Setting up and running a business

The coursework is an insight to the running of a small business. A product was chosen to be produced and sold at an annual trade fair, again this coursework follows the development on the task.

Companies will be selling products, which have to made by hand and cannot be bought then re-sold. The trade fair will be held at the beginning of October, and every company involved should be ready to trade by that time.

Each company will have their own pitch to set up a stall, which will be decorated ready to sell to the public..

The first thing our group needed to do was to decide what we wanted to make. There were five people in our group and each of us is able to contribute to the group in some way.

Here is the list of people in the group including what each member could contribute to the group:

A.K. – I.T skills

C.G. – Designing skills

H.H. – Able to get hold of free paper

A.S. – Able to do girl’s hair

D.H. – I.T skills

We decided that the best thing for the group to do was to brainstorm some ideas for what we should produce. Each member contributed to this and here is a spider diagram showing what the group came us with:

The products that we had brainstormed we felt were all very good ideas. We now had to do some market research. This involved us asking questions to a number of people. The next page shows our market research questionnaire for some of the products that we felt were the bets to sell.

But to a certain extent we would not be able to produce them. E.g. If we were to make CD’s, we would be breaking the copyright law, if we were to copy a musicians music. So it was clear to us that making CD’s was something we were not able to do.

Making sweets also seemed a good idea at first but not one member of the group was able to make sweets or have a family member who could show us. So we decided that sweets was something we weren’t able to produce.

Making frames was not one of our favourite choices as it involved the group in painting the frames. We felt that it would cost too much to buy the frames and then buy paint to paint them. If we were to do this we would have to sell the product at a very high price. But if it was at a high price there would be less people interested in it as the people at the trades fair were mostly children.

My personal favourite was a calendar. It would have a picture of a country and a recipe for a common food dish made in that country. But the rest of the group decided that it would be very expensive to use colour ink. It would also require expensive paper. So it was not a good idea to sell this product if we knew we weren’t able to make a profit.

One of our member’s of our group was able to do hair braiding. This also seemed to be a good idea at first as she was able to get hold of things that were required for free. But she was the only one able to do hair breading. She would then have to teach the rest of the group and this would all be time consuming.

David Hodges, Chris Gould and I have hair-cutting machines. We thought that many people would like to shave off their hair. But our teacher told us that this could have health and safety issues so we decided not to do any hair cutting.

We ended up with two products, A4 white boards and stress balls. These both seemed to be excellent ideas as we would be able to get hold of laminated paper for free and the only thing we would need to pay for were pens. This product seemed perfect for teachers as they could use them in class and it would also be fun for young children who can write on the laminated paper and then rub the pen off.

The group felt that this was the best idea that we had thought of. We felt that just encase we weren’t able to go through with the whiteboards we should have a back up product. We thought that stress balls were a good idea as this was also very cheap. All we would need was a balloon full of flour. Balloons are very cheap and so is flour. But this was only to be a back up plan as we thought that the A4 whiteboards would make us the most money. But we still felt we needed to do some research on both products.

Market Research

Market research can be defined as the collection, collation and analysis of data relating to the marketing and consumption of goods and services. Our company will need to find out information about the whiteboards. The data gathered by this research might include

* Whether or not consumers would want such a product

* The functions or facilities it should have

* What style, shape, colour or form it should take

* The price people would be prepared to pay for it

* Where people would wish to purchase it

* Information about the consumers themselves – their age, their likes, attitude, interests and lifestyle

* What consumers buy at present.

Without thinking about market research, our company and other companies might spend a large amount of money on a product, promote it and then find that no one wants the product. They would find out that the money they spent on everything was for nothing. A good company would find out whether or not the product would be successful.

Markets are constantly changing. Due to this change, businesses are likely to use market research on a regular basis for a number of reasons.

* Descriptive reasons. A business may wish to identify what is happening in its market. For example, our company may want to find trends in its sales or various types of colour or sizes of whiteboards over a certain period, or to find out the types of customers who are buying a particular whiteboard.

