Business Summary
Business opportunities exist where customers are not satisfied with the quality of equipment available, and their prices are too high. Opening a brick and mortar store would be a profitable business as potential customers have expressed a lack of satisfaction and unavailability of quality equipment for their hobbies. Apart from identifying an excellent business opportunity, it is essential to consider whether the individuals should start a small business or be business owners. Carlos and Julia have a passion for both business and sporting, and therefore they would easily make this a boom. It is evident that Julia does not want to own the business, and thus he should not be forced into it. From the case study, it is evident that although the duo has identified an excellent business opportunity, they are yet to come up with a business plan and decide on the role each one of them is going to play to ensure business success.
The difference between an entrepreneur and a small business owner is that an entrepreneur deals with a whole team from management, accounting, and marketing. In contrast, a small business owner is mostly a sole trader who does most of the activities by himself or with the help of a few individuals (Putting it together: Entrepreneurship, Entrepreneurs). An entrepreneur is a risk-taker who is always ready to suffer the setbacks. Carlos may ask himself this question to determine whether he is an entrepreneur or a small business owner. Is he prepared to take huge risks? Entrepreneurs play a vital role in the economy and society. Therefore, if one wants to transform their society through the creation of employment and infrastructure development, they are probably entrepreneurs. Although small business owners may employ one or two individuals, their main aim is mostly the creation of self-employment. Answering the question of whether one is ready to take risks would help one to understand whether they are entrepreneurs or small business owners.
The size of the business will highly determine the amount of capital needed to start the business. Before getting to this point, a business plan is a crucial requirement. Since Carlos has fewer responsibilities, he can contribute a portion of his $50, 000 to start the business. A business plan enables one to identify the requirements (legal and capital), their sources, and the business location. Financial projection in the business plan is essential in estimating the amount of capital needed (Create your business plan, Financial Projections). This will be achieved by determining business size, the number of employees required, cost of goods to be sold, and their transportation fee as well as the cost of renting a space in a suitable location.
Creditors may require financial statements such as the income of statement, statement of retained earnings, balance sheet, statement of cash flow, and a good business plan before providing finances (Financial Statements, Learning outcomes).
Choosing the wrong form of business may lead one to lose personal property in case one goes into debt. Carlos may select a partnership form of business instead of a sole proprietorship. This will not lead to loss of personal property if the business falls into debt (Types of Business Ownership, Why it Matters). Partnerships, unlike other public corporations, also have fewer legal requirements, and therefore it’s recommendable. Sole Proprietorship may lead to loss of personal property in case the business does not pay back creditors or employees, while private companies would attract high taxes from the government.
Since Julia is hesitant about being a business owner, Carlos may work with him as a silent business partner. This would not affect the business as the two would still be critical decision-makers in the business. Julia may also be assigned roles as top management because he doesn’t have to be a business owner to do that. Since Carlos and Julia have a passion for sporting, they would easily work together. Starting a business must be accompanied with the right marketing strategies for business success to be achieved. It is recommendable to follow the 4P’s of marketing to attract customers to buy their products. This can be done through product promotion in social media platforms like Instagram offering quality products at a reasonable price and bringing them closer to the customers through free customer delivery. Hiring sales representatives would help to boost the volume of sales. (Marketing Mix, Evolving Definition)
To increase the volume of sales and to ensure customer satisfaction, the business may need several employees who will play the role of marketing, customer delivery, accounting, and Information Technology. All these employees may perform their tasks under the leadership of an overall manager whose purpose is to ensure that all departments are working effectively. Business management is important in promoting teamwork and avoiding laxity and neglect of the roles of each employee. An overall manager would, therefore, play an essential role in ensuring that business operations run smoothly (Management, Why learn about management).
The motivation of employees is important as it keeps employees focused on the vision of the business. It is therefore important to motivate employees through the provision of commission for sales representatives, giving employees allowances, offering specialized training, awarding them with certificates and celebrating business success with them after a reasonable financial period (Motivating Employees, Why it Matters). Giving employees free meals and medical allowances makes them love their job; this has been proven to motivate them. Motivated employees translate to improved sales as they treat customers with the same love shown to them by their bosses (Putting it together, Need-Based Theories)