Essay: Entrepreneurship, Small Business & Innovation - A Comprehensive Overview.

Human beings have engaged in enterprising for millennia and yet there is no agreed definition of entrepreneurship. Entrepreneurship is often seen in the context of starting a new venture. Given that, most of the new ventures start on a small scale, thus entrepreneurship and small business are often synonymous. However, it is also true that nowadays, even large businesses are trying to imitate the behavioural advantages of small businesses. Entrepreneurship is also related to creativity and innovation. It is believed that creativity may play an important part in the process by which entrepreneurs come to recognise or create opportunities.

Similarly, innovation can provide the basis for new business opportunities. As a result, entrepreneurship is a pervasive and vital concept in any successful organisation.Over the following weeks you will have the opportunity to explore a range of issues surrounding this fascinating topic. This will include aspects of enterprise such as the entrepreneurial
environment and factors that contribute to the birth, survival or death, and growth of new ventures.Entrepreneurship also shapes many aspects of running an entrepreneurial firm i.e. its business model, and those elements tend to be different to the traditional ones. For example, marketing planning may involve a range of specific decisions around product positioning, differentiation, pricing and promotional strategies.

Yet, activities and resources need to be perfectly aligned to obtain such innovative and appealing propositions for the market. This is why understanding and creating a coherent business model around a business plan/idea is extremely important. In the final part of the module, a great attention will be payed to this crucial aspect that allows the progression from a structured idea to a successful functioning business.

The module aims to:
Highlighting a range of pertinent issues to the understanding and analysis of entrepreneurship and the small business sector.
Understanding the importance of creativity and innovation within the small business sector.
Developing the ability of creating and presenting business ideas in the form of a business plan.
Mastering the process of translating successful business ideas into feasible business plans and models
Developing a set of practical skills necessary to operate effectively as an entrepreneur.Teaching Expectations.

The Concept of Entrepreneurship, Small Business, and Innovation

The role of sports in modern world is very crucial for ensuring that the people are engaged in physical activities and thereby also maintain their fitness. Among the different sports which are played in different countries, Football is the most followed and celebrated sports. The sports of football capture the imagination of young generation and also, they tend to follow the footballers like their heroes.

Therefore, in order to utilize the demand and popularity of the sport, the management has decided to open an Exclusive Football Pub. The Pub would provide a center for football fans of all ages to enjoy the game with some beverages and snacks (Burns 2016). The business also would be showing all club matches and international matches when no major tournament is taking place and would be covering the different leagues.

The market gap refers to the potential customers who are not yet attracted to the business but the management is planning to attract such customers to the Pub (Trenberth and Hassan 2013). The management also plans to introduce a new gaming station which would further attract new customers to the business. The management also wants to bring in the best quality services in the business.

1.0 Identification of Market Opportunity

In order to ensure that the business is success in the market, the management needs to take care of the needs of the customers and also identify the target customers of the business. The business aims to provide a place where customers can get dining and snacks options along with an environment where customers can enjoy and feel every aspect of a football match (Wilkinson  2013). The potential customers are the regular football viewers and fans of different clubs.

1.1 Market Formation – Customer Needs 

The management of the business needs to firstly identify the target market of the business on whom the business would be focusing more. As identified by the management, the business would be targeting the demographic population who are football lovers and are dedicated towards a particular club (Cross, Belich and Rudelius 2015). The target market of the Pub would be people who are between the age group of 21 to 51 years of age. As per the situation, the people are lovers of football in Sri Lanka and they are dedicated towards the sports.

The managements plan to create an atmosphere which would be favorable for football fans and which can create the excitement of watching a match with a crowd just in case of a stadium. The pub would also be providing all kinds of alcoholic beverages along with non-alcoholic mocktails to serve all the kinds of crowds which will be visiting the pub. The business also plans to incorporate big home theater sets which can support High definition quality and also three-dimension effect (Anderson and Xie 2014). The aim of the pub is to enhance the visual experience of the public and provide them with a feeling that they are watching the match with a crowd at some stadium. Another need of the customers which is identified by the management is the quality of food and also the availability of different types of beverages.

