Lakhasly

YOU AND YOUR TEAM 33 Checking out your entrepreneurial strengths You can find out more about your likely strengths and weakness as an entre?preneur by taking one or more of the many online entrepreneurial IQ-type tests.(In practice you would be wise to take professional advice before doing so.) Partnerships Partnerships are effectively collections of sole traders, and as such, share the legal problems attached to personal liability. By pooling resources you may have more capital; you should be bringing several sets of skills to the business; and if you are ill the business can still carry on. There are two serious drawbacks that merit particular attention. First, if your partner makes a business mistake, perhaps by signing a disastrous contract, without your knowledge or consent, every member of the partner?ship must shoulder the consequences. Under these circumstances your personal assets could be taken to pay the creditors even though the mistake was no fault of your own. Second, if your partner goes bankrupt in his or her personal capacity, for whatever reason, his or her share of the partnership can be seized by credi?tors. As a private individual you are not liable for your partner's private debts, but having to buy him or her out of the partnership at short notice could put you and the business in financial jeopardy. Even death may not release you from partnership obligations, and in some circumstances your estate can remain liable. Unless you take 'public' leave of your partnership by notifying your business contacts and legally bringing your partnership to an end, you could remain liable. The legal regulations governing this field are set out in the Partnership Act 1890, which in essence assumes that competent businesspeople should know what they are doing. The Act merely provides a framework of agreement that STRATEGY AND PURPOSE 38 applies 'in the absence of agreement to the contrary'. It follows from this that many partnerships are entered into without legal formalities - and some?times without the parties themselves being aware that they have entered a partnership! The main provisions of the Partnership Act state that: ? All partners contribute capital equally. ? All partners share profits and losses equally. ? No partner shall have interest paid on his/her capital. ? No partner shall be paid a salary. ? All partners have an equal say in the management of the business. It is unlikely that all these provisions will suit you, so you would be well advised to get a 'partnership agreement' drawn up in writing by a solicitor at the outset of your venture. One possibility that can reduce the more painful consequences of enter?ing a partnership as a 'sleeping partner' is to have your involvement registered as a limited partnership. Cooperative A cooperative is an enterprise owned and controlled by the people working in it. Once in danger of becoming extinct, the workers' cooperative is enjoy?ing a resurgence, with over 9,000 operating in the United Kingdom as of January 2024, employing 1.3 million people. They are growing at a rate of 2.8 per cent per annum. Cooperatives are governed by the Industrial and Provident Societies Act 1965, whose main provisions state: ? Each member of the cooperative has equal control through the principle of 'one person one vote'. ? Membership must be open to anyone who satisfies the stipulated qualifications. ? Profits can be retained in the business or distributed in proportion to members' involvement, e.g. hours worked. ? Members must benefit primarily from their participation in the business. YOU AND YOUR TEAM 39 ? Interest on loan or share capital is limited in some specific way, even if the profits are high enough to allow a greater payment. It is certainly not a legal structure designed to give entrepreneurs control of their own destiny and maximum profits. However, if this is to be your chosen legal form you can pay from GBP90 to register with the Chief Registrar of Friendly Societies, and must have at least seven members at the outset. They do not all have to be full-time workers at first. Like a limited company, a registered cooperative has limited liability (see under 'Limited liability companies') for its members and must file annual accounts, but there is no charge for this.STRATEGY AND PURPOSE 42 Suggested further reading Adair, J (2007) The Art of Creative Thinking: How to be innovative and develop great ideas, Kogan Page, London Bridge, R (2009) How I Made It: 40 successful entrepreneurs reveal how they made millions, Kogan Page, London Pullan, P and Archer, J (2013) Business Analysis and Leadership, Kogan Page, London Watkins, A (2015) 4D Leadership: Competitive advantage through vertical leadership development, Kogan Page, London Widdowson, L and Barbour, P J (2025) Building Top-Performing Teams: A practical guide to team coaching for organizational success, Kogan Page, London 43 PHASE TWO Market research 44 THIS PAGE IS INTENTIONALLY LEFT BLANK Introduction Assignments 4-6 are intended to help you to bring your customers, competi?tors and the marketplace more sharply into focus, and to identify areas you have yet to research. As a sole trader there is no legal distinction between you and your busi?ness - your business is one of your assets, just as your house or car is. It follows from this that if your business should fail, your creditors have a right not only to the assets of the