Professional Documents
Culture Documents
Research Report
Economic Setting of Business
BBA 5
Course
BBUS 412
Introduction to Business
Presented To,
Prof. Mansoor Anis
Presented By,
S. M. Hussam Haider Tirmizi
Dedication
1. Synopsis 1
2. Preface 2
3. Are you ready to start a business? 3-7
3.1. The reality of starting a business 3-4
3.2. The challenges of running a business 4-5
3.3. Assess your business skills 5-6
3.4. Outsource, recruit or improve business skills 6-7
4. Will your idea work? 7-9
4.1. Research the market 7-8
4.2. Protect your idea 8-9
4.3. Commercialize your idea 9
5. Turning your idea into a business 9-13
5.1. Professional advice 10
5.2. Business plan 10-11
5.3. Market research for your business 11-12
5.4. Starting, buying or franchising 12-14
6. 7 steps to business success 14-19
6.1. Consider your suitability 14-15
6.2. Consider your idea 15-16
6.3. Consider your market 15
6.4. Consider your competition 16-17
6.5. Consider your environment 17-18
6.6. Consider your financial control 18
6.7. Consider your start-up costs 19
7. Establishing your business 19-23
7.1. Business structure 20
7.2. Business and company name 20-21
7.3. Premises and leasing 21
7.4. Finances and expenses 22
7.5. Banking 22-23
8. Meeting your legal obligations 23-31
8.1. Legal requirements 24-25
8.2. Licenses, permits and regulatory requirements 25-26
8.3. Taxation 26
8.4. Record keeping 27-28
8.5. Intellectual property 28-29
8.6. Insurance 29-30
8.7. Employing staff 30-31
9. Preparing Your Small Business for Hard Economic Times 31-34
9.1. Eight ways a business can survive and prosper in a downturn 31-33
10.References 36
Synopsis
The main objective of the research report to study the economic setting of
business that is the starting of business. As well as in this research report it is
discussed that what problems you will face in starting or later during business.
The report consists of seven chapters.
First chapter is about different realities and challenge of business and gives idea
how to access your business skills outsource, recruit or improve business skills.
Second chapter discusses the ways you can assess and develop your business
idea.
In fourth chapter, seven keys steps for success of any business are discussed.
How to prepare your business for hard economic time or recession is discussed in
seventh and last chapter of this report.
Preface
It is absolutely essential that you have the right reasons for wanting to start and
run your own business. If the idea of establishing a business is the only option
that you have then I would strongly urge you to think again. It is not an easy
option and unless you consider that it is the right option for you, it is more than
likely you will become one of the failure statistics.
However, if you have decided that you really want to start your own business then
this report is for you. It covers all the essential points you need to know and think
about before you actually go ahead. Even if you already operate your own
business, it will prove invaluable in contributing to your ongoing success.
There era no secret tricks to being successful in business. Success will only come
through hard work and through always offering something that the consumer
wants, at the price, in the right place, and in the right quantity. On a final note,
you must always remember that you must never lose sight of the fact that you
are also in business to make money. Without ongoing profit you will eventually
fail.
Techniques
Take the time to assess if you have the right skills to run a business successfully,
and to identify any skills you may need in the future. If you don’t have the right
skills, identify the ones you could outsource or employ someone to look after. A
wide range of training resources is available for you and your employees.
This report will help you to start a business, and point you in the right direction
for further information and advice.
Market potential
Before you start your business, thoroughly research your market. Many
businesses fail because the market for their products or services is too small to
support them. It isn’t enough to know that a market exists for a product or
service; you must also investigate the strengths and weaknesses of existing and
potential businesses so you don’t underestimate the strength of your competition.
Capital
Carefully consider your capital requirements when planning your business. You
will need sufficient capital to sustain your business until it begins to break even or
consistently return a profit. You could also use financial benchmarking data to find
out what funding might be required to start your business.
Business plan
Prepare a detailed business plan to help you set out clear goals for sales, growth
and expenses. Operating without a business plan can cause a business to lose
direction and exceed its budget.
Growth
Carefully plan growth to give your business a much greater chance of success.
Some businesses expand too quickly, putting pressure on their financial and
management structures and damaging the quality of their products or services.
Location
You may struggle to attract customers if your business is difficult to find, hard to
access, and surrounded by competitors. Retail businesses in particular require a
prominent and easily accessible location.
Getting started
There are a range of start-up activities to complete when you start your business.
Interpersonal skills
Can you lead, train, supervise, motivate and mentor employees?
Do you know how to communicate and negotiate with employees and
customers?
Are you familiar with requirements for staffing and human resources?
Entrepreneurial skills
Do you have an entrepreneurial spirit?
Do setbacks motivate you to try harder or do you become frustrated and
give up?
