ENTREPRENEURSHIP AND INNOVATION Report: Retail Business in Australia

This report offers a comprehensive analysis of the retail business in Australia, using Quicksave Supermarket as a case study. It begins with a competitor analysis to assess the industry's competitiveness. The report identifies various funding sources for startups, including angel funding, personal savings, bank loans, government grants, and 'love money,' along with how to obtain them. It also explores the challenges and problems entrepreneurs may face, such as political, economic, social, technological, environmental, and legal factors, analyzed using the PESTEL method. Furthermore, the report delves into the potential risks the business may encounter, including securing sufficient capital, team building, and competition. The analysis provides valuable insights into the critical aspects of starting and operating a retail business in the Australian market.

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Executive summary
The report discusses and analyses the retail business in Australia. The report uses an example of
retail supermarket referred to as Quicksave. The report begins with competitor analysis which is
aimed at determining how competitive the industry is. The potential sources of funding for the
business include angel funding, personal savings, bank loans, government grants and subsidies as
well as Love money. The report also discusses how the funds are obtained. Additionally, the
report also discusses the challenges and problems that are expected in beginning the type of
business. The potential risks of the business are also discussed in this report.

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Introduction
This report analyzes the retail business enterprise to determine the advantages of the
venture and the challenges that an entrepreneur may face when they invest in this sector. The aim
of the report is to identify the sources of capital for the new business. The report also identifies
how these finances will be obtained and the capital structure of the business. The report also
explains why the business venture was chosen and the advantages of the business other options
that could have been chosen. There are various challenges in the external environment that could
face the business venture. These external factors are analyzed using PESTEL method of analysis.
An environmental analysis is required in order to help understand the business environment that
the business will operate and hence help the management put in place strategies that will help the
business succeed in the specific environment (Davidsson, 2008).The competitive environment of
the venture is also analyzed in order to determine the level of competition in the retail industry in
Australia. Before starting any business venture, it is important to identify and analyze the
potential risks that the business venture may face. This is very crucial in helping to put measures
in place to help minimize the likelihood of the risk occurring.
Discussion
Sources of start-up capital for Quicksave Supermarket
There are several sources of funding that startups such as Quicksave can take advantage.
These sources range from personal savings, the contribution from family and friends, long term
and short term loans as well as grants from the government (Apostola, Goodrich &
Killackey,2013). This section discusses the available sources of funding for Quicksave and how
they can be assessed.
Angel Funding
Angels, in this case, are defined as wealthy individuals who directly invest in small firms
owned by other people. These individuals provide technical and management knowledge which
is crucial to the growth of the business ventures. Angel funding involves an individual with cash
injecting capital in a business in exchange for a share of the business. They also demand to have
a say in the day to day running of the business by sitting on the board of directors of the
company. Therefore, a business venture such as Quick save can get between $25,000 and
$100,000 from angel financing.
Personal savings

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When starting a business a person has to ensure that they have saved some finances as
startup capital. This is because it is difficult to start a business while entirely depending on
borrowed capital. A person intending to start a business must have some financial foundation
which can be supported by other sources of funding to support the business. (Durkin, 2017)
Personal savings of the Quicksave entrepreneur can be used to register the company to finance
the purchase of furniture, computers and other minor expenses. Personal savings may not be
enough to start a large business but its very important since its used to finance important logistics
for the business. Personal cash proves to other investors that the entrepreneur is committed to the
business for the long-term and the entrepreneur has a lot of interest in the business.
Venture capital
Venture capitalism is a type of private equity financing that is provided by either an
organization or an individual to fund early startups that have high growth potential.Venture
capital normally comes from entrepreneurs who are rich, investment banks and other financial
institutions. Venture capital can also be provided through technical and managerial expertise.
Venture capital is a very strategic source of capital for QuickSave supermarket since it provides
a large source of capital which is enough for the business to open up (Nihoul & Skoczny,2015).
The other advantage of venture capital as a source of finance for Quicksave is that it can provide
the much needed technical knowledge that may be necessary for the management of the
business. The disadvantage of venture capital is that the person providing the funds will have an
ownership share in the company and hence denying the entrepreneur control over the company.
Government grants and subsidies
Government agencies in Australia provide funding for startups in Australia. This is done
at both state level and at the federal level. Getting grants can be tough due to the stringent
requirements that are in place. The requirements of the grants may be such that the business
seeking the grant covers 40% of the total cost. The requirements for a business like Quicksave to
get a grant include; having a detailed project description, a detailed justification of the project
and complete application forms that are required.
Bank loans
A bank loan is one of the most commonly used sources of funding for small and medium-

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sized businesses. Banks offer customers loans at an agreed interest rate and the customers are
required to repay the amount due within a given period of time (Gunn & Durkin, 2010). Banks
offer loans under different conditions and the interest rates vary across the banks. The advantage
of banks as a source of capital is that they provide huge finances that can help the business to
invest in important infrastructure to help the business run smoothly. The disadvantage with banks
as a source of capital is that at times they charge a very high-interest rate which may make the
cost of capital too high for the business (Peris-Ortiz &Sahut, 2014). The requirements for a start-
up business to get loan funding from a bank are very strict since most of the banks require
collateral which may not be available for many new businesses like Quicksave.
Love money
This is money borrowed from parents, spouses, family, and friends. The people who lend
this money to the business expect to be refunded once the business grows and begins making
profits. The amount of capital contributed by friends and relatives is very little to fund a business
venture such as a supermarket and therefore it cannot be largely depended on as a source of
funding. The contribution from family and friends is important for small and medium business
such as the retail supermarket.
Challenges and problems that may face the business venture
Political challenges
The local politics of the region that the supermarket can affect the business in case the
local government enacts policies that might be against the business venture.The political
environment may become unstable in the future and hence make it difficult for business in this
region to thrive. At present the political environment in Australia is stable and therefore the retail
business is unlikely to be affected by political instability (McCuddy, 2007).
Economic factors
In addition to this, the business may struggle to repay the borrowed capital due to the fact
that the business may start at a slow pace before making enough profits. During the initial stages
of a business, the business is overburdened with fixed costs such as rent expenses as well as
wages. The business may struggle to meet these costs in the beginning. These costs have a big
burden on the business operations unless measures are in place to cater for these costs (Knox &
Knox, 2015). Therefore, it will be challenging for Quicksave supermarket to meet the fixed costs
before the business gains ground to the point of making profits.

