurs are required to be updated, with the existing employment laws of their target country. The employment laws also include the basic criteria that organisations are required to keep for giving liberty to their employees. The criteria include basic pay scale, grade pay, relaxations to employees. Legal procedures are also required to follow while building an in-house legal time. The creation of an in-house legal team requires approval from the legislative government. Again, the business must have the required infrastructure for holding a good number of employees and providing them with proper infrastructure to work. Small and medium-sized enterprises have the capacity to hold 250 people(OECD, 2019). The small and medium-sized businesses are further divided into small firms, micro-sized organisations and medium-sized firms. As per the payment service regulation (PSR) 2017, companies are not allowed to charge a fee from consumers using online payment mode such as Google Pay, or PayPal linked with their debit cards(PSR, 2019). Charging additional fee from consumers comes under violation of the PSR. General Data Protection Act (GDPR) is aimed at preserving the privacy of consumers and the details shared by them with the company(Europa, 2019). As per the act, organisations are not allowed to share personal details of consumers with the third party without taking their concern. Telemarketing calls are banned in England, Wales and America as per the Do not Call (DNC) registration Act(Donotcall, 2019). According to the act, businesses are not allowed to promote themselves by making nuisance calls.

The micro firms are usually fresh new start-ups consisting of 10 number of employees or less than that. The small firms consist of 10 to 49 employees, and the medium-sized businesses consist of 50 to 249 number of employees(OECD, 2019). Thereby, as per the legal consideration of organisational Infrastructure, the firms must have adequate infrastructure to hold their desired number of employees. Start-ups usually have the liability to hold 10 to 20 number of employees as per the employment criteria of small and medium-sized businesses. It is required to protect the copyright of the logo and trademark of new business ventures. The business is required to avail licenses to become a registered business. The quality of products or services is required to be approved by a legal body to avoid trust issues.

Proposal of a legal form for my new business venture

The business venture of "Ladies Only"will be put forward with the help of the legal form of the sole proprietorship. The sole proprietorship is the legal process of setting up a business venture, considering the sovereignty of an individual entrepreneur(Villaluz & Hechanova, 2019). The joint venture has not been proposed for "Ladies Only" as it involves allotment of shares to stakeholders and their unnecessary involvement into management decisions. The cosmetic products of "Ladies Only" will first be legally tested before launching them into the market. It is being proposed to take the products into Eurofinsfor testing the quality of the cosmetics and to ensure the safety of the usage of cosmetic products. Eurofins in the UK is a testing centre of cosmetics and personal care, where products are being tested and approved for risk-free usage of cosmetics by the UK people(Eurofins, 2019). Post to the approval of the quality of cosmetics, it is required to register the business of "Ladies Only" with Companies House as per the business set up norms of the UK. In the UK, for the legal execution of business, it is required to register a business under Companies House(Mygov, 2019). For registration of a business, the basic human resources are one director, one shareholder and cooperating with Corporation tax. "Ladies Only" is having all the required set up for establishing their business firm and hence is ready to be a legal business within the ground of UK.

Task 3- Development of a business plan

Mission, vision and business objective for the proposed business

The mission statement of "Ladies Only": The mission of "Ladies Only" is to serve the British ladies with an exclusive collection of cosmetics like body lotion, moisturiser, lipsticks and makeup kit.

The vision statement of "Ladies Only": The vision of "Ladies Only" is to gain trust among the women of the UK by providing them with high quality and safe beauty products. The firm opts for gaining the long term retention within the market of the UK. It is having the vision of gaining a global reputation in the industry of cosmetics.

The business objective of "Ladies Only": The business objective of "Ladies Only"are

To take care of the beauty of European ladies by availing cosmetic products suitable for all skin types within affordable price.

To provide healthy skin for European ladies by distributing nourishing beauty products

To become an international brand in manufacturing cosmetic and skincare products by attracting people from worldwide

Skills, experience and resources required for introduction and establishment of business

The key skills of creativity, innovation, management and social responsiveness is required among entrepreneurs for formulating a new business venture and establishing it(Henry, et al., 2017).The entrepreneur must be aware of the ongoing social trend in cosmetics to make the business portfolio of "Ladies Only" socially acceptable. The leadership skill is also required for building a team for business. The founders must have the capability of decision making and influencing the operation of the business. The entrepreneur must have the experience of planning and organising as these are the basic criteria of developing a business. In the case of "Ladies Only", the planning must be done accordingly, starting from opening a showroom first. The daily usable cosmetic essentials such as moisturiser, lip balm, primer and body lotions must be kept in the front part of the store layout. The experience for active visual merchandising is highly required for setting the retail business of cosmetics. Visual merchandising is the activity of attracting customers by placing products strategically on the shelf such that they drive customer attention(Park, et al., 2015).The resources required for the establishment of busies are the human resource, financial resource and the resource for adequate infrastructure. Prior experience of solving a problem and providing instant solution ads up to the scenario of establishing a successful business. The practical skills of goals setting and identifying opportunities are required to be within an entrepreneur for long term retention of business.

