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The importance of the location decision differs depending on the type of product or service provided by the business. For retail outlets location is the key. Service providers such as hair salons and shoe repairs services also largely depend on the location to drive traffic to their stores. Location is also important to manufacturers who need to be in proximity to the suppliers. However, if it is small manufacturing business which does not have to be in proximity to suppliers and which sells its products over the internet than location may be not very important. The costs of securing good locations increased significantly over the last decade. However, the internet allows many businesses to establish proximity to customers at a very low cost.
Factors to consider when selecting a business location
Selection of location is often a once-off decision. Relocation is usually very costly and time consuming but sometimes is necessary if the choice of location was incorrect.
The importance of location differs depending on the type of product or service provided by the business. However, there are number of important factors that should be considered by entrepreneurs when selecting a location for the business. Depending on particular business and situation, each factor may be more or less important but all of them should be considered.
The first factor that should be considered is proximity to customers. The importance of proximity to customers depends on the type of product of service provided by the enterprise. For retail outlets location is the key. Service providers such as hair salons and shoe repairs services also largely depend on the location to drive traffic to their stores. However, if it is small manufacturing business which sells its products only over the internet than proximity to customers is not very important, if important at all.
Site-selection software can be used by businesses to help select a location with good proximity to customers. Such software is relatively sophisticated and allows evaluating such information as demographic information, traffic flow and businesses which are located in the area when choosing a location with good proximity to customers.
Proximity to customers is also a very important consideration when businesses supply product which is very expensive to ship, especially if shipping costs are high compared to the value of the product, such as soft drinks. Such businesses need to be located as near to customers as possible to decrease shipment costs.
An internet presence allows good customer accessibility to many types of businesses and should be considered.
Proximity to employees is also very important. Business need to be located in the area where employees of the right calibre, skills set and education are available. Requirements that business have to employees depends on the type of the business and may include wage rates levels, history of relationships between employees and employers in the area, general labour productivity in the area, certain type of skills and availability of surplus labour which refers to the situation when supply of labour is higher than demand and therefore many workers are searching for a job.
Proximity to suppliers is also can be important consideration. For example, it may be very important for a manufacturing business to be close to the raw materials’ supplier. In this case, the cost of shipment or the need to maintain close relationships may be critical.
Proximity superior transportation facilities: Availability of transportation is also very important. For example, a retail store may require a good highway, roads and public transport services nearby to ensure that customers can access the store. For manufacturing businesses it may be important to ensure that good roads are available to transport its products. When considering cost of the location it is also important to consider whether target customers will be able to afford this location. For example, the cost of parking and transportation to access the business location should be considered.
Cost of te location is also an important factor. Generally, it is better for new businesses to first rent a location. This allows business to refine its understanding of its location needs before purchasing a location as well as saving its available funds for necessary operating expenses.
Leasing also reduces risk as it means businesses will have less debt. Risk rises as the debt of the business increases because businesses can be forced into bankruptcy by lenders if debt obligations in terms of interest and principal payments on debt cannot be met. Since sales and other income sources of the new business are usually uncertain during establishment phase of the business, it is much less risky not to have large debt obligations.
If the leasing option is selected, it is important to ensure the insurance policy is adequate for the business’s needs and it does not expose the business to unnecessary risks due to confusing clauses. It is advisable to have an attorney to review the agreement before signing it.
When considering cost of the location it is also worthwhile to consider taxes. Some areas of the country may offer lower tax rates and this could be very helpful for a new business.
If entrepreneurs have very limited funds, and if type of product or service permits, it may be a good idea to initially locate the business on the internet and operate it from home. This will significantly decrease the operational costs required to start a business.
Facility requirements are also important to consider. Entrepreneurs need to consider if the business has any particular facility requirements such as high power consumption.
Competition is another factor to consider when selecting location. For example, if the business is a coffee shop than selecting a location where there are no other coffee shops are currently located can be advantageous, especially in the start-up phase.
Specifics of the community must be understood. It is important to investigate the community in the locations considered. Entrepreneur can do research at almost no cost by reading local press, watching local television, speaking to other business owners in the area and understanding the background of the area.
Entrepreneur’s preferences are another factor that must be considered when choosing a location for the business. Many entrepreneurs give this factor the most attention. Entrepreneur may wish to locate business in the area in which he/she is a resident of and which he or she knows well.
This can have many advantages such as better understanding of the target customers, including their needs and preferences. Other advantages include established relationship that can be utilized for the benefit of the business. An example of this could be a relationship with the local bank manager which can be helpful in obtaining a loan. Another example is the relationship with other business owners which can be helpful in obtaining general advice and guidance.
Entrepreneur’s family and friends may be the first customers of the business and may recommend businesses to other people, which would make it easier to jump start sales of the business.
