In their first year of operation
79 percent of all small companies thrive. However, half of them fail within five years, and only one-third survive after ten years (Small Business Trends, 2015). Such shortcomings are due to concerns such as a lack of rigorous market analysis prior to launching the company, insufficient financing, and noncompliance with vital federal regulations.
Market Research and Competitive Advantage
According to Productivity Teams (2016), performing adequate market research will help an entrepreneur determine the right ways to transform a business concept into a profitable investment opportunity. It aids in gathering the data required to give guidance on the potential success of the business idea in the locale of operation. According to Productivity Teams (2016), proper research directs entrepreneurs on how to adopt the information in finding a competitive advantage for their businesses.
Background
The Smarts have been driven to start up a small eatery business by their passion for baking and travelling. In their business idea, they seek to duplicate two desserts (Umm Ali and Qatayef) they saw on their trip to Egypt. The couple lives in Raleigh-Durham; one of the most lucrative towns for business activities in North Carolina. The two work as college professors at North Carolina State University and have a lot of time to engage in business activities. The planned venture will be a mobile coffee café dealing in desserts and Egyptian coffee.
Discussion
Challenges Facing Startup Businesses
It is important for the Smarts to be informed of the hitches faced by startups to operate competitively in its areas of engagement. The challenges of small businesses tend to vary with the stage of growth of the enterprise. According to Small Business (2013), the issues that affect small ventures range from steady cash flows to support from stakeholders to making the right choice of partners to hiring the right employees to drive the entrepreneurial agenda. The Smarts need to change their lifestyle and finances in such a way that they are fully dedicated to running the business to ensure high levels of effectiveness and efficiency.One of the most notable challenges faced by startups is their ability to meet market needs while fixing the gaps presented in their areas of engagement. The Smarts must present their products and services to their markets of engagement in such a way that they meet the critical customer requirements with high levels of uniqueness. Competition from established ventures is one of the greatest challenges affecting startups. It plays a significant role in keeping these ventures on toes to ensure that their operations are not flawed (Small Business Trends, 2015). They compete for customers, establishment of strong brands and market awareness.
Effects of Import on the U.S. Economy
The Smarts’ business deals in goods sourced from Egypt. It is important to know that an increase in the extent to which businesses in a country import increases its levels of dependency in instances where the commodities under consideration are foods, industrial materials, and oil (Small Business, 2013). While the key raw materials required for Egyptian Delights are of foreign origin, there is a need for the Smarts to look for substitutes to drive their agenda. Imports have a significant effect on their extents of contribution to international trade and gross domestic products of different countries. According to Small Business Trends (2015), many states attribute great economic value to international trade based on their contributions to the creation and strengthening of social, political, and economic ties among nations.
Forms of Businesses
There are different legal forms of businesses, and entrepreneurs need to make the right choices based on aspects like capital base, size of enterprise, and the number of people pooling their resources. Putting the Smarts’ case into perspective, it would be advisable that they adopt a partnership as a form of business. Partnerships require pooling resources by two or more members, and more capital can be raised by increasing the number of partners or allowing the two partners to increase their levels of investment. By adopting a partnership, the Smarts will not be free from the burden of double taxation evident in corporations and limited liability companies (Newtek, 2013).
Team Building
The Smarts are professors at North Carolina State University. It calls for immediate hiring of team members to help them in running the business. The entrepreneurs need to look for the right candidates for these positions by posting the job opening announcements on social media and professional sites like Facebook, Twitter, and LinkedIn. According to Productivity Teams (2016), the establishment of a venture’s core values at an earlier time goes a long way in guiding the stakeholders on the right members to fit into their teams. The Smarts need to give their new employees an orientation of the organization’s culture of operation for smooth operation.
Leadership and Motivation
Leadership plays a significant role in aligning the operational activities of any venture. There is no single leadership style considered to be perfect for any startup. However, adoption of transformational style of leadership places Egyptian Delights at a better place in its activities. According to Small Business Trends (2015), transformational leaders are charismatic, highly inspiring, and expansion-oriented. They have the ability to survive the less promising business times and can easily take advantage of the good instances presented to their enterprises. Such qualities ensure higher levels of adaptability throughout the business cycle.Motivation is considered as a very crucial tool of leadership in the business environment. A motivated team tends to develop high levels of self-responsibility. It leads to maximum and efficient use of resources presented to the venture, an aspect that steers profitable operations. Motivated employees maximize their extents of productivity. It is attributed to the fact that employees become satisfied leading to the development of morale (Newtek, 2013). On the other hand, organizations that provide both monetary and non-financial forms of motivation to their employees tend to minimize disputes and strikes, which are known for their detrimental effects on the operations of a business.