Financial requirement needed for a new start-up

The financial requirement needed for a new business venture is capital investment, taking loans, taking monetary help from relatives and family and opting from government grants. Acquiring the required finance for starting up a business holds the most challenging criteria of an enterprise(Reid, 2018). This is because, without the association of required financial resource, it is not possible to uphold the business, including fulfilment of desires of employees and customers as well. The personal investment occurs when an entrepreneur spends money on business from his own pocket without taking help from any authority. Entrepreneurs having strong financial background opt for lending money from their relatives and family members which is also considered as a financial resource. The procedure of debt financing is also adopted by start-ups, where the firms opt for repaying loans, with the advancement of marketing and sales(Baucus & Mitteness, 2016).Sole trader firms go for capital financing, where they need to invest their own capital for running business operations(Bertoni, et al., 2015). Borrowing is also another method of financial sourcing, where entrepreneurs borrow amounts from loan giving organisations.

Proposal of business structure and systems

The functional organisational structure has been proposed to "Ladies Only", as this will be the ideal one for running small scale businesses and start-ups. The functional structure of businesses aims to segregate department in accordance with their respective functions(Chang, 2016).Since the business is a new one, the functional structure will be simple and transparent as it will not contain multiple departments. The proposed business structure for "Ladies Only" and associated systems will somewhat look like this:

There will be three departments, namely HR, Delivery and Operations. The operations department will perform both the activities of manufacturing cosmetics and outsourcing if needed. The CEO of the business is 2 persons, the number of showroom staffs includes 150 members. Additionally, sales executives of the business will be around 300 members and the delivery persons of the business will be around 600 persons. The cosmetic selling firm should have three functional systems only, like, showroom staffs, sales executives and delivery persons. The other functions, like counts and finance management and technical amenities, are required to be solely monitored by the entrepreneur itself.

Strength, weakness and risks of the proposed business plan

The strength of the proposed business plan is that it will not incur huge investments behind recruitment and selection because the departments of technology and finance are being allotted to the CEO itself. Again, the proposed organisational structure is a transparent one, and thereby, the employees will be able to communicate directly with the CEO of the company. The weakness of the business plan is the CEO itself is required to take multiple responsibilities due to lack of enough financial and human resource. Along with managing the finance, the CEO or the entrepreneur is also required to take care of the wellbeing of employees. The business during its initiation stage will serve only Manchester city of UK, which is another weakness of the business plan. People outside Manchester will not get the delivery of cosmetics. Instead, they are required to visit the store at Manchester for buying their required cosmetics. Multiple responsibilities are required to be taken by the entrepreneur itself. Thereby, in the business plan, there lie risks of overlooking or omitting tasks. Levying multiple tasks over a single person leads to missing up of vital task, which is an important risk associated with the proposed business plan (articles.bplans.com, 2020).

Contingency strategies for the business plan

The contingency strategies are the approaches taken by entrepreneurs for addressing the weakness of their designated business plan. The support officer who will be assigned to "Ladies Only" should share some of the responsibilities assigned to the entrepreneur or CEO. The said strategy of sharing tasks will reduce the workload and make the system run effectively. An important contingency strategy, which has been proposed for "Ladies Only" is to keep some temporary salespersons who will work as per zero-hour contract. The zero hour contract staffs are not required to pay on a monthly basis; instead they are required to pay on the basis of the amount of work assigned(Ndzi, 2017). The firm must not utilise al of the capitals in recruitment and set up of infrastructure. They must keep some of the capital resources for the management of risks (entrepreneur.com, 2020). 24

Task 4- Securing funding

Approaches required to secure funding of the new business venture

The popular methods of securing funding resource are crowdfunding, accepting loans from banks only and using credit cards. The crowdfunding is a method of acquiring funds from multiple people through the online interface(Baucus & Mitteness, 2016). The banks are the most trusted financial resource and hence availing loans from banks are the most trusted option for funding businesses. Using credit cards is also another popular approach of secured payment, as it protects businessmen from frauds. The entrepreneurs also find out the benefits and cashback and rewards upon multiple payments. Personal investment is the most popular and trusted funding which does not incur risks of repayment of loans and shareholder responsibility.

Benefits and Risks of funding sources

The benefits of using one's own money as the capital for businesses that, there lies no pressure of repaying loans with interests. However, depending solely upon intrinsic capital investment do have risks of financial overrunning. Funding from banks isthe most conventional source of acquiring funds. On the other hand, the banks are required to keep track of the cash flow statement of businesses in order to provide loans(Chang, 2016). Thereby, the risk of leakage of transactions made by the business lies in getting funds from banks. The crowdfunding helps in the manipulation of huge funds as the quite larger number of investors are involved. However, the investors often expect the quick return of their investment and interrogate upon the management decisions. Capital funding does have the benefit of non-dependency upon financial investors. The entire profit is enjoyed by the entrepreneur itself without the responsibility of sharing with financial stakeholders. The risk of capital finding is the overrunning of financial resource as the entrepreneur does not get the help of external investors. The benefit of borrowing is that businesses can have the opportunity to pay back the loan in instalments. In case of losses, businesses face the risk of paying the loan back, which results in seizing of indigenous property.

References

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