SatE: CUSTOMER SERVICE AND CUSTOMER LOYALTY (part 4)

Benchmarking

• The company would look at competing businesses using mystery shoppers
• Analyzing the competing business quantitative and qualitative aspects
• Adopting anything that the Bloomsbury finds useful
• Measuring the viability and validity of the benchmark
• Monitoring the established benchmarks

Quantitative and qualitative indicators

Qualitative measures: this refers to the results based on quality or characteristic as opposed to size or quantity.

Qualitative indicators

• Questionnaires: these are designed to find out information and requirement of the market. This is a means of primary research which can be laid out in various formed all designed to acquire the information needed to make the right decisions.
• Suggestion cards complaint centres: when a firm conducts this type of research the firm would be trying to attain information on how the customers feel about the firm, if there are any common requirements that the firm needs as well as information that could help the firm make better decisions.
• Focus groups: theses are usually conducted to find out customer loyalty and more information on repeat customers. There are two major types of focus groups that the firm can use these would be :
•  
• Internal: internal focus groups would be done within the firm with internal customers in order to discuss and find out how staff are feeling about their jobs and how they would want this to be, this is because management would want to know how the could improve the internal working environment for their staff which would reflect onto the staff. The information that is attained form these focus groups is used to make better decisions that would have derived from the employees interest indication the quality of the firm.
• External: external focus groups would be when the firm gets customers together to discuss how they feel about their experiences with the firm and how they feel about the firm in general the firm would find out information such as customer loyalty and what makes them loyal. These focus groups are generally set up to investigate, and acquire information on how to satisfy their customers best. The most imperative way of gaining and maintaining a competitive advantage would be by satisfying and ultimately wowing the customers

Quantitative indicators

Quantitative measures: these are results that are based on or measured in terms of quantity or numerical value. This can be seen as sales and profit levels, speed of service, customer retention, the number of complaints received about staff, or products or services, the percentage of orders resulting from visits to customers by sales people, and responses to marketing material sent out.

Quantitative indicators would include:

Sales figures: sales figure show the performance of the firm in terms of numbers, this shows general statistics of the firm performance from that the firm would now how well they are doing in comparison to other firms in the same market or to its history.

Staff turnover: this is the rate of staff leaving the firm and being replaced if the staff turnover us high then the firm would know that their motivation in the firm is low and then would have to do something about this.

Guaranteeing 100 percent satisfaction

Entrepreneurs can be best guarantee 100 percent satisfaction to their customers by securing how they feel about their purchase or service. This is key in order to satisfy customer’s needs and fulfil their expectations. Since customer service is the way the company looks after it’s customers by putting them first, it should not just concentrate on the dogmatic elements of the staff to customer relations but staff, to be consider what a customer would expect to be available, such as; the business should make sure the range is of products advertised and marketed, is available to the customers, the company should make sure the product range would be delivered on time if delivery services are offered, the company should be able  provide the relevant information about the product and if not the staff should know where to refer the customer, to acquire the information, the entrepreneur  should be able to give advice on the choices of purchase, the company could offer services that can help support the customers financially such as credit facilities when appropriate specially when purchasing expensive commodities for example allowing the customers to pay over a period of time, the company could offer:

• after sales
• guarantees,
• spare parts,
• helplines
• services and upgrades

This could differentiate the customer service from competitor’s customer service giving the company a competitive advantage and by making sure the company is selling goods of quality and value for money, which is safe and reliable. The best way and most common way to do this would be by offering after sales services, this come in a number of forms:

• Warrantees
• Lifelong guarantees
• Free insurance
• Money back policies

To ensure that the customer is fully satisfied the firm can then ask customer for feedback and attend to the feedback accordingly. Most firms such as Cruicialmemory.com offer seven days to return and they give you your money back promptly, the firm also offers to insure you product for free if you are happy with the product purchased. 

