Business Plan: Consultancy Services

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Table of Contents

Research Methodology
Literature review
Conclusion
References

Research Methodology

Introduction and background

A report on the success rates of entrepreneurial start-up companies show that many of the organizations in the US do not make it past a critical point. A critical analysis of the situation shows that a decline in the number of business organizations that navigate through the challenges that face every start-up business has been the outcome (Ries 2011).

It has strongly been argued that despite entrepreneurs entering the business world with confidence, most of them lack the requisite professional training and experience necessary to become successful. To address those problems, this business plan aims to provide professional training that engages entrepreneurs with the domain knowledge necessary for them to create effective business plans (Chwolka & Raith 2012).

The goal of the business plan is to offer consultancy services that draw on different disciplines, skills, competencies, and experience of professional consultants in the business industry. The proposed offerings to focus on include basic documents and links to several internal and external resources.

Objectives

To investigate the business challenges that lead to the early failure of start-up businesses
To determine the entrepreneurial skills necessary for start-up business to be successful
To establish the type of offerings necessary for the start-up business
Conduct a market analysis of the proposed business plan
Establish the marketing strategy for the business plan
Establish the staffing and operations of the proposed business plan
Develop financial projections for the proposed consultancy services

Research questions

What factors do lead to the early failure of start-up businesses?
What entrepreneurial skills are necessary for start-up business to be successful?
Which offerings could be necessary for the start-up business?
What are the marketing analysis results of the proposed business plan?
Which marketing strategy could be used for the proposed business plan?
How will the staffing and operations of the proposed business plan be done?
What are the financial projections for the proposed consultancy services?

Statement of opportunity

After the global financial crisis, it became evident that many entrepreneurs starting new businesses in the United States were unable develop and sustain their businesses to maturity (Chwolka & Raith 2012). The purpose of the study will be to develop a business consultancy service that provides business offerings tailored to provide professional consultancy services for new and upcoming business organizations to become successful.

Methodology

Different research methods based on theory and practice have been proposed for conducting business research. The continuum of research paradigms cannot be entirely applied on the proposed study. Here, two approaches, which include the qualitative and quantitative paradigms, have been proposed as appropriate for fact finding to answer the research questions (Daymon & Holloway 2010).

In the context of the proposed business plan, the justification for study is based on seeking for answers to questions on the factors that underlie the failures noted among start-up businesses (Churchill & Iacobucci 2010). The research will establish the right approaches for answering the research questions on the appropriate marketing strategies to reach the clients, staffing operations, and financial projections besides ethical and legal issues for business establishments.

In view of the research objectives, the proposed research paradigm includes theory that helps to explain the aims and functions of this research. Here, the deductive approach is proposed to enable the researcher to establish a connection between theory and practice.

In particular, when considering both the deductive and inductive approaches, it is important to note that those strategies enable the researcher to start from general to specific solutions to the research problem. The inductive approach is a top down approach that enables the researcher to develop a hypothesis to address the research questions.

Inductive paradigm

A critical evaluation of logical thinking on research paradigms shows that the inductive approach provides the framework to infer the results of the study back into the investigation. According to Järvensivu and Törnroos (2010), inductive thinking corresponds to the tenets of approximate reasoning, logical thinking, and probabilistic approaches for creating solutions to the research problem.

Besides, inductive reasoning provides the foundation for the professional consultant to apply the cognitive skills in the provision of advice on business processes and strategies for beginners.

However, Järvensivu and Törnroos (2010) fail short of noting that inductive research could provide the foundation to a number of central issues related to cognitive activities, which include judgement, categorization of qualitative and quantitative data on various aspects of the business plan. This is category based induction where different techniques are used to determine the best strategy to segment and provide the right professional advice to the customers.

Deductive approach

Järvensivu and Törnroos (2010) provide a good foundation for researching on the use of deductive thinking. In theory, the deductive strategy is based on the methods used for developing hypothesis and drawing conclusions on data based on existing theories, which is used to develop the research design for addressing the research questions. However, the approach that is based on moving from the general to the specific solutions on the research issues under consideration.

