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Business Studies Notes 3
rd.
Year
Undergraduate / Graduate Level
SUBJECT: The different
ways to run a
business
Authors: (Original Study Notes and Lecture Notes prepared by Mr. K.P. Saluja (M.B.A. from Indian Institute of Management Ahmedabad), and by Mr. K. K. Prasad (M.B.A from IGNOU Delhi) These notes are intended to be used by undergraduate students, completing Year 3 Business Degree Courses. These notes will help undergraduates and graduates complete case studies, coursework assignments and pass exams in Business Studies and Economics.
TABLE OF CONTENTS
(1) How to start a business-Introduction (2) Determine your business concept (3) Research your competitors and market (4) Areas critical to business success
How to start a business-Introduction
Beginning a business is perhaps of the most intriguing and compensating experience you can have. Be that as it may, where do you start? There are multiple ways of drawing nearer making a business, with numerous significant contemplations. To assist with removing the mystery from the cycle and work on your odds of coming out on top, follow our complete aide on the most proficient method to begin a business. We'll walk you through each step of the cycle, from characterizing your business thought to enrolling, sending off and developing your business. Before You Begin: Get in the Right Mind-set People in general frequently catch wind of unexpected successes since they make for an extraordinary title. In any case, it's seldom that basic — they don't see the long periods of dreaming, building, and positioning before a major
What do you love to do? What do you hate to do? Can you think of something that would make those things easier? What are you good at? What do others come to you for advice about? If you were given ten minutes to give a five-minute speech on any topic, what would it be? What’s something you’ve always wanted to do, but lacked resources for? These inquiries can lead you to a thought for your business. Assuming that you as of now have a thought, they could assist you with growing it. When you have your thought, measure it against whether you're great at it and assuming it's productive. Your business idea also doesn’t have to be the next Scrub Daddy or Squatty Potty. Instead, you can take an existing product and improve upon it. Or, you can sell a digital product so there’s little overhead. What Kind of Business Should You Start? Before you choose the type of business to start, there are some key things to consider: What type of funding do you have? How much time do you have to invest in your business? Do you prefer to work from home or at an office or workshop? What interests and passions do you have? Can you sell information (such as a course), rather than a product? What skills or expertise do you have? How fast do you need to scale your business? What kind of support do you have to start your business? Are you partnering with someone else? Does the franchise model make more sense to you? Consider Popular Business Ideas
Not sure what business to start? Consider one of these popular business ideas: Start a Franchise Start a Blog Start an Online Store Start a Drop shipping Business Start a Cleaning Business Start a Bookkeeping Business Start a Clothing Business Start a Landscaping Business Start a Consulting Business Start a Photography Business Start a Vending Machine Business
2. Research Your Competitors and Market
Most business visionaries invest more energy on their products than they do getting to know the competition. On the off chance that you at any point apply for outside financing, the possible moneylender or accomplice needs to be aware: what sets you (or your business thought) separated? On the off chance that market examination demonstrates your product or service is soaked in your space, check whether you can imagine an alternate methodology. Take housekeeping, for instance — as opposed to general cleaning administrations, you could work in homes with pets or spotlight on garage clean-ups. Primary Research The main phase of any contest review is primary research, which involves acquiring information straightforwardly from potential customers instead of putting together your decisions with respect to past information. You can utilize polls, overviews and meetings to realize what shoppers need. Reviewing loved ones isn't suggested except if they're your objective market. Individuals who say they'd purchase something and individuals who do are
the assets we have? assets do we don’t have that we need to be competitive? available that we could hire? dependent on a single manufacturer or supplier? What unique resources do we possess? What business process needs improvement? Are there products our customers ask for that we could provide? What happens if a natural disaster strikes either where we do business or where we do business or where we get products or materials from? What is our competitive advantage? What knowledge or assets do our competitors have that we do not? Can we offer something that our competitors don’t have? What is our selling or valuable proposition? What technology needs to be updated? Can we increase our pricing in some way? Can we easily get additional capital if we want to? What expertise do we lack? What business processes work successfully? Does one customer makeup more than 10% of our business?
3. Create Your Business Plan A business plan is a unique report that fills in as a guide for laying out another business. This record simplifies it for expected potential investors, monetary organizations and companies the board to comprehend and ingest. Regardless of whether you mean to self-finance, a field-tested strategy can assist you with fully exploring your thought and spot likely issues. While composing a balanced strategy, incorporate the accompanying segments as mentioned below,
Executive summary: The executive summary should be the first item in the business plan, but it should be written last. It describes the proposed new business and highlights the goals of the company and the methods to achieve them. Company description: The company description covers what problems your product or service solves and why your business or idea is best. For example, maybe your background is in molecular engineering, and you’ve used that background to create a new type of athletic wear—you have the proper credentials to make the best material. Market analysis: This section of the business plan analyses how well a company is positioned against its competitors. The market analysis should include target market, segmentation analysis, market size, growth rate, trends and a competitive environment assessment. Organization and structure: Write about the type of business organization you expect, what risk management strategies you propose and who will staff the management team. What are their qualifications? Will your business be a single-member limited liability company (LLC) or a corporation? Mission and goals: This section should contain a brief mission statement and detail what the business wishes to accomplish and the steps to get there. These goals should be SMART (specific, measurable, action-orientated, realistic and time-bound). Products or services: This section describes how your business will operate. It includes what products you’ll offer to consumers at the beginning of the business, how they compare to existing competitors, how much your products cost, who will be responsible for creating the products, how you’ll source materials and how much they cost to make.
