Business

THE TIMES 100
www.thetimes100.co.uk

Supporting new business start-ups
Introduction
Barclays is a major global financial services provider. It operates in over 50 countries and employs 135,000 people. In 2007, Barclays had an income of £23 billion, generating a profit before tax of just over £7 billion. In the UK, Barclays has 724,000 business customers. Many of these customers runrelatively small enterprises; some are new business start-ups. Barclays offers a dedicated banking service for smaller enterprises called Local Business. This is provided through the bank’s UK retail banking division. More people are choosing to start their own businesses. Barclays estimated that more than 380,000 new businesses started up in England and Wales in 2007. However, the number of businessesthat ceased trading also rose in 2007. While the majority of these businesses closed voluntarily, setting up in business does also carry risks. This case study looks at the challenges of setting up a new business. It looks at some of the decisions that must be made by a budding entrepreneur. It outlines some of the services and support that are offered to business start-ups by a financial institutionlike Barclays.

CURRICULUM TOPICS • Business start up • Types of organisation • Budgeting • Sources of finance

st

rategy

GLOSSARY Entrepreneur: a person who has an idea for a business or enterprise and is prepared to take a risk without the certainty that a profit will result. E-commerce: using the Internet and associated technologies for trading purposes. Market research: a range ofresearch functions that link retailers to consumers by supplying essential information to identify customer need, solve marketing problems and help with marketing decisions.

The business idea
An obvious starting point is the business idea. Many people think that they might have spotted a business opportunity. Translating that thought into action is another matter. There are many ways of comingup with a bright idea. Source of idea Developing a hobby Using your skills A chance idea Spotting a gap in the market Combining two ideas Solving problems for people Example A gardening service A service creating and maintaining websites Producing a musical toothbrush Selling photography online Running an Internet café Financial adviser

Many people are inspired by existing businesses. TimO’Neil runs T&T Vision, a business that sells spectacles through an online shop on eBay. Tim got the idea for his business in his first year at university. His father bought a pair of reading glasses online. This seemed a good idea for an e-commerce business. Before setting up a new business, there are important questions to answer. This requires market research to systematically gather, record andanalyse data about the market for the planned goods or services. This is an ongoing process as markets are always changing. However, some market research is essential before starting any new business. The research should attempt to answer questions such as: • What is the target market for the new business’ products? • Who else is in this market? Is the idea already in the market? Can the new businessoffer something that existing businesses are not providing? • Where are the customers based? What is the best way of reaching them? • What do they really want? Can the product be improved? • When do they want it? How should the product be sold or distributed? • How much are these customers prepared to pay? • How they be reached? What is the best way of promoting the product?

33

B A R C L AY STHE TIMES 100
www.thetimes100.co.uk

Secondary (or desk-based) research will answer many of these questions. Secondary research involves scanning already published materials such as reports, patents and statistical data. This research will help a business to decide on its marketing mix. The marketing mix (or the four Ps), sets out the business offer in terms of: • product • price •...