Establishing a New Venture: Partnership Business

The report provides an overview of starting a new venture, focusing on the partnership business structure. It highlights the advantages of partnering with others to share profit/losses and utilize distinct skills/knowledge. The case study '7th Heaven' bakery shop is used to illustrate the effectiveness of this approach.

Launching a New
Venture

INTRODUCTION
Every organisation always tried to enter at international market with an objective of
achieving huge market share as well as profitability. For this, a successful entrepreneurs first
make an appropriate market research of such nation where they decide to reach their newly
business. It assist them in identifying the products and services which are more in demand. The
decision of entering into new market may faces difficulties to sustain due to influencing factors
exist in business environment which are fluctuated on frequent basis. The present assignment is
based on new venture named as "7th Heaven" which is a bakery shop opened by a successful
entrepreneur in Germany. It is engaged in manufacturing and selling wide range of bakery
products such as pancakes, cookies, pastries etc. Organic chocolate is one of the famous bakery
item in their offering list which assist them in capturing the needs of health conscious customers.
The project discusses the specific target market along with an appropriate competitive analysis.
Types of resources needed to start a new venture and formulation of credible proposal are also
briefly discussed under this report. The project also summarises skills and capabilities, Cash
Budget, promotional activities.
TASK 1
P1: Identification of specific target market and competitive analysis
"7th Heaven" is newly established venture which is decided to enter into Germany market
with wide range of bakery products such as pancakes, cookies, pastries, organic chocolates etc. It
mainly targeted health conscious people who prefer to consume less sugar and high nutrition
products. An entrepreneur decides to locate its newly venture business in Berlin city of Germany
due to having huge number population which indirectly supports in achieving huge customer
strength and profitability. While making research on the needs and requirements of people in
Germany, it has been identified that they took quality and healthy products as main priority over
price of products. It also came to know through collecting information from online sources that
Germany customers have begun to opt for organic chocolate which contains cocoa content than
traditional milk chocolates and also provides lower sugar levels with no artificial colours.
Therefore, to capture their needs and preferences, an entrepreneur decided to start new Bakery
shop in which they start to provide organic chocolate in order to achieve high sustainability
within shorter period of time (Baron and Tang, 2011).
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An entrepreneur begun to start a new bakery shop in partnership with their trustable
partners who are their college mates as well. This will bring an advantage in form of getting new
and innovative ideas to promote its new venture by bringing an appropriate amount of capital to
invest. "7th Heaven" has acquired approx. 1500 square feet land in Berlin city on lease of 5 years
with an expectation of sustaining in market without facing any disturbance from external factors.
"7th Heaven" is formed in partnership thus have sufficient capital to run and operate business
more smoothly. It has been estimated that approx. £340000 needed to be invest in establishment.
Objectives: SMART Objectives need to be prepared which are given as under:
Specific: The new venture has target to hire skilled and experienced marketing manager to
promote their business in new markets,
Measurable: There is need of 4 marketing members which are required to be engage in
promotional activities.
Attainable: Imposing advertisements on social media platforms and official company's website
to recruit marketing employees.
Relevant: Adding marketing team in business operation build good image of company in new
market.
Time-based: Need to be hire marketing members within two months.
Mission:
Its mission statement of company is that “to fulfil the needs and requirements of health
conscious customers by offering tasty and healthy bakery products at discounted prices”.
Target market:
Before entering into new market, an entrepreneur first research about the taste and
preferences of customers and on the basis of decide to change in their current offerings so as to
achieve huge customer strengths. Therefore, customers are the main whose interest and buying
behaviour can decide the plans and strategies of entrepreneur in establishment of new business
(The baked products market in Germany, 2018). It has been identified from the online research
that the bakery shops which offers bakery items with proper packaging at discounted prices will
easily attracts the interest and buying behaviour of targeted people. To make division of
population on the basis of their common taste and preferences, the market has been segmented
on the basis Geographic, Demographic, Psycho-graphic and Behavioural. Bakery shop is
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targeting teenagers who prefer to buy bakery products at their different occasions such as
birthdays, parties etc.
Geographic: It includes the market which is targeted on the basis of their geographic
areas or location. Before started to think to reach their business at global level, an entrepreneur
first decide to identify the nation or city where they get huge number of population. Due to this,
an entrepreneur decide to launch its venture in Berlin city of Germany who attained huge
population among other cities.
