MGT602 Entrepreneurship GDB 1 Solution Spring 2013

The construct

No one can deny the importance of writing a business plan before actual commencement of business. A good business plan helps entrepreneur in refining the business idea and it becomes mandatory if he/she is planning to take some loan from any financial institution. From financer perspective the business plan is actual business on papers. The business plan has many sections but the general business description is more critical as it lays the foundation of business idea do-ability. Introduction of the opportunity is the primary step of the description of a business in which entrepreneur justifies the viability of the idea. History and the team of professional’s introduction are also of great importance. Industry analysis means how an industry is progressing and what place this idea or business is currently taking in the industry. It includes demand and supply position, number of players in the industry, growth rate of industry and opportunities and threats prevailing in the industry. These strengths and weaknesses are analyzed with that of the business’s individual opportunities and threats. Legal issues are those that cannot be foreseen in any way as it is obligatory practice for firm’s survival. All the legal rights licenses and permits come in this regard. Besides these practices it is also very important for the firm to know its customer base, channels, revenue streams, key resources, activities, cost structure, customer relationships and values.

 

Point of Discussion:

In your opinion, can description of business section in a business plan work as foot-in-door technique for an entrepreneur if he is applying for a loan?

Provide 05 strong arguments to support your stance. (Each argument contains 6 marks , so it should be comprehensive.)

http://www.smallbizpro.com/Chapter7Businessplans.pdf

Entering the world of big business is an achievable goal for the smallest business. But it’s not easy. Apart from a foot in the door, you’ll need to prove yourself and have a really strong team behind you.

 

Some “business experts” say that home-based businesses or micro businesses are different to bigger small and medium-sized businesses, or even big business. Don’t believe them. The fundamentals of business always apply, no matter what your size. And just as small business can learn from big business, large organisations are now learning from smaller, more flexible and more customer-focused players.

An example

Here’s the story of a business that is very small for most of the year, but come a big day in September, grows into a very big operation.

 

Kerrie Hayes runs and owns a micro-business, Kerrie Hayes Productions, with two full-time staff in the office and an accountant. Despite the smallness of the operation, Hayes has overseen some really big shows on the Australian sporting calendar. Before the first bounce of the ball on AFL Grand Final day, and before the Formula One cars rolled onto the Albert Park circuit, the sporting crowds of Australia enjoyed the work of this small business that defines the new age of outsourcing.

 

One of Hayes’ proudest achievements was to create the entertainment for the official opening of Stadium Australia in 1999. There was also the Rugby Union contest at the same ground, which was played in front of a record breaking crowd of 107,042.

 

However, Kerrie’s strongest testimonials regarding the seriousness of her business credentials are her two longest running contracts. First there is the Australian Football League Grand Final, which she has run since 1986, and the Australian Formula One Grand Prix, which she has held since 1987.

 

So how has Kerrie established herself as the big show girl of Australian sport? Starting her life as a dancer on stage and television, in the 1980s Kerrie gradually moved into choreography and directing. But her big break came through a famous friend, Paul Hogan, who introduced her to the advertising firm George Patterson and as a result of that meeting she put on the show for the 1986 Rugby League Grand Final.

 

From there she became the promoter and producer of Rock Eisteddfod Australia, USA and Fiji from 1988 to 1995.

The smallest business can win the biggest contracts

Outsourcing allows small businesses to enter the realm of very big contracts. “On a big event I could have up to 100 people working with me,” Hayes says. “It’s all in the planning and the co-ordination of the brilliant people I work with, some of who have been with me for 19 years. By Grand Final day I only walk the grounds with a walkie talkie.”

 

Asked to explain how she has held the footy and car racing contracts for so long, Hayes believes it comes down to getting it right each time. “I never get paid until the job is done,” she explained. “And you can’t relax until drinks with the VIPs upstairs at the end of the event.”

 

Hayes says her business is tough because there are no second chances if anything goes wrong while millions of people watch the event. “The weather is the worst factor to deal with,” she said. “We always have three back up sound systems so we never have to live through things like the Billy Idol incident at the 2002 Rugby League Grand Final when a power problem ruined the act.”

How to think big

  • Build a strong support team.
  • Create a formidable network for referrals.
  • Run your business on systems.
  • Never let ego get in the way of good customer service.
  • Plan to make sure everything happens right the first time.
  • Being small and thinking big means you develop systems that ensure you can deliver, and this has to be provable to clients.
  • Many big operations won’t deal with smaller players because they fear that they are too dependent on one key performer. You need to show big customers that you have a Plan B, which swings into operation if ever things go wrong.
  • Be professional and focused. The small operator, like the big business, needs to continually assess how they are doing — can it be done better; what needs to be done; what is best practice; what do my customers want?
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Business Loans for Women Entrepreneurs

“The government itself provides loans, even large amounts, if they are sure that the endeavor will benefit the woman and her family or the society at large.”

It is true that applications for business loans for women are considered more favorably than for men; the reason is that most economies of the world are trying to bring more women into business. Even in this day and age, business is largely a male domain. Governments think that if more women get their feet into the door here, economies will improve, and we will probably even get a solution to the problem of recession that has gone on for too long already.

This kind of feeling definitely exists in the UK right now, where there is a very low proportion of women in business as compared to men. There is a very low presence of them in the large corporate sector and even at the SMB level, it is mainly the men who are ruling the roost.