Develop a scalable business model As your private company develops, it's essential to have a versatile plan of action so you can oblige extra clients without causing extra expenses. A versatile plan of action is one that can be recreated effectively to serve more clients without a huge expansion in costs. Some common scalable business models are: Subscription-based businesses Businesses that sell digital products Franchise businesses Network marketing businesses Start planning for taxes Perhaps of the main thing to do while beginning an independent company is to begin making arrangements for charges. Expenses can be perplexing, and there are a few unique sorts of duties you might be obligated for, including personal duty, independent work charge, deals expense and local charge. Contingent upon the kind of business you're working, you may likewise be expected to make good on different expenses, for example, finance duty or unemployment tax.
4. Choose your business structure While organizing your business, it's fundamental to consider what each construction means for how many duties you owe, day to day tasks and whether your own resources are in danger. LLC
An LLC limits your personal liability for business debts. LLCs can be owned by one or more people or companies and must include a registered agent. These owners are referred to as members. Advantages LLCs offer liability protection for the owners They’re one of the easiest business entities to set up You can have a single-member LLC Disadvantages You may be required to file additional paperwork with your state on a regular basis LLCs can’t issue stock You’ll need to pay annual filing fees to your state Limited Liability Partnership (LLP) An LLP is similar to an LLC but is typically used for licensed business professionals such as an attorney or accountant. These arrangements require a partnership agreement. Advantages Partners have limited liability for the debts and actions of the LLP LLPs are easy to form and don’t require much paperwork There’s no limit to the number of partners in an LLP Disadvantages Partners are required to actively take part in the business LLPs can’t issue stock All partners are personally liable for any malpractice claims against the business
Corporations are subject to double taxation They’re more expensive and complicated to set up than other business structures The shareholders may have limited liability Before you decide on a business structure, discuss your situation with a small business accountant and possibly an attorney, as each business type has different tax treatments that could affect your bottom line.
Areas critical to business success
There are a couple of components all entrepreneurs need to figure out how to really maintain a business. The following are seven regions basic to business achievement. Maintaining a business seems like an enormous and convoluted endeavors, yet truly, there are only a couple of components that each entrepreneur needs to zero in on to make and maintain a fruitful business. Here are the components you really want to zero in on to figure out how to maintain a business.
1. Create and Follow a Business Plan Your business plan is a guide that can assist with directing you to settle on the ideal choices in your everyday business tasks. Numerous entrepreneurs hold back to make a field-tested strategy until they expect supporting to develop or extend their business. Be that as it may, a strategy can help you: See the big picture of your target market Analyse your competition so you can differentiate and compete effectively in the marketplace Identify, acquire, and retain customers Conduct market research for optimal product and service development and placement Market your products and services in the most effective way
A mistake many business owners make is to create a business plan, but when it quickly becomes out-of-date, they leave it in a drawer to collect dust. A business plan should be a living, breathing document that gets reviewed and updated regularly so that you and your team stay on mission and don’t get distracted by opportunities that are out of scope for your business. That said, if new ideas for products, services, customer acquisition, or target markets come up, the business plan structure can help you to assess these ideas in a clear-cut fashion. That way you can properly identify risks and opportunities instead of relying on guesswork as to whether opportunities should be pursued or not.