Acting on complains, ideas, suggestions and personal information

Entrepreneurs need to train their staff to help them understand customer’s different situations and be impersonal to any circumstances. Businesses should maintain confidentiality and should be able to practice that procedure within the business. Customers should be able to give personal information and should be secured that the information is safe. Different policies with the business should reinforce the customer’s security. Staff ought to be trained in sufficient ways, to be able to handle customer’s sensitivity and must be smart enough to allow customers to feel confident when confronting the staff. The customer service should be trained to speak to customers on different levels of interests for example a woman entering a game store with a small child would be expected to be looking for a simple child’s game where as if a teenage boy was to enter the same shop the staff would expect him to be looking for an advanced active game. So staff should be able to relate to their customers according to those criteria. For example is a woman is buying ladies sanitary items would not need to be commented on whereas clothing or fashion would. 

Situations where customers have been referred to someone:

When an internal or external customer has been referred to the business by another business the customer or business the firm should be able to attend to the new customers’ needs thoroughly by communicating to them clearly and attentively supporting the customers’ suggestions. The firm should identify the reasons for the customers’ referral and resolve the matter. If the business is referring customers to a business they show state reasons why and how to locate the referred business, give full details on how to contact them as well as advise on alternative solutions. Since there are situations when an organization may not be able to fully help a customer with a specific problem and the firm would need to refer the customer to another personnel or firm that would be able to deal with the issue. The major thing that is involved in this case is the firm capability to identify where they stand. Staff should know how much authority they have to handle different situations. Internal customers must be able to communicate in a way that makes it easier for them to be able to refer external customers. internal staff should be able to identify their lines of work and must be able to identify which superiors they can delegate work to. To do this the internal staff should be able to recognize the limitations of the wok and job requirements. This way it would be clear for staff to be able to recommend customers to either their colleagues, superiors or other businesses.

Reference can occur for example then a customer enters a shop looking for a specific product and finds that it is not there, they may need to be recommended to another firm that has it or another branch. Staff can only do this if they have knowledge of the firm’s product portfolio. Another example would be if a customer where to enter Zara and wanted their money back for a product they purchased a one month before, if the customer where to confront a sales assistant the sales assistant may not be in the position to take the customers claim, but the sales assistant would need to know which authorised personnel to send the customer to as reference. Another example where reference might take place would be; if Curry’s because they sell laptops in the store a customer may automatically assume that the firm sells replacements parts for the lap top, curries dose not sell the replacement parts so they would need to refer the customer to the manufactures or to a firm that does sell the replacement parts.

Legal requirements that must be met concerning information supplied to and records held about customers:

The business would have to comply with the, Data Protection Act 1988.The personal data obtained by the business should be fairly processed. The business should constantly update the information provided by the customer. The business is only required to keep the data for lawful purposes. The business should only collect information that is adequate for its purpose. The business should insure the data from unauthorised access or destruction of the data. A business should consider all these aspects, before providing a service to the public. (Source; www.dataprotection.ie/viewdoc .-Data, protection commissioner-Ireland)

Prompting employee ‘buy in’

Entrepreneurs should able to reflect their success onto their employees the same way Bill Gates has. All of his staff are very confident in his work and thus have bought shares I the firm. They have shared the same ideology as himself. The internal customers should have a relationship with the entrepreneur this would then motivate the staff to work more effectively and more vigorously. It is important for the staff member to be motivated in every way.

SatE: CUSTOMER SERVICE AND CUSTOMER LOYALTY (part 3)

Becoming a trustworthy advisor

For an entrepreneur to become respected and successful the entrepreneur has to attain the fundamental knowledge they need to become successful. This knowledge can be attained either through experience or training and education. A good entrepreneur should be able to pass that knowledge and skills down to their workers. An entrepreneur should be able to understand major concepts and should be flexible with ideology this means an entrepreneur should be open minded. A good entrepreneur should be skilled in a variety of business areas and should be able to give honest advice to customer as well as internal customers. An entrepreneur should have the relevant characteristics to be in the position of advisory this is because they will have the experience to interact with people. An entrepreneur should have good PR skills because this would help them communicate to new customer

Attributes of an advisor

• good communication skills
• good interpersonal skills
• organised
• honest and professional
• experiences
• multi-skilled

If an entrepreneur exercises these qualities in an advisory position it is easier for customers to become closer to the firm especially if the advice is beneficial to the customer, this would increase the prospects for customer loyalty and repeat business. This is also exclusively important for the entrepreneur because this would boost the reputation of the entrepreneurs which will open doors to more opportunity. An entrepreneur has to ensure that their business can be trusted by customers that is why it is important for an entrepreneur to install polices that guarantee good advisory services. The firm should also be secure about enquires and should abide by the data protection act 1998. 

