Risk Management for Entrepreneurs

This assignment explores the risks encountered by entrepreneurs when starting a business. It delves into financial risks, including interest rate fluctuations and funding shortages, highlighting the importance of contingency planning and market analysis. Legal risks are discussed in the context of employment laws and regulatory compliance, emphasizing the need for legal expertise and adherence to labor standards. Human resources risk is addressed through the imperative of recruiting skilled personnel and aligning employee capabilities with business requirements. The assignment concludes by proposing strategies for mitigating each type of risk, emphasizing proactive measures and informed decision-making.

Starting a Business

Table of Contents
EXECUTIVE SUMMARY PART 1...............................................................................................4
Company Introduction.................................................................................................................4
Business aims and objectives.......................................................................................................4
Description of the product or service...........................................................................................4
Marketing research and potential growth identification..............................................................5
Competitor analysis.....................................................................................................................6
Marketing strategies.....................................................................................................................8
Business strategies.......................................................................................................................9
Financial feasibility...................................................................................................................10
Sources of finance......................................................................................................................14
Legal rules or regulations..........................................................................................................14
Use of information and communication technologies to achieve business objectives..............15
Identification of potential risks and ways to mitigate it............................................................15
REFERENCES..............................................................................................................................17

EXECUTIVE SUMMARY PART 1
Company Introduction
Shopping time is an online platform which will offer wide range of products and services
to the customers. Through this, entrepreneur who will be sole proprietor of this online platform
will provide opportunity to the small business enterprises to offer their products through the
means of online services. It is one of the main innovative aspects which make this business
different from the rivals. Shopping time will place high level of emphasis upon providing the
detailed information about the products or services. Further, this online platform will also make
focus upon the effective products packaging. Besides this, appropriate sources of finance will be
undertaken by the entrepreneur by taking into the results of feasibility analysis. Sole proprietor
will also follow all the legal rules and regulations to build and maintain faith in the mind of
stakeholders. Risk assessment strategies will also be undertaken by the entrepreneur to identify
the threats which have impact upon the growth and success of the firm.
Business aims and objectives
 To offer online platform to the small business enterprise.
 To provide quality product or services to the customers.
 To build the confidence and loyalty of the customers towards the site.
 To provide convenience to the customers of East London.
Description of the product or service
Entrepreneur will offer huge variety of the products to the customers. By accessing such
site customer will able to purchase clothes, electronic gazettes, retail and other luxury products.
Thus, this site will offer all kinds of product or services to the customer which entails their
satisfaction among the customers.
CATEGORIES PRODUCTS
Clothes Traditional and designer
wears (Ranging from kids to
adults)
Electronic gazettes Smart phones, speakers, iron
etc.

Accessories Watch, handbags and belts
Retail Food products
In addition to this, shopping time will also provide attractive services to the customers.
This site will provide detailed information about the products which will be displayed on the site.
Further, such site will also include the attractive pictures of the product as well. Besides this,
information about the discounting offers will also be served by such site on the special occasion.
Moreover, customers are attracted to purchase the products only when they are aware with such
aspect (Allio and Randall, 2010). This site will also offer convenience facility to the customers
by making home delivery of the products. Cash on delivery, good packaging and attractive
features are some effectual services which will be offered by the site. Shopping time will serve
the customer in 25 days in a month. Moreover, on Sunday entrepreneur will not deliver the
product. Beside this, on government holiday sole proprietor will not offer delivery services to the
customers. Thus, on an overall basis entrepreneur will make delivery of the product on an
average 25 days in month (Bowhill, 2008). Services of shopping time also include click and
mortar facility which include both online and offline transactions. It enables customer to enjoy
the benefits of fast online transactions as-well-as face to face services.
Marketing research and potential growth identification
By conducting market research, it has been identifying that online businesses of the UK
have grown with the annual rate of 11%. This growth rate is 50 times greater as compared to the
development of whole economy. This is one of the main factors which encourages entrepreneur
to enter in the online business industry (Brunsman, DeVore and Houston, 2011). In the present
era, there is increasing trend towards the online shopping of the products or services. Due to the
busy life, people are unable to visit the physical store to fulfil their needs and wants. From the
secondary research, it has been assessed that now-a-days women prefer to do job with the aim to
build their bright future. Thus, it is also one of the main reasons due to which large number of
people prefers to make shopping of the product or services through the online means (Eom,
2012). By taking this into account, all the above mentioned aspects of Shopping time will
provide convenience to the customers by offering huge variety of products through online.
In addition to this, site will also consider price, quality of the product or services, time
factor etc. Moreover, customers place high level of emphasis on getting the quality products at