* Predictive reasons. A business may wish to predict what us likely to happen in the future. Our company does not really have a future as we are only going to sell our product for one day. An example of a predictive reason is a travel company will want to discover possible changes in the types of holidays that people might want to take over the next 3-6 years. Thus will place them in a better position to design new and better package that will sell in the future.

* Exploratory reasons. This is apprehensive with a business investigating new possibilities in a market. For example, a soft drinks manufacturer could trial a new canned drink in a small area. They could then find out the reaction to the product and then market the product nationally.

We also had to consider many other things. There were areas that we had to research and the elements that have to be considered.

The Market – Identifying market trends. Discovering the potential size of the market identifying market segments. Building up a profile of actual consumers. Forecasting sales levels.

Competition – Analysing the strengths and weaknesses of the competitors. Identifying trends in competitors’ sales. Finding information on competitors’ prices.

Promotion – Analysing the effectiveness of promotional materials. Deciding upon the choice of media for promotions.

The Product – Testing different product alternatives. Identifying consumer wants. Developing new product ideas. Assessing consumer reaction to a newly launched product.

Distributing the product – identifying suitable retail outlets. Exploring attitudes of distributors towards products.

Pricing the product – discovering the value consumers place on a product. Identifying the sensitivity of the demand for the product to changes in its price.

We had to find out whether or not people would buy our products. There were two types of ways we can do market research, one was to do some field research and the other was to do desk research. Desk research is also called secondary research. The main advantage with desk research is that it is cheaper than field research. But the biggest problem is that it is not always relevant to what you want. And in this case desk research was not an option. We were not able to find out any earlier records of pupils in our school selling whiteboards in the trade fair. So we had to do field research. Field research is useful for finding out new information. New information is what we needed and we would also be able to get views on the product from the customers. One of the main advantages is that it was relevant to what we were producing. The questions would be specific to our product. But the main disadvantage was that it is very expensive and it is time consuming. It also needs a large sample for it all to be accurate. The questions would involve us asking whether you were interested in buying our products and how much you would buy them for. The market is separated into different groups, which are, Age, Social Class, Location and Culture or religion. With both of our products the age was not restricted. Any age could use a stress ball or a white board. We felt that the social class and the culture and religion did not matter as the background of the person would not matter. Your social class didn’t seem to matter either.

A problem that we face is that with our stress balls we face competition from another group. They were also making stress balls and we felt that as a threat as they might sell their product at such a low price that we would not be able to compete with. But we still kept this idea as a back up encase something went wrong with the whiteboards. But we decided that it was going to be hard to compete with another group.

We needed to find out what customers would really want to buy. We had to make a questionnaire for people to answer. This would then give us a good idea of what the product should be and who the product is for.

We had to find information that did not exist. This data is known as primary data. One advantage is, is that we are the only people that have access to the information once we have collected it.

To give us a good idea we decided to collect information from a number of people. This is known as the population. The next page shows you the questionnaire that we offered to the population.

Result Of Questionnaire

The results of the questionnaire showed us that the vast majority of people believed that the whiteboards were a very good idea. Many people would pay up to �3 for the product. But some would only pay �1.50. The population also considered the other ideas that we had but it was not liked as much as the whiteboards.

The questionnaire asked whether they would want their hair shaved or braided as well as would they want to purchase whiteboards. The result shows us that whiteboards are the best thing to sell and they should be sold to people of all ages and at an affordable price.

Costs, Revenue, Profit Or Loss?

Costs, revenue, profit or loss is very important to any business. One of the first things a company would do is find out how much their product would cost. This is because they would need to know how much they are able to sell their product for to make their profit. Since we decided to make whiteboards, we knew that we were able to get laminated A4 pages for free; the only costs of the group were the pens that cost us 37.5pence each and the string on each board would cost us 6.5 pence each. So when we add the two costs together we end up with 44 pence for the product. This means that we should sell the product for more than that to make a profit. Another important things that the groups needed to remember were that we had to pay rent. The rent was for the table that we were going to put our product on. This would cost us 10 pounds altogether. So we had to make enough to cover the cost of producing the product and then an extra 10 pounds to cover the rent.