Companies such as UCAS and Debenhams have put in place areas on their website where customers can securely communicate to and from the firm either asking for advices or suggesting something. Another way in which the firm could increase the comfort of the customer is by keeping  a clear line of communication with the candidate by telling them how and where their information is being processed. Firms usually do this by sending letters to the prospective candidates. For example UCAS applications online:

This site has been secure when retrieving personal information as well as any applications, the site also offers the candidate or applicants the opportunity to track the progress of their information, requests and updates. This is done by keeping the candidate as a member instead of just a random person patronising the forum.

Another example would be Debenhams which makes all its staff and applicants a member before applying so that once they do apply the have a record of the candidate and can constantly communicate any kind of vacancies without the trouble of constantly applying

Entrepreneurs should be able to back up their policies on good advisory service with good results, so feedback is very important the firms should always give feedback on quires and should always offer the customers a chance to reply in acquisition

This firm has made sure they have replied all my enquires on time and have kept me up to date with my order

Exceeding the expectations of customers

The most rewarding aspects and influence that an entrepreneur could have on a business is to build the firm up in a way that would promote exceeding the customers’ expectations. This would include a lot of marketing. Marketing is the anticipation, identification and satisfying of customers wants and needs profitably. Once the entrepreneur has established what the customers actually want from the firm. The entrepreneur should be able to plan how to exceed those wants and needs, either using various strategies such as price cutting or quality service. Company for example Tesco have done so by doing various activities to wow customers. Another good way to wow customer would be by improving customer service standards in the firm, this can be done if the internal customers are trained to practice customer service on a high level of competency.

Training and how it helps the company meet needs and expectations

The staff should have policies  which they can go by ethically to improve and add value to the customers visit to the business. The internal customers should be trained to treat external customers with the respect they expect to receive. Staff should make it a priority to achieve all the objectives of the customers service department, has that corresponds to building up an industry key success factor, for example; Tesco’s main objective is,” creating value for customers, to earn their lifetime loyalty.” That is they’re strategic vision. The staff must be able to manage the resources intensively to optimise the level of service given to their customers that is why it is imperative for the company to train the staff on site as well as offsite if necessary, to familiarize the staff with the firm and all its conduct. 

This training may be induction training or experience based training. The company could offer customer care training as well as a customer care scheme, which concentrates on the company as a whole and the needs of the customers’ rather than the needs of the company and management. The business could also offer external training which could be expensive; this training could be equipping the staff with the relevant skills to tackle changing situations, general ethic and human relation skills, problem solving and many other specified skills. These skills would help, build a pleasant environment in which the customers would feel free to explore the business fully encouraging the customers to spend more time when visiting the, for example when a customer is moving around the business, they might be expecting assistance from staff, so staff should be aware of this, contrary to that the staff encroach on the customers personal space.

Internal customers need to be able to apply their skills to internal customers within the business to satisfy their co-workers and to maintain a healthy working environment; the internal customers’ have expectations just as external customers and the staff should be able to identify these expectations and cater for them sensibly, this could then improve the productivity of the staff and also keep staff happy, this always reflects to the external customers; for example if the internal customer has been annoyed by another member of staff they may take that out on an external customer there for causing the company to possibly lose that customer. If the internal customers were happy about their work place, they would tend to take that enthusiasm to their external customers, creating a pleasant transaction for the external customer. (Sourced: www.wikipedia.com customer service). Bloomsbury should also cater different type of customers. This means that the company should consider that different groups of the customers that will patronize the company different groups such as:

• Children 

• Special needs (these people that have unique requirements from the business) 