Importance of Creativity and Innovation within the Small Business Sector

2.0 The Product/ Service

The main product which is offered by the business is good quality food along with sports entertainment (Venter, Wright and Dibb 2015). The pub would be proving the lovers of football a place where they can support their clubs or teams and watch live feed in a thrilling environment.

The management in order to effective analyze the internal and external factors which can have an impact of the business would be applying SWOT analysis. This analysis allows the management of the Pub to effectively identify the strengths, weaknesses, opportunities and threats which are associated with the business.

Source: (Created by the Author)

Strengths

• The pub would be sport related and therefore would be providing live entertainment to football fans in a country where football is highly appreciated (Zyrina 2013).
• The management plans to make the entire pub a Wi-Fi zone which would attract more customers to the pub.
• The business would be providing high quality food products which includes finger food, snacks and all variety of beverages both alcoholic and non-alcoholic in nature.

Weaknesses

• There are numerous other pubs which also offer similar services and therefore there is a serious risk of competitive rivalry among the players in the market.
• The cost overheads which is estimated for the project is very high and therefore the overall profitability is affected.
• The employee turnover in such businesses is very high and therefore it is very difficult to recruit and retain employee for a long period of time.

Opportunity

• The business has the opportunity to expand into new markets and also attract more and more customers to the business.
• The business can penetrate new markets with the efficient services and food products which are offered by the business.

Threats

• The major threats which is faced by the business is from the competitors who provide similar services and experience to the customers.
• The regulations of the government relating to pubs is also an area of concern for the business and cam be regarded as a threat to the business.

PESTLE Analysis is a tool which can be used by the management of the business for the purpose of analyzing the external environment of the business and also ensure whether the same is favorable for the business or not (Marí Romaguera 2016). The analysis of the external environment for a football-based pub is shown below:

• Political Factors: The political factors include the regulations of the government which is related to a pub business (Schmieder-Ramirez and Mallette 2015). Another major impact of the political factors is the effect of the budget on the business for instance, if the government increases the value of alcohol in the yearly budgets, the prices for the beverages which is provided by the pub would be affected. Therefore, political factors are related to the influence which governments and its regulations has on the business.
• Economic Factors: The economic factors which can affect the business are rise in inflationary pressures which directly affects the price of the products of the business, increase in the rate of wages of staff. In addition to this, the advertisement and promotion practices of the pub would also come under economic factors.
• Social Factors: The social factors of the business include the social environment and the atmosphere which is created in the pub. The pub should be located in a localized area where people can easily access the same and football fans can come in for a drink and also for enjoying a game of football.
• Technological Factors: The technological advancement which can be made in the business of Sports pub is making upgradation to the television and sound system in order to create an atmosphere like the stadium (Manoli 2014). During premier league matches the people can also purchase caps and flags to support their respective clubs or teams. The management can bring about changes in the delivery system and also introduce a variety of mocktails.
• Legal Factors: The legal factors of the business incorporate the licensing requirements, lease agreements and contracts which the business enters into with the suppliers. The legal restriction with respect to alcohols is also a legal factor which affect the business.
• Environmental Factors: The environmental techniques which are applied by the business in day to day operations of the business such as recycling and reuse practices. The management needs to comply with the environment codes of conduct.

3.0 Market Segmentation and Targeting

The market segmentation strategy is followed by the business for the purpose of identifying the target market of the business and also formulating strategies for the purpose of targeting such a market. The target market of the business which is identified suggest that around 75% of the populations which is based in Colombo are fans of football and definitely support one club from the premier league (Carlstrom, Fuerst and Paustian 2017). The served market base which the management anticipates would be higher from the region of Colombo. The target market of the business will be football lovers who range between the age of 21 to 50 years of age.

3.1 Objective Identification

The objective of the management of the pub is to attract more customers on a daily basis for not only the match experience but also for the quality and variety of beverages and snacks which is provided by the business. The target market of the business is identified in such a manner that the management can build up a loyal customer base who are football lovers and are mostly locals. The aim of the business is to generate maximum revenue from the operations and the main source of income for the business would be from the sale of beverages in the market.

