Developing a Framework to Turn a Passionate hobby into a Financially Successful and Sustainable Business
Introduction This project aims to create a business framework to help turn a passionate hobby into a financially successful business. This is very important as it is increasingly encouraged to develop a career with what a person is most passionate about. This idea intends to increase job satisfaction and fulfilment. However, in order to do this successfully, it is vital that a sound business framework to supports this passion is skilfully planned and explicitly followed so that a sustainable income can be sought from this business. To develop this framework, research interviews with industry experts and a literature review was pursued to advance this aim. From this research, it was found that many theoretical and physical framework ideas were needed to discuss what will be needed to occur within a business framework for a financially successful and sustainable business to be achieved.
Aims
The aim of this project is to develop a framework for a successful and stainable business start-up
Objectives
– To research on business competitors in the industry and investigate their pricing structures
– To conduct one or more than one pilot study to determine customer preferences and generate cash flow
– To determine the profitability and sustainability of the business concept,
– To develop a justified business plan.
Literature Review
Introduction
Different approaches have been used by different companies amongst which; is e-commerce. . E-commerce is a form of business in which the undertakings are carried out via the Internet (Johnson, 2012). This is the online sales and marketing of the business product. A range of products can be transacted online through various e-commerce frameworks depending on the product in question. The following research below will show the benefits of using e-commerce towards the customers and the business.
Theoretical framework
With the growing competition in the business environment, the running of businesses has become an uphill task taking into account that the key agenda in starting a business is to make profit(Robbins et all, 2010). Therefore every business strives to pursue whichever available avenue that can make it possible to achieve their set objectives. One of the key objectives of the business is to sell at profit to the highest possible number of customers. In order to do this, a company must try to sell to the global community other than basing the business locally. However, it is very costly to travel world over to sell a product (Power, 2010). This is complicated by the fact that at times even the potential customers are not known. It is also difficult to get all your customers in one location. It is therefore economically unreasonable to engage in travels attempting to sell to the world. The operational cost of the business itself will increase in the process. This makes it necessary to look into other avenues for reaching the highest number of customers without necessarily incurring such unnecessary expenses. One of the platforms that can help achieve this desire is the use of online business (Robbins, 2010). This is called e-commerce.
E-commerce offers one of the best platforms for transacting online (Power, 2010). It has succeeded a great deal with companies like McDonalds, Dorman’s, Fair Coffee, Amazon, eBay among others. The business transaction is via credit card or PayPal. This is because it comes with a lot of benefits that would be of great deal to growth of any business. This benefits cut across the customer and the business owners as each of them stands to gain in a number of ways.
E-commerce is the kind of business undertaking where the Internet is used a medium for transactions (Stephan, 2012)
Benefits of e-commerce to customers
Elimination of queues
One of the greatest headaches to customers is the agony of making long queues in order to buy the products they want. This is because their need for agency at times may not allow that. It is also not convenient for customers to wait so long in order buy a product. The emergence of e-commerce and its introduction into the business environment has come as a real relief to customer, especially those who do not enjoy the inconveniences of long queues (Jackson, 2011). This is because e-commerce is done through websites. This offers them an opportunity to do business at the comfort of their homes then wait for the products to be delivered to their doorsteps. This saves them the agony of traveling to the business location which at times may be time consuming. It is thus convenient for them. For customers this is the best way of engaging in a transaction. It favours every client regardless of their financial muscle. It is always the wish of every entrepreneur that their businesses offer customers as much convenience as possible. This is one of the reasons why one can opt to start online business as there is many benefits towards the customers.
Easy access to remote stores
Every business is formed to serve people without any form of discrimination (Chapin et al, 2012). It is therefore of great concern to consider the geographical location of your potential customers while setting-up a business. The use of e-commerce makes it easy for those who are not located in urban areas to be able to access companies’ online stores thus make it possible for rural dwellers to access and view any commodity they intend to buy. This will also accord them the opportunity to get to know other products that could be useful to them but were not within their scope of knowledge. E-commerce also makes it possible for customers to view a range of commodities that would help them assess their future needs and decision making in terms of whether they would need these commodities or not (Robbins et al, 2010). Therefore the use of e-commerce remains very paramount in getting access to remote business stores. It is thus important for clients to be able to access online store from wherever they are hence the reason to do this kind of business.