• The physically handicapped and disabled 

• The mentally handicapped, 

• The deaf (hearing-impaired), 

• The blind (visually–impaired), 

• Foreign customers (none English speaking) customers 

The company should be able to provide for these types of customers (see 1.2a). The staff should be sensitive to the needs of these groups by the use of signage and pictures with sound communication (see 1.2b). (Sourced; Michael Fardon, Glynis Frater, John Prokopiw business pg135). The company should achieve or meet its charter (a code of practise, published document). Most medium/large companies have a code of practise at which they go by, for example Tesco’s,” we treat customers they way we would like to be treated”. Since the companies industry success factors are constantly changing the management should be very good at their job. According to covey’s seven habits of highly effective people the management should be: 

• Proactive 

• Mindful of the business goals 

• Put first things first

• Thinking positively 

• Analytical  (analysing skills)

• Synergize (working in a team)

• Always looking for improvement

 This is important if the management is going successfully going to supervise the customer service to satisfy customers. The management has to be able keep up to date with work and changing staff requirements as well as minimising stress levels, the management should be active and exemplary. The management must be organised, ambitious, must identify new customers’ needs quickly. Tesco’s management has been able to achieve this by altering, even the smallest issues customers bring up such as Tesco’s innovation on their upgraded ageing weighing scale infrastructure; as Tesco’s service productivity team recognised then need to introduce more modern weighing scale application. Tesco and Conchango developed this technology to suit customer’s needs and by doing so they managed to exceed the customer’s expectations and satisfied the customers fully. The technology helped the company in a number of ways, it increased the efficiency and satisfaction of internal and external customers by integrating with the current system, easy to use for the staff and operating 24 hours a day 7 days a week, keeping accounts and automatically providing information about the stocks of that branch. This gave the management superior speed in ordering new stocks. The intelligent counters enable members of staff with information instantly and customers can choose from a wealth of product options and information.   This ultimately provided a key success factor for the improvement of the customer service. Management has also identified that customers would be attracted to a business that caters for their specific needs. So Tesco has inbuilt:

• Bakeries available with all the commodities that a normal bakery would sell. This includes ordering by bulk, specified services for example birthday cakes.
• Delicatessens are available with free tasting facilities to explore
• Welcome helpers, which they call customer champions, they welcome, familiarise them self’s to the customers, answer to any queries and assist the customers in any way possible.
• Glass hire services for large parties or weddings
• Dispensing pharmacies, they carry out pregnancy tests, advice on healthcare and NHS dispenses in the dispensing stores.
• Free phone services to call taxies at selected stores.
• Special offers to encourage the customers to patronize the stores more often.(Sourced:www.tesco.com/customerservices/custServAroundTheStore.htm)

To enable the customer service department to satisfy the needs and expectations of the customers, they would have to analyse the customers demographically. I suggest Bloomsbury should identify the business’s dependent path (how the business got to its current status), analysis its service capabilities (the resources that give the business initiative to do go further) and strategise the staff to successfully meeting these customer expectations.

SatE: CUSTOMER SERVICE AND CUSTOMER LOYALTY (part 2)

Taking care of detail (cont.)

Sir Stuart Rose is another example of an entrepreneur that has identified the importance of catering to the detail of customers’ requirements. He has managed to pick M&S up form problems in the market and used customer service to satisfy customers. He has identified that customers don’t like to shop in:

·         untidy environments,

·         thin or narrow alleys

·         dark lighting

·         woman don’t like bending over to collect shopping

·         long queues

So he made sure that M&S improvised and implemented these new customer service counter techniques. The shop brand also diversified into the food industry with simply foods this was because Stuart rose identified that customer like healthy food products. In this market Stuart Rose has paid a lot attention to detail to provide detailed information to customers. All the foods products for example hare label correctly and detailed to provide the right information for the customer to make the right decision on their purchases.

 By providing detail to the service that the customer gets is a very good way of satisfying a customer.