business, but also to your personal assets, YOU AND YOUR TEAM 37 subject only to the provisions of the Bankruptcy Acts (these allow you to keep only a few absolutely basic essentials for yourself and family).REAL-WORLD EXAMPLE Tesla Elon Musk, the visionary entrepreneur behind Tesla, made strategic decisions in five areas when choosing a business name that contributed to the company's global impact.Each of these forms is explained briefly below, together with the procedure to follow on setting them up. Relative business populations As of early 2024, there were approximately 5.5 million active businesses in the UK, a slight decrease from the peak of 6 million in 2020.The UK private sector business population comprised 3.1 million sole proprietorships (56 per cent of the total), 2.1 million actively trading companies (38 per cent) and 356,000 ordinary partnerships (6 per cent).They started with 'BackRub', as their algorithms checked backlinks to estimate the importance of a site, but moved on to use Google, a misspelling of the word 'googol' - the number one followed by 100 zeros.It means you (or your partner) can play no active part in running the business, but your risks are limited to the capi?tal that you put in. Unless you are a member of certain professions (e.g. law, accountancy) you are restricted to a maximum of 20 partners in any partnership.That will ensure management in depth, thus providing cover for every?thing from illness to expansion, and guaranteeing some stability during the turbulent early years.Your business plan should explain clearly what the ideal composi?tion of key managers should be for your business; who you have identified, or recruited so far; and last but certainly not least, how you will motivate them to remain with you and perform well for at least the first few all?important years.This information has to be shown on all busi?ness letters, orders for goods and services, invoices and receipts, and statements and demands for business debts.By associating with Tesla's legacy, Elon Musk positioned his electric car company as a symbol of innovation and forward-thinking technology.It represented a departure from gasoline-powered vehicles and emphasized electric mobility.Elon Musk's choice of the name 'Tesla' encapsulated innovation, simplicity and a commitment to a greener future.Most new businesses start as sole traders and, if successful, transition to limited liability companies to benefit from legal protections.Sole trader The vast majority of new businesses set up each year in the United Kingdom choose to do so as sole traders.YOU AND YOUR TEAM 41 TABLE 3.1 Sales history of Notonthehighstreet Year Sales (GBP000) 1 100 2 1,000 3 2,500 (forecast) For a joining fee of GBP450 suppliers can promote their products on Notonthehighstreet's website for five years.A couple of sources can be found in the Index of key organizations and resources for business planning at the end of the book, but an entry in Google will produce a small torrent!Jeff Bezos originally chose Cadabra as the name for his business - as in abracadabra - summing up the magic of being able to find any book online.PayPal, Body Shop, Toys R Us and Kwik-Fit are other good examples of names that sum up the essence of their businesses.Google, though a colossally successful venture, struggled in arriving at a meaningful business name.Your company name can be the starting and sustaining point in differen?tiating you from your competitors, and as such it should be carefully chosen, be protected by trademarks where possible and be written in a distinctive way.In 2009, limited companies made up 26 per cent of the business population, partnerships 12 per cent and sole traders 62 per cent.Not all cooperatives bother to register, as it is not mandatory, in which case they are treated in law as a partnership with unlimited liability.Spark pumped in a sizeable six-figure sum, taking a minority stake in the business which allowed it to plan to more than double sales in its third year of operations (see Table 3.1).Building the team Not surprisingly, an investor's ideal proposal includes an experienced and balanced management team, who have all worked together for a number of years.But at the time, 'geeks' populated the internet, and the name caught on. Your business name is almost always the first way people get to hear about your venture and it needs to convey the essence of the business quickly and clearly.It will be accepted unless there is another company with that name on the register or the Registrar considers the name to be obscene, offensive or illegal.The name 'Tesla' pays homage to Nikola Tesla, the brilliant inventor and engineer.Tesla evokes positive associations related to electricity, clean energy and sustainability.In a market where traditional automakers dominated, Tesla's name signalled disruption.This has the merit of being relatively formality-free, and unless you intend to register for VAT, there are few rules about the records you have to keep.There are very few restrictions to setting up in business with another person (or persons) in partnership, and several definite advantages.Limited liability companies In the United Kingdom, before the 1895 Companies Act it was necessary to have an Act of Parliament or a Royal Charter in order to set up a company.The shareholders of the business are not liable as individuals for the business debts beyond the paid-up