Ease of comparing commodity prices
It is always healthy for customers to know the prices offered by different companies who deal in the same line of business or sell similar commodities (Reuvid, 2011). However, it is always difficult for customers to get to know the prices offered by other companies without going to the company’s business premise physically or taking time to check their weekly business articles in order to keep in touch with up to date information about the company services. Online business makes it easy for customers to be able to check companies dealing with same products, especially those of their interest (Muldrow et al, 2009). This is possible in a matter of minutes as online websites offer this very fast. They can access all information relating to these companies in a matter of minutes. This will enable them get a chance to do comparison in the pricing of these companies especially those related to the same product (Johnson, 2012). Getting such information can be crucial in helping them decide on which company to buy from. It can further help them get the supplements and complements of their products of interest. This can be helpful if one does not find what they need. It is therefore gainful to the customer if a business uses the e-commerce platform to offer their transactions. It is deemed right for clients to have information about the costs of all products available so as to make informed decision. This will benefit every entrepreneur who wants to offer quality at a cheaper price.
Range of choices
Online stores mostly have no physical capacity limit. This therefore implies that sellers can be able to list as many products as possible. When the products listed are many, the customer gets the chance to enjoy range of products that also makes it easy to have a range of choices before they venture into buying a specific product (Jones, 2011). This is important for customers since anyone would like to find all they need under single store. It is therefore apparent that e-commerce offers such kind of important aspect of customer satisfaction to their clients hence making it deem it appropriate to start the online cupcake sales.
Benefits of e-commerce to the business
Businesses are started by their owners in order to enjoy certain benefit. One of these benefits is the money that comes from a successful business. It is good to note that the success of a business is mainly dependent on the number of clients it serves (Robbins, 2010). It is also of great importance to realise that getting the largest possible customer base may bring the need to enlarge the customer scope. This brings the need to operate the business online alongside the physical business. Doing business online offers several benefits to the business and its owners as discussed below;
Enhanced marketing and logistics
Internet is one of the best marketing platforms in the world of business. This online platform offers a 24/7 product viewership which in turn enhances the marketing scope of a product (Robbins et al, 2010). The logistics aspect of the business is also effective in online platform as there is free flow of information about the product.
Access to large number of customers
Online business enables the business to reach the largest possible number of customers (Power, 2010). This is because the business is operated via the Internet which makes it easy for the business to access customers from all corners of the world. This makes it attract a large business fan base that is profitable to the business in the process. This will also lead to the growth of the business which in turn will lead to several other benefits to the owner of business. Getting large number of clients is one of the major lures for entrepreneur to start an online business.
Quick scalability of the business
In online businesses, the limitation of having the physical boundary beyond which one may not be legally permitted to operate is not existent (Goodridge, 2009). This makes it easy for online business to scale up very quickly as compared those businesses that operate physically. This is important because it increases the number of clients that can be served hence increase the profit margins of the business and enhance overall business growth thus the need to carry out the sales online.
Ease of communication
One of the easiest and cheapest ways of communication is through the Internet. It is very easy and cheap for the business operators to get into contact very fast through e-mails and VoIP interfaces (Stolze, 2011). This only requires the Internet to be available. This helps the business save the cost of communication thus enjoy reduced overhead cost of operating business. Getting easy contact with clients can help improve any business hence giving entrepreneurs the urge to start a business online.
Disadvantages of online business
There are a number of drawbacks associated with an online business. These include; overreliance on the Internet which makes the business useless when there is no internet, credit card issues makes it a bit inefficient, the business also depends too much on the website that can be easily brought down by experts through unethical behaviours like hacking, there is also no clear regulations on the taxation of online transaction which leaves loopholes for extortion by the financial institutions (Jackson, 2011).
Relevance of this research
The emphasis of the business is to get the right platform to sell cupcakes and to widen the scope of operation while at the same time offer the clients the best deal. Creating a website for selling cupcakes online is a form of e-commerce. It is important for the business to enjoy these benefits. With regard to the prospect of starting online cupcake business, the above mentioned merits makes it viable to start a cupcake business online with the view that the business will enjoy them. This will help improve the business while also earning the rewards for the efforts put. Such information is important for a start-up as it helps in decision making before engaging into online venture.
Physical framework
There are numerous frameworks for doing online business. With respect to online sales of cupcake many factors have been considered to ensure the business kicks off without fail. It is always important know the target customers and most importantly the capital base to ensure the business does not crumble within a short time. For this kind of business, certain factors have been taken into perspective the benefits that will be enjoyed for selling cupcakes online other than start a physical shop. However, in order to do the business successfully, one must develop an e-commerce website with a working online payment system so as to be able to successfully initiate and carry out transactions effectively.