Järvensivu and Törnroos (2010) notes that deductive logic is systematic, beginning with the investigation of the underlying theory, followed by a hypothesis, observations, and gradually the acceptance or rejection of the hypothesis. However, the business plan is not based on validating a hypothesis, but depends on both qualitative and quantitative data to develop appropriate conclusions to act on.

In both cases, the deductive and inductive approaches could be combined to address the weaknesses and establish the research on the benefits of both approaches to inform the study. However, it is important to note that the two approaches cannot be used as alternative means, but together. In theory, both methods are based on the process and problem views.

Qualitative and quantitative paradigms

The sources of data include secondary and primary. Secondary sources include data from articles, Internet, and databases. While Daymon and Holloway (2010) do not account in detail how to apply data from the primary sources, it is important to note that interviews and questionnaires are some of the best candidates to adopt into the study.

In each case of the combined approach of the qualitative and quantitative paradigms, the deductive and inductive approaches could be used to address the research objectives exhaustively (Daymon & Holloway 2010).

The approach uses a mixed research method, which work primarily on the positivist techniques that are based on the QUAN and QUAL approaches. Basically, the thematic and statistical analytical are appropriate for use in data analysis based in the mixed research methods function by way of data conversion and transformation techniques to answer the research questions.

On the philosophical levels, the mixed research method could be appropriate for the study because of the ability to counter the incompatibility and pragmatism associated with other research paradigms.

Churchill and Iacobucci (2010) contend that the approach is designed in such a way as to avoid the clash that exists between the purposes and capacities of both research methods. In theory, it is appropriate to consider the facts that the QUAN approach employs deductive reasoning and the QUAL approach employs logic or systematic reasoning.

Data collection tools

In practice, different tools are used for data collection. Among them are interviews, questionnaires, and observations. However, each tool is appropriate for a specific context of the study in data collection (Churchill & Iacobucci 2010). The proposed data collection tools include interviews and questionnaires. Observations will not be appropriate for data collection because of the time required for changes on the business to occur is long. In each case, both tools have their own advantages and disadvantages that suit them for use in this study.

Despite lacking generalizations, interviews have certain issues such as acquiesced where some people show string consistency in agreeing or disagreeing on certain questions (Churchill & Iacobucci 2010).

Other issues include social desirability bias where responses to questions are usually based on one’s bias perceptions. It has been suggested that structured interviews are characterized by response sets, where respondents provide answers that are consistent with the study, but irrelevant to the concepts of investigation. However, interviews provide immediate answers, are time

Questionnaires will be used as the tool for data collection when conducting the quantitative study. The rationale is to enable the researcher to collect data and make follow ups when the responses are inadequate.

Data analysis

Secondary and primary data will be collected and analysed using statistical software to analyse quantitative data and categories to analyse qualitative data. The process of analysing quantitative data will include editing data to ensure completeness and consistency, eliminating questionnaires that have less than 10% responses, converting data into numerical values, and changing the data into new formats for statistical analysis (Churchill & Iacobucci 2010).

Here, a univariate analytical approach will be used in the study besides using frequency tables and pie charts to show the behaviour and distribution of the respondents. SPSS will be used to generate numerical values of the mean, standard deviation, mode, and median definitions will be used to analyse the responses. The rationale for using SPSS is that the software has been used by students to analyse data and has been proved to be appropriate for the task.

On the other hand, qualitative data will be analysed by the use of the transcription methods using the hyper transcribe software depending on the language translation software such as SYSTTRAN (Churchill & Iacobucci 2010). Besides, data cleaning by labeling, structuring, familiarizing, and establishing a coding plan based on the framework for coding the data. By use of the descriptive analysis, the range of responses and recurrent themes will be established using second order analysis.

Justify methods for data analysis

The approach used in statistical analysis will provide the p-values that enable the significance of the data to be determined so that the probability of establishing extreme values could be avoided.