Can you turn your ideas into a business?
Do you know how to research business ideas?
Financial skills
Are you familiar with profit planning, financial forecasting, and cash flow
management and budgeting?
Do you know how to complete payroll? Pay superannuation?
Can you cost your supplies, overheads and labor to price your products or
services effectively?
Can you manage purchasing for the business?
Do you know how to manage creditors?
Do you have bookkeeping skills?
Do you know your requirements for tax, goods and services tax (GST)
and business activity statements (BAS)?
Marketing skills
Do you have strong written and oral communication skills?
Can you analyze your competitors and your customers?
Do you know how to research the market, test your product and advertise
your product?
Are you familiar with different marketing channels?
Do you know the best way to promote and sell your product or service?
Outsource tasks
Teaching yourself specialized skills is often unnecessary when you could hire a
professional to work more accurately and economically. Even if you have the
skills, it may be a good idea to outsource complex or time-consuming tasks so
you can spend more time working on your business.
Recruit employees
You do not have to be an expert in all areas of your business. However, it is useful
to have a basic understanding of key skill areas so you can recruit the right staff
to help you.
As your business grows, or your role changes, I recommend that you regularly
assess your skills to identify any additional skills that you may need.
Researching your idea helps you to decide if you can turn it into a business. Your
research may tell you there is a market for your product or service, or you may
find information that persuades you not to pursue your idea (e.g. competitors
might also be starting up or the target market might be too small).
This guide discusses the ways you can assess and develop your business idea.
IP is a complex area and I strongly recommend that you seek professional advice.
Patents
A patent is a “right granted for any device, substance, method or process
which is new, inventive and useful”. You can apply for a standard patent or
an innovation patent to protect your invention.
Trade marks
A trade mark is a “word, phrase, letter, number, sound, smell, shape, logo,
picture, aspect of packaging or a combination of these”. As trade marks
should distinguish the products and services of one business from another, it is
important to search IP for existing trade marks.
Designs
A design relates to the “features of shape, configuration, pattern or
ornamentation which, when applied to a product, gives the product a
unique appearance”. Designs cannot be registered unless they are new and
distinctive, so you should search IP for existing designs.
Copyright
IP explains that copyright protects the original expression of ideas, not the ideas
themselves. Copyright is unlike other forms of IP as it is free, automatic and you
do not have to apply for it. It is good practice to put the © symbol and date on
any work your business produces - including your website.
It is important that you take the time to thoroughly research and plan your
business before you begin operating.
This guide will help you turn your idea into a business.
Professional advice
Business plan
Market research for your business
Starting, buying or franchising
Professional advice
It is essential that you have the correct information when starting and running
your business. A good adviser has expert knowledge of a subject, and can explain
any rules and regulations that apply to your business.
Ask about fees
When choosing an adviser we recommend that you ask for information about
their fees upfront, as fees will vary. A higher fee may indicate the adviser has
plenty of experience. A lower fee may not be a bargain if the adviser has less
experience. An adviser can save you from making costly mistakes, so find the one
that is best for you.
Do your research
Meet with potential advisers to discuss their fees as well as their qualifications,
experience and how they can help your business. Request the contact details of
current or previous clients so you can ask them for feedback.
Your accountant can help you to analyze your cash flow so you know how
much of your budget can be spent leasing premises.
Your solicitor can help you to investigate and understand a business
premises lease to avoid unexpected rent rises.
Your insurer can help you to take out the right level of insurance cover to
protect your business.
Ask your network of business contacts to recommend advisers.
Research potential advisers to make sure they have experience helping
start-up or small business owners.
Business plan
Your business plan will be a guide to starting your business and will help you turn
your idea into reality. A business plan details how you will handle all the
important aspects of your business. It maps your current situation, identifies your
goals, and allows you to plan for the future.
A well thought out business plan can make it easier to secure finance to start
your business. It can also help you to attract buyers if you want to sell your
business.
An executive summary
A business profile
Product or service and market analysis
A marketing plan
A legal and risk management plan
An operating plan
A management and personnel plan
A finance plan
An action plan.
Who your customers are, what their needs are, and how much they are
willing to pay for your product or service
Who your competitors are, what they sell and for what prices.
Market research helps you to make decisions about many important areas
of your business (e.g. pricing and marketing of your goods and services,
the location of your business, how you plan to compete with similar
businesses).
You could survey a wide range of potential customers in public places such
as shopping centers. Learn more about your customers by asking them for
feedback after they contact your business.
Research your competitors
What products or services do your competitors sell, and for what price?
How do they market their business?
What are your competitors´ current turnovers, market shares, pricing
structures, availability of products or services, supply chains and
competitive advantages?