reasonable prices. Further, time which is taken by the cited online company also has high level of
influence upon the decision making aspect of the customers. Thus, all these aspects help in
attracting the large number of potential customers of East London towards the products or
services offered by them (Problems and how to solve them. 2012). Besides this, business may
face difficulty in complying with the rules and regulations which are framed by the UK
government in relation to the online business. Furthermore, this unit also might face issues in
relation to meet the needs, wants and expectation of the customers for which entrepreneur is
trying to make efforts.
Gap analysis: From the secondary investigation, it has been found that sites which offer variety
of products or services with the means of internet have direct connection with the producer. They
completely neglect the dealer or small business enterprise who offers branded products in the
physical market. Due to this, people of physical of physical stores are unable to build their global
presence (Kraten, 2010). By identifying such gap, entrepreneur has decided to open up online
store in which small medium enterprise is taken as suppliers who makes supply of products to
the site. Through this, small business enterprises are also able to enhance their productivity and
profitability aspects.
Competitor analysis
Basis of
comparison
Amazon Quicker Shopping Time
Products Home, beauty and food
products, electronic
gazettes, designer clothes
and other accessories etc.
Amazon offers all types of
product which are needed
by the customer except
automobiles.
Quicker also offers all kind
of products which are
offered by amazon.
In in the initial
stage,
entrepreneur will
offer limited
range of products
in each category.

Delivery time Amazon takes 2 days for
delivering the product
which is ordered by the
customers.
Entrepreneur
claims that it will
deliver the
product within the
1.5 day.
Moreover, its
warehouse is
situated on
Grnnenwitch
which enables
them them to
making delivery
of the product
within the less
time.
Advertisement
mode
Social media is used by
Amazon to provide
information about the
product or services to the
large number of customers
Quicker advertises its
product or services by
placing advertisement on
television and social
networking sites.
Sole proprietor
will undertake
both traditional
and modern form
of advertisement.
Through this, it is
able to increase
its reach to the
large extent.
Suppliers It includes manufacturer
who make supply of the
productive or services.
Quicker makes direct
contact with the
manufacturer for the
product.
Suppliers of
shopping time
includes small
and medium
enterprise who
supplies product

to the
entrepreneur.
Pricing strategies Amazon offers high level
of discount to its customers
as compared to the rival
firms.
Quicker undertakes
competitive pricing
strategies for serving the
customers in an effectual
manner.
Shopping Time
will make focus
on the serving
customers at low
prices. Through
this, entrepreneur
will be able to
strengthen his
brand image.
Marketing strategies
Sole proprietor is required to frame effectual marketing strategies with the aim to develop
awareness among the customers about the products which are offered by them. Marketing mix of
Shopping Site is enumerated below: Product: Large variety of the products will be offered by Shopping Time as compared to
its competitors. It includes electronic gazettes, clothes, accessories, retail and other
luxury products (Morato, 2013). Price: In order to attain high market share, penetration pricing strategies will be adopted
by the site. On the basis of this aspect, entrepreneur will initially set lower prices for the
product with the aim to build the confidence of the customers towards the site. Moreover,
in the competitive business arena, company will attain success only when they offer
quality products at lower prices. Place: Business entity will offer opportunity to the customers to order the product
through online mode. In this, product will be delivered by the site through service
personnel (Reading, 2004). Promotion: Shopping Time will undertake both traditional and modern means to promote
the products or services which are offered by it. For this purpose, advertisement will be
placed by the site on newspaper, radio etc. Besides this, business entity will also take