Enabling customers to build associations with a brand

It is imperative for a good entrepreneur to help customers understand the brand and there for get more involved with the brand. The more familiar a customer can be with a brand the higher the chances that the customer would repeat business at the same shop. Entrepreneur should train their staff to attend to customers in a way they would be distinct to the customers. The customers should be able to feel a difference when they are patronising a firm, this would help create a competitive advantage. This competitive advantage should reflect on the customers association with the firm. An entrepreneur can help its customer become more associated with the firms brand by:

·         conducting out reaches

·         exhibitions

·         rally’s

·         and other below the line promotions

The PR (public relations department) should make an effort to create a strategic advantage to help customer be more informed and better associated with brand. Then entrepreneur should always take responsibility for its firm and so it is up to the entrepreneur to ensure that the PR function is efficient and is promoting a strategic advantage

Strategic advantage

For a business to achieve a strategic advantage over its competitors it has to establish a difference that can be preserved, the customer service of a business is highly important since it demonstrates the businesses value for its customers and also generates value for the actual transaction. If the customers have had their expectations exceeded by the level of customer service they would tend to utilise the business more often and might recommend the company to other potential customers. If the business has a good internal structure and clear communication paths the firm could use its internal resources and capabilities to strategically establish an industry key success factor. The customer service department should be able to master the interactions between customer and staff to ensure that the right service is being given. Since it is very difficult for a business to predict the situation a customer may face the staff should be fully trained and equipped to manage any arising situation. The staff should aim to wow a customer to encourage a life time loyalty from the customer. Once the company has established this expertise, the method of customer service cannot be imitated by other companies since it is impossible.

A good example where a firm focuses its energies on associating its brand with its customers would be Microsoft and Apple:

Microsoft is always trying hard to get customers familiar with their new software either through promotions that are both above the line or below the line. 

Microsoft like many other firms in many industries has opened up websites to advocate to their promotions and advertisements, to the customers. These websites have been created so well and have innovated to an extent that they even have various facilities on them that are compliments to the firms. Some firms have eCommerce  and some have facilities that allow for the customers to test the product or gain information amount the product before they use it.

Apple

Another example where apple has done this would be using the iStore and iTunes apple has created its own e-market place where you can only utilise the market place if you down load their free software to play the music. 

Also on entering Apple stores you get the opportunity to associate yourself with their products before you get to use them the whole store has many of its popular products ready for trials.

Apple and Microsoft are both competitors in an oligopolistic market feed their customers facts about their products to help the customers make well informed decision. These firms have also made their brand identifiable by creating a very unique and copy righted brand logo for example.

Apple logo

  

SatE: CUSTOMER SERVICE AND CUSTOMER LOYALTY

 Taking care of detail

As an entrepreneur it is important for you to use your skills to entice your customer’s interests and loyalty. This can be done by exercising elite customer service, to both your external customer and internal customers. Customer service can be seen as making and ordinary transaction or visit to a business premises into a good experience.  An entrepreneur should be able to reflect their attributes towards their internal staff so that their staff can do the same thing to the external customers.

Internal customers are employees of an organisation this is because employees can be said to be internal customers of their colleagues, they treat their colleagues as external staff. To be a successful entrepreneur you need to make your customers feel as though you’re worth every penny. An entrepreneur is only as good as their customers make them. So in order to do this an entrepreneur needs to understand how to satisfy customers.

A customer can be satisfied if their expectations are low, this means that if the customer gets what they are expecting they will be a satisfied, but is an entrepreneur gives them more than what they expect form a service or transaction the customer will feel wow, this is the basics of elite customer service. An entrepreneur can do this by providing good customer service systems that enable them organisation to make detail undertaking of activities that the customer may be involved in. There are many ways in which entrepreneurs can do this:

·         Offer services to different types of customers such as customer groups

·         Cater for special needs customers

·         Implement various activities for customers

·         Support various customers in different ways

·         Multifunctionalise the firm (the firm having various functions to suit customers)

The benefits of caring for internal customers       

Caring and respecting the internal customers’ is key in a business. According to the KBV (knowledge based view) knowledge is the most important asset in a business and the internal customer provides the business with the human resources, knowledge an example of a firm that uses this would be 3M which thrives on different innovative ideas to create technology. The human resources or internal customers also have needs that have to be met by the business. The staffs need to be satisfied and happy with the business environment they're working in, physically as well as mentally; a healthy environment should be present for the internal customers. The staff should be trained to help them acquire the confidence to tackle new situations, the internal customer would also feel good about themselves as well as, feel they're part of a team. The internal customer for example staff served by other staff in an organizational hierarchy structure would benefit from good customer care.

