Task 1:
In this task of assignment I am going to talk about the benefits of starting your own business. I am also going to give an example of someone who started their own business. (Bill Gates)
Now a days, people have chosen to become self-employed because their jobs are not secured. Therefore, there are a lot of advantages of being self-employed such as:
-Be your own boss which means you can make your own decisions without asking anyone but on the other hand, it also brings its own responsibilities and challenges.
-Making money/profit: Having your own business means you can make money by selling your products or providing services. You should put back some of your profit into your business to survive and the rest you can keep it for yourself. It is your decision how to manage your money; it is either use it to expand your business or merge with other company.
-Create your own success which means your business success is in your hand and it is in your decision; you do not have anyone to blame but yourself, So think twice before you decision and also always be prepared to take the risk.
-Gain new experience in life which means being in business society is a good experience because its improve your self-confident to solve problems which can be your strength too.
All of these are just few examples of being self-employed. Therefore, you need to research about your competitors and make a clear plan for your target market such as: which strategies you may need to encourage customers to buy your products.
Starting up in a business is not easy, but it is challenging for everyone; especially for those people who have passion in business.
Bill Gates is one of examples of successful businessmen in the world, he is the CEO of Microsoft (the largest computer software in the world). He is ranked as the world's wealthiest people from 1995 to 2009; except year 2008 which he was third. In year 2011 he was the wealthiest American and the second wealthiest in the world."He didn't have a proper study plan and he also spent plenty of time using the school's facilities such as computers. Bill Gates remained in touch with Paul Allen. Then, the following year they both saw the release of the MITS Altair 88 00 based on the Intel 8080 CPU and both of them saw the chance to start their own computer software company."
Conclusion: Everyone have got opportunity to be successful in life like other successful businessmen/businesswomen, all we need to do is to work hard and be wise.
Task 2:
In this task of assignment I am going to make a list and explain all the possible benefits for customers and business in developing an online business.
Customer's Benefits:
-Save Time: Customers don’t have to go to the shop, they can
just relax at home and go to the company's website where they can make order
and within 3-5 working days it will get delivered in their house. This is very
convenient for everyone especially for all disabled customers because they do
not need to carry heavy shopping bags. All they need to do is to make order
through online and wait.
-Able to order anytime: Online shopping are available 24/7
which means you can make orders anytime and anywhere. You do not need to wait
in a long queue and waste your time. All you need to do is choose your things
that you want to buy and when you checked out you all you need to do is enter
your card details and it is done.
-Different type of payment methods: Customers can choose
different type of payment methods they can choose paying through Credit/Debit
Cards, Payslips, Paypal, etc. It is also keep your details safe and confidential especially when you register at online website.
-Discounts: Online websites offer massive discounts. It can
be much cheaper buying things online instead of in store products.
Businesses' Benefits:
Having your own website is very convenient for you and for your business because it has 24/7 presence for customers; they can still check and order something anytime from your website. It is also very helpful and useful because you can easily control all the contents of your products such as changing the prices, adding new products, etc.
Task 3:
I am going to analysis of three different aspects (Regulations and Laws, Marketing and Sales & Financial Issues) that will affect business.
Distance Selling Act (DSA): this is one of very well-known policy that have been made in business. The main purpose of the Distance Selling Act is to protect customers’ rights and keep their details safe and confidential from shopping online or making a contract from distance supplier. This happens when customers don’t meet personally. (Source)
This policy provide customers the right to..
- Get proper and
honest information about the products/goods from the supplier.
- An order cancellation period of 7 working days in which means
pull out the contract from the supplier/customer.
- Protection of credit card payment which is to avoid
identity fraud.
Employees’ Minimum Wage: this law helps the employees to
get the right amount of payments from their employers and it helps all the
employers to have ideas on how much do they need to pay their employees depending
on their ages, working hours, etc. (Source)
The Current National Minimum Wage Rates
There are currently aged based national minimum wage rates
and an apprentice rate, which is always updated every month of October every
year. The rates have been applied from 1st October 2012. These are..
-21 years old and above: £6.19 per hour
-18 years old to 20
years old: £4.98 per hour
-Under 18 years old: £3.68 per hour
-Apprentices: £2.65 per hour
Partnership: are two or more people own the company and share the
risk, cost, profits and business responsibilities. They have equal rights on
making decisions. Therefore, partners are both in the risk once the business
fails. (Source)
-Business set-up: Each person who involves in this business partnership needs to sign a
partnership agreement/contract and also need to register with the Inland
Revenue as self-employed.
-Management and raising finance: The people who are involve
in this partnership should invest large amount of money for the business and
they should also always be ready to face all the problems that they may have,
including financial problems.
-Tax and National Insurance: As partners are self-employed,
they will be taxed based on their profit share. Each of them needs to pay
fixed-rate Class 2 National Insurance contributions (NICs) and Class 4 NICs.
-Profits: Partners share the money they gained.
Private Limited Company: Control and own by directors and shareholder.
