E-commerce is a growing trend in the business community. It has proven to be among the best form of trading. Questions among people who are illiterate about the particular field include what exactly e-commerce entails. E-commerce is a form of trading and exchange of goods and services through the internet. It is one of the best forms of trading since it has globalized the whole world. Additionally, one can trade many varieties of commodities. For instance, a producer is able to establish online car sale and the same time offer small accessories just with the help of a click of a button. This essay is going to examine a case study of what a startup online business requires.
An Overview of Organizational Structure
A business plan entails setting up an online accessory shop, and establishing an online store that has all the clothing accessories one may need. The majority of online clothing stores tend to forget to offer a variety of accessories to the customers. The online business in question will entail getting different accessories from various manufacturing companies (Queensland Government 2016). Some of the accessories will be branded with the companys name, while others will retain their originality. The organization will have different departments:
The three divisions must relate to each other for the business to be successful. Each of the departments has a role to play in the whole process. However, within this structure, most of the burden lies with the management. Its responsibility is to ensure that the entire process runs smoothly.
The business plan has a lot of strengths compared to other organizations. First, the cost of labor is low, but most of the burden under e-commerce depends on efficient machinery. The recurrent cost of labor is smaller compared to other business forms. In addition, some fixed costs such as rents are not available (Top Achievement 2016). For instance, let us imagine having shops in France, United States and Britain. The expenses will be high, but e-commerce gives one an exceptional opportunity to enjoy minimum costs. The weakness of such business is the fact that the whole process is reliable on the internet, making it a slave to the web. Moreover, delivering one particular accessory might be even more expensive compared to the price of this good discouraging some of the customers from purchasing (Top Achievement 2016).
Opportunities give the company space to expand, and the business will have more opportunities compared to any other commercial site, since due to globalization the company has a large market pool. However, being internet reliable, the business is subject to the risk of hacking. Usually, this is a security threat of malicious individuals who want to benefit financially by ruining the business.
The Sales and Marketing Plan
The success of the sales and the marketing plan will depend on two factors. First, the demographic composition of a particular group of potential customers affects business decisions. Research has shown that the composition of a specific population holds the key to success in marketing and planning. Most people who are interested in clothing accessories are the teenagers, youth, and young adults. Research maintains that 60% of the given group will be likely to purchase an accessory. Besides, these people are internet educated, thus they will be able to buy commodities with ease (Palo Alto Software 2016).
Secondly, the marketing and sales of the business will focus on the geographic specifics. Most of the marketing and sales will focus on the urban areas, since most people in urban areas are educated about fashion and at the same time have access to the internet (Queensland Government 2016). Additionally, research has shown that the majority of people resides in the urban areas. The more the target population is, the better the business is expected to perform, since the market pool will be larger for the products of the company. Some of the sale forecasts are offered below.
Manufacturing, Distribution, and Operations
The product supply depends on production and branding. The manufacturing channel comes from the industries that produce the accessories directly (Palo Alto Software 2016). The product still has the origin of manufacturing. The business is just a supply chain under this category. Another channel of goods is where the company makes its own products and brands it under the companys name. However, this is not the primary objective of the enterprise. The primary function of the business is distribution of the offering through the online portal or website that allows an individual to purchase commodities and request for personal delivery. Therefore, the online portal is the structure mandated with distribution. The operations of the business are guided by the management who ensures that all the branches cooperate smoothly.
Finance (Cash Flows and Start-Up Funding Needs)
The cash flow statement shows how the business will be getting funds. Importantly, many companies opt to get income from shares. However, in the case under study, business funds will come straight from the directors personal savings. Over the course of operations, the leaders will begin to buy additional assets as a form of investment, and that explains extra income from investment (Queensland Government 2016). The only expense the company has is the production of commodities, which explain why direct expenditure is the same as the cost of producing the accessories. With time the business will begin selling shares to the public, thus increasing additional capital and enabling the organization to purchase more resources. On the other side, dividends will encompass new expenses for the company.