Legal requirements for the online cupcake sales
There are general requirements for starting up any online business is similar to any other physical business with main different being their locations. This is because the online businesses are carried out on the internet while the physical business is carried out on physical locations like along streets on various shopping centres. However, many requirements remain common to both of them though there is emphasis on the use of internet in the former. Below are the requirements to start online sales of cupcake:
Business license
Doing business whether it’s online or physically requires authorisation which is always deemed necessary and of great importance (James et al, 2012). Online sales of cupcakes is a business that deals in the sale of foodstuff which requires that the clients clearly understand that the business is legitimate thus eradicate the fear of dealing with a business whose existence is not authorised by anybody. There is always fear from any potential customer especially if they realise that the business is legalised by the authorities concerned. This is because they can never be certain whether it is just a scam like any other cybercrime that is aimed at coaxing and hoaxing innocent and unsuspecting customers in order to take away from them what they have been working for. If the business is not licensed, it is difficult to win the customer confidence about the cupcakes thus it can make it difficult for the business to attract a good number of customers as many would not wish to risk with their money (Collins, 2010).
Registering the business on the other hand will improve the trust people will have on the business (Barreca et al, 2010). This is because the business will definitely be dealing with people who do not know exactly whoever they are dealing with thus making it difficult to for them to claim for damages just in case any arises. It will be good for any customer to enter into business with people they can trace and report to the authority in case of any breach of agreement. This fear is always common amongst many customers especially those who have been victims to the internet scams and pranks. It is always difficult to convince such a person about the legitimacy of a business unless they can be assured that the business being conducted is well known to the authorities hence no need to worry about getting into such business with me.
It is also worth to mention that such businesses as online sales of cupcakes involve use of confidential information and use of some important things like credit cards to activate transactions. It is very risky to share such information if you are not sure the credibility of the transactions you are getting into and more worrying is the feeling that may come with lack of knowledge of the person you are dealing with as it may later on turn out be a massive loss to the client if the transaction was not done with legitimate company (James, 2012).
Tax obligations
It is always expected of any business to comply with the tax regulations of their respective countries. Different countries have different tax laws that spell out specific ways of what kind of obligations online business is expected to meet. The tax requirements vary depending on the nature of the business and the size of the business (Fitzgerald, 2011). This is because it is not logical to set common tax requirements for online businesses as their size determines their financial muscle. It is therefore ideal to have varying requirements for businesses in terms of what they pay as tax as paying certain figures as tax may not be healthy for the business.
The business is thus expected to meet the tax requirement as one of the legal obligations that must be met in order to be able to set the business rolling. One is thus obliged to meeting such requirements as the business is also expected to be of benefit to local government in order to further the development of the nation.
Online business regulations
There are certain regulations that govern the use of online businesses and how the parties involved should engage (Collins et all, 2012). These legal regulations were majorly established to ensure the rights of all parties involved in the business. These regulations govern the use of confidential information to effect different transactions. These rules take into perspective various payment systems use in which on shares their confidential information thus it is necessary to protect such information like credit card number.
The regulations govern the privacy issues, ethical practices, advertisements and use age limit issues. Privacy policies govern the protection of the information provided by the customers during transactions (Pitre, 2009). There is certain information that customers give to the sellers in a bid to secure the purchase of what they want. However, the information may be considered private and confidential. Sharing such information with the public is always against the wish of the customers thus breaching their rights. It is therefore the responsibility of the online companies to protect such customer information. The cupcake business should be ready to observe these regulations and protect the customer privacy.
There are also information that are not deemed right to be made available and accessible to children these content are protected by acts such as Children Online Privacy Protection (COPPA). This act regulates the kind of online information that can be collected or shared to children. There are laws that also regulate the use of commercial advertisements and e-mailing (Pitre, 2009). They also regulate the kind of practices a company can carry out or those they cannot legally carry out. The cupcake business is expected to observe these regulations and act within the set laws in order to work with minimal legal constraint. This will help the cupcake business to only carry out ethical practices that is good for the reputation of the business hence likely to attract many customers.