If the business fails, they only loose the money they invested and they are not
responsible for any debts of the company. The worst part is they can't sell their shares to the public (stock exchange). (Source)
-Business Set-up: Private Limited Company must be legally registered
(incorporated) at Companies House.
-Management and Finance: Board of directors or shareholders,
depends who is the majority make the management decisions. Finance comes from
shareholders, borrowing and retained profits.
*Public Limited Companies raise money by selling shares on the stock market,
but private limited companies cannot.
-Profits: Their profits are divided to shareholders.
-Tax and National Insurance: The company pays the corporation tax
and must make an annual return to the Inland Revenue.
*Company directors are employees of the company and they
should pay Class 1 NI contributions as well as income tax on their salaries.
Payment of Taxes: Any business should go to HM Revenue &
Customs (HMRC) to enquire about being self-employed. (Source)
There are two different types of corporation taxes rates that
business should pay on time with the right amount. These are:
- Small company business rate of 19% on profits of £0 to £300,000
- Main rate of 30% of profits over £11.5 million
Income Tax: As a sole trader they will need to submit an
annual self-assessment form to the Inland Revenue and keep accurate and up-to-date
records of all business transactions and accounts. They will also need to pay
income tax and National Insurance contribution any on profits. Losses can be
offset against tax on other income.
National Insurance: The contributions are collected by HMRC
from employed people and are linked to contributory benefits such as the state
pension. There are various classes of contributions payable over a certain
earnings which can affect the entitlement to benefits at later stage.
Marketing and Sales
Online Marketing Campaign: There are a lot of different ways
for marketing online such as Social Networks: It is very effective way to
advertise your business and your products too because the adverts fee is very
cheap and it is tailored and the targeted marketing is very specify this is
very effective and efficient to use because it saves your time and money.
Joining in social networks doesn't cost you anything; it is free to make your
own profile/page.
Adverts in a Major Newspaper: This is another way to
advertise the business you may catch a lot of peoples’ attention but on the
other hand this kind of advert may cost you a lot of money it may be expensive
or not depending the size you want; it should be eye-catching but simple.
How to encourage repeat customer? (Source)
Business can be successful because of repeated sales or
repeated customers to make it happens you must be devoted to your customers,
making them come to you than other businesses that might offer the same service
or products of yours. Make sure you stand out and you offer something more or
different to set you apart from your other competitor, it maybe by your great
customer service, competitive prices range or quality of your products or
service.
You can offer them loyalty card by giving them good discount
every time they spend more £75 buying your product or they can also collect points
that they can use in the future to get extra discount when they purchase stuff,
this might help you to encourage them to keep them coming back and even expand
the number of customers with the word of mouth referral.
Make sure to have a good business reputation, so you can attract
and encourage customer to buy your products and the most important is that your
employees should be also polite, friendly and always willing to help. Gain your
customers trust is very important and also make sure you do satisfaction
survey/check to all the customers to make sure that they are happy with your products
or service and if they have any problem don’t get scared, be polite and try to
be friendly and ask them if is it
everything alright or what/how can you help them?
What I would do if sales were low?
If the business sales are low, there’s might be something going
wrong with the products/goods or services. Business may need some changes on
advertising or new different marketing strategy.
At the moment, I am going to research every detail that can
possible affects the business. I am also going to research about my competitors
in that way I can get ideas on how to improve the products/sells or services
that I provide. I think I should try online marketing, because now a days a lot
of people do online shopping, I can also do some offers such us 30% discount on
selected items or buy 1 get 1 half price. Therefore, the most important thing
is I will try to reduce my costs as possible as I can.
Financial Issues
Borrowing money from family and friends: This is a good way
of getting money because you don’t need to pay them straight away. You only
need to pay them when you are ready; when you have your money and when you pay
them back you don’t pay extra which means no interest. Therefore, the money that
you borrowed from your family can also invest in your business if they want to
be part of your business and it can be a successful business but on the other
hand, they can be very disappointed and they may think that they just threw
their money once the business fails.
-Borrowing money from the bank: When you borrow from the bank
they ask you a lot of requirements that you may need to present to see if you
are able to pay them back when they give you the money. However, you will have
to pay the bank monthly and the worst part is paying them back with interest. They will also ask you to give them a copy of
your business plan so, they know where or in what will you spend your money.
This this is a good thing for some reason because once they grant your request,
you have the chance to change your lifestyle and your future.
-Costs greater than profits: Meaning of this is that you can
be in debts and you might not be able to cover your next operating cost (for
stock and other monthly costs). To ensure that you balance this out you should
increase the number of sales and research about your other business competitor
and start doing some changes that will help you to improve your business for
better.
-Not maintaining accurate financial records: for not
maintaining accurate financial records could possible affects your business
because of all inaccurate figures; if your business costs aren't calculated
properly you may lose money and the risk that you won’t have enough sales to
cover up and because of the wrong calculation of profits you won’t able to do
your break-even which means, will cause you in trouble.
The financial report/record is very important to see if your
business is doing better or not and also to get information about your yearly cost
budget.