Demographic: It includes the customers who are targeted on the basis of their
characteristics such as religion, culture, gender, income level etc. which can influence the
demand and profitability of business. For this, an entrepreneur must invest funds in carrying out
an appropriate research in order to identify the actual needs and preferences of customers. For
example, Teenagers and Kids are the most targeted people who prefer to buy bakery products on
their different occasions (Burns, 2017).
Psycho-graphic: Under this, the customers have been targeted on the basis of their
lifestyle and personality . As "7th Heaven" is engaged in providing bakery products thus it can
influence the buying behaviour of higher income group to consumer organic chocolates product
containing less sugar.
Behavioural: Under this, customers are targeted on the basis of their buying behaviour,
usage and interest. As in Germany people are price sensitive due to which they prefer to buy
bakery products on such stores which offer discounts on products. Therefore, "7th Heaven" can
hugely attract lots of customers by providing its wide range of bakery items at discounted prices
(Bijker and et. al., 2012). .
Competitive analysis:
Launching a new venture at global level is too difficult for an entrepreneur as it requires
huge amount of funds and innovative ideas to attract huge customer strengths for getting high
sustainability within shorter period of time. Presence of large number of rivals are also one of the
major threat which can affect the existence of new business venture. "7th Heaven" is engaged in
offering wide range of bakery items such as cookies, pastries, organic chocolates etc. in Berlin,
Germany which are the products that are provided by other competitors as well in same locations
which brings more difficulties to exist. Thus, to compete with them in more effective and
efficient manner, an entrepreneur required to analyse the market situations and accordingly
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prepare an effective plans and strategies which can differentiate their newly business venture
than their rivals in same market. Offering organic chocolate by "7th Heaven" is one of an
effective part of such plan and strategies. In Berlin, Oliv Cafe, Brammibal's Donuts etc. are some
famous bakery shops which gives tough rivalry to "7th Heaven". To compete with them, an
entrepreneur must continue to bring improvement in their existing offering list along with the
pricing policies so that large number of customers can be easily attracted towards their products
(Fernhaber and Li, 2013).
P2: Specific tangible and intangible resources that required for a new venture
Resources are the basic requirement of every organisation which does not depend upon
the size and are essential for executing the various operations of business in effective manner.
Therefore, for starting a new venture, it is essential to have enough resources through which all
the actions are made. These resources are segmented into tangible and intangible form. Tangible
resources are the resources which are physically visible and can be touched or seen. These
includes workers, money, land & Building, equipments etc. Whereas, Intangible resources are
the assets which can't be touched or seen but are necessary for achieving growth and success in
the market. 7th Heaven" is already offering wide range of bakery products to the consumers in
UK. So, this firm needs to have enough funds, human resources, financial and other resources to
serve the customers delicious bakery products. These resources are explained below:
Tangible resources: These are the assets which are visible and can be touched or felt in
the organisation such as equipments, tools, human resources, Land and building, vehicles,
inventory, cash, current assets etc. Thus these plays an essential role in fulfilling customer’s
needs and expectations. Among these resources, funds are basic requirements for carrying out
various activities like expansion of business, launching of new product or services in the market.
For carrying out an business operation it requires resources and assets. Tangible assets in an
organization is termed as any physical form which can be touched and felt when come in contact.
The assets of the company is it's employees or staff members they are tangible assets as they can
be recognized and their presence can be seen. Therefore, it is necessary for entrepreneurs of "7th
Heaven" to have the proper money for hiring or purchasing the required resources for doing the
operations effectively and efficiently. Human resources or staff members are also essential for
providing the maximum efforts for the satisfaction of customers (Hulbert, Gilmore and Carson,
2013).
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Intangible resources: These resources are not visible and can not be touched or felt when
come into contact. They are necessary for the growth and expansion of the organisation as they
are directly or indirectly related with organizations success and flourishment. These includes
trademarks, copyrights, goodwill, customer relation, etc. These can be acquired by the firm by
performing their operations in an ethical manner. Efforts of employees is another intangible
resources which can support company in establishing a new venture more successfully in new
market. Some of the intangible sources like goodwill, copyright,customer relationship etc. plays
a critical role in building brand image in the eyes of the customers. For example, Production
quality and healthy product helps the company to retain its loyal customers for long time and
managing good relation with them. The customers are easily attracted towards hotels that are
having good quality products and strong image in market. So, it is crucial for entrepreneurs of
"7th Heaven" to provide high quality and healthy bakery products to the customers at affordable
prices for ensuring customer satisfaction. It is also essential for "7th Heaven" to prevent their
ideas from theft by rivals using tools such as copyrights, trademarks, patent etc. for attaining
good position in market by offering delicious bakery food.
