4 Elements of a Successful Business
In this section, I will analysis 4 different elements which are significant to my business. This is a form of strategic planning, used to analyse the “SWOT” that my business will have. SWOT stands for:* Strengths* Weaknesses* Opportunities* ThreatsThis involves identifying and explaining the internal and external factors that will be beneficial or a disadvantage to achieving my aim- running a successful business.StrengthsA strength is something my business does well, giving it an advantage over its competitors. These are internal factors, as they are points related to my business only.
* ResearchI have done primary and secondary research on many aspects of the business world before starting my accessories business. I have designed a questionnaire that contains queries significant to my business, gave it to people to be filled in and then analysed my results of the questionnaire using graphs. From this, I have concluded with a ‘customer profile’, which is an insight into what my typical consumer will be like. I’ve analysed possible locations in which to situate my store and identified my competitors and analysed their strengths and weaknesses. Doing this research is vital before starting up a business as it helps to eliminate risks therefore minimising chance of failure. Consequently, the more good, detailed research you do the bigger strength this is to your business.
* Small financeI will start up as a small business, therefore meaning I will only have a small finance to pay. This is a strength because it means I won’t have as many expenses to pay as that of my larger competing businesses, e.g. Accessorize, Claire’s. This will minimise my chance of bankruptcy because the smaller the outflow from my business, the more likely the inflow of money, e.
g. sales, will outweigh this, consequently leading to a profit when totalling my net amount at the end of the month. I am predicting a small outflow of money; therefore my inflow should be larger than my outflow.* AccessibilityDue to where I have chosen to situate my accessories store, accessibility comes as a strength to me. My business is going to be situated in the Metro Centre, which has a great number of transport links and can be accessed easily by car, due to it offering over 9000 car parking spaces situated all around the Metro Centre. Its transport links include many bus routes which travel a great distance, a shuttle across to Newcastle City and a train station.
This is a strength because the more accessible it is to get to a location, the more potential consumers will visit.* LocationAlthough situating my business in the Metro Centre has been mentioned previous in ‘accessibility’, this factor includes more than one strength for my business. The Metro Centre is the largest shopping centre in Europe, and a very popular option not only for shopping but for leisure also. It is the favourite choice for many shoppers, including myself, and attracts millions of people to its location. Consequently, situating my accessories store here immediately gains potential consumers, as it is in a very popular shopping centre where thousands of people will see my store.
* Own knowledgeDue to learning Business Studies in school, I have lots of knowledge in many aspects of the business world. My own knowledge about the business industry is a strength to my business because it will help me make decisions and overcome any problems I may have whilst starting up or running my business. I already have knowledge about frequent problems many businesses face, how to overcome and manage these problems, therefore giving me an advantage over some of my competitors who may not know business knowledge to the extent that I do.* Own enthusiasmI am very enthusiastic about starting up my own business, so I believe that my own strong willed personality and determination will help me run a successful business. For example, some business owners might give up easily when coming across many problems or beginning to loose money rather than making profit, but I will not give up easily and will put a lot of time and effort into the running of my business. This is a strength because it means my business will succeed where others may fail, due to my sheer determination and positive attitude.
WeaknessesA weakness is something that my business will lack and doesn’t do well compared to its competitors. It is a disadvantage to my business compared to others, and these are internal factors, as they are also points related to my business only.* Quantity of researchAlthough research appears in my strengths section, in this case I believe it to be a weakness also. Because of my time limit, my research has been completed on a very small scale, and I have not completed anywhere near as much research as I will when starting up a business for real. For example, in my location analysis I on analysed 3 possible locations in which to situate my business, whereas if I was starting up my business for real, I would analyse many more locations so I was confident I had the best location for my accessories business. Also, I would analyse many more competitors in much more detail to find out what the strengths and weaknesses of their businesses are, as this would help me make the right decisions with my own business.
Overall, I believe the quality of my research to be of a good standard, however the quantity is simply not enough which comes as a weakness to my accessories business.* Lack of expertiseAlthough learning Business Studies as a chosen subject in school, I have no actual experience of running a business because I have never done this before. Lack of expertise could lead to a number of problems and difficulties for me as I might be very naï¿½ve and unsuspecting of problems, or making bad decisions where people who have previous experience of running a business would no better. Consequently, this means I won’t have the experience that my competitors will already have from running their businesses, leaving me at a disadvantage to them.* Surrounding competitorsI am situating my business in the Metro Centre, where I will be surrounded with many popular competing accessory stores e.
g. House of Fraser, River Island, and Accessorize. Although these competitors will bring potential consumers to the area, getting my business noticed by the type of consumer my business is aiming at, it also suggests I will have less consumers purchasing from my store as it is likely they will prefer to purchase accessories from the big, well known stores. This is due to these type of stores, alike Accessorize and [email protected], already owning a good reputation therefore meaning less risk factor, of purchasing a faulty product, for the consumer.OpportunitiesAn opportunity is a direction my business could profitably take in the future because of the strengths it has.* Expanding my businessI am starting up as a small business, but one of my long term objectives will be to make decide whether or not to expend my business I the foreseeable future.
