The guidance, advice and support available to a business to consolidate its operations and achieve sustained growth
I am working for Hounslow Chamber of Commerce as a trainee manager. The Hounslow Chamber of Commerce provides advice to existing businesses and to entrepreneurs seeking to set up their own businesses. In my user guide I am now going to analyse the guidance, advice and support available to a potential business and what actions it should take to consolidate its operations and achieve sustained growth. My analysis will also include how a business establishes itself in the market and how it looks to grow its activities to ensure its survival.
Before a business can expand its operations they will need to make sure to complete proper research. For instance, they must consider the state of the economy before expanding. It is better to expand a business in the boom period because people have more disposable income. This means there will be an increase of demand in the businesses products of services leading to increased sales, increasing profits. Whereas expanding in the recession would result in loss of sales as your products wouldn’t be at high demand as people do not have as much disposable income.
Another way to expand is to change the legal structure or type of ownership. For example, expand from a sole trader to a partnership, from a partnership to a private limited company, to a private limited to a public limited company, to a public limited to a franchise. However, the business should be aware that when changing the structure means a change in liabilities. For instance, sole traders have unlimited liability which is when, if your business becomes bankrupt the owners personal assets are sold to pay it off. But, public and private limited companies has limited liability and if the business goes bankrupt only the amount of money invested will be lost.
Profits is another factor that needs to be considered when expanding. This is because partnerships need to be shared amongst the partners and private and public limited companies’ profits are shared amongst their shareholders in the form of dividends.
One way to consolidate business operations is through mergers. Mergers is when you combine all of the interests of both companies into a stronger single company. This will help the business by merging you will become larger which makes it more difficult for competitors to compete as they will become a bigger brand. Another way to consolidate business operations is through acquisitions. An acquisition is the process of obtaining a company to build on strengths or weaknesses of the acquiring company. You can acquire another company by having more than 51% of the shares. When you acquire another company or acquiring the majority shares it will mean you may be acquiring a company that you would consider competition.
Furthermore, they could consider more market opportunities. The business could operate in a local, regional, national or global area. For instance, Tesco expanded to America. However, it’s important to do your market research for rules and regulations. This is great because it allow the business to sale their products to a larger audience which hopefully improve sales.
Diversification of their products is another way a business can grow its activities. This is when you come up with a range of new similar products to sell to your customers. This is good because if your initial products becomes a brand name it will be easy to sell other products as the business may already have gained a customer base.
Another way to sustain growth is to start up a franchise. A franchise is the biggest business there is. A franchise is where a large company allows smaller businesses to use their name there are the franchisor and a franchisee. This is good because you will get a share of the profits and royalties and the franchisee will have to pay a large sum of money to buy it. Also you supply the materials needed at your own cost which could be set at a high price.
Moreover, online operations is another way to increase activities. This is when you sell your products online which means that people worldwide can buy your products. This is good as it provides a greater and wider target audience which can improve sales. Also you can charge the customers for postage and packaging. Also it can increase customers as it’s more convenient for shoppers to use.
Overall, using the guidance on what actions it should take to consolidate its operations they will achieve sustained growth and grow its activities to ensure its survival.