Small Business Mgmt 2

SMALL BUSINESS MANAGEMENT 10

To Build or Buy

Selected Business: Coffee Shop

Strategy for Business Concept

For any business to thrive in any market there needs to be an effective strategy in place. This will ensure that all necessary elements are taken care of in the best way possible. A coffee shop is a business that serves customers especially from the local community, therefore, its strategy must take into account the culture as well as other social aspects of the local people. This basically implies that it is necessary to first understand the people so that they can be served as per their expectations.

The strategy for the business concept will take into account the following:

1. Understanding the Market

The first step in any business strategy is to understand the market because this determines how far the business will go (Cecile & Dirk, 2008). By taking a careful look at the market, it is possible to understand its nature as well as the specific products that are needed. With respect to a coffee shop business, this step makes it possible to understand the market as well as the specific type of coffee that is preferred.

1. Understanding the Product

After understanding the market, there will be enough information that will make known the specific type of coffee that is preferred. This will create interest in understanding the product as well as how its demand will be. Understanding a product is a crucial stage in a business strategy because it makes a business owner to know whether or not there will be sufficient demand.

1. Factors to Consider Before Engaging in the Business

Different businesses are affected by different factors and it is necessary for the owners to consider the specific factors that affect their potential businesses. For instance, one of the most important factors is location. A business needs to be strategically located so that it is easily accessible by its customers. Considering this factor, a coffee shop needs to be located in a busy area where it can be easily reached. For instance, it can be located at a junction because many people meet in such places. This implies that there will be a ready demand for the business’ products and this directly translates to profitability.

1. Possible Challenges

Apart from looking at the factors that might affect the business, it is also necessary to analyze the specific challenges that the business is likely to face. One of the greatest and most common challenges for a coffee shop is competition. Various coffee shops might be existing in the same area, therefore, competing for the same customers. This is a challenge because it reduces the size of the market that a business can access. This is one of the challenges that must be addressed because it has a direct negative impact on the business especially in terms of the market size.

1. How to Deal with the Challenges

It is also important for there to be a plan on how challenges can be dealt with. For instance, competition is a challenge that can be dealt with through improving the quality of products and services offered (Stokes & Wilson, 2006).

Build or Buy

A business can either be built or bought depending on various factors. Taking into consideration the described business, it would be a better idea if the existing one was bought. Buying an already established business comes along with a set of challenges but it has more advantages. In this case, there are reasons as to why it is a better idea to buy an existing business than to build a new one. Below are the advantages:

1. The Brand

When a business exists for some time in the market it is able to build its brand name and be familiar with the market. It takes a lot of effort as well as resources to make build a strong brand name for a new business. Considering the idea that an existing brand attracts more customers than a new one, it is a better idea to purchase an existing business. In such a case, the business will keep providing its products and services and will not have to build a brand for it to attract the attention of the customers in the market. There is a ready demand for an existing business as compared to a newly established one.

1. Established Relationships

Relationships are very important in business because they determine how it operates with different stakeholders. It should be considered that stakeholders also trust businesses which they have been in a relationship with for a long time. For the interest of such relationships, it is a better idea for one to buy an existing business as compared to starting a new one. An existing business has established relationships that enable it to carry various tasks and operations.

1. Immediate Commencement of Operations

An already existing business has all necessary mechanisms put in place and it is ready to start operations as soon as it is acquired. This implies that the focus can be shifted to operations and profits will be made immediately. This is a better idea as opposed to establishing a new business that will require a lot of time setting different elements in place. Additionally, a newly established business takes some time before being stable and to start making profits. An existing business is advantageous in this perspective in the sense that it is ready for operations.

1. Human Resources

Human resources are the people that provide their services in different organizations for the interest of making sure that different products and services are available to customers as well as other stakeholders. It takes time for a business to identify the right set of human resources that are ideal for its operations. Taking this into perspective, it is better to buy an existing business because it already has human resources that understand its systems. It would take a long time for a new business to come up with the best human resources that will provide the needed services and make the business successful (Arun & Rachana, 2000).

Basically, the greatest benefit of buying an existing business is the idea that it already has established systems and this implies that it is ready for work. As much as it is more expensive in the short-run, it is more beneficial in the long-run. It can start operations as soon as possible and this implies that profits will be realized within a short time.

Appropriate Form of Ownership

The form of business ownership has a role to play with respect to the how operations and other activities will be run. It is also necessary to take a look at other factors such as the nature of the business before determining the kind of ownership that is appropriate. In this case, a sole proprietorship is the most appropriate form of business conspiring the fact that it is a small business.

One of the greatest benefits of this form of business ownership is total control and decision-making. The business owner has the power to make any decisions concerning the business without necessarily consulting any other stakeholders. This gives the power over the business and they can run it in any way that they think is the best. This also implies that the process of making decisions is short because it does not have to go through many levels.

A sole proprietorship is the best form of business ownership in this case because it does not require the payment of any corporate taxes. This makes it easy to run considering the fact that other forms of business ownership have to comply with corporate taxes or risk being subjected to legal action.

Basically, a sole proprietorship has few legal requirements and this is an advantage because the business will operate freely without the interference of authorities. A sole proprietorship will enable the owner to make any decision and run the business in a manner that pleases him with involving other parties.

Business Plan

This is primarily a business statement that outlines the business goals and how they will be achieved.

Business Description

The business is a coffee shop that intends to serve all members of the society. It is strategically positioned so that it can attract as many customers as possible.

Management

The business has a centralized management system. It has one president who is also the owner and he manages it through a top-down approach.

Business Goals

The first goal of the business is to ensure that it is the leading in terms of proving the best-quality coffee in the market. Second, the business intends to offer the best customer service to make sure that all those who visit are comfortable. Through this, customer satisfaction will be achieved and this is beneficial to the business.

Achievement of the Goals

The first way to achieve the goals is by ensuring that the best technology and strategies are used in the production process. This will boost the quality of the coffee sold to the customers. Secondly, employees will undergo periodic training to ensure that they make use of the best approaches so that their services are the best (Arjun, 2009).

References

Arjun, K. (2009). Small Business Management. New Delhi: Global India Publications.

Arun, K, & Rachana, S. (2000). Principles of Business Management. New Delhi: Atlantic Publishers and Distributors.

Cecile, N. & Dirk, R. (2008). Business Management: A Contemporary Approach. Cape Town, South Africa: JUTA & Company.

Stokes, D. & Wilson, N. (2006). Small Business Management & Entrepreneurship. London: Cengage.