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Small Business Enterprise

Small Business Enterprise

Introduction

The small business enterprises in United Kingdom are mostly owned and operated by individuals or group of individuals. As stated in the Companies Act, 2006 of United Kingdom, the staff headcount for the small business organization is less than 50. The balance sheet total for the small business enterprise does not exceed £3.26 million and the turnover is less than £6.5 million. In United Kingdom, around 99% of the business organizations are either small business enterprise or are medium sized business enterprise. These organizations have been able to create large number of job employment and generate huge revenue to contribute towards the development of the country’s economy. In this assignment, the importance of small business enterprise has been explained. In order to explain this in a detailed manner, the business idea of a UK based company called Skinnydip Limited has been taken into consideration. The company Skinnydip was able to pitch its business idea and sought the investment from the investors in Dragons’ Den reality show. The company was able to get an investment of £120,000 from Peter Jones, Theo Paphitis and Deborah Meaden with different stakes in the company. The company was launched in the year 2011 in London, which offered products like headphones, bags, tech accessories, speakers, phone cases, jewellery and other fashionable products (Skinnydip.com, 2017). The current business performance of the company has been evaluated in this assignment. After the analysis, relevant recommendations on how Skinnydip can improve its operations and performance have been mentioned.

Task 1

a) You are to produce a profile of your selected business from the Dragons Den series using the suggested headings:

Name of the Company: Skinnydip Limited

Owner structure: Skinnydip Limited was incorporated in the year 2011