2. Human Resources Whether you have a full team, or it's simply yourself, you actually need to manage HR when you maintain a business. You need to go with choices like the amount to pay workers (and yourself), what employee advantages are you legitimately committed to offer, and what advantages you decide to propose to draw in top ability. You will likewise have to choose how to recruit, fire, and oversee worker issues. Quite possibly of the main thing you can do to maintain a business well is to recruit a different group, and we will make sense of why. It's enticing to recruit individuals who are very much like you since it seems like it would prompt more tomfoolery and less struggle, however this can prompt a ton of employees with excess perspectives and ranges of abilities. All things considered, it's ideal to stay objective while recruiting and cautiously gauge the advantages and disadvantages of every possible worker. There is an astonishing scope of advantages to recruiting a different group. As indicated by research, work environment variety can: Improve company morale Strengthen employee loyalty
them based on the specific needs of your business. This is one area where you don’t necessarily want to skimp on cost if a cheaper system can’t actually perform the tasks that you need to understand the performance of your business properly. It’s of great benefit for you to learn how to write your own profit and loss statement. Even though accounting software can create a P&L for you, creating your own simple statement will teach you how to read one. That way when your accountant or bookkeeper wants to discuss issues, you’ll have a full understanding of the points they raise, and you’ll be better able to make informed decisions about your business. Cash flow Having a decent comprehension of your business' income is basic to figuring out how to maintain a business. Most entrepreneurs find that following income consistently gives a smart thought of working pay and costs for the business, yet an income proclamation can be ready for any timeframe, like quarterly or yearly assuming that you'd view that as supportive to figuring out the monetary activity of your business. A cash flow calculator can be a useful device to get a total picture, as it can consider those costs that spring up on occasion, for example, future commitments like duties and protection, or deterioration and hardware support costs. Business taxes Speaking of taxes, it's essential to have a certified public account (CPA) who has practical experience in business expenses can assist you with ensuring you guarantee all the business charge derivations you're entitled as well, while likewise keeping you on the right half of the law. While it's enticing to do your expenses yourself, a decent CPA can assist with making up their charge and afterward some by recognizing extraordinary credits your business could fit the
bill for or derivations you probably won't remember to take. A decent CPA can likewise save you a ton of time and stress by setting up your business charges for you. It's significant you investigate as needs be and employ a bookkeeper who is suggested, in light of the fact that very much like some other calling out there, some are great at what they do, while others — not really.
4. Hone your entrepreneurial mind set Business isn't ideal for everybody. Business people are frequently inside persuaded — meaning they needn't bother with a supervisor to bear down or hang a check before their countenances to cause them to get to work. They are in many cases daring people, realizing that they could empty time and consideration into an undertaking that doesn't show them the cash consequently. While effective business people comprehend that return for money invested is attractive, they additionally know what is happening. Richard Branson, one of the world's best business people is determined when confronted with disappointment. He begins once again. Effective business people are OK with disappointment, realizing they can learn, develop, and improve with every disappointment, which draws them that much nearer to progress. Assuming you really want others to spur you, in the event that you disintegrate at the smallest whiff of disappointment, in the event that you desire conviction and soundness — however you actually need to be a business visionary, then, at that point, work on your outlook. Peruse books about business, and realize the stuff to makeover your psyche to arrive. One supportive instrument to get and remain spurred as a business visionary is a statement of purpose. Mission statement
your site, content showcasing is an incredible method for shaping further associations with current clients and to assist with getting new clients. It’s very helpful to have an email newsletter so that if someone sees your content and likes it, they have the opportunity to sign up for updates from you when you create new content in the future. That way you can remain top of mind and easily reachable if potential customers have your emails coming to their inbox. The next piece of the puzzle is figuring out how to get the word out. What if you take all this time to create this thoughtful content, but no one sees it? This is where paid advertising comes in. Rather than creating a standard advertisement that’s easy to ignore, you can pay for advertising on this high- quality content you created. For example, you can post a video or a blog post on your business’s Facebook page, and then pay to advertise that content. Don’t forget to target the ad to your geographic and interest demographics so you’re targeting the right audience. Social media advertising provides a relatively inexpensive and yet targeted way to reach your target market.
6. Customer relationship management For tiny organizations, it appears to be a little glimpse of heaven to have such countless clients that you want to follow and oversee them, yet the best way to really focus on a little client base well and to develop it bigger is via cautiously following and sustaining the client connections you have. There are numerous customer relationship management (CRM) systems to browse. A thought for how and for what reason to follow clients: Giving gifts, bonuses or coupons for special dates like birthdays or anniversaries Sending follow-up emails when you haven’t seen this customer in a while to help maintain the relationship Offering referral bonuses if your customer recommends your business to others
Upselling customers to VIP services or higher tiers or packages with a discount Getting feedback from customers so you can continue to improve and serve your customers better Making revenue projections based on sales from your list of regular customers Customer relationship management ought to zero in on mutual benefits for both you and your clients. It ought to assist with supporting the association among you and your clients and proposition advantages to your clients to allure them to continue to utilize your business' products and services, and assuming they are fulfilled, to elude your business to other people. By following your collaborations and deals with clients, you can raise a ruckus around town notes by zeroing in on the items and administrations every client is explicitly keen on, as well as not overpowering or disappointing them with communication.
7. Business Financing It’s an admirable goal to subsidize your business by bootstrapping and never venturing into the red, however there are times when a money implantation can assist with saving a business from disappointment or to grow a business past what's conceivable with bootstrapping. There are circumstances in which business supporting can possibly assist with growing a business and lead to more prominent monetary outcome over the long haul than bootstrapping alone. How do you have any idea about when to fund the development of your business? In the event that you arrive at a moment that you have a greater number of clients than you have items in stock, you can utilize the business funding to buy more stock. On the off chance that you want to extend your tasks, move to a bigger area, or recruit more representatives to serve more noteworthy quantities of clients, and hence see an expansion in your overall