value of their shares.This applies even if the shareholders are working directors, unless of course the company has been trading fraudulently.Certainly investors will look for reassurance in this respect and will expect to see more reference to the steps you will take to encourage loyalty.After a few phone calls to canvas opinions, he ditched Cadabra as it was too easily confused with 'Cadaver'!He settled on Amazon, STRATEGY AND PURPOSE 34 figuring that most people thought it to be the largest river in the world, and he wanted to convey the image of having the 'Earth's Biggest Book Store'.It's unlikely that many people outside the Stanford University campus (where the founders developed their business idea) would have any idea what a googol was or why it would help describe the biggest search engine.It follows therefore that the main consideration in choosing a business name is its commercial usefulness. how you do it. Given all the marketing investment you will make in your company name, you should check with a trademark agent whether you can protect your chosen name (descriptive words, surnames and place names are not normally allowed except after long use).Second, all businesses that intend to trade under names other than those of their owner(s) must state who does own the business and how the owner YOU AND YOUR TEAM 35 surnames with or without forenames or initials, you are not affected.If any name other than the 'true' name is to be used, then you must disclose the name of the owner(s) and an address in the United Kingdom to which business documents can be sent.If you are setting up as a limited company you will have to submit your choice of name to the Companies Registration Office along with the other documents required for registration.Innovation.????

YOU AND YOUR TEAM 33
Checking out your entrepreneurial strengths
You can find out more about your likely strengths and weakness as an entre￾preneur by taking one or more of the many online entrepreneurial IQ-type
tests. A couple of sources can be found in the Index of key organizations and
resources for business planning at the end of the book, but an entry in
Google will produce a small torrent!
Building the team
Not surprisingly, an investor’s ideal proposal includes an experienced and
balanced management team, who have all worked together for a number of
years. That will ensure management in depth, thus providing cover for every￾thing from illness to expansion, and guaranteeing some stability during the
turbulent early years. For this reason management buy-outs are a firm favourite.
At the other end of the scale is the lone inventor whose management
skills may be in doubt, and who is anyway fully stretched getting his or her
product from the drawing board to the production line. This type of proposal
is unlikely to attract much investment capital. It has obvious risks beyond
those every company expects to experience in the marketplace. In any case,
without a management team in place the business is ill-prepared for the
rapid growth required to service an investor’s funds.
In practice, most business proposals lie somewhere between these
extremes. Your business plan should explain clearly what the ideal composi￾tion of key managers should be for your business; who you have identified,
or recruited so far; and last but certainly not least, how you will motivate
them to remain with you and perform well for at least the first few all￾important years.
Certainly investors will look for reassurance in this respect and will
expect to see more reference to the steps you will take to encourage loyalty.
Your business name
A good name can, in effect, become a one- or two-word summary of your
business strategy. Jeff Bezos originally chose Cadabra as the name for his
business – as in abracadabra – summing up the magic of being able to find
any book online. After a few phone calls to canvas opinions, he ditched
Cadabra as it was too easily confused with ‘Cadaver’! He settled on Amazon,
STRATEGY AND PURPOSE 34
figuring that most people thought it to be the largest river in the world, and
he wanted to convey the image of having the ‘Earth’s Biggest Book Store’.
PayPal, Body Shop, Toys R Us and Kwik-Fit are other good examples of
names that sum up the essence of their businesses. Google, though a colossally
successful venture, struggled in arriving at a meaningful business name. They
started with ‘BackRub’, as their algorithms checked backlinks to estimate the
importance of a site, but moved on to use Google, a misspelling of the word
‘googol’ – the number one followed by 100 zeros. This was chosen to convey
the idea of large quantities of information being sifted for useful data. It’s
unlikely that many people outside the Stanford University campus (where the
founders developed their business idea) would have any idea what a googol
was or why it would help describe the biggest search engine. But at the time,
‘geeks’ populated the internet, and the name caught on.
Your business name is almost always the first way people get to hear about
your venture and it needs to convey the essence of the business quickly and
clearly. Once you have to start explaining what you do, the job of communi￾cating gets harder. As you are going to have to put some effort into creating
this name and that of your web presence (domain name) if you plan to have
one, it makes good sense to take some steps to protect your investment.