Ethical

An ethical form will be issued to seek for consent from the participants and factors such as privacy could be factored as important components in the study (Churchill & Iacobucci 2010). In theory, ethics involves the fundamental application of the principles of ethics such as ensuring accurate reporting, ensuring that the principles of moral concern will be factored into the study, intellectual property rights, being conscious of multiple roles, following the principles and rules of informed consent.

Validity

In theory, validity is the extent to which the results accurately correspond to goals of the study besides the attesting to the evidence of the theory and support of the interpretation of test scores (Churchill & Iacobucci 2010). Content, presentation, face, convergent, concurrent, and construct validity will be assured by putting in place the necessary measures to achieve the different forms of validity.

Reliability

Reliability is the overall consistency of the measures that will be used to ensure the accuracy and precision of the results. To achieve reliability, the factors that contribute to inconsistencies will be determined and removed to ensure that the results become reliable.

Time plan for completion of the project

Literature review

Introduction

This section is a literature review of academic sources that provide qualitative data on the reasons for start-up failures and the appropriate strategies for adoption to avoid failure. The secondary sources of data include articles and books that have been written on the subject of investigation.

Business challenges leading to failure of start-ups

In the proposed business plan, an investigation will be conducted to determine the challenges that new entrepreneurs get exposed to that leads to their failure to sustain the business in the market. Simmons, Wiklund and Levie (2014) note that between 2004 and 2013, approximately 2, 000 venture funded companies failed to penetrate and succeed their operations the US.

Figure 1: Percentage of failing businesses between 1997 and 2010

Figure 1 shows the rate at which businesses have failed to take off or to continue existing. Simmons, Wiklund and Levie (2014) note 25% to 30% of venture-backed businesses fail for various reasons. Here, failure means that the business either does not generate enough profits to become self-sustaining.

Other start-up businesses have all their assets liquidated and investors end up losing all their money despite making investments in high potential businesses. Empirical evidence points out the facts that show the reasons for failure of the start-up businesses.

While Simmons, Wiklund and Levie (2014) do not categorise different entrepreneurs, but generalise the factors that lead to their failures, the study is rich in the strategies to adopt to avoid failure based on specific indicators. One of the core factors that contribute to failures is marginal niche where the entrepreneur tries to void competition by operating in a limited market size.

The study will investigate the effects of marginal niche along with other factors such as derivative ideas, lack of obstinacy in pursuing a business idea to success. Researchers have suggested that market problems make significant contributions to the failures due to lack of value propositions for compelling buyers to be devoted to buying their products, wrong market timing, and a low market size. Daymon and Holloway (2010) suggest business model failures because most start-up entrepreneurs are overly optimistic.

They fail to factor issues such as the cost of acquitting a customer, lifetime value of the customer, and the capital efficiency rules. Besides, a poor management team that builds and works on a weak strategy with members who are poor at executing strategies. The study will investigate additional factors such as the effects of getting cash strapped, product related problems, having poor knowledge of who the investors are.

The research will focus on problems associated with marketing, failure to adequately conduct a PESTEL analysis and the five forces of competition, which include threat of new entrants into the market, bargaining power of suppliers and customers, threat of substitute products, and industry rivalry.

Entrepreneurial skills necessary for start-ups

Cassar (2014) provides exhaustive evidence, which points out that for an entrepreneur to be successful, it is vital for them to have some skill to make them navigate through a competitive business.

Among the factors to be investigated in the study include the ability to manage money, overcome stress related issues, ability to raise money, strategies for improving ones; productivity, ability to make friends, knowledge on who to hire into the business, management approaches, and the training and development programs of the staff that the entrepreneur implements.

Type of offerings

The aim of the proposed business plan is to offer various professional services to educate entrepreneurs on strategic approaches to apply to make start-up businesses successful. Among the proposes areas of investigation are providing start-up kits that provides details on financial models and associated templates to use, business plans for specific markets, and execution presentations.