TASK 2
P3: Formulation of credible proposal to launch a new venture
A successful entrepreneur may also find difficulties while entering into new market due
to having different market situations and trends. Due to this, it is more important to prepare an
effective plans and strategies in advance so as to compete with the influencing factors which
were identified through a market research (Karadag, 2015). Such plans should include the taste
and preferences of targeted people in order to generate huge revenues. Before launching an
proposal in the market different segmentation should be analysed as customers taste and
preferences, climate conditions, geographical structure, ethical norms of the government,
countries cultures, adaptability etc. Here is an appropriate plan which is going to be formulated
by "7th Heaven":
Executive Summary "7th Heaven" is newly bakery shop which is going to open in
Berlin, Germany by an entrepreneur who already achieved
success in UK. Its main objective is to capture huge market
share and profits by serving health conscious customers with
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healthy bakery items such as organic chocolates.
Company description "7th Heaven" is a bakery shop located in Berlin, Germany
where large number of people are there as compared with
other cities. It is engaged in manufacturing and selling wide
range of bakery products such as pastries, cakes, organic
chocolates etc. to capture huge market share in European
countries. It's main target is to provide organic chocolates to
the customers of all age groups. Customers health and safety
is the main concern for the company.
Market Analysis External environment changes frequently which is affecting
the business operating at global level. In the dynamic world
to meet the changing needs of the customers and satisfying
them by all means like cost, affordability, preferences,
quality, quantity etc. is a great challenge for any company in
the era of 21 century. It makes both negative as well as
positive impact on decision of establishing new business in
new market. For this, an entrepreneur must require to analyse
such influencing factors through conducting SWOT and
PESTLE Analysis so that further decisions regarding deal
with them more effectively can be made within an
appropriate time period.
Financial projection Operating business at global level requires huge amount of
financial resources otherwise the business operations may be
interrupted the process of establishment which can cause loss
to an entrepreneur. Thus, an entrepreneur must ensure about
maintaining financial resources in advance through raising
funds from various resources such as financial institutions
like banks, venture capital etc. on agreed rate of interest.
Benchmarking Entering into new market requires motivation and confidence
among team members involved in the establishment of new
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business venture. For this, it requires an entrepreneurs to
develop benchmark which defines future target with time
deadline so that suitable action can be taken to achieve by
following legal laws and standards.
P4: Skills and capabilities required to launch a new venture
Before entering into new market it requires lots of effective strategies and plans so as to
achieve sustainability within shorter period of time. For this, it requires an entrepreneur to attain
an effective skills and knowledge which are determined as under:
Management skills: It can be defined as the certain attributes or abilities than a company
should posses in order to achieve certain tasks in an firm. Good management skills is beneficial
to any business associates to achieve desired targets and objectives on time. An entrepreneur is
responsible to manage and control resources and operations so as to minimise their wastage due
to which it is important to build management skills which can be developed through better
communication, setting goals, practising praising and rewarding etc.
Decision making skills: It can termed as those key skills which are requires at a
workplace to take efficient decision and become effective and efficient leader in the near future.
Effective leader has to decide which candidates to hire,which strategy to implement, which
suppliers to use, the ability to take reliable decision with the available resources. Entering into
new market may bring lots of complexities due to influencing factors arises in the business
environment. Therefore, an entrepreneur should have skills to make an effective plans and
suitable decisions after analysing the future outcomes regarding their sustainability in order to
ensure whether to reach business to Germany will bring profitable for them or not.
Leadership skills: The word leadership skills can be explained as, it is an art of
motivating group of people to act towards achieving a common goal or targets. An entrepreneur
must also be an effective leader who have an ability to lead other team mates and employees to
work hard and achieve the desired target within limited time period. For this, motivation and
confidence should be build among staff through providing training programs which educate them
for better functioning (Kariv, 2013). Leadership requires different attribute which can be
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extended beyond management duties. It is a main base for future growth of the business and
career opportunities.