Companies such as Tesco M&S and even Microsoft value customers this is because by showing value to customers, the customers will feel more inclined to patronise the firm more and this increases repeat business as well as customer loyalty. Firms such as Tesco have created the structure of their entire business to suite the requirements of their customers because it is in the best interests of the entrepreneur as well as the organisation to have satisfied customers. Tesco has multi-formatted their firm  by introducing a multi-formatted service structure, according to the location (community),demographic profile and buying behaviours, the business could easily divide itself to suit different communities. The segmentation could specialise in the needs of the community around the business for example, Tesco has four different store formats, and each tailored to customers' needs;

Tesco express: which offers customers great value, quality and fresh food close to where they live. This format is placed to act as a general food, wine, spirits and baked commodities, convenience store. These stores are up to 3,000 sq ft. 

Tesco metro: these stores are bigger than the Tesco express stores and are usually located in shopping centres in the city or towns. Metros cater for thousands of busy customers each week and offer a tailored range of food lines, including ready-meals and sandwiches. These stores are approximately 7,000-15,000 sq ft.

Tesco superstore: Are larger than the metro stores and are located where customers are densely concentrated. These stores have none food products which include items such as DVDs and books and are approximately 20,000-50,000 sq ft. 

Tesco extra: these are the largest stores. These one stop department stores offer the widest range of food and non-food lines, ranging from electrical equipment to home wares, clothing, health and beauty and seasonal items such as garden furniture. These stores are approximately 60,000 sq ft and above.

Businesses similar to Tesco such as Bloomsbury have a similar customer service structures to help customers in the best way possible, the similarity of these structures are caused by the common factors that influence the business, which have been mentioned before. Within my desk research I noticed that most of these medium/large companies don’t publicize their structural information, they tend to keep it internal as part of their policies.

SatE Chapter 11: FINANCE FOR THE CHOSEN IDEA (part 3)

Budget & Support for organisations and businesses

This is a plan which shows the different items of income and expenditure for a future period of time. Usually budgets are done on spreadsheets.

Support for organisations and businesses

Trade associations

• It brings research and ideas together in a structured format

• You can decide when you business would be ready to start off

• Explain your business purpose

• Predict future scenarios and pitfalls and address them before they can threaten the success of the business.

• You can set out a strategy for your business and mostly for your marketing plan

• You can set targets and objective, including sales and financial targets

There are business or organisations that help support new firm coming up or to start them of by supplying finance to these firms. Usually businesses would have to prove to them that their firm is viable and worth investing in. Such organisations would include:

The Trade Associations are organisations that represent the interests of their members in a particular industry. An example of this is ABTA which represents the travel agencies. Members pay a fee and in return receive support and services from the organisation. The organisations will provide assistance in the application of law and dealing with problems, as well as trying to convince the government to consider their industry when it makes policies and laws.

Chambers of commerce

There  is a chamber of  commerce in each area in Great Britain its like the trade association except that it has members involved in almost every different business. It represents the wishes and the needs of local businesses. It occasionally interacts with local government and the central government and can also act as a means by which businesses can receive grants and training from central government or the European Union.

Business links

This is a national organisation with offices working in each area of Great Britain. They are designed to help local businesses and to provide them with services support and advice .they also provide training, assistance in writing business plans, exporting and importing, dealing with European regulations and improvements in the quality of products and services.

Confederation of British industry (CBI)

This is a British organisation that works as a pressure group to influence the government so that it produces favourable policies and laws for businesses. The organisation also carries out research to look at how trends in the future might affect businesses.

Institute of directors

The institute of directors supports business leaders by providing them with information, advice, training and publications. The institute of directors also represents the concepts of businesses to the government.

Government agencies

Government agencies provide primary support for businesses the main organisation would be the DTI. It has an enormous range of information, advice and support for businesses in every industry. Specific information is available to different business sectors, such as computer games manufacturing and telecommunications. In each sub-sections the DTI analyse the market and provides information about the opportunities and threats to the industry.