In addition, the proposed offerings include establishing access to program experts through the Internet, telephone conferences, emails, and on-site mentoring. In addition, further investigations will be conducted on additional offerings such as web based access to frequently asked questions to help the client avoid making the same mistakes. It is important to ensure that the customers are informed on technology patenting and the patents’ approval cycle.

It is proposed that professional services can be offered on other professional platforms by creating free website links to other expert services to supplement those services offered on those in the proposed business plan. Expert services include legal advice, accounting, and investment opportunities.

The study will provide the platform for free access to articles on start-ups, techniques for managing cash flows, and incorporation of other businesses into the start-up business. It is proposed that the consultancy services will include assisting clients to determine when and where market opportunities happen, analyse the opportunities, and establish the best methods for opportunity sizing.

Market analysis

A market analysis based on competitive evaluation of the investing in the plan and market research on the existing opportunity will be conducted to justify the need for a consultancy firm (Galician 2013). Galician (2013) does not present an exhaustive list of strategies to adopt when conducting a market analysis, but provides strong evidence of accurate methods of conducting a market research before making a decision to enter the market.

The rationale is to demonstrate that the market is viable and that by offering the services, it is possible to generate profits that could sustain the business. In addition, the study will investigate the current size of the market. Studies show that many companies that are offering similar services focus on established companies and rarely take their services to start-ups. On the other hand, those companies that offer services targeting new start-up businesses are expensive and the success rates of the start-ups are low.

In theory, the strategic approach of establishing the feasibility of the business plan and the proposed approach to addressing the market research issues includes conducting cluster analysis, factor analysis, and understanding the customers. The theoretical foundation could include establishing buyer behaviour, relationship development methods, and conducting marketing research. That is in addition to conducting investigations targeting, positioning, and segmentation.

Marketing strategy

The marketing strategy for the proposed business includes direct selling of the company to the target customers, using agents to market the company among the prospective entrepreneurs, and use of social sites and other Internet based services.

In theory, modern marketing strategies are based on massive power transfer to the customer (Palmatier et al. 2006). Here, the proposed marketing strategies include planning, social and ethical responsibility, and being able to develop the required competitive strategies for the business to successfully compete with rivals in the market.

However, Internet based services such as social networking websites provide a platform for real time communication between the customer and the service provider. On the other hand, the strategic approach will include investigating the pricing strategies used by the competitors to determine the right pricing mechanisms for the services to be offered.

Here, a preliminary investigation shows that an investor presentation could charge $ 2500, developing the marketing plan document could charge $ 1000 alongside the additional services such as focus strategy and plan, cost leadership strategy, service differentiation strategy, advertising plan, and the branding strategy. The proposed charges for the executive mentoring are $1000 and $5000 will be the charges for developing a business plan.

Staffing and operations

The staffing operations will be done by advertising on the daily newspapers and the Internet to recruit the best candidates for the job. Recruitment will provide the best talents to occupy different positions to build the right management structure to operate the business.

Various responsibilities such as marketing, human resource, operations, and risk management will be filled by qualified and experienced personnel. Besides, employees will be subjected to regular training programs to ensure that those working in the organization are week skilled to do their work.

Financial projections

Various assumptions underlie the financial projections that provide the framework for arriving at key figures such as profits and income to the business. The sales forecast includes offering services to 10 customers per day besides advertising on the social media. However, the business is projected to grow by 50% in the first year and other subsequent years. On the other hand, the fixed assets of the business cost $ 1000 while $ 12, 000 was taken as a bank loan.

Models

Teece (2010) provides a reliable academic source that discusses various business models that entrepreneurs can adopt. Examples include the affiliate model that where products are sold by a third party on commission, the Auction model where products are sold through auction, the advertising model which relies on adverts.

In theory, a good model enables the entrepreneur to establish a good balance between the cost of acquiring the customer and the ability to monetize those customers. The characteristics of a good business model include those models that enable employees to work and see their jobs within the context of the firm, provide powerful tools for the strategy, and easy to retell the customers about the values offered in the business.