Marketing
All marketing decisions can be classified into four key categories, which include product, price, place, and promotion. The Smarts must be aware of the fact that the product dimension of the marketing mix comprises the tangible objects and services generated by the venture. When coming up with business products, the Smarts need to consider issues like diversification of the portfolio to avail a wider variety as a way of meeting the diversified customer needs. The Smarts must uphold quality in delivering the café products. For effective brand development, a business must deliver high-quality products. Issues like proper packaging and after-sales services go a long way in building the brand of any business (Small Business, 2013).Product promotion is an element of the marketing mix that looks into the communication procedures undertaken by marketers to increase the levels of awareness. Advertising, sales promotion, public relations, and personal selling are the four aspects of promotion that need to be considered by the Smarts in their business activities. Advertising puts a lot of emphasis on showcasing the products of a business to potential customer niches. Thus, sales staff are considered as useful instruments of socializing the products and services of a business through personal selling and stirring positive public relations (Newtek, 2013).
Operations Management
Organizational structure and culture are important aspects of operations management, which must be embraced by the Smarts in their business. According to Productivity Teams (2016), the kind of organizational structure adopted by a business helps in demystifying the flow of command, organization of activities, and distribution of roles. For instance, there could be a marketing section, production section, and the sales department. Each of these sections should rely on aspects like talent and levels of experience in driving business activities. On the other hand, organizational culture defines the values upheld by a business. Adoption of a good culture leads to business success since all stakeholders are confined to certain set traditions governing the venture.
Technology Management
Technology management is an array of policies and practices aimed at influencing the technologies adopted by a firm for maintenance and building of the organization’s competitive advantage (Newtek, 2013). The Smarts need to identify the most suitable technologies based on the nature of their operations for easy management of business activities. For instance, there should be departmental customization of technologies in such a way that each functional area of the venture is effectively served will play a significant role in minimizing inventory. There is a need for the Smarts to adopt technology management techniques that complement the strategies adopted by the venture.
Accounting
Accounting is one of the most important instruments employed by business owners in scoring the operations of their enterprises. It gives room for businesses to create financial records, which can be compared with other ventures and industrial yardsticks. Business operators can use accounting data to assess the efficiency of their activities. Further, accounting plays a significant role in keeping accurate records of the cash flows of a venture (Productivity Teams, 2016). The Smarts need to consider initial high-quality supplies and equipment to avoid exorbitant maintenance costs. For instance, a good truck should cost the couple about $35,000. They need to engage a reputable organization for maintenance services for the truck. While the key ingredients are sourced from Egypt, the entrepreneurs need to consider local supplies for commodities like coffee and sugar to minimize the costs of operation.
Finance
There exist varied methods of financing a new business. Loans from financial institutions like credit unions and banks can be used to spearhead business operations. On the other hand, businesses can adopt venture capitalists as sources of finance. They invest in businesses with high returns and are not afraid of taking risks like banks. Friendly loans are sources of startup finance, in which the business owners borrow from family and friends who have investment interests in the business (Small Business, 2013).The business investment considered by the Smarts requires heavy inputs. With $75,000, the entrepreneurs need to source out for more finances for efficiency. The business will involve the importation of products, buying automotive, recurrent expenditure, maintenance, and acquisition of equipment. Having proposed a partnership as the legal form of business for the couple, a bank loan would be the best source of finance for this venture. One of the advantages of taking a bank loan is that it does away with the manipulation of other parties who are not partners of the business.
Conclusion
The study sought to present a consultancy report to the Smarts on the challenges facing small businesses, forms of businesses, marketing techniques for startups, financial management, and the role of research activities in developing small businesses. While the challenges are vast, it is advisable that they adopt a partnership as the legal form of business because of its double taxation exemptions and ease of management. The entrepreneurs need to effectively implement the 4Ps of the marketing mix to ensure that their products are well marketed with the best channels of delivery to clients. Putting into consideration the financial demands of the new enterprise, it is recommended for the couple to adopt a bank loan to foster its startup agenda.
References
Newtek. (2013). 7 habits of great small business owners. Forbes. Retrieved on October 06, 2017 from https://www.forbes.com/sites/thesba/2013/02/26/7-habits-of-great-small-business-owners/#7c1523f334b3
Productivity Teams. (2016). 11 challenges startups face. Teamwork.com. Retrieved on October 06, 2017 from https://blog.teamwork.com/11-challenges-startups-face/
Small Business. (2013). Ways for small-business owners to maintain work-life balance. The Wall Street Journal. Retrieved on October 06, 2017 from https://www.wsj.com/articles/ways-for-smallbusiness-owners-to-maintain-worklife-balance-1380648257
Small Business Trends. (2015). 3 challenges small business owners face. Retrieved on October 06, 2017 from https://smallbiztrends.com/2015/04/3-challenges-small-business-owners-facee.html
