Response

I need a response to these two subjects. It is for a forum. Just give opinions on what they wrote. Ca be one to two paragraphs. Thanks.

Subject One:

The two most common variables reported for the failure of a small business are capital and management experience (Lussier, 1996). It is important to define a realistic strategy before launching a business, unfortunately many entrepreneurs find this part of the process to be unnecessary due to optimism and enthusiasm (Scarborough & Cornwall, 2015). A lack of planning results in the business needing to continue adjusting their approach after the business is launched. A continued search of what works is something that often cannot be sustained in the long-term. The first step of the business plan process, the feasibility analysis, could help to work some of these issues out before launching. Developing a business plan involves financial analysis as well as a financial plan, including start-up costs, break-even analysis, capital requirements and potential return on investment. Capital should be secured with a consideration for all operating costs necessary until the business reaches a breakeven point, it is better to overestimate then underestimate (Scarborough & Cornwall, 2015). It is important to keep fixed costs low even with early success, in case activity and sales slow. It is crucial for small businesses to be strategic. In order to achieve results a business must be able to navigate challenges and uncertainty. The business world is competitive, without a plan in place you will be missing opportunities instead of working towards accomplishing the vision, goals and objectives necessary for success. The SWOT analysis is another step in the business plan process that creates a strategic framework. This analysis helps to determine factors of the internal and external environment that can impact the business, classified as strengths, weaknesses, opportunities or threats (QuickMBA.com, 2010). Entrepreneurs and small businesses especially, need to develop a competitive advantage to differentiate themselves from their competitors, big and small, and use it to support their vision. A business plan also includes an assessment of risk, and an analysis of the competition as well as potential customer base. Creating a plan, and continuing to act on it, adjust it and reformulate it, helps a business move towards its goal (Scarborough & Cornwall, 2015). The discipline needed to study all these factors is crucial to the survival of a new business.

Subject Two

Hi Class,

Many businesses fail in their early years as a result of both external and internal factors. According to a Science Direct study published by Elsevier Ltd., common external factors included economic conditions, changes in government policy, and other unexpected events (Atsan, 2016). From an internal perspective, frequent causes included issues related to partners, finance, and a lack of critical information and mentoring (Atsan, 2016). One example of this from my own experience includes a venture I attempted to start midway through college. The intent was nothing drastic; simply purchasing a duplex primarily to rent out to other tenants while maintaining the property ourselves to save money. I had two other partners and we had gone as far as setting up a Limited Liability Company to formalize ownership interest between the three of us. This venture never ended up getting funded as the property we intended to put an offer on sold unexpectedly and the other two individuals lost interest in searching for an alternative. Perhaps if we had developed a formal business plan the outcome would have been different.

I believe that a business plan can help reduce the possibility of failure because planning ahead naturally increases preparedness. In my own experience for example, planning in advance helps me forecast potential outcomes in virtually any scenario, making me ready to adapt quickly to changes in a particular situation having already anticipated them. I believe this translates into business. Evidence of this includes a study by the American Institute of Small Business, which found that new startup businesses or companies undertaking major expansion increased their likelihood of success by 50% or more if they prepared a business plan first (Becherer and Helms, 2009).