Challenges and Opportunities for New Businesses in Information Technology
The business information about business opportunity as presented in this paper is based on the project, ‘Challenges and Opportunities Emerging in the Renewable Energy Industry.’ As a project that three individuals with different professional qualification want to institute, the business opportunity will be examined with reference to different aspect of features of an entrepreneurial business in the renewable energy industry. To ensure the success of their business, Josh, Hannah, and Mathew need to consider the following when setting up a new business in the renewable energy industry.
Factors to Determine If the Business Opportunity is Viable
The skills of the three business partners are the primary determinants of the viability of the business opportunity presented in the case study. Since Hannah, Josh, and Mathew have different skills that fit the opportunity to start a business in the renewable energy industry, it is apparent that their capabilities and knowledge will play an important role in making their proposed project into action or real operative business. Although educated people face higher opportunity costs, they are likely to have the required skills that will enhance appropriate management of a business and improve the success of an entrepreneurial business upon implementation of the ideas at hand (Verheul et al., 2010).
The Market Drivers that the Partners Need to be Have an Idea about
For effectiveness in the market, Josh, Hannah, and Mathew need to research on external market drivers such as competition, legal policies for new businesses, the customer base, technological development, and the change of segment behaviors and their perception toward specific brands. It will be important for the business owners to stress on understanding these factors since they are interconnected and inter-influenced (Gursoy, Saayman, & Sotiriadis, 2015). Likewise, when these elements are researched, and the people conducting the business understand them, they will be in an outstanding position to come up with strategic decisions regarding their operational activities.
The Flaws of the Current Business Strategy
The business strategy that is proposed in the case is to form a cooperative firm, in which local members would be involved in the production of biodiesel energy. Although the strategy is significant for new businesses, it is associated with a number of weaknesses. A major flaw associated with cooperative businesses is that firms tend to take long a period when executing decisions. At the same time, as a collaborative enterprise, members will be supposed to participate in the success process. However, due to the lack of commitment, key stakeholders may lose interest in running the organization and let a small group of people manage the company on their behalf. This will affect the achievement of the business because entrusting other people to manage the company may cause dispute and unnecessary conflicts due to poor decision-making process.
Sources of Financing for the Business
For a business to be successful and sustainable under all conditions, capital should be adequate and obtained from reliable sources. In this case, for the business to go forward, the owners need to consider securing financial support from all prospective sources including their own money. As such, to enhance business continuity with their new ideas, they need to consider bank loan as the primary source of finance for the business or even grants from the local agencies and government associations. For the company to acquire a bank loan, the management team and the owners need to show the capability of paying the loan after a period that the bank will recommend (Kariv, 2011). The other source of finance for entrepreneurial organizations is the owners themselves. The money contributed by the owners can ensure that the business has a supportive financial system that will benefit the owners regarded as the key investors. For the case of Josh, Hannah, and Mathew, this means that they can use their money and invest it in the company through a program called ‘bootstrap funding’ (Stokes, Wilson, & Wilson 2010). This is a primary source of finance for new ventures and when applied appropriately, both the owners and the business will benefit from the business profit and investment achievement.
Distribution Channels
In the modern business environment, the inability of a company to bring products in the market efficiently is regarded as one of the factors that may lead to the failure of new ventures. Therefore, for a new entrepreneurial business, it is substantial to have a flowless distribution channel that the organization can use to generate revenues relevant for long-term success (Brettel et al., 2011). Thus, for new businesses, having reliable business channels will influence the success of the venture and allow the firm to save costs related to marketing activities. For the case of the new business that Josh, Hannah, and Mathew want to start, some of the types of distribution channels that they can use include direct sale, reseller sale or indirect channel, and online distribution. In the case of online distribution, the business can opt to use social media and other Internet platforms to connect with customers and deliver products. Distributing the products using online platforms will allow the business to save money, acquire customers directly, and increase its market share.
A direct sales strategy allows a firm to get direct contact with the customers, which is essential to determine any change within the market (Ehmke, Fulton, & Lusk, 2005). The direct sale technique will also enable the business to have complete control in the market since the supplier will determine the process that the company needs to adapt in selling its products and the price of each commodity within the market. Conversely, instead of selling the products directly, the company can select to sell its product through an intermediary, like wholesalers and retailers (Brettel et al., 2011). This will give the new business an opportunity to reduce the storage space necessary for the stock and access the customers in the market effectively (Ehmke, Fulton, & Lusk 2005). In many cases, retailers and wholesalers have a well-established connection with the customers, and hence, they will allow the business to access as many customers as possible.
Improving the Chances for Success
For the business to improve its chances for success, it will be required to manage risks appropriately, implement decisions in the right manner, and hire skilled personnel for different tasks within the venture. Notably, in the process of managing the risks that might affect the performance of the business, owners need to identify, assess, and prioritize the risk management tasks. Through this process, risk in the firm will be minimized and controlled using the resources within the firm. In other words, since managing the risks in the business means developing a framework that will underpin the operations of an entrepreneurial venture, it is with no doubt that, if risks are well-managed the new organization will succeed and accomplish its goal efficiently.
On the other hand, the process in which the decisions are made throughout the business will have a considerable impact on its level of success, growth, and development. In essence, the new firm will be required to have a speedy decision-making forum, as when the process is faster and quick enough there will be reduced control and coordination in the different levels of management. This is to say that with quality decisions enhanced in the new business, success will be guaranteed, as most of the operations will be accurate at all levels of management. Lastly, for the business to be successful in both internal and external context, it will be needed to hire a team of highly competent personnel. Skilled workforces will ensure that the needed experience for development is enhanced in the company and bring new ideas through their innovative capabilities. The skilled employees will ensure that the company is performing at its best and it has competitiveness both internally and externally.
Recommendations
With the discussion identifying a series of activities that Josh, Hannah, and Mathew need to have in the quest to start a new business, it is meaningful to consider the way forward upon implementation of each point highlighted in this paper. They should clearly differentiate their respective roles and responsibilities in the executive levels. Secondly, the owners need to come up with efficient ways of consulting with necessary members concerning strategic directions. Besides, IT needs to be a core element in the business, especially for improving performance-management systems throughout the working context. They should also focus on contributing an equal share in the initial funds or agree on how to share profits based on financial and physical contribution of each member. Finally, they should differentiate the business from their personal state as friends and only provide professional decisions that focus on improving the business.
References
Brettel, M., Engelen, A., Müller, T., & Schilke, O. (2011). Distribution channel choice of new entrepreneurial ventures. Entrepreneurship Theory and Practice, 35(4), 683-708.
Ehmke, C., Fulton, J., & Lusk, J. (2005). Marketing’s Four P’s: First Steps for New Entrepreneurs. Purdue University, Purdue Extension.
Gursoy, D., Saayman, M., & Sotiriadis, M. (Eds.). (2015). Collaboration in tourism businesses and destinations: A handbook. Emerald Group Publishing.
Kariv, D. (2011). Entrepreneurship: An international introduction. Taylor & Francis.
Stokes, D., Wilson, N., & Wilson, N. (2010). Small business management and entrepreneurship. Cengage Learning EMEA.
Verheul, I., Thurik, R., Hessels, J., & van der Zwan, P. (2010). Factors influencing the entrepreneurial engagement of opportunity and necessity entrepreneurs. EIM Research Reports 201011, 1-24.