You can find valuable information about your competitors by reading their
marketing material, contacting their suppliers, contacting licensing bodies,
shopping in their store and reading their website.
Research your industry and the wider world by staying in touch with mainstream
newspapers and magazines and new media such as blogs. Read trade journals,
become a member of your industry organizations and attend industry expos and
trade shows.
Starting a business
Advantages
Disadvantages
Disadvantages
Disadvantages
Business structure
Business and company name
Premises and leasing
Finances and expenses
Banking
Business structure
Choosing the best legal structure for your business is important as each structure
has different rules regarding issues such as tax, liability, succession, ownership
and disposal of the business.
Learn more about the advantages and disadvantages of each business structure.
Business structure
Consider your business name or company name at the same time as your
business structure. I recommend that you seek professional advice before
deciding on your business name and structure.
Premises checklist
Ask your financial adviser or accountant to analyze your cash flow to help
you set a premises budget.
Contact your local council for information about any legal regulations or
compliance requirements (e.g. planning permits, zoning, and parking) for
your suggested premises.
Ask your solicitor to investigate and explain the terms and conditions of a
lease or sales contract before you sign.
Ask your insurer to read the lease or sales contract so you understand who
is responsible for insurance.
Banking
You should set up a business bank account to help you to separate your business
finances from your personal finances. A separate business bank account makes it
easier to track and control your business’s income and expenses.
Once you have listed your needs, ask your preferred banks for a competitive rate
on this package. Bank fees can vary considerably so do your research to find the
best deal for your business.
Transaction banking
Having the right transaction banking products can improve your cash flow and
streamline your business operations. You must be able to access and monitor
your business’s financial transactions, and transaction banking products help you
to do this. Common transaction banking products include:
Business accounts (accessible by cheque, ATM, EFTPOS, phone or internet
banking)
Overdraft and other limit facilities
Cheque book
Payroll processing.
Merchant facilities
Using merchant facilities makes it easier for your customers to pay for products
or services as they can use their credit or debit card (i.e. they don’t need to use
cash). Merchant facilities improve your cash flow as funds are available quickly.
Banking checklist
Seek advice from your accountant about your banking needs.
Research the best deal on banking products and services to suit your
business.
Ensure you have a direct contact at your bank (e.g. an account manager)
that can help you to manage your banking, and answer any questions you
may have.
This guide will help you meet your legal obligations when starting a business.
Legal requirements
Licenses, permits and regulatory requirements
Taxation
Record keeping
Intellectual property
Insurance
Employing staff
Legal requirements
You must consider your legal requirements when starting your business. If you do
not follow legislative requirements and regulations, your business can face serious
penalties. A range of legal requirements may affect your business.
Business structure
You must keep all registrations for your business structure up to date. For
example, your business name must be renewed when due and you must
lodge annual returns if you operate a company.
Taxation requirements of businesses include GST.
If you go into a partnership, your solicitor should draw up a written
contract before you begin trading or make any financial commitments.
Leasing premises
Your solicitor should read any lease before you sign to ensure the terms
and conditions are appropriate and you understand your obligations before
you sign.
If you operate a home business, local authorities may limit the number of
people who can work there.
Employment
Legally, when you employ staff you must meet certain requirements.
You must select the right person for your business in line with the job
description and selection criteria you have specified.
You should make offers of employment in writing, including conditions of
awards, agreements and the employment contract.
All employees should attend induction training to become familiar with the
workplace and any workplace health and safety issues. A carefully
developed induction training process can protect your business from risks
including health, safety and environmental (HSE) issues, discrimination
and unfair dismissal claims.
Before dismissing a staff member you must ensure you’ve followed due
process.
Supplier agreements
Getting your agreements with suppliers in writing will minimize
misunderstandings and disagreements. Agreements may include creditor
terms, supply conditions and any marketing and promotion support.
Risk management
Manage risks by avoiding them, minimizing their negative effects,
transferring them to another party, or deciding to accept some of the
possible consequences should they arise.
Several forms of insurance can help with risk management.
Contracts
Contract law is complex. Your solicitor can develop standard agreements
for your business to reduce confusion and costs.
All parties must have the legal capacity to enter into a contract.
A contract of sale involves an exchange of goods, services, or property
from the seller to the buyer for an agreed amount. It refers to a specific
type of legal contract.
You must operate your business with the correct licenses and permits. If you
don’t, you could experience serious penalties.
Contact your local council
Every council has different regulations. Contact your local council to discuss town
planning laws, zoning requirements and other issues such as home business
requirements. You must gain council approval for any relevant issues before you
begin operating.
Registrations
There are many areas of your business that you may need to register, including
your business name, trademark and domain name, as well as registering your
business for tax.