Entrepreneurs also may choose the location they are comfortable with due to the specific life style that they wish to maintain. For example, certain individuals may prefer to live near the ocean and would want to locate the business in such an area.
However, it is vital to keep in mind all other important factors that must be considered when choosing a location and do not allow just personal requirements to be a sole reason for locating in the specific area.
Entrepreneurs may even consider locating at home. This has a number of advantages such as lower costs, saving time that could be spent on the commute and ability to spend more time with the family. Entrepreneurs, however, need to consider if it will be possible to maintain a professional image by being located at home. Establishing special and non-special boundaries may help to achieve this. It also needs to be considered if the city in which entrepreneur resides allows to locate this particular type of business at home in this area and if there are any restrictions on activities of the business that apply in case.
Prestige of the location will be more important for some types of businesses. For example, if business targets an elite customer than prestige of the location is an important consideration.
Entrepreneurs should also consider sharing facilities with other business. Business incubators offer facilities for the new businesses. Such facilities usually allow new business to become operational right away. Business incubators generally provide businesses with building space, clerical assistance, general equipment such as phones and fax machines and management advice. Such choice will result in lowering operational costs and therefore decrease the risk of business failure due to insufficient funds.
Generally such business incubators are sponsored by governments or universities and their purpose is to help new businesses get established before such businesses become strong enough to move to their own locations. The main benefit of business incubators is management advice that they provide. This could be especially beneficial to inexperienced entrepreneurs.
Other considerations when choosing a location is economic and (business) environmental factors. This refers to such factors as tax structure, legal requirements, crime levels and weather. Safety is an important consideration when choosing a location. Therefore, location at a high crime rate area may not be very suitable, especially if this is a type of business where customers will need to visit the location.
Some areas of the country may offer location incentives such as enterprise zones. Enterprise zones are established to entice businesses to locate in the areas which are economically deprived and in need of job creating by offering businesses lower taxes.
However, many cities also place certain restrictions on businesses. For example, it is common for cities to have zoning requirements which place restrictions on businesses which operate from home. This is a problem especially over the last few years since more and more businesses consider locating at home and home based business are no longer considered to be “second grade” businesses in the eyes of both consumers, business partners and owners.
Focus on why venture may fail. When investors consider a business venture they focus on why this particular new business venture may fail. This is in comparison to the perspective of the entrepreneur who focuses mainly on why this particular venture will succeed.
Main concerns of investors: It is important to clearly address areas that investors are looking for first and foremost. This includes whether the product or service will be accepted by the market as well as potential demand for the product or service. The calibre of the management team and critical risks are also of vital importance to prospective investors. Investors also look for honesty and transparency in the way information is presented to them.
Short, simple and to the point: Investors receive a lot of business plans. Therefore, generally, investors will spend only five minutes briefly looking through the business plan to determine whether this particular plan deserves more time investment for exploration.
Investors usually briefly consider new business opportunity by the reading executive summary or by listening to in-person presentations by entrepreneurs. If within five minutes the opportunity does not seem to be promising, investors will likely to move on to another opportunity.
Therefore, it is vital to be well prepared. An executive summary must highlight all important details why this opportunity is promising. Presentations by the entrepreneur should be concise, to the point and first focus on what investor is most interested.
Value credibility: When an opportunity is presented to an investor in person or via a business plan, the fact whether the investor feels he or she can believe entrepreneur or not will play an important role.
Perceived credibility of an entrepreneur influences the interest of the investor. If the investor will not believe an entrepreneur’s claims and will see entrepreneur as not being trustworthy, the investor most likely will not do business with such an entrepreneur even if the opportunity is promising. Therefore, it is imperative to provide factual support for any claims made in the presentation to the investor, verbally or in writing. The plan should include realistic sales projections and profit margins which are aligned with average figures for the industry, with the exception where the opposite can be factually supported.
High level of preparation: Investors want to see the entrepreneur thoroughly researched the opportunity and considered all important areas.
Value passion: Investors look for passionate entrepreneurs. Investors often invest in entrepreneurs and the management team rather than the business opportunity itself.
After investing: After an investor provides funds to help establish a new business venture, it is imperative to act with integrity and follow through the business plan as agreed at the commencement of the relationship between an entrepreneur and investor. Furthermore, an entrepreneur should monitor actual performance against performance standards and milestones to ensure that he or she stays on track. In building relationship with the investor, it is advisable to follow the simple rule of under promising and over delivering instead of the opposite, which is more customary. Also, the entrepreneur can only control what he or she can control. However, as long as the entrepreneur remains true to his or her word and acts with integrity – natural setbacks and troubles should not be a problem with investors as they usually understand that in the turbulent start-up enviornment setbacks and troubles are inevitable.