Presently, trends have started to change because of the great Internet revolution. This is an optimistic scenario, because it is helping women to become work at home moms, also known as mumpreneurs. The mumpreneur phenomenon is certainly helping women find an outlet to their entrepreneurial skills, but at the same time, there are certain stumbling blocks. One of them is the need for finance. Though work from home businesses don’t require much finance for the setup, there are investments that are needed such as a computer and probably a home office setup, which some women are finding to be an obstacle. These are the problems that the specially devised business loans for women are trying to answer.

So, who provides business loans for women in the UK? Almost every finance provider worth their salt has some kind of provision for that. The government itself provides loans, even large amounts, if they are sure that the endeavor will benefit the woman and her family or the society at large. Businesses with wonderful projections and great plans behind them stand to get a better reckoning from the government loan providers.

But there are several private financial institutions that provide business loans for women in the UK as well. You might even want to check out your own bank. Visit them and ask them about their provisions for such financial aid. Ask them if they have special rules and concessions for women business loans, which they are most likely to have anyway. In most cases, women who apply for business loans in the UK find that their applications move on faster, they have lesser restrictions and liabilities on the loans and they can even stand to get higher amounts than their male counterparts can get. The reason behind these concessions is that everyone wants to see more women starting their own businesses so that they become independent and even provide a boost to the wavering economy.

Now, if you are a woman trying to apply for a business loan in the UK, there are some things that are required. These are the things you have to take care of to ensure that your application stands in better light.

  1. Make a very clear and concise business proposal. Outline clearly what your business will be about and what product or service it will deal in. Mention the industry. If you have a business plan already, submit it along with the proposal. Most importantly, do your homework well. When you have the initial meeting with the loan provider, they will quiz you on various aspects of your proposed business. This is where you have to really shine; you have to show that you know the business well.
  2. You also have to make the right projections. These projections shouldn’t be too fantastic, but should be real and practical. It is all right if you don’t start showing huge profits right away, but there should be a steady and substantial amount of growth. If there are any obstacles in your path of meeting these projected profits, you have to mention them. You have to also mention about your competition—what kind it is, how intense it is and how you plan to dominate despite the competition.
  3. If you have any previous experience related to the niche, you should mention that in your loan application as well. This puts on a lot of weight. If you have already run a similar business previously, your loan application will be looked into more favorably. You might also put in the experiences of all your managers. It helps if they have prior experiences in the same line as well.
  4. Another thing that should become a part of your loan application is your own qualifications and eligibilities. Mention your educational qualifications and the qualifications of all your partners and managers, if there are any. This becomes important if you are applying for a loan for a business that requires some kind of academic expertise.
  5. There are special considerations for businesses that deal with some kind of research and development. Is your proposed business going to research for a new innovative product that will benefit society in some manner? If so, you must mention that. Such considerations are taken into better account by the government loan providers, but even the private providers will consider this favorably.
  6. The government will also be happier to process your loan application if your projection indicates that your business will benefit the society in some manner, like by providing some employment for people from the unemployed sector. If you are planning to start a business in a socially or economically deprived area, your application’s prospects are definitely enhanced. Such things should be a part of your proposal.

These are some of the factors that ensure a successful business proposal. You have to be sure to write everything authentically and professionally, without missing out on any detail. If you think this crucial task is too difficult for you, it would be a good idea to hire a professional application writer who knows what it takes to get these applications approved.

 

Another Idea Solution:

While every loan program has specific forms you need to fill out and documents you need to submit, you will likely need to submit much of the same information for different loan packages. Before you start applying for loans, you should get some basic documentation together. The following are typical items that will be required for any small business loan application:

  • Personal Background: Either as part of the loan application or as a separate document, you will probably be asked to provide some personal background information, including previous addresses, names used, criminal record, educational background, etc.
  • Resumes: Some lenders require evidence of management or business experience, particularly for loans that are intended to be used to start a new business.
  • Business Plan: All loan programs require a sound business plan to be submitted with the loan application. The business plan should include a complete set of projected financial statements, including profit and loss, cash flow and a balance sheet.
  • Personal Credit Report: Your lender will obtain your personal credit report as part of the application process. However, you should obtain a credit report from all three major consumer credit rating agencies before submitting a loan application to the lender. Inaccuracies and blemishes on your credit report can hurt your chances of getting a loan approved. It’s critical you try to clear these up before beginning the application process.
  • Business Credit Report: If you are already in business, you should be prepared to submit a credit report for your business. As with the personal credit report, it is important to review your business’ credit report before beginning the application process.
  • Income Tax Returns: Most loan programs require applicants to submit personal and business income tax returns for the previous 3 years.
  • Financial Statements: Many loan programs require owners with more than a 20 percent stake in your business to submit signed personal financial statements. You may also be required to provide projected financial statements either as part of, or separate from, your business plan. It is a good idea to have these prepared and ready in case a program for which you are applying requires these documents to be submitted individually.
  • Bank Statements: Many loan programs require one year of personal and business bank statements to be submitted as part of a loan package.
  • Collateral: Collateral requirements vary greatly. Some loan programs do not require collateral. Loans involving higher risk factors for default require substantial collateral. Strong business plans and financial statements can help you avoid putting up collateral. In any case, it is a good idea to prepare a collateral document that describes cost/value of personal or business property that will be used to secure a loan.
  • Legal Documents: Depending on a loan’s specific requirements, your lender may require you to submit one or more legal documents. Make sure you have the following items in order, if applicable:
    • Business licenses and registrations required for you to conduct business
    • Articles of Incorporation
    • Copies of contracts you have with any third parties
    • Franchise agreements
    • Commercial leases

 

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