Risk taking ability: Risk stands for a probability of injury,loss, liability,threat of damage
which is occurred by external vulnerabilities. The more experience of handling of risk will
provide them more confident to deal with problems. Risk always exist in business environment
due to having contingent in nature. An entrepreneur if willing to achieve huge sustainability for
their business then they should go for grabbing competitive market opportunities through taking
huge risk.
TASK 3
P5: Determination of promotional activities and channels for launching a new venture
It is essential for a new business to spread information about their entering into new
market so as to attract new customers and influence their buying behaviour towards their
offerings. Therefore, the entrepreneurs of "7th Heaven" should compulsorily required to adopt
promotional tools and techniques which are given as under:
Social media platform: It is economic but more effective promotional tools where the
entrepreneurs easily get huge number of customers for their new business. Nowadays, the people
are more active on social media platform such as Facebook, Instagram, twitter etc. which
requires less efforts and money to promote productions market. It is the best way to promote the
product and services worldwide on the social media as customers are more active on social
platforms.
Mobile Billboards: This is another effective promotional tool to grab an eye of customers
through preparing catchy punchlines, attractive logo, stickers etc. It brings interest and
willingness among customers to try company’s products at once which becomes the first step of
achieving their loyalty (Klotz and et. al., 2014). Attractive logo and tag lines is easy to pull
customers to recall and recognize the product. Example McDonald logo colour is red and yellow
which is easily recognized and the tag line is “I am loving it”, which itself is easily
understandable by the customers.
Personal promotions: Such tool provide an opportunity for an entrepreneur to make
direct contact with customers through meeting them personally and influence their buying
behaviour by informing them about the benefits of their offerings. It can be done through
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distributing pamphlets, catalogues etc. It plays a vital role in promoting new product in the
market. The main motive of promoting a product is to create awareness , increase sales, brand
loyalty, create interest.
P6: Formulation of appropriate promotional activities plan for both launch and pre-launch
To spread the information about the entering into Germany market, "7th Heaven" must
required to be promoted by using an effective promotional methods at both pre-launch and at the
time of launch of business. It aware the people of Berlin city, Germany about the establishment
of new bakery shop business in their city which brings interest among them to visit shop at once.
Pre-launch promotion: It is first and valuable stage in which an entrepreneur
communicates people about their entrance into new market through preparing and use of official
websites which provides sufficient details about their actual location and offerings along with
their product benefits. It is done to make customers aware about the new product its features,
benefits,characteristics,durability etc. Example: When APPLE launched iPhone 8 and informed
about it's unique features added in it at pre launching it directly affected the sales volume of the
firm.
Launch: It is the stage at which an entrepreneur finally launches its business into market
through organising opening party in which all the media representatives are invited to capture the
various details about their business. It further advertised on TV, Newspaper etc. which assist
their targeted customers to acquire knowledge about their business.
TASK 4
P7: Monthly cash budget for the pre and after launch phase
Cash budget is compulsorily required to prepare by the entrepreneurs which allows them
to make suitable plans and effective decision for the betterment of their newly business venture.
Cash budget provides the relevant data regarding cash outflow and inflow in a firm over the
period of time. It makes easy for entrepreneurs to allocate funds to different divisions according
to their requirements by ensuring the cash availability with business at present. To prepare cash
budget more effective, entrepreneurs should hired an accountant who have specific knowledge
and skills regarding entry of cost in books of accounts. Here is the cash budget for "7th Heaven"
for the launch of bakery shop and after 12-18 months (Kuratko and Hornsby, 2017).