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The other economic factors that could affect the business include the rate of growth of the
economy. If the economy of the country slows down, the rate of growth of the business will slow
down and hence affecting the profit margins.
Startups may also be affected by interest rates.Increase in the lending rates will have a great
impact on the new business. This is because an increase in interest rates means that cost of
getting credit will rise and hence discourage borrowing. A business like Quicksave will,
therefore, find it difficult to access additional capital to help the business expand. Fluctuating
exchange rates will also be an economic challenge for Quicksave.
Social factors
Changes in tastes and preferences of consumers in future present a major challenge for
the business. The modern consumer is very complex and their preferences keep changing from
time to time and hence its important for the business to keep up with the trends. The customer
base of the company consists of people with different demographics and hence its important for
the business to understand the demographics so as to serve the market better.
Technological factors
New purchase modes of payment such as the use of electronic cards and mobile money
will affect the retail business. Increase in popularity of online retailers will also be a major
challenge for the business.
Environmental factors
The business needs to come up with creative ways to manage its waste in order to ensure
that it complies with the government legislation regarding the environment.
Legal factors
Legal requirements for registration of business need to be fulfilled in order for the
business to start operations.
Potential risks the business is likely to encounter
There are various risks that an entrepreneur planning to start a retail supermarket business
is likely to encounter especially in the initial stages of the business. Some of the challenges
include securing enough funds to run the business, marketing challenges, as finding the right
staff to help run and manage the business. Starting a new business comes with harsh challenges
but they are rewarding in the long term (Haltiwanger, 2017). Establishing the brand to keep up
with competition in the very competitive industry is also a huge challenge for the retail business.

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The following is a detailed discussion of the potential challenges that the supermarket business
may face.
Raising sufficient capital
Despite there being many sources of business capital, it is difficult to secure enough
capital to start a business with a substantial capital requirement such as a supermarket. Most of
the lenders of finances have placed very stringent lending conditions and hence making it
difficult to qualify for the loans and therefore the entrepreneur risks failing to raise enough
capital for the business (Hougaz, 2015) The stringent conditions for getting funding limits the
sources of funding and hence, the business may struggle in the initial stages due to insufficient
capital. The retail business may initially start without enough stocks on the shelves.
Team building
The business faces a risk of failing to pick the right team of employees for the new
business. Assembling the right team is stressful and may involve substantial costs for the
business. It is very important for a business to bring together individuals who are highly
motivated and with enough experience in the retail sector in order to ensure that the level of
customer satisfaction is high and hence help to attract new customers and retain existing
customers. (Andersen, 2014)Therefore,it will be a huge challenge for the business to bring
together a team that will be able to grow the company and establishes the brand.
Competition
Competition is very stiff in the retail industry in Australia. The business risks losing to
the competitors in the market.There are very many established supermarket chains in Australia
which are very competitive and they have a very big market share (Hisrich&Ramadani, 2017).
The big supermarket chains establish such as Coles offer products at low competitive prices.
This is because they enjoy large economies of scale. The new supermarket will take some time to
establish its own brand that will be attractive to customers.It is, therefore, a big challenge for a
new supermarket to compete against the existing enterprises.
Conclusion
This report analyzes and describes the retail business in Australia. The business discussed
is a new supermarket by the name Quicksave supermarket. There are various sources of capital
for Quicksave and they include; Love money, personal savings, loans, grants and government
loans and venture capital. The report discusses the sources of capital and the way in which they

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can be obtained. The report discusses the potential challenges that the business is likely to face a
particular focus on the external environment of the business. The risks that the business faces
include; risk of failing to raise enough capital, the risk of business failure due to competition and
risk of failure to assemble the right team of employees.
References
Andersen, T. J. (2014). Contemporary challenges in risk management: Dealing with risk,

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uncertainty and the unknown.
Apostola, A., Goodrich, S., & In Killackey, F. (2013). Taking back retail: Transforming
traditional retailers into digital retailers.
Davidsson, P. (2008). The entrepreneurship research challenge.
Durkin, C. (2017). Social entrepreneurship: A skills approach. Policy Press.
Gunn, R., & Durkin, C. (2010).Social entrepreneurship: A skills approach. Bristol, UK: Policy
Press.
Haltiwanger, J. (2017). Measuring Entrepreneurial Businesses: Current Knowledge and
Challenges.University of Chicago Press.
Hisrich, R. D., &Ramadani, V. (2017).Effective Entrepreneurial Management: Strategy,
Planning, Risk Management, and Organization.
Hougaz, L. (2015). Entrepreneurs in family business dynasties: Stories of Italian-Australian
family businesses over 100 years.
Knox, M., & Knox, M. (2015).Supermarket monsters: The price of Coles and Woolworths'
dominance. Collingwood: Schwartz Publishing Pty, Limited.
Nihoul, P., & Skoczny, T. (2015). Procedural fairness in competition proceedings.
Peris-Ortiz, M., &Sahut, J.-M. (2014). New challenges in entrepreneurship and finance:
Examining the prospects for sustainable business development, performance, innovation,
and economic growth.