Financial requirements for an online cupcake business
Capital is the cornerstone of every business. The size of finance dictates the kind of business venture one can undertake. For many businesses, the limitation of finance can limit the range of products you deal in. There are different sources of finance that someone can use while starting up business. The source of funding for the start-up will determine the financial muscle of the business at start-up.
Cupcake business financing
Southampton Solent University offers four different types of funding for whatever stage the entrepreneur is at. The first funding scheme is called ‘Trail’. This is for the current Solent University students that has an idea which they would like to test out and sees if it is really a viable business. With this scheme, the current student can get up to £350 (Solent University, 2013).
The second scheme is called ‘Adapt’. This is for entrepreneur that has tested their business idea and wants to develop it further. The entrepreneur can be a current or graduate student (within the last year). The scheme can give up to £500 which will help any entrepreneur push their idea to the next stage. With the grant money, training and mentoring is available to help the entrepreneur to spend the money wisely (Solent University, 2013).
The third funding scheme is called ‘Launch’. The entrepreneur can be a current or graduate student (within the last year). This scheme is for entrepreneurs that have tested their business idea and is confident that it is a viable business. This scheme includes 10 week educational boot camp which helps entrepreneur develop their business plan. An entrepreneur can pitch for £2000 but £5000 is available to start their business idea. Along with this money, the entrepreneur will be part of the Solent Entrepreneurs programmers which will mentor them and help with networking/training. To get this grant money, the entrepreneur needs to enter into the ‘Launch Awards’ which is a pitching competition (Solent University, 2013).
The last funding scheme is called ‘Build’. This is really for individuals that have established themselves in the business world. They must have been working on their projects for over a year and can proof that their business is viable. This scheme is a grant which can give up to £15,000 and will pay the entrepreneur living cost for 12 months. To get this grant money, the entrepreneur needs to enter into the ‘Build Awards’ which is a pitching competition (Solent University, 2013).
All the funding money is grant schemes, meaning that none of the money will be needed to be paid back to the university. Also, the last two funding schemes entrepreneur business needs to benefit the community or is a solution to a social problem (Solent University, 2013).
Another way which an entrepreneurs can seek funding from various financial institutions include Barclays bank government schemes to raise the required the capital (Lesonsky and Entrepreneur Media, 2004). Entrepreneurs have an opportunity to get bank loans to start their business. However, the process of getting a bank loan involves a lot of formalities. The entrepreneurs may need to present the forecasts of their expected cash flows and provide security to guarantee the payback of the loan and the interest. This process may discourage many potential entrepreneurs because of the formalities that are required.
Hirst (2013) suggests that this process calls for a more supportive bank which is likely to provide financial guide and useful advice to the entrepreneurs alongside generous loans. This is what prompted Barclays bank to assist entrepreneurs gets funding. Barclays don’t only give loans; they provide guides for business start-ups for free. They also assist small businesses to get information on credit control business profitability and marketing. This then will provide the start-ups on necessary information on how to manage their businesses and issues concerning credit facilities available for business. Barclays bank does this through seminars, where they engage their customers with new businesses.
Entrepreneurs who are members of the Barclays bank also have benefits and opportunity of their financial reports and statements being reviewed by mangers from Barclays for free. This therefore is very important in keeping the entrepreneurs informed about the financial position of their businesses and getting advice on how to manage their financial statements. This has therefore seen Barclays empower small businesses to grow and successful stand stiff competition in the market with great advantages over their competitors.
According to Hirst (2013), new entrepreneurs who decide to bank with Barclays are given free banking services for a period of two years financial review on their businesses for free. Alongside this offer, Barclays provides transactions which are automated through their accounts for business start-ups when the period for free banking comes to an end. This therefore provides friendly and convenient banking services for business start-ups and minimizes problems that may face the business start-ups on their banking transactions.
After getting funds, one can then develop a plan on how the start-up is going to run. (Walsh, 2011). This will then bring the entrepreneur on the point of finding potential partners and the suppliers of the products to be traded. The entrepreneur can also start to look for a premise on which the business will be based.
It is undisputable that young and starter entrepreneurs may seek financial assistance from their parents (Heartfield, 2010).
The major source of the finance for this online business is theentrepreneur parents. It is the wish of every parent that their children succeed in their endeavours. Parents have been one of the major inspirations behind this bid to pursue cupcake business.
The initial amount of capital available for an entrepreneur to start this business is £1800. This amount will cater for the operational logistics of the business including financing the development of website, and hiring system administrator to manage the online issues of this business. This amount will also be used in purchasing the kitchen necessary materials to start baking the cupcakes. Below is a table demonstrating the budget for the start of the business.