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Pre launch cash budget
Cash Flow budget
Particulars Jan Feb Mar Apr May June
Cash inflows
Investment 8000
Credit sales 2000 3000 3000 4500 1500 3500
Total inflows 10000 3000 3000 4500 1500 3500
Cash outflows
Fixed : Equipment’s 2000 2500 1500 2000 1200 1500
Variable : Direct
material 300 300 200 300 150 500
Total outflows 2300 2800 1700 2300 1350 2000
Net cash flow 7700 200 1300 2200 150 1500
Opening balance 0 7700 7900 9200 11400 11500
closing balance 7700 7900 9200 11400 11550 13000
Particulars July August September October November
Decembe
r
Cash inflows
Investment
Credit sales 4200 1000 2000 800 1200 1500
Total inflows 4200 1000 2000 800 1200 1500
Cash outflows
Fixed : Equipment’s 800 200 300 100 600 300
Variable : Direct
material 300 400 500 100 100 400
Total outflows 1100 600 800 200 700 700
Net cash flow 3100 400 1200 600 500 800
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Opening balance 13000 16100 16500 17700 18300 18800
closing balance 16100 16500 17700 18300 18800 19600
Post launch cash
budget
Particulars Jan Feb Mar Apr May June
Cash inflows
Investment 8000
Credit sales 1200 2000 7500 3000 5000 6500
Total inflows 9200 2000 7500 3000 5000 6500
Cash outflows
Fixed : Equipment’s 2500 1200 1500 2500 1100 1500
Variable : Direct
material 350 300 250 150 100 500
Total outflows 2850 1500 1750 2650 1200 2000
Net cash flow 6350 500 5750 350 3800 4500
Opening balance 0 6350 5850 11600 11950 15750
closing balance 6350 5850 11600 11950 15750 20250
Particulars July August September October November
Decembe
r
Cash inflows
Investment
Credit sales 1200 3200 1500 8200 1250 3210
Total inflows 1200 3200 1500 8200 1250 3210
Cash outflows
Fixed : Equipment’s 1200 600 500 500 1200 700
Variable : Direct 500 250 450 250 1300 500
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material
Total outflows 1700 850 950 750 2500 1200
Net cash flow -500 2350 550 7450 -1250 2010
Opening balance 20250 19750 22100 22650 30100 28850
closing balance 19750 22100 22650 30100 28850 30860
P8: An appropriate legal form for the venture
There are different kinds of business ventures which are required to fulfil all legal
requirements in their registration process in order to establish venture into new market. Such
types of ventures includes sole trader, partnership and companies. It can be further understood as
under:
Sole trader: It is formed by single individual to earn livelihood without expecting of
earning huge profits. It is more risky due to holding unlimited liability which means owner is
personally liable to pay all debts and as a single owner enjoy all profits and bear all losses (Read
and et. al., 2016). It is easiest form of business due to which most of the entrepreneurs first tried
to start the business on their own without getting involvement from others.
Company: Private and public are two types of companies which are having different
purposes and owners. Private company is run and owned by individuals privately whereas public
company is owned and controlled by government. Private company is facing some disadvantages
as they are restricted to allot shares directly to the public where in case of public, no such
restrictions are there. Private company faces some restrictions due to heavy rules and regulations
framed by governmental authorities as compared with public company. For example, private
company cannot allot shares directly to the general public whereas the public company can.
Partnership firms: It is formed by signing partnership deed made by two or more
partners who are decided to start a new business with agreed terms and conditions mentioned
under partnership deed. It is most effective form of business due to receiving maximum from
partners in terms of generating new ideas, increasing capital etc. It is also preferable business
structure by entrepreneur as it encourages to share profit/losses due to which one single owner
cannot faces huge losses on their own.
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In the present report, "7th Heaven" bakery shop is formed under partnership due to which
it complying with rules and regulation implemented by government for partnership business. It
has some advantages as well as it ensure business about obtaining adequate amount of capital
which can be effectively utilised with the help of taking support from different partners having
distinct skills and knowledge (Launching a new venture, 2018).
CONCLUSION
It has been concluded from the above project report that establishing a new venture into
new market is quite difficult for an entrepreneur due to having more complexities in market
environment. To deal with them, more effectively, an entrepreneur must have an effective skills
and knowledge to achieve huge sustainability for their new business within shorter period of
time. For this, an entrepreneur must prepare an effective cash budget in order to allocate budget
to different departments according to their requirements. There are two types of tangible and
intangible resources which should be arrange and managed by the entrepreneurs in order to
utilise them in an optimum manner with an expectation of getting maximum results in near
future.
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REFERENCES
Books and Journals
Online
Launching a new venture. 2018. [Online]. Available through:
<https://www.exed.hbs.edu/programs/lnv/Pages/default.aspx>.
The baked products market in Germany. 2018. [Online]. Available through:
<http://www.bakingbiscuit.com/germany/articles/the-baked-products-market-in-
germany.html>.
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