Conclusion

In conclusion, it is evident that different perspectives have been discussed on the strategies to adopt for the development of the business plan that could enable successful accomplishments of the outlined objectives. Basically, many business start-ups fail because of lack of professional training on the part of the entrepreneur, lack of organizations that offer specialized services to equip the entrepreneurs with the right skills and knowledge on how to start, manage, and successfully run the business to maturity.

In the case of the study, two theoretical approaches were proposed for use in the study. Both inductive and deductive analytical approaches were recommended for use in conducting and analysing the academic literature to answer the research questions. A mixed research method was proposed for the study.

The proposed strategy will provide the framework for capturing various aspects of the business plan by getting informed on how to address the research questions using information processed form data obtained through a mixed research method, which factors both qualitative and quantitative paradigms.

In theory, the qualitative paradigm is based on the QUAL technique that enables relevant academic literature to be assessed and critically analysed to inform the various aspects of the business plan. The core area of investigation is to establish the reasons that underpin the failure experienced entrepreneurs setting up new businesses from becoming stable. On the hand, the study will factor QUAN, which is based on the quantitative paradigm to collect data for statistical analysis.

Besides, two data collection tools were proposed, which include interviews and questionnaires. However, observations were disqualified for data collection because such a tool could be expensive and require a long period of observations to establish the reasons for the occurrence of failures. On the other hand, interviews were deemed to be the right tools to use for data collection despite the weaknesses associated with them.

On the other hand, it was deemed necessary to use two data analysis tools, which include SPSS software for numerical analysis of questionnaire data to generate values such as the mean, standard deviation, and the p-values. Besides, the findings will be evaluated to determine the reliability and validity of qualitative and quantitative data. All the aspects of the quantitative and qualitative research study paradigms will be factored into the study in the data analysis process using appropriate software tools.

On the other hand, different models have been proposed to use in the study to answer the research questions. Among the models that were proposed to use in the study is the affiliate model among others. However, the most appropriate model proposed for the study was the advertising model.

The need in this case is to acquire the necessary knowledge and skills to start and sustain a business to grow to maturity. Besides, the physiological and psychological bases of need will provide the foundation on which the proposed business plan will be used to develop a framework that explains how the factors that that influence the customers can be manipulated by the consultant.

References

Cassar, G 2014, ‘Industry and start-up experience on entrepreneur forecast performance in new firms,’ Journal of Business Venturing, vol. 1, no. 29, pp. 137-15.

Churchill, G A & Iacobucci, D 2010, Marketing research: methodological foundations, Macmillan Publishing, New York.

Chwolka, A & Raith, M G 2012, ‘The value of business planning before start-up—A decision-theoretical perspective’, Journal of Business Venturing, vol. 3, no. 27, pp. 385-399.

Daymon, C & Holloway, I 2010, Qualitative research methods in public relations and marketing communications, Routledge, New York.

Galician, M L 2013, Handbook of product placement in the mass media: New strategies in marketing theory, practice, trends, and ethics, Routledge, New York.

Järvensivu, T & Törnroos, J Å 2010, ‘Case study research with moderate constructionism: Conceptualization and practical illustration’, Industrial Marketing Management, vol. 1, no. 39, pp.100-108.

Palmatier, R W, Dant, R P, Grewal, D & Evans, K R 2006, ‘Factors influencing the effectiveness of relationship marketing: a meta-analysis’, Journal of marketing, vol. 4, no. 70, pp. 136-153.

Ries, E 2011, The lean start-up: How today’s entrepreneurs use continuous innovation to create radically successful businesses’, London, Random House LLC.

Simmons, S A, Wiklund, J & Levie, J 2014, ‘Stigma and business failure: implications for entrepreneurs’ career choices’, Small Business Economics, vol. 3, no. 42, pp. 485-505.

Teece, D J 2010, ‘Business models, business strategy and innovation’, Long range planning, vol. 2, no. 43, pp. 172-194.

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