Business plan

Before starting a business an entrepreneur should finish their plan in order to gain finance. The business plan will enable the entrepreneur and the people who would be interested in the funding the venture. To know exactly everything the entrepreneur would need to do in order to hit profit objective including: target specific customer groups, product pricing which also known as market planning. All the costs, sales, forecasts and marketing, the business plan shows what the business is worth’s and points out weather the business is worth being invested into, this information would be included in the business plan.

An entrepreneur needs a business plan because it doesn't matter how big or small a  business is it would need some sort of plan. This is vital to the establishment of the firm. There is no set format for a business plan. Planning ahead is vital if you are to set a successful enterprise. The entrepreneur needs to set business objectives such as profits and growth and then gather information from market research. He/she would be required gather information and set an action plan (this is the way in which the entrepreneur is planning on achieve the business objectives). Financial planning is the main essential component for starting up a new business, simple because without it you can't start the business.

Benefits of writing a business plan

For the business to attain finance from sources, the entrepreneur would have to construct a formal business plan. A business plan is a formal statement of a businesses set goals, the reasons why they are believed attainable, and the plan reaching those. It may also contain information about the how the organisation is planning on achieving the goals. The business goals that are being attempted may be for profit or non-profit. For-profit business plans typically focus on financial goals. Non-profit and government agency business plans tend to focus on service goals, although non-profits may also focus on maximising profit. Business plans may also target changes n perception and branding as its primary goals is called a marketing plan. Sourced, (wikipedia). Once the business plan has been constructed and designed covering all the areas of the firm it is up to go through the business plan and make sure that the business plan covers the marketing plan and all the areas of interesting which the stakeholders would be interested in. this is because the business plan has to prove to be truthful and realistic in terms of aim and objectives, in order to gain the requested capital. Entrepreneurs need to plan in order to produce finance for the business, they need to aim there business plan at:

Whom they want to get the finance form, for example the government, family or bank

The entrepreneur would then be required to contact the ideal sources of finance and presents the business plan as well as help guide them through it preferably with some sort of presentation to highlight the relevant areas of the business plan in which would be in the best interests of the sources of finance such as a venture capitalist. The entrepreneur should leave copies of the business plans for their sources of finance to look at and therefore maintain close contact with them.

SatE Chapter 10: FINANCE FOR THE CHOSEN IDEA (part 2)

External finance

This is money that is source from out side the firm, this type of finance sourcing can come in various forms, short term, middle term, and long term finance.

• Bank loan- A loan is a type of debt. this type of loan is an agreement made between the firm and the bank where the same agreed amount is paid back every month this is a fixed loan and could be short term or long term depending on the amount and the agreement. The only variance to the original amount would be the interest paid to the bank. Interest is the cost of borrowing money in most cases interest is usually there, unless money is borrowed from family or friends. This interest is paid every month and the interest may vary every month slightly, depending on the national interest rates which are set by the bank of England. A bank loan can be set against an asset as reassurance of payment. I recommend my firm to utilize this method of attaining finance form my label as a short – to middle term loan

·       Overdraft- An overdraft occurs when withdrawals from a bank account exceed the available balance which gives the account a negative balance - a person can be said to have gone "overdrawn". If there is a prior agreement with the account provider for an overdraft protection plan, and the amount overdrawn is within this authorised overdraft, then interest is normally charged at the agreed rate. If the balance exceeds the agreed terms, then fees may be charged and higher interest rate might apply. the main difference between an over draft and a normal bank loan is that the mount of money paid back every month is decided by the borrower, there Is no agreement on the amount of money paid back and interest is only charged on the amount outstanding. This type of loan usually charges a higher rate of interest on average.

Sourced: (http://en.wikipedia.org/wiki/Overdraft )

There are negative and positive aspects to borrowing money from the bank. Different banks over different interest rates and these rates are constantly changing. Since interest is the cost of borrowing finance. As a business you would want to be paying as little interest as possible so you would want to have a low rate. You may borrow money form Nat west for example and they may be offering 8.4% interest on your borrowed money but this could change and you could end up paying higher interests form another bank. These rates are unpredictable.

This also applies to mortgages. The slight change in interest rates could lead to very high amounts of money being paid in excess for no reason.

