Katie’s Custom Engraving Logos

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Table of Contents

Executive Summary
Introduction
Analysis
Alternatives
Recommendation
Implementation

Executive Summary

Katie, a 23-year-old, has a passion for business and already has the required skills and creativity to start her own business. She is in a dilemma of whether to start a company or go to a graduate school for further studies. Starting a business is the better alternative for Katie because she has skills, experience, and passion. To start a business, she should comply with the relevant legal and financial requirements. Furthermore, she is supposed to gather both primary and secondary data from the most recent and reliable sources. The business has a tremendous market potential based on the population, the number of competitors, and area of coverage. Katie needs 77.1% of the market share to break even.

Introduction

Katie, a 23-year-old with an undergraduate degree in new media, is interested in starting a business. The business is to deal with the production of custom image files for engraving logos. She is skilled in the creation, designing, and production of digital media. Furthermore, she has experience obtained by working at her uncle’s store; Bullet’s Awards Inc. Katie wants a digital business and wants the use of the internet in all the sales and productions to make it a continental business.

Her business aims to offer services and goods at a wholesale level. It seeks to sell logos to the retailer shops who in return sell to the consumers in their respective markets. However, apart from the financial concern, Katie’s has a problem of inadequate information about the market. She does not know the size of the custom images market and the market share for break even.

Problem Statement

Katie’s problem is deciding whether to start a business or not and how to estimate the market potential in case of beginning the business. In addition, she does not know the real estimate of the market share that she needs to break even.

Analysis

Katie should use both the primary and secondary sources of information in her market research. She should use cost and reliability in the determination of the particular data source for the business. Cheaper sources of information are appropriate especially the ones that are free. The sources should entail the use of relevant websites and free printed materials. Katie should, therefore, use the United States government’s open sources in getting the market information.

She should also use SBA.gov that issues statistics and data for both retailers and wholesalers. Alternatively, Katie can use information from the U.S Census Bureau, FedStats.gov, SBA Office of Advocacy, and economicindicators.org. The U. S Census Bureau has several tools for accessing data that make easy and fast access of information. A good example is The American FactFinder that gives relevant options through the insertion of the city and state. It offers a variety of options for households, economic, demographic, and social for the location asked. It also has an interactive map that makes it simple to find any data about a state, city, or town in America.

The FedStats.gov offers formal statistical information. The owner of the site is a federal agency, and the report was issued about the institutions, education, and energy use among others. The SBA Office of Advocacy has got small businesses research publications of the economy. Lastly, Economicindicators.gov provides updated information from the Census Bureau and the Bureau of Economic Analysis. It is a site with a broad range of information since it combines data from two bureaus.

Katie should collect the data needed from the relevant websites and printed documents that are up to date. She should consider using reliable data sources in terms of data completion, relevance, and accuracy. Moreover, she should gather information about the price of the market share, the movements, and promising investments. She should also gather both internal and external information in connection with the business.

The internal information includes production performance, standard operation procedures, sales performance, and the manufacturing systems he expects to have. The external information contains information about markets and customers. It entails the demographics of the target market and their taste and preferences. She should also look for information in connection with the financial performance of the potential competitors. Besides, the economic trends in her country and other countries are of importance since the business market is at the continental level. In addition, she should collect data about the custom design research and its development.

The product has a tremendous market potential since it is meant to cover the whole of North America. Furthermore, it aims at dealing with the retailers as opposed to the consumers leading to less fluctuation about taste and preference. The business seeks to address a significant population of retailer stores, that is, the whole of North America stores. The vast number of product users also determines the potential market’s hugeness.

The products are also issued annually and, therefore, lead to high demand. However, Logos as means of identification, are on-demand in most business entities and institutions. It, therefore, implies that continuing and upcoming bodies need the logos. The product also has a high market potential since it has been positively tested at Bullet’s Awards Inc. It means that it is not a new product on the market, and the potential customers are already aware of it. Besides, the product is an improvement in the engraving practices and already has a ready market.

The breakeven point is important in determining the amount of market share. Katie’s break-even point can be calculated as;

Profit per Unit= (6,200+ 36,000) ÷ 1000 = $ 42.2

Profit per Month= (6,200+ 36,000) ÷ 12= $ 3,516.67

Fixed Cost per Month= 27,000 + 400+ 300 + 500+ 300 = $ 32,100 28,500

Sales per Month= 83.33

Break even= 28,500 ÷ 3,516.67= 8.10 months or after selling 675 logos/ month

Market Share= Break Even÷ Market Sales per Year = (675 ÷ 876) x 100= 77.1%

Therefore, the share of the market that Katie needs to break even is 77.1%.

Alternatives

The first alternative that Katie has is to start her own business and forgo going to graduate school. Besides, she will get a chance to utilize her talents and skills that would otherwise be wasted. Starting a business will enable her to make her decisions and be able to determine her destiny. She will be able to identify her company’s culture. Besides, if she starts her business she will be able to have a work-life balance. It will, therefore, enable her to set the culture she wants for her business. The business will also help her to decide the type of people she wants to employ. It will give her the authority to decide who to or not to hire and who to fire.

Moreover, it will strengthen her emotionally and physically about business activities. She will be able to take risks and in the process reap the benefits. Starting a business will give her a challenge and make her think critically and creatively in the business field. It will give her an opportunity to go for her passion and make use of her skills. As a small business, she will be able to interact with her customers and learn more about the business. Besides, doing something on your own makes one proud.

Katie’s second alternative is going for graduate education that will enlighten her more about her field of study. In case she decides to join college the aspect of starting the business will have to wait since it demands a lot of effort. The importance of a graduate degree is that it will improve her career, whether she wants to be self-employed or otherwise. Furthermore, it will increase her business ideas and options as she gains in-depth knowledge. For instance, graduate school can enable her to network with other professionals from different fields. Lastly, it can spark her passion for studies by promoting her intellectual curiosity.

Recommendation

I do recommend that Katie starts a business instead of going to graduate school. Even though both the business and advancing education are investments, the former is short term compared to the latter. Starting a business will enable her to have Investment Returns as soon as the enterprise picks up. Furthermore, she already has the skills required for the beginning of the operation and can raise the starting capital. Besides, she can go to graduate school as soon as the company has picked, and she has some staff to run the business. In fact, with the significant improvement of technology, she can go on with her studies at her business premises whenever she feels it is appropriate.

A cost-benefit analysis shows that starting a business is more appropriate than going to a graduate school. AS an illustration, starting a business will create her wealth and benefit the community directly. Through the enterprise, new jobs will be established for the public and at the same time, it will promote innovations. Since she is introducing a new product in the market, the business will improve diversification in the market. Lastly, starting a business will be an inspirational move for generations to come.

Implementation

Starting a business entails planning, completing several legal activities, and making financial decisions. The first step of starting a business is writing a business plan followed by looking for business advice. A business plan will act as the guide for the enterprise and, therefore, determining its success or failure. It can also be used in the search for advice from business gurus. The third step is the identification of where to locate the business, then financing the business itself.

The location should be complying with the zoning laws of the region. Fifthly, Katie should determine the legalities that are related to her business, that is, legal procedures for starting a sole proprietorship. She should then register the business with the relevant authorities and be given a tax identification number. After that, she should register for local and state taxes and obtain business permits and licenses. Lastly, she should understand her responsibility as an employer and follow the appropriate steps in hiring.

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