Requirement Budget / Amount (£)
Website development 200
Hiring system administrator 300
Purchasing of bakery and baking equipment 500
Purchasing of baking ingredients 300
Back-up capital 200
Total 1500
As demonstrated in the table, the available capital is put to serve different purposes. The website will be developed using £200. This will be a fully operational website with a working secure payment system like PayPal that will help in effecting the transactions between the company and the clients.
System administrator will also be hired using £300. The work of the administrator will be to manage the online operations of the business. £500 will be used in purchasing the baking equipment to aid in preparation of the cupcakes. Another £300 will be used in purchase of ingredients to support the baking process. The remaining £200 will be kept as back-up capital to help in the circumstance of eventuality. This will ensure that risks are managed effectively without panting for another source of capital.
Technical requirements of the online cupcake business
The technical aspect of business includes the platform through which the business will take place. This business will use online platform to engage with customers who will be able to order for their cupcakes via the internet. The technical requirement for e-commerce business incorporates both the website and website administration (Collins, 2010). The mentioned aspects of technical requirement are discussed below.
Website
This business will be conducted on an interactive e-commerce website. The website will contain a user friendly interface that will facilitate the easy with which the user engages the company. Any e-commerce website must have a payment system. This will include home page with different links that also lead to other pages like the online payment system that helps in making the payments. It will also have an online store that will help stock the variety of cupcakes that are to be made. Using website as a selling platform makes it easy to for customers to access all functions they need in just a single interface (Powers, 2011).
The payment system will use varieties of payment modes. The payment for this business will only accept PayPal as the only modes of payment for any effected transaction. This is because it’s the safest way to make online transactions. The customer will feel at ease as they do not have to write their credit or debit card details on the website making the customer more likely to purchase some cupcakes. The payment system have secure security authorisation mode to detect fraud (James, 2012). This will help guard our clients from misuse of their credit by unauthorised persons. Our shopping cart will help enable customers to pick as many cupcakes as they wish and make order for them. The system will be available 24 hours every day.
System administrator
This is an information technology expert whose main work will be to ensure the system is working efficient and secure all the time (Lincoln, 2009). The administrator will thus be responsible for system support services to the overall system needs. The administrator will ensure that our customers get any kind of technical assistance they request for.
Conclusion
With many businesses striving to make the required profit in order to be the movers in the business fraternity, online business companies must adhere to certain norms in order to be successful. The services of an expert can thus not be overwritten. It is therefore important to put have an in-depth understanding of the needs of online business so as to operate successfully and conveniently
PROJECT SPECIFICATION
Introduction
There is lack of certainty and clarity of the existing frameworks for turning a passionate hobby into a successful and profitable business. This is majorly due to laxity in providing clear information on what frameworks one should use while developing the existing businesses.
Starting-up a business poses alot of challenges ranging from finance to other issues. Tackling these challenges often seem to be a tough with research showing that over 60% of start-up businesses fail due to failure to do good assessment of the business background, inability to understand the needs of their customers and also deal with proper products that can compete in the market (Reuvid, 2011). Ways to prevent this is:
– The entrepreneur must come out with a clear purpose of business, core values, and roles of the other members involved, and a detailed description of the work involved (Bradberry, 2011). – The entrepreneur should consist of like- minded people who have skills and knowledge needed in running the business (Dible, 1999).
– The entrepreneur should test his products to determine whether it meets its design (Bradberry, 2011).
– The entrepreneur chooses the best source of funding (Chandler, 2005).
– The product meets the expectations of the customers. Customer satisfaction should be a priority at this stage. This would increase the business brand awareness and people would begin to recognize the business (Lowrey, 2009).
Therefore turning a hobby into a good business sets a good idea for starting something that fits your likes and the state of your heart. This makes it easy for one to effectively carry out any business undertaking. Several individuals live with little care on various passions that could prove successful if turned into a business venture. The puzzle comes on how to realise that what you actually treat as a hobby can become profitable. This project is therefore majorly focused in developing a framework that can help individuals with hobbies turn them into profitable and sustainable business ideas that could aid their future in terms of financial security.
Goals and objectives of the project
The project is mostly focused on how to build a framework that can help develop a passionate hobby into a profitable business. The main aim of this project therefore is to find out what mechanisms and frameworks would be useful in tu