Nat West

In comparison to Abbey (now Santander):

(*note: displayed images are consistent with current bank loans)

It is easy to deduce from the above images that borrowing money from abbey would be positive for the business as the business would not be paying as much interest in comparison to NatWest.

·       Debentures- is defined as a certificate of acceptance of loans which is given under the company's stamp and it carries an undertaking that the debenture holder will get a fixed return (fixed on the basis of interest rates) and the principal amount whenever the debenture matures. In finance, a debenture is a long-term debt instrument used by governments and large companies to obtain funds. A debenture is usually unsecured in the sense that there are no liens or pledges on specific assets. It is, however, secured by all properties not otherwise pledged. In the case of bankruptcy debenture holders are considered general creditors. The advantage of debentures to the issuer is they leave specific assets burden free, and thereby leave them open for subsequent financing. Debentures are generally freely transferable by the debenture holder. Simply put a debenture is very similar to a bank loan the major difference is that the money is not being borrowed from the bank but is being lent out from a privet lender, who would have agreed on a fixed date in which they receive all the money at once including the fixed interest rate lump sum. Sourced: (http://en.wikipedia.org/wiki/Debentures ) a debenture is always a loan from a private investor or business, interest is always payable but must be paid all at once as a fixed amount. The debenture is always paid back as a lump sum at the end of the set period.

• Venture capital- Venture capital is a type of private equity capital typically provided by professional, outside investors to new, growth businesses. Venture capital investments are generally made as cash in exchange for shares in the invested company. A venture capitalist (VC) is a person who makes such investments. Simply put a venture capitalist is a successful business person who injects money into a new and promising business idea or business to help it succeed. Venture capitalists look at their investment in the firm as a long gain.

• Government grants- depending on the nature of the business they firm could be issued a government grant. These grants are either financial injections of finance. They could come in various forms. The government could pay for some of the firm’s bills or could be given start up capital.  Government grants would usually be given because the firm is directly involved with:
1. Training and development
2. Environmental greenness
3. Real estate development
4. Infrastructural  development
5. International enterprise

Usually this grant is given to firms that would benefit the community in anyway. Grants are funds given to tax-exempt nonprofit organizations or local governments by foundations, corporations, governments, small business and individuals. Most grants are made to fund a specific project and require some level of reporting. The process involves an applicant submitting a proposal to a potential funder, either on the applicant's own initiative or in response to a Request for Proposals from the funder. Other grants can be given to individuals, such as victims of natural disasters or individuals who seek to open a small business.

Other methods of sourcing capital

• own capital: most small business that are aiming or starting very small and growing over time (organically growing), start off by having their owners putting in the money that helps the firm start that is either the money sourced from the owners’ savings or a random injection of cash to boost the firms liquidity. This is most common in sole traders and partnerships where you would see the owner making a lot of contribution form their own money pools. This is mainly because these two types of firms leave the owners with the most liability for the firm where as large companies and conglomerates have their firms registered giving their firms a separate identity form their owners leaving their owners not liable for mayhems of the firm 
• Friends and family: a good way to get a loan which dose not have to be paid back with interest would be from family and friends. If you have an agreement between family and or friends it is very possible to gather a considerable amount of capital from them without having to pay any interest on top of the money lent, but this is all down to the agreement that is made.

Recommendation

I recommend that the business takes out a mortgage and a loan for its start up capital the mortgage should cover the property cost as well as the interior and furniture of the gallery.

Business finance

The business idea should be developed economically but effectively. The business would need finance to pay for resources, for example:

• The equipment used to print the logos or to pay the firm’s creditors the firms that would be making the printouts.
• The premises in which the firm will store the products, sell the shirts form operate all its business in. this will be the rent of the premises or the actual cost of the businesses building.
• Raw materials such as the wool need to produce the shirt or the money needed to buy the already made shirts from other firms that specialise in producing these shirts ready for printing.
• Labour and other resources such as the cost of operation and the costs of maintaining the premises. There should be money set aside to pride for bad debts as well as depreciation of fixed assets. There should always be pools of finance or money available any kind of unforeseen liability in which the business may encounter especially since the firm is a new firm.