4.0 Alternatives and Competitors

4.1 Industry Feasibility 

The overall industry of pub, casinos and bars have gain significant popularity over the years and the with changing preferences of the consumers the demand for such businesses will be increasing further over the years (Laamanen 2016). The industry is favorable for such a pub business and in addition to this the business is also creating a sports environment which allows the business to attract sports fans from all over the area. This is an innovative idea wherein fun of watching football match is mixed with facilities which are provided in a pub. Therefore, it is quite natural the business is quite popular in western countries and the same is also developing market in this region.

Business Model and Marketing Planning for Small Businesses

4.1.1 Porter’s Five Force Model

The porter five force model analyzes the five factors which can have an impact on the business and can affect the operations of the business.

• Bargaining Power of the Customers: The bargaining power of the buyers is a matter of concern for most of the business as they are source of revenue for the business. In the case of Pub, the services and the product are customer oriented (E. Dobbs 2014). However, the customers would not have that much of bargaining power as the pub is one of its kind and will be attracting more of the locals who mostly wants to watch a game with some friends.
• Bargaining Power of the Suppliers: The bargaining power of the suppliers would be high as they are providing the main beverages which are costly in nature and the demand is high for such beverages in other bar and casinos as well (Mathooko and Ogutu 2015).
• Threat of New Entrant: The risk of new entrants is high in the business as the industry is quite attractive in nature and therefore, new entrepreneur who wants to open a pub would like to be it sports based (Porter and Heppelmann 2014). Therefore, the management should consider such a factor and differentiate the product and service offered by the business.
• Threat of Substitutes:  The threat of substitute is also high in businesses as the pub business which the management is planning to establish has numerous substitute such as casinos. Normal pubs and Bar cum Restaurants. Therefore, the risk is very high.
• Competitive Rivalry: The rivalry in the market is very high as new businesses are entering the industry. Therefore, the rivalry is high in the market.

The competitive mapping is strategy which is formulated by the business for visualizing the competition, brand, product of the business. The competitive mapping of the business would allow the business to effectively target the customers and also segment the market on the basis of product which is offered by the business.

5.0 Market Entry Strategy

Porter’s Value Chain Analysis

As per Porter’s value chain model, the business has to undertake certain activities in order to create value right from the procurement stage of raw materials until the delivery of services and even post sales services. The porter’s model emphasized that value is created from the start of the process and the figure below shows the elements of Porter’s model.

In case of pub business, the value is created from the service which is provided by the business and also through the snacks which are provided by the business. The primary activities which would be undertaken by the management with a view point of creating value are:

• Inbound Logistics: The raw material which are required such as snacks foods, beverages of different variety including mocktails are obtained from suppliers of the business. The quality of such raw materials are high so value is created in this process it self.
• Operations: The main activity then is serving the customers with the snacks and beverages as per the orders of the customers.
• Outbound Logistics: There is no distributor required in this case and the business would not be providing delivery services so there is no outbound logistics required.
• Marketing and Sales; The marketing of the pub is an important part of value creation and the management plans to undertake promotional tactics for the business.
• Service: The most essential element in a business of Pub is to make the customers welcomed and provide the highest quality of services and create a sports environment in the business.

The secondary activities focuses on support of primary activities of the business:

• Procurement: The procurement of the raw food products and beverages and transport of the same falls under this function.
• Technological Development: In the business, the management plans to provide the latest technology in television experience wise and ensure that appropriate environment is created.
• Human resource management:  This is related to the employees who are employed by the business in day to day management of the company.
• Infrastructure: The building and furniture and equipment fall under this function and they also contribute towards creating value in the business.

Marketing Plan

The marketing plan of the business aims to promote the business in the market and the business would be applying promotional and advertisement techniques in order to attract customers to the business. The opening day would be free for customers and most of the beverages would be on the house. This will be attracting the local customers to the business and thereby also help the business to build a name for themselves in the market.

5.1 Launch Phase

The launch phase of the business would be for a period of 6 to 8 months which would be comprising of the phase where the management need to take a property on rent or lease or even purchase the same. The management then needs to incorporate the start up expenses such as licensing, furniture and equipment purchase, labour recruitment, set up costs. The period would be needed to effectively establish the business. At the initial stage the business would be keeping the beverages to limited and would only keep the products which are demand and also try to keep the costs at its minimum level.