Your company name can be the starting and sustaining point in differen￾tiating you from your competitors, and as such it should be carefully chosen,
be protected by trademarks where possible and be written in a distinctive
way. It follows therefore that the main consideration in choosing a business
name is its commercial usefulness.
When you choose a business name, you are also choosing an identity so
it should reflect:
● who you are;
● what you do;
● how you do it.
Given all the marketing investment you will make in your company name,
you should check with a trademark agent whether you can protect your
chosen name (descriptive words, surnames and place names are not normally
allowed except after long use).
First, anyone wanting to use a ‘controlled’ name will have to get permis￾sion. There are some 80 or 90 controlled names, which include words such
as ‘International’, ‘Bank’ and ‘Royal’. This is simply to prevent a business
implying that it is something that it is not.
Second, all businesses that intend to trade under names other than those
of their owner(s) must state who does own the business and how the owner
YOU AND YOUR TEAM 35
surnames with or without forenames or initials, you are not affected.
Companies are also not affected if they simply use their full corporate name.
If any name other than the ‘true’ name is to be used, then you must disclose
the name of the owner(s) and an address in the United Kingdom to which
business documents can be sent. This information has to be shown on all busi￾ness letters, orders for goods and services, invoices and receipts, and statements
and demands for business debts. Also, a copy has to be displayed prominently
on all business premises. The purpose of the Companies Act requirements is
simply to make it easier to ‘see’ who you are doing business with.
If you are setting up as a limited company you will have to submit your
choice of name to the Companies Registration Office along with the other
documents required for registration. It will be accepted unless there is
another company with that name on the register or the Registrar considers
the name to be obscene, offensive or illegal.
Changing your name
It’s not the end of the world if you decide after a year or so that your busi￾ness name is not quite right. But you will have largely wasted any earlier
marketing effort in building up awareness.
REAL-WORLD EXAMPLE
Tesla
Elon Musk, the visionary entrepreneur behind Tesla, made strategic decisions in five
areas when choosing a business name that contributed to the company’s global
impact.
● Innovation. The name ‘Tesla’ pays homage to Nikola Tesla, the brilliant inventor
and engineer. By associating with Tesla’s legacy, Elon Musk positioned his electric
car company as a symbol of innovation and forward-thinking technology.
● Simplicity. The name is short, memorable and easy to pronounce. It stands out in
an industry dominated by complex automotive brand names.
● Positive connotations. Tesla evokes positive associations related to electricity, clean
energy and sustainability. It aligns perfectly with the company’s mission to
accelerate the world’s transition to sustainable energy.
● Differentiation. In a market where traditional automakers dominated, Tesla’s name
signalled disruption. It represented a departure from gasoline-powered vehicles
and emphasized electric mobility.
STRATEGY AND PURPOSE 36
● Global appeal. The name works internationally without translation issues. Tesla’s
global expansion was helped by a universally recognizable brand.
Elon Musk’s choice of the name ‘Tesla’ encapsulated innovation, simplicity and a
commitment to a greener future.
Deciding the legal form of your business
Before you start trading you will need to consider what legal form your
business will take. There are four main forms that a business can take, and
the one you choose will depend on a number of factors: commercial needs,
financial risk and your tax position. Each of these forms is explained briefly
below, together with the procedure to follow on setting them up.
Relative business populations
As of early 2024, there were approximately 5.5 million active businesses in the
UK, a slight decrease from the peak of 6 million in 2020. The UK private sector
business population comprised 3.1 million sole proprietorships (56 per cent of
the total), 2.1 million actively trading companies (38 per cent) and 356,000
ordinary partnerships (6 per cent). Most new businesses start as sole traders
and, if successful, transition to limited liability companies to benefit from legal
protections. In 2009, limited companies made up 26 per cent of the business
population, partnerships 12 per cent and sole traders 62 per cent. By the end of
2024, these proportions had shifted to 30 per cent, 64 per cent and 6 per cent
respectively.
Sole trader
The vast majority of new businesses set up each year in the United Kingdom
choose to do so as sole traders. This has the merit of being relatively
formality-free, and unless you intend to register for VAT, there are few rules
about the  records you have to keep. There is no requirement for your
accounts to be audited, or for financial information on your business to be
filed at Companies House.
As a sole trader there is no legal distinction between you and your busi￾ness – your business is one of your assets, just as your house or car is.
