Explooring creative product promotion
I aim to explore the achievements, motivations and aptitudes of John Blackburn, an entrepreneur who over the past few years has built up a profitable business based upon his skills and ideas. I will also explore the advantages, disadvantages and rewards of being an entrepreneur. Business Background. The company I have chosen to study is called Precision Weighing Systems (PWS), located in Burnley in the north west of England it offers service, supply and repair of industrial, retail & laboratory weighing equipment. It has been officially established for roughly 4 years and was started solely on the proprietor, John Blackburn’s expertise gained from over 20 years of service to the weighing industry with later support from his family. He spotted an opportunity in the market for a local, reliable service with excellent quality service at the right price.
The business was originally run from a home bedroom/office as a sole trader organisation due to advantages such as confidentiality of accounts, total control and the proprietor being the sole financial beneficiary of the business’ success. As the business grew so did the need for expansion, so he rented a small unit (1000sq ft) from which he could fabricate the required goods and services to meet his customer’s needs. The sources of finances for this venture were a bank loan, owners equity and later some share capital from family. Business continued to grow with the cyclical economic boom and a large demand for laboratory scales.
The growth required the acquisition of more fixed assets such as machinery and the accumulation of more staff. A partnership approach was later adopted with his wife as this gave the business additional skills, greater potential for expansion whilst keeping all profits “in the same pot”. Vehicles and renting of the adjacent larger unit in addition to the smaller unit was also required to utilize capacity to meet demand striking a balance between supply and demand.
At its peak Precision Weighing Systems employed 8 full time staff and 2 subcontracted workers, with 4 staff being family or very closely related. The firm is Based in a 3,200 sq foot premises housing Fabricating facilities, 3 administrative offices and a canteen. PWS achieved a turn over increase from 33,000 to250,000 from the time of first account audit, with a profit increase from ,500 to6,250. It now employs 5 staff is based in the same site, but has changed back to a sole trader organisation due to the separation of proprietors.
Industry ; Market Analysis. The weighing industry is currently in a period of recession; this is due to cyclical fluctuations in the economy as previously seen in the early 90’s. Not only is this affecting the weighing industry but also the industries & markets which PWS’ clients are in, with a few of PWS large customers going into receivership whilst having outstanding debts. Another contributory factor is that due to cheaper labour costs in the Middle East a lot of the manufacturing companies (a vital part of PWS market) are re-locating.
Having said this there is still enough business around to keep PWS trading, as long as it is competitively priced and offers second to none after-sales care to match customer needs.
PWS main market competitors are Avery Berkel and Auto-Scales. Avery Berkel are a multi-national organization set-up in more than 16 countries and due to their size are able to predatory price and offer loss-leaders due to their “deep pockets”. This can be extremely damaging to smaller firms. The type of business organisation operated by Avery is of in-corporation and very recently (September 2003) Avery Berkel and weigh-tronix was consolidated to form a single legal entity. This company now has many large partners and will give it both economies of scale such as bulk buying and diseconomies of scale such as length of communication chain both of which will be assessed in a SWOT analysis. In the past Avery were concentrating their objectives upon going global and as a result reduced their presence in the north of England, leaving a part of the market share to be taken, which PWS did. Recently Avery Weigh-Tronix have been trying to gain this lost market share back as the market as a whole shrinks, meaning that PWS is trying to compete directly with a multi-national company.
The second competitor and more prominent in the local market is Auto-Scales. The firm is located is Blackburn (roughly 10-15 miles away) and operates in the same catchment area with the same corporate objectives i.e.: profitability ; market share growth. It has roughly the same organisational size and market share, which makes it precision weighing systems main competitor. The firm is incorporated and therefore has company directors who are family members and published accounts, which allows for benchmarking of the accounts figures and ratios.
There are also some figures from a Weighing federation survey of industry: 1998 and beyond, which can be found on the following pages. This allows for trends to be spotted, however this doesn’t have a major impact on the market but shows the competitions average progress
Context & process of the business start up.