5.2 Long Term Time Period

The long-term goal of the business would be to expand the scale of operations and also the product line which is offered by the business. The variety of beverages which is offered by the business would be increased so that all the pub can match with the tastes of all sort of people. The management also plans to open new pubs with the same orientation in different region with a view of creating a brand name and customer base for the pub.

Developing a Business Plan and Feasible Business Models

6.0 Supply Chain Strategy

In order to effectively market the product and service which is offered by the business, the management has decided to offer discounts and coupons to customers of the Pub on beverages and meal of the day. The management also plans to promote the pub in social media platform and also among the locals by attracting them to football matches with a grand experience.

Inbound Logistics: This function of the management would be including the process which is applied by the business for the purpose of procuring raw materials such as snack products, meat, fish, finger foods from suppliers and also the beverages which are to be imported by the management of the business.

Human Resources Requirement of the Business.

 The major risk which is faced by the business is from the rivals who are operating in the market and rise in the prices of the alcoholic beverages. Another area of risk for the business of Pub is the management of liquidity in the business as there is bound to be shortage of funds in the initial stages of the business. There is also a concern of governmental regulations on the business.

8.1 Risk Mitigation

The management needs to develop an appropriate risk mitigation strategy for the purpose of ensuring that the revenue of the business is not affected in any way by risks of a business. The following points are considered for avoiding or reducing the risks of the business:

• The management plans to develop a uniqueness in its approach in order to attract more and more customers to the business and the main USP of the business is the sport relation and thus this can reduce the risk of rivals
• The management plans to enter into long term contracts which would secure the supply of beverages to the pub and create no shortage.
• The management can take loans for financing the businesses obligations and this can reduce liquidity risks of a business.

The risk management strategy of business complies of risk avoidance principle, risk mitigation, transfer of risks and acceptance of risk. The best approach which can be taken by the pub business is avoidance of risks in the first place and the same can be done by formulating an appropriate strategy.

9.0 Conclusion

The above discussion shows that the business plan which is formulated by the management is feasible in every aspect and the management can therefore proceed with the plan. The management has effectively surveyed the market and identified the target market of the pub for which the business would be trying to built a brand name.

The above discussion also shows that the USP of the business would be the beverages along with the football game which will be on display showing and covering all the major leagues of soccer. The above discussion also shows use of tools like SWOT analysis and PESTLE analysis for external and internal analysis of the market and identify the feasibility of business plan. The financial plan which is developed for the business also looks promising for the two-year period and therefore the management should move forward with the business plan.

Reference

Anderson, C.K. and Xie, X., 2014. Pricing and market segmentation using opaque selling mechanisms. European Journal of Operational Research, 233(1), pp.263-272.

Burns, P., 2016. Entrepreneurship and small business. Palgrave Macmillan Limited.

Carlstrom, C.T., Fuerst, T.S. and Paustian, M., 2017. Targeting long rates in a model with segmented markets. American Economic Journal: Macroeconomics, 9(1), pp.205-42.

Cross, J.C., Belich, T.J. and Rudelius, W., 2015. How marketing managers use market segmentation: An exploratory study. In Proceedings of the 1990 Academy of Marketing Science (AMS) Annual Conference (pp. 531-536). Springer, Cham.

2014. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.

Laamanen, P., 2016. Feasibility analysis of a new business idea: case: Bookertainment.

Manoli, E.A., 2014. The football industry through traditional management analysis.

Marí Romaguera, P., 2016. Strategic planning and management of SMES.

Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other factors that influence the choice of response strategies adopted by public universities in Kenya. International Journal of Educational Management, 29(3), pp.334-354.

Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming competition. Harvard business review, 92(11), pp.64-88.

Schmieder-Ramirez, J. and Mallette, L., 2015. New developments in analysis techniques for organizational transitions. Education Applications & Developments.

Trenberth, L. and Hassan, D. eds., 2013. Managing the Business of Sport: An Introduction. Routledge.

Venter, P., Wright, A. and Dibb, S., 2015. Performing market segmentation: a performative perspective. Journal of Marketing Management, 31(1-2), pp.62-83.

Wilkinson, F. ed., 2013. The dynamics of labour market segmentation. Elsevier.

Zyrina, D., 2013. Developing a business plan for a Family Logistics Company.