This would mean owning another accessories store in a different location so that to make my business more widely recognized and, understandably, to make more profit! To do this, there will be lots of factors I need to consider; for example I must ensure I have enough money to finance another store by considering my options, the most suitable sources of finance being own finance or retained profits combined with either a bank loan, debenture or venture capital, e.t.c. My research of the business world makes this an opportunity for me as I have already completed previous to starting up my business, which will consequently come in useful when expanding my business to another location.ThreatsA threat is something which could go wrong and therefore damage my business. Threats generally arise from the actions of a competing business or from changes in the environment from which my business operates, making these external factors.
In my case, the environment from which my business operates will be the accessories industry.These issues will cause a major problem when my business-Ignores the problem-Doesn’t have enough strengths to deal with it* Many competitorsTo my knowledge, there are several reputable businesses dedicated only to the producing and selling of accessories, and a huge, but growing, number of clothes stores offering their own range of accessories also. Consequently, this means I will have a lot of competition. A large number of competitors result in a larger chance of bankruptcy, which could occur in many different ways. For example, a competing business could use a pricing technique called predatory pricing, which is setting a very low price at which to sell their products at in order to gain more consumers than the competition.
If facing this situation, all the other competition may also lower their prices to compete with each other. This could lead to my business being forced to decrease my prices to an extent that my products become unprofitable, therefore possibly leading to bankruptcy. Furthermore, because I will only be a small, newly opened business I wont have enough finance to compete with big, popular businesses. Overall, having many competitors comes as a threat to me simply because they can afford to do things I cannot.* Government FinancesThis section includes government finances that will affect my business, for example if any changes occur to tax or to the minimum wage. To explain this I will use an example; the minimum wage increasing.
My employees will be mainly shop assistants and due to this not requiring any certain grades or much experience, these employees will get paid the minimum wage. Therefore, if the minimum wage increases, it means i will have to pay my employees more money. This would therefore lead to less profit at the end of each month, or possibly a chance of loosing money when adding up my net profit each month. This would mean having to find ways of minimising costs and maximising income; otherwise I could lead to slowly developing a high chance of bankruptcy. To conclude, this proves if any government finances change to a businesses disadvantage it means a bigger risk factor of bankruptcy. Although this would apply to all businesses, it would not affect large competition to a worrying extent as they’ll have a larger profit margin than my small business, which will be affected greatly by any changes which come at a disadvantage to me, meaning this is a big threat to my upcoming business.
* Trend changes / Change in fashionMy targeted consumer will be interested in keeping up with the latest fashion, as this is what my business will offer- fashionable accessories for the modern woman. However, recently fashions and trends have been known to change very quickly, making it hard to keep up with what’s ‘the latest trend’. This will come at a disadvantage for my business, because, just like the consumers, it will be hard for my business to keep up with ‘what’s in’ this month also. If a fashion change happens very quickly, it is likely I will be left with unsold stock that will be difficult to sell and may require sales or special offers to get rid of this stock, ultimately leading to a loss of money. This is a big threat because it is very likely to happen regularly, due to the products my business will be offering.CONCLUSIONFirstly, I have many strengths that will be vital towards helping the succession of my business.
I have carried out important research, chosen a location which is easily accessible for my consumers and I have knowledge about the business world; these will help to greatly minimise the chance of failure. Furthermore, although there are a few weaknesses my business will have, they are not greatly important and will only weaken my chance of success slightly.For example, I have no experience in the business industry because I have never run a business. However, I have family who have run their own business and are willing to help me with important choices and decisions until I gain enough experience of my own. Another weakness is I have many competitors surrounding the location of my business. However, this could also be seen as a strength as it brings more potential consumers to the area, therefore making my store more noticed and well known.
I think that the strengths greatly outweigh the weaknesses of my business, which is a good advantage and gives me confidence in my upcoming business.If my business becomes continuously profitable, there is the opportunity of expanding my business and owning another store in a different location. This should be easier to achieve than when I first started up my business, simply because I have already completed research for my business which can be used again as help to expanding my business. However, there are several threats to my business.My opportunities of expanding my business will only occur if good, continuous profit is achieved every month over a period of time, making this opportunity indefinite.
Taking this into account, I believe my threats to outweigh my opportunities. However, these threats are either unlikely to happen or wont be too much of threat for my business.Overall, I have come to the conclusion the strengths and opportunities overweigh the weakness and the threats and, consequently, the 4 elements of the SWOT analysis suggest that there is scope for my business.