Taxation
Your business’s tax requirements will vary according to the type of business you
run and the number of employees you have. Tax is a complex area. Outsourcing
your tax to a professional or employing an experienced accountant can help you
to avoid legal and financial problems.
Tax help
Before you start your business you should seek advice from a tax professional.
They can explain tax considerations such as:
Taxation checklist
Speak to your accountant about your tax requirements and record
keeping.
Record keeping
Keeping accurate and up-to-date records is vital to the success of any business.
Well-kept records help you to minimize losses and manage cash. It is also a
requirement under taxation laws. Your accountant can help you set up a record-
keeping system.
Sales
Invoice books, receipt books, cash register tapes, credit card
documentation, credit notes for goods returned and a record of goods
used by the business owner personally
Purchases
Cheque butts (larger purchases), petty cash system (smaller cash
purchases), receipts, credit card statements, invoices, any other
documents relating to purchases including copies of agreements or leases
Depreciation
Original purchase agreements or tax invoices, a depreciation schedule, the
cost of transporting the items to your business (if applicable) and
installation costs (if applicable) - to obtain tax deductions for depreciation
(wear and tear) of assets
Expenses
Cheque butts, receipts, cash register tapes, copies of statements and
invoices, credit card documentation, details of payments by cash and log
books - other than the normal purchases of the business
Other records
Stock records, accounts receivable, accounts payable, and other basic
accounting records
Sales and purchase contracts, loan agreements, rental agreements, lease
agreements, franchise agreements, sale and lease back agreements,
trading agreements with suppliers, legal documentation, evidence of
deposits with utilities, contracts with telephone companies and your
business name registration certificate
Intellectual property
Your ideas are your intellectual property (IP). You may have an idea for:
A new business
New processes or a new business model
An improvement to how old products or services are used
A new use for products or services
New products or services.
Protect your IP
While you cannot copyright your ideas, there are many ways to protect your IP.
Protecting your IP prevents other businesses from using it to make money.
Learn more about IP considerations such as copyright, patents, trade marks and
designs, and whether your idea will work.
Business name and trademarks
Registering your business name does not protect it. To protect your business
name from use by a competitor, you’ll need to register a trade mark. You can
then control the use of the name or any part of the name. A trade mark can be a
letter, word, phrase, number, sound, scent, logo or image.
Think about IP
Thinking about your IP needs to be an ongoing process. For example, your
business may generate new logos and ideas as it grows and it's a good idea to
make sure you keep these protected. If you don't protect your IP properly,
someone else can use it. You will also need to review and, if appropriate, renew
IP protection regularly. For example, you need to renew trade marks every 10
years.
Insurance
Being uninsured, underinsured or having the wrong kind of insurance could force
your business to close in the case of fire, staff or customer injury, personal
illness, product defects or staff errors. The right insurance can keep your losses to
a manageable level.
Seek advice
A professional insurance broker can help you make the right insurance choices.
They can put together a comprehensive and cost-effective package of insurance
policies for your business. You should seek specialized advice if your business is
classed as a high insurance risk.
Insurance checklist
Contact your industry association for information and advice on the types
of insurances required for your industry.
Seek professional advice from an insurance broker.
Employing staff
Staff with the right skills and knowledge will help make your business a success.
Before hiring, you must understand your obligations as an employer. These vary
depending on the type of staff you hire, which may be:
Your obligations
It is important for you to understand employment legislation and your obligations
towards the people who work for you. Obligations can cover considerations such
as:
Before you can see the opportunities before you, you must do what you
can to view the problem from different perspectives. Ask yourself what you
can do if you can’t do what you are used to. With practice at looking at
problems from other perspectives, you can become your own best
consultant. Creative problem solving is what will separate those who thrive
during a downturn and those who end up throwing in the towel.
3. Look closely at where you are spending your money and cut
back. There is some cutting back to do and it may not be apparent at first
look to what items are needs and what items are wants.
4. See what you owe, and check the interest rates for each. Pay off
money you owe that is costing you the most. You can do this by focusing
on the higher interest rates or by consolidating debts under the lowest
possible rate.
Growing the business is all about cash flow. Positive cash flow is maintained
through a simple equation: keep the expenditures shrinking against the
revenue. Even a one percent change can have significant effects on your
success. The four main components of maintaining a positive cash flow include
lowering accounts receivable, reducing level of inventories, pricing to maintain a
healthy gross profit, and reduction of debt—especially high interest debt.
Hopefully, these few ideas aimed at generating productive thought can put you on
a track to be creative about increasing your business and reducing your costs.
Look at your situation with a new, creative point of view—get outside your usual
pattern and think how you can improve your situation. Feel good about doing
things to grow the business and let the competition cry about the bad economy
causing bad business.
REFRENCES