It follows from this that if your business should fail, your creditors have a
right not only to the assets of the business, but also to your personal assets,
YOU AND YOUR TEAM 37
subject only to the provisions of the Bankruptcy Acts (these allow you to
keep only a few absolutely basic essentials for yourself and family).
It is possible to avoid the worst of these consequences by ensuring that
your private assets are the legal property of your spouse, against whom your
creditors have no claim. (You must be solvent when the transfer is made,
and that transfer must have been made at least two years prior to your
business running into trouble.) However, to be effective such a transfer must
be absolute and you can have no say in how your spouse chooses to dispose
of his or her new-found wealth!
The capital to get the business going must come from you – or from loans.
There is no access to equity capital, which has the attraction of being risk-free.
In return for these drawbacks you can have the pleasure of being your own
boss immediately, subject only to declaring your profits on your tax return. (In
practice you would be wise to take professional advice before doing so.)
Partnerships
Partnerships are effectively collections of sole traders, and as such, share the
legal problems attached to personal liability. There are very few restrictions
to setting up in business with another person (or persons) in partnership,
and several definite advantages. By pooling resources you may have more
capital; you should be bringing several sets of skills to the business; and if
you are ill the business can still carry on.
There are two serious drawbacks that merit particular attention. First, if
your partner makes a business mistake, perhaps by signing a disastrous
contract, without your knowledge or consent, every member of the partner￾ship must shoulder the consequences. Under these circumstances your
personal assets could be taken to pay the creditors even though the mistake
was no fault of your own.
Second, if your partner goes bankrupt in his or her personal capacity, for
whatever reason, his or her share of the partnership can be seized by credi￾tors. As a private individual you are not liable for your partner’s private
debts, but having to buy him or her out of the partnership at short notice
could put you and the business in financial jeopardy. Even death may not
release you from partnership obligations, and in some circumstances your
estate can remain liable. Unless you take ‘public’ leave of your partnership
by notifying your business contacts and legally bringing your partnership to
an end, you could remain liable.
The legal regulations governing this field are set out in the Partnership Act
1890, which in essence assumes that competent businesspeople should know
what they are doing. The Act merely provides a framework of agreement that
STRATEGY AND PURPOSE 38
applies ‘in the absence of agreement to the contrary’. It follows from this that
many partnerships are entered into without legal formalities – and some￾times without the parties themselves being aware that they have entered a
partnership!
The main provisions of the Partnership Act state that:
● All partners contribute capital equally.
● All partners share profits and losses equally.
● No partner shall have interest paid on his/her capital.
● No partner shall be paid a salary.
● All partners have an equal say in the management of the business.
It is unlikely that all these provisions will suit you, so you would be well
advised to get a ‘partnership agreement’ drawn up in writing by a solicitor
at the outset of your venture.
One possibility that can reduce the more painful consequences of enter￾ing a partnership as a ‘sleeping partner’ is to have your involvement
registered as a limited partnership. It means you (or your partner) can play
no active part in running the business, but your risks are limited to the capi￾tal that you put in.
Unless you are a member of certain professions (e.g. law, accountancy)
you are restricted to a maximum of 20 partners in any partnership.
Cooperative
A cooperative is an enterprise owned and controlled by the people working
in it. Once in danger of becoming extinct, the workers’ cooperative is enjoy￾ing a resurgence, with over 9,000 operating in the United Kingdom as of
January 2024, employing 1.3 million people. They are growing at a rate of
2.8 per cent per annum.
Cooperatives are governed by the Industrial and Provident Societies Act
1965, whose main provisions state:
● Each member of the cooperative has equal control through the principle
of ‘one person one vote’.
● Membership must be open to anyone who satisfies the stipulated
qualifications.
● Profits can be retained in the business or distributed in proportion to
members’ involvement, e.g. hours worked.
● Members must benefit primarily from their participation in the business.
YOU AND YOUR TEAM 39
● Interest on loan or share capital is limited in some specific way, even if the
profits are high enough to allow a greater payment.
It is certainly not a legal structure designed to give entrepreneurs control of
their own destiny and maximum profits. However, if this is to be your chosen
legal form you can pay from £90 to register with the Chief Registrar of
Friendly Societies, and must have at least seven members at the outset. They
do not all have to be full-time workers at first. Like a limited company, a
registered cooperative has limited liability (see under ‘Limited liability
companies’) for its members and must file annual accounts, but there is no
charge for this. Not all cooperatives bother to register, as it is not mandatory,
in which case they are treated in law as a partnership with unlimited liability.