support from social media to provide information to the potential customers about the
products or services. People: It includes the personnel who make home delivery of the products or services.
For this, skilled people will be hired by the Shopping Time because decision making of
the customer is highly influenced by the time which is taken by the firm to deliver the
product (Allio and Randall, 2010). Process: In this, for making order customer needs to make click on the offer which is
placed by the site. Thereafter, entrepreneur will send the message of order confirmation
to the customers. After this, personnel make home delivery to the respective customer
and receive payment.
 Physical evidence: Entrepreneur will also place emphasis on making Shopping Time
more attractive by adding appealing and influencing picture on it. Through this, sole
proprietor will be able to increase the customer traffic on site to the large extent.
Business strategies
Segmenting and targeting strategies Demographic segmentation: Potential customers would be divided by the sole proprietor
on the basis of age. Thus, entrepreneur will make focus upon serving of products or
services to youngsters (Brunsman, DeVore and Houston, 2011). Moreover, adult and
young are usually highly interested to make shopping of products through online store. Geographic segmentation: Entrepreneur will segment his customer base on the basis of
region or city. On the basis this aspect, business entity will serve the customers who live
in East London. Moreover, in the initial stage sole proprietor is not in condition to offer
online product to people of whole London. After getting entrepreneur will expand his
business operations. Positioning: Entrepreneur will position his site on the basis of price and quality of the
product or services which is offered by it. In the present time, people purchase the
product or services by making comparison of the price and service quality of the different
sites (Kraten, 2010). Thus, by highlighting the various aspects company is able to attract
large number of customers to the significant extent.
Sales strategies: Entrepreneur will enter into both B2B and B2C market. In business to business
market, sole proprietor will take products from small business enterprise and thereby makes

contribution in the growth and success of it. Further, in B2C market business entity will give
delivery of the product or services at the home of their customers.
Financial feasibility
Entrepreneur will also make projection of sales by taking into account several
assumptions. On the basis of this aspect, sole trader will also able to prepare the income and cash
flow statement (Bowhill, 2008). Sole proprietor will also make break even analysis to assess the
point where they are able to attain the situation of no profit or no loss.
Assumptions: In order to manage the business there are several assumptions which will be
undertaken by the entrepreneur are as follows:
 Sales of the online business will be increased by 12%. (Moreover, online business of UK
have annual growth rate of 11%)
 Monthly rent of warehouse for two years would be 10% of the revenue.
 Working days of online business is 25 days due to 4 Sundays and government holidays.
 Service fee of the online business is 5% of the sales revenue.
 It is assumed that COGS (Cost of goods sold) will be 40% per annum.
 Contribution would be 4% of sales.
 Inflation rate would be increased by 3% per annum.
 Salary of the personnel will be increased by 7% per annum.
 Entrepreneur assumed that office expenses will be decreased by 12% per annum.
 In the initial year, entrepreneur will incur huge expenses to promote the product or
services. Thereafter, sole proprietor has to incur additional 15% per annum. Entrepreneur will take loan from the bank worth of £150000 @ 7% for the period of 5
years (Eom, 2012)
Foretasted assumptions
Fixed cost
 Insurance for the 2 years @ £10000.
 Market research and investigation (In initial year £1500)
 Depreciation charged on fixed assets which is worth of £35000. Depreciation will be
charged on such assets @10% on a straight line basis which is 3500.
 Training expenses £4000 for the two years

Sales projection
Cash flow statement
This statement clearly reflects the revenue which will be generated by the during the
year.