Let’s use Portia as an ongoing example. Portia can consider using external financing, which refers to funds invested by outside investors and lenders. External financing is divided into equity and debt financing. Portia can either borrow money with the agreement to repay the borrowed sum plus interest or can obtain funds in exchange for equity, or use a combination of equity and debt financing.
Portia can consider debt as a source of external financing. Debt financing increases her financial risk because debt must be repaid regardless of whether or not the firm makes a profit. If debt is not repaid according to an agreed upon schedule, creditors may even force the enterprise into bankruptcy. Alternatively, equity investors are not entitled to more than what is earned by the enterprise.
When borrowing from the bank, an entrepreneur has number of options. The following types of loans are generally available:
Lines of credit – this is when bank agrees to make money available to the business. Agreement is made for up to a certain amount and is not guaranteed, but only in place if the bank has sufficient funds available. Such agreement is generally made for a period of 1 year.
Revolving credit agreement – this is similar to the lines of credit but the amount is guaranteed by the bank. A commitment fee of less than 1% of the unused balance is generally charged. Therefore, such arrangement is generally more expensive for the borrower.
Term loans – such loans are generally used for the financing of equipment. The loan is generally corresponds to the useful life of the equipment.
Mortgages – such loans are long-term loans and are available for purchase of the property which is used as collateral for the loan.
Portia can also consider equity financing. Private equity investors include venture capital firms and business angels. Venture capital firms raise a fund and then select portfolio of businesses in which to invest. Portfolios generally include start ups and existing businesses.
In exchange for investment, venture capital firms obtain partial ownership of the business. Convertible preferred stock or convertible debt is usually preferred. This is because the venture capital firm would like to have the senior claim on assets in case of liquidation but still wants to have an option to convert it to common stock if the business becomes successful.
Business angels, which are also referred to as informal venture capital, are wealthy private individuals who invest in the firms in their individual capacity. A very small percentage of start ups manage to get such funding. Therefore, entrepreneurs should have other options available as well.
There are also government supported financing options available to Portia which are specific to Portia’s location.
Further, Portia can use personal sources of funds. The “personal” sources could be personal savings, credit cards, borrowing from friends and relatives or any other way of obtaining money such as selling an asset, such as a car or a summer house, to free up funds for investment in the enterprise.
Personal savings are usually the leading source of “personal” funds. Credit cards are often used but needed to be used with extreme caution as interest rates on outstanding amounts can be incredibly high.
Borrowing from friends and family is also very tricky and should be done with extreme care. If Portia’s business fails or does not perform as expected and money is not repaid when agreed than it can destroy or severely damage relationships. When borrowing from friends and family, it is a good guideline to ensure that it is seen as an investment rather than a gift by the lending side of the transaction. An agreed upon deal should be put in writing since memory is not always reliable. Moreover, the amount borrowed should be repaid as soon as possible.
Overall, Portia has a number of the sources of external financing to choose from. Portia needs to evaluate upsides and downsides of each option and consider all options in light of the unique situation of the business to choose the best option or combination of options.
Public relations is a staff function within s company which is concerned with the purposeful and ongoing attempt to establish a mutual understanding with all the stakeholders (both internal and external) of the organization.
Staff functions are differentiated from line functions. Staff functions are supportive functions. Examples of staff functions are public relations and human resources. Such functions directly support line functions. Continue reading “Overview of Public Relations”
There is an important difference between the internet and the World Wide Web or the Web. Internet refers to the entire infrastructure which allows otherwise incompatible individual computers to communicate with each other, regardless of where they are located. Basically, the internet refers to all computers, telephone or cable lines and network cables that make it possible for any computer to communicate with any other computer, as long as they are connected to the internet.
Continue reading “The Difference Between the Internet and the Web”
One such activity is sponsorship. Sponsorship refers to a situation when an organization supports a cause or event via contribution of some of its resources, which may include monetary and other resources. Examples of sponsorships include supporting sports events, charities and providing education grants.
Media refers to the channels via which particular message of the public relations campaign reaches stakeholders. Medium makes it possible for the campaign to reach stakeholders through the use of one or more channels. It can refer to mass media or to individual. Channel refers to a tool which is used to carry information. A channel is a medium of communication.
PR and media
Media refers to the channels via which a message of the public relations campaign reaches stakeholders. Media is not only an important stakeholder for a business but also make it possible to communicate with all other stakeholders of the business.
Types of media
Media can be of two types, controlled or uncontrolled.
Controlled media are usually paid media over which businesses have some control. An example of controlled media can be the annual report.
Uncontrolled media is unpaid media over which organization does not have control. An example of uncontrolled media is a news release. Media representatives, such as editors of a newspaper, will have control in such situation regarding whether this information will be published and in which form it will be published.
Choosing the media
When choosing appropriate media, public relations practitioners should consider which media is accessible to targeted stakeholders and which media they prefer. Available budgets should also be considered.