Limited liability companies
In the United Kingdom, before the 1895 Companies Act it was necessary to
have an Act of Parliament or a Royal Charter in order to set up a company.
Now, out of the 5.5 million businesses trading in the UK, over 1.4 million are
limited companies. As the name suggests, in this form of business your liability
is limited to the amount you state that you will contribute by way of share
capital (although you may not actually have to put that money in!).
A limited company has a legal identity of its own, separate from the people
who own or run it. This means that, in the event of failure, creditors’ claims
are restricted to the assets of the company. The shareholders of the business
are not liable as individuals for the business debts beyond the paid-up value
of their shares. This applies even if the shareholders are working directors,
unless of course the company has been trading fraudulently. (In practice, the
ability to limit liability is severely restricted these days as most lenders, includ￾ing the banks, often insist on personal guarantees from the directors.) Other
advantages include the freedom to raise capital by selling shares.
Disadvantages include the cost involved in setting up the company and
the legal requirement in some cases for the company’s accounts to be audited
by a chartered or certified accountant. As of 2024, UK businesses with assets
approaching £5.1 million generally qualify for audit exemptions. However,
if shareholders owning more than 10 per cent of the company request an
audit in writing, the company must comply with the request. You can find
out the latest information on auditing small firms either from your account￾ant or by searching for ‘running a limited company’ on the GOV.UK website.
A limited company can be formed by two shareholders, one of whom
must be a director. A company secretary must also be appointed, who can be
a shareholder, director or an outside person such as an accountant or lawyer.
STRATEGY AND PURPOSE 40
The company can be bought ‘off the shelf’ from a registration agent, then
adapted to suit your own purposes. This will involve changing the name,
shareholders and articles of association, and will cost about £250 and take
a couple of weeks to arrange. Alternatively, you can form your own company,
using your solicitor or accountant. This will cost around £500 and take six
to eight weeks.
The behaviour of companies and their directors is governed by the vari￾ous Companies Acts that have come into effect since 1844, the latest of
which came into effect in November 2006.
Past achievements
If your business has already been trading for some time, your business plan
should include a summary of past results and achievements. Annual reports,
audited accounts, etc, if voluminous, can be included in an appendix, and
referred to in this section of your business plan. Otherwise they can be
shown in detail. You should emphasize what you have learnt so far that
convinces you that your strategies are soundly based.
REAL-WORLD EXAMPLE
Notonthehighstreet Enterprises Limited
When Holly Tucker and Sophie Cornish decided that a business selling well-designed,
high-quality products that cannot easily be found on the high street was a good
business idea, choosing a name for their venture was the easy bit. Notonthehighstreet
was distinct and captured the essence of their proposition. The aim was to bring
together businesses that lacked the resources to have an effective presence on the
high street and put them all under one roof, spreading the cost base accordingly. The
‘one roof’ as a physical concept was ditched in favour of the internet at the early
planning stage.
Their first draft of the business plan called for a £40,000 investment, but within
months of starting up that grew to £140,000. After scrabbling around family, loans
and bank overdrafts to fund the first year’s growth they pitched to Spark Ventures,
an early-stage venture capital company that includes Brent Hoberman, co-founder of
Lastminute.com, in its portfolio.
Spark pumped in a sizeable six-figure sum, taking a minority stake in the
business which allowed it to plan to more than double sales in its third year of
operations (see Table 3.1).
YOU AND YOUR TEAM 41
TABLE 3.1 Sales history of Notonthehighstreet
Year Sales (£000)
1 100
2 1,000
3 2,500 (forecast)
For a joining fee of £450 suppliers can promote their products on Notonthehighstreet’s
website for five years. Notonthehighstreet also takes a 20 per cent slice of any sales
generated. It offers a tailored audience and a professional web presence that small
firms would find hard if not impossible to emulate without spending tens of thousands
of pounds. The site has been voted a top 50 website by the Independent magazine.
It’s hardly surprising then that the business hit £6.4 million turnover in year
two and in 2010 they reached £14 million. The business hired Jason Weston,
formerly of Amazon, as COO and Mark Hodson from PayPal in 2011. The company’s
latest accounts filed in March 2019 show turnover had reached £139 million.