Income statement

Balance sheet
Break even analysis

Sources of finance
Entrepreneur will undertake both internal and external sources to fulfill his financial
needs of £230,000. Sole proprietor will make use of his own capital worth of £80000 to starting
up his own business. Further, on the basis of financial feasibility analysis entrepreneur will take
loan of £150000 @ 7% from Barclays bank to meet his financial needs or requirements. It is the
most effectual source which will provide assistance to the sole proprietor in starting up online
business. The main purpose behind taking such source into account is tax benefits which will be
gained by the entrepreneur (Kraten, 2010). Through this, business entity can easily enhance its
profitability aspects. Further, banks are always ready to offer financial assistance on the basis of
collateral security. Thus, by approaching bank for the monetary assistance on the behalf of
collateral security entrepreneur can easily fulfill his need.
Legal rules or regulations
Entrepreneur will follow Minimum Wage act 1998 which offers high level of protection
to the personnel. According to act, business entity needs to offer fair salary to the personnel for
the work which will be performed by them. In addition to this, Equality act, 2010 would also be
followed by the entrepreneur while recruiting and selecting the personnel. Thus, sole proprietor
will not discriminate the employees on the basis of their gender, age and religion aspect (Morato,
2013). Along with it, according to the Employment Rights Act, 1996 entrepreneur would be
required to give employment letter to the personnel within the appointment of 2 moths. This

letter contains information about the job titles and duties, amount of pay and interval, place of
employment, working hours, disciplinary procedures, probationary period as well as termination
requirements.
Use of information and communication technologies to achieve business objectives
The whole business of the entrepreneur is based upon the information and
communication technologies. Shopping Time is highly based on the ICT which will help it in
offering the product or services through online means. The main objective of the entrepreneur is
to widened their geographical reach and offer convenience to the customers. Thus, business
entity will use technological aspects to offer click and mortar facility to the customers. Besides
this, entrepreneur will also undertake social media sites to communicate with the customers
about the product or services which are offered or provided by him (Reading, 2004). This
promotional strategy also requiring use of information and communication technologies.
Furthermore, entrepreneur will also use of technology to make contact with the potential
customers. By sending e-mail to the customers about the discount offers as well as product and
services business entity can develop awareness among the customers. This activity will enable
sole proprietor to encourage the customers of east London in relation to make purchasing of the
product or services through Shopping Time. Thus, information technologies would be used by
the entrepreneur to fulfill the business objectives.
Identification of potential risks and ways to mitigate it
There are several risks which entrepreneur might face while performing the business
operations and functions which are enumerated below: Financial risk: Changes which will take place in the interest rate is one of the mains
aspect which imposes high level of financial risk in front of the entrepreneur. If bank rate
will increase from 8% to 10% then it will closely influence the financial aspect or
profitability of the firm. In addition to this, financial risk might occur due to the hike and
decrease in inflation rate (Bowhill, 2008). It is also one of the significant factor which
will impact the growth and success of the organization. Compliance risk: Entrepreneur has to follow the working hour’s act which is framed by
UK government. In online store, company can attain success only when then he quickly
delivers the product which is ordered by the customers. In this, business entity will face
difficulty in making compliance with the laws and legislation which is introduced by the

government authority of UK. Further, business entity will also be compelled to give
written document to the employers which contains detailed information regarding the job.
Thus, detailed legal work closely influence the working aspects and operations of the
firm. Human resources risk: For making delivery of the product entrepreneur will require
skilled and active personnel. If business entity fails to hire enough and skilled personnel
for the job Shopping Time will not able to build effective image in the mind of target
market.
Ways for the mitigation of risk:
 In order to overcome the financial risk business entity needs to make contingent fund
which will helps them in coping up with the monetary crisis. In addition to this, by
making estimation of the interest rate on the basis of market trend financial risk can be
easily mitigated the entrepreneur (Eom, 2012).
 Entrepreneur can fulfill the legal aspects by hiring the suitable number of the personnel.
Through this, business entity is able to maintain the act in relation o the minimum
working hours to the great extent.
 Human resources risk can be reduced by the sole proprietor by making the comparison of
the actual qualities of the personnel with the required skills. Through this, business entity
is able to recruit and select the best personnel for the job and thereby become able to
serve the customers in an effectual manner.

REFERENCES
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