PR campaign refers to undertaking organized communicating activities to achieve a specific objective, usually within a specified period of time. Organized communicating activities may include research on the subject of the campaign, creating a combination of messages and ongoing provision of a lot of information, distributing information and evaluation of the success of the campaign.
The general objective of a PR campaign is to influence behavior of a large audience of targeted diverse stakeholders in one way or another.
Specific objectives of PR campaign can include changing or reinforcing an attitude or behavior of targeted stakeholders. It can also be to educate, create awareness or inform stakeholders about specific issue. Objectives of a PR campaign may also include all of the above.
PR campaigns can focus on products or services, be political or be ideological or focus on particular issue or cause.
PR campaign management consists of four phases: research, planning, implementation and evaluation.
The PR campaign is affected by the business environment. A business environment is very turbulent and continuously changes. Ongoing environmental scanning is essential for public relations practitioner to be well informed about happenings in the business environment to ensure that such changes can be incorporated into the public relations campaign planning and management.
PR campaign planning
Effectiveness of the PR campaign is measured by whether or not the general objective of the PR campaign is achieved. In other words, whether the behavior of the targeted stakeholders was influenced in a way organization intended. To ensure effectiveness of the PR campaign, it is vital to undertake systematic public relations campaign planning.
There are various campaign models the public relations practitioner may use to systematically plan a PR campaign. One of the models is four-step public relations campaign model by Cutlip, Center and Broom. Other modules include the communication by objectives model developed by Fourie, Steyn and Puth’s. All models are similar but differ in some respects.
To take a look at one of the models, we will briefly discuss the Cutlip, Center and Broom model. The four-step process suggested by those authors are:
In planning the PR campaign, other important aspects to consider would be the profitability of the campaign. A PR campaign can be very expensive and analysis should be undertaken to see if the campaign will bring a greater benefit to the organization compared to the cost involved in implementing it.
In the planning stage of the PR campaign, the important aspect is feed-forward. This refers to researching beforehand the targeted stakeholders and how the stakeholders might react to particular messages.
Research of targeted stakeholders should include such variables as demographic characteristics of the targeted stakeholders. This refers to such aspects as age, gender and religious beliefs.
Comprehension capacity of the targeted stakeholders also must be understood. In other words, how well educated are the stakeholders and what is their level of understanding and knowledge about the subject of the campaign.
Communication habits of the targeted stakeholders also must be considered. This refers to such aspects as which language the targeted stakeholders speak and which media they prefer. In researching targeted stakeholders, public relations practitioners may gain a better understanding on what kind of approach for the campaign they should select. The types of approach may include being serious, emotional or humorous.
The probing of how targeted stakeholders might react to particular messages may be achieved by, for example, giving an indication to the stakeholders of the message of the proposed campaign. This can allow evaluating of potential opposition of the stakeholders to the campaign. This information can be used to adjust the campaign to better meet the needs of opposing stakeholders or to prepare to deal with the opposition.
Ensuring effectiveness of the PR campaign
For the PR campaign to be effective, it must establish an image of being revolutionary in nature. It must entice targeted stakeholders to buy into the message communicated and to identify themselves with the message.
Moreover, for campaign to be effective, the communicator, organization and medium must be perceived as credible by targeted stakeholders. Media makes it possible for campaign to reach stakeholders through use of one or more channels. It can refer to mass media or to individual mediums.
It is important to ensure the public relations campaign is culturally acceptable to all stakeholders and that channels used to communicate messages are accessible to targeted stakeholders. Channel refers to a tool which is used to carry information. Further, media refers to the channels via which the message of the public relations campaign reaches stakeholders.
The PR campaign must also incorporate values and norms of the organization and of targeted stakeholders. If this aspect is ignored and the values and norms of stakeholders will conflict with the campaign – such a campaign will likely not be effective.
For a PR campaign to be effective, it must be supported by top management.
During and after implementation of the PR campaign, public relations practitioners need to obtain and respond to the feedback from the stakeholders.
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Public Relations campaigns must be data driven. Data, data, data must guide your thinking and approach. Many, many public relations firms simply follow the crowd. They generate press releases, contact authors and so on. This will get a company’s name out in the market but will not build a brand.
Below are three forms of collecting data:
Market research is research with intent to find information on specific issues, problems or opportunities. It is conducted when a need arises and not on an ongoing basis.
Market intelligence is an ongoing process of obtaining relevant information about the business environment on a formal and informal basis. Formal market intelligence procedures occur when specific personnel are assigned to search for any relevant information on the business environment. Informal market intelligence procedures refer to ongoing scrutiny of newspapers, magazines, industry related publications, relevant books and any other external sources which may contain relevant information on the business environment.
Internal data – refers to collecting data from internal reports of the organization. Internal reports may include billing reports, reports on inventory levels, at cetera.
Skills & Knowledge for Driven People 