WORKSHEET FOR ASSIGNMENT 3: YOU AND YOUR TEAM
1 How did you arrive at your new idea?
2 What is your business name and why have you chosen it?
3 What experience and skills do you have that are particularly relevant to this
venture?
4 Who else will be working with you and what relevant experience and skills
do they have?
5 What professional advisers (accountant, lawyer, patent agent, etc) have you
used, or do you plan to use?
6 Under what legal form will you trade and why?
7 If your business is already trading, give a brief summary of financial and
marketing results and achievements to date.
STRATEGY AND PURPOSE 42
Suggested further reading
Adair, J (2007) The Art of Creative Thinking: How to be innovative and develop
great ideas, Kogan Page, London
Bridge, R (2009) How I Made It: 40 successful entrepreneurs reveal how they
made millions, Kogan Page, London
Pullan, P and Archer, J (2013) Business Analysis and Leadership, Kogan Page,
London
Watkins, A (2015) 4D Leadership: Competitive advantage through vertical
leadership development, Kogan Page, London
Widdowson, L and Barbour, P J (2025) Building Top-Performing Teams: A
practical guide to team coaching for organizational success, Kogan Page,
London
43
PHASE TWO
Market research
44
THIS PAGE IS INTENTIONALLY LEFT BLANK
Introduction
Assignments 4–6 are intended to help you to bring your customers, competi￾tors and the marketplace more sharply into focus, and to identify areas you
have yet to research. The research should be done before the business is started
or a new strategy is pursued, so saving the time and cost incurred if expensive
mistakes are made. Obviously, the amount of research undertaken has to be
related to the sums at risk. If a venture calls for a start-up investment of
£/$/€1,000, spending £/$/€5,000 on market research would be a bad invest￾ment. However, new and small businesses that do not want to join the
catastrophically high first-year failure statistics would be prudent to carry out
some elementary market research, whatever level their start-up capital is to be.
As a President of the Harvard Business School said: ‘If you think
knowledge is expensive, try ignorance.’
The starting point in any market research has to be a definition of the
scope of the market you are aiming for. A small general shop may only
service the needs of a few dozen streets. A specialist restaurant may have to
call on a much larger catchment area to be viable.
You may eventually decide to sell to different markets. For example, a
retail business can serve a local area through the shop and a national area by
mail order. A small manufacturing business could branch out into exporting.
People all too often flounder in their initial market research by describing
their markets too broadly: for example, saying that they are in the motor
industry when they really mean they sell second-hand cars in Perth; or saying
they are in health foods, when they are selling wholemeal bread from a village
shop. While it is important to be aware of trends in the wider market, this
must not obscure the need to focus on the precise area that you have to serve.
The purpose of gathering the market research data is to help you decide
on the right marketing strategy when it comes to such factors as setting your
45
MARKET RESEARCH 46
price, deciding on service and quality levels and choosing where and how
much to advertise. Assignments 4 and 5 pose the main questions you need
to answer concerning your customers and competitors, and Assignment 6
covers the principal ways in which basic market research can be conducted,
and where such data can be found.
47
ASSIGNMENT 4
Researching customers
Without customers no business can get off the ground, let alone survive.
Some people believe that customers arrive after the firm ‘opens its doors’.
This is nonsense. You need a clear idea in advance of who your customers
will be, as they are a vital component of a successful business strategy, not
simply the passive recipients of new products or services.
Knowing something about your customers and what you plan to sell to
them seems so elementary it is hard to believe that any potential businessperson could start a business without doing so. But it is all too common, and
one of the reasons many new businesses fail.
Recognizing customer needs
The founder of a successful cosmetics firm, when asked what he did, replied,
‘In the factories we make perfume, in the shops we sell dreams.’
Those of us in business usually start out defining our business in physical
terms. Customers on the other hand see businesses having as their primary
value the ability to satisfy their needs. Even firms that adopt customer satisfaction, or even delight, as their maxim often find it a more complex goal
than it at first appears. Take Ella’s Kitchen, the real-world example that
follows, for example. Their end customer, babies, were carefully considered
when designing their product, though they were not the actual purchasers.
They were the parents concerned.
Until you have clearly defined the needs of your market(s) you cannot
begin to assemble a product or service to satisfy them.