The cash flows of the business will increase proportionately to the cash costs due to production. However, during the third, tenth month of the first year the cash received will automatically increase. The reason for high sales is significant marketing effect. The market will be so interested in the new idea that more customers will participate in purchasing. In addition, the business will be offering more varieties to the public. The sales of the company will reduce thereafter, and the competitors will be adapting to the same strategic plans the company has created and stiff competition will develop. Unfortunately, the company will have to adapt its market plan and discover the loopholes in the market to ensure that other competitors don not have added advantage.
Risk management is a paramount section of the business plan. Most companies usually collapse because they do not have a proper risk management plan. First, risk management comes in handy in the process of capitalization. The business requires more than $400,000 according to the case study (Queensland Government 2016). However, since it is the first time the idea is implemented, it is advisable to start with half of the estimated capital, which is $200,000 (Queensland Government 2016). It is wiser and less risky to start with the half of the capital and half of the units produced. The business will be able to discover whether its idea is well composited, and whether its products will gain a market share, or not.
Secondly, the directors of the company will be investing in other assets with time. It is one of the best methods a business can use to spread its risk. The more the assets, the better, since they will bring more income to the enterprise. Moreover, the business can liquidate the property when the company is suffering from losses thus producing additional revenue (Palo Alto Software 2016).
Measuring Success (SMART Targets)
The business plan is very specific to its goals, and the entire trade circle entails only clothing accessories. When dealing with specific products, the company can choose to specialize in a particular product chain. By specializing, the company is able to increase the quality of the services offered and thus create a larger market pool compared to other businesses. Moreover, it is easy measure the progress of such company. Individuals tend to capture wrong perspectives of economics, and higher sales do not necessarily mean higher income of the enterprise. The company has been able to measure both its revenues and its costs. By ensuring maximum success, reducing the cost of production and increasing income, it is possible to reach a higher profit margin (Top Achievement 2016).
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The business has a target of reaching cash flows of $500,000 and assets equal to the same amount. The set goals are very achievable due to two factors. First, the company is selling its products online. It means that the business has a large market pool due to globalization. People from the most remote parts of the globe can purchase the products from this company. Secondly, the firm specializes in one product line thus ensuring maximum quality. This goal also works for the next ten years making the whole idea realistic. Besides, the goal is timely since the company can increase its cash flows yearly. In fact, firm company will become even more successful in the future because the use of e-commerce becomes is the most advanced method of trading that is expected to grow (Top Achievement 2016).
For the business plan to be well-thought and structured, the individual starting the business should have confidence in the investment. Additionally, investing in online trade is the next big thing in the business community. However, the director should also invest in assets, as with time competition in the field will increase. The management should monitor operations and ensure the high-quality sale of accessories to all countries. Offering a great variety will help to market the business (Palo Alto Software 2016). The company should also be very specific when it comes to hiring individuals with the needed skills. Research shows that most companies with well-skilled personnel manage to sell more output compared to those that do not have the skilled manpower. The company will require an information technology expert and a system administrator, who will be monitoring the database of the online portal, in order to ensure all the activities are running smoothly. The data entry department will include individuals who will ensure access to the needed data and upload pictures (Queensland Government 2016). The customer care department is also very sensitive, as it ensures that the customers are fully satisfied by the services offered.
E-commerce is a very convenient way of conducting trade. However, on the dark side, it has some challenges. The internet has a lot of scammers, and it is easy to be tricked into delivering a product without payment. Secondly, the business requires a lot of resources, as offering products to the whole world is not that easy. Thirdly, one has to be careful with the currency conversion rate, because dealing with different countries can cause conversion losses. However, online trading is widely advocated because it is the most convenient method of selling goods both for the buyer and the seller. A decent business plan will always ensure that the company will be successful. The business plan focuses more on accurate data compared to theoretical analysis. However, one cannot avoid making some assumptions about market preferences, since most of the data acquired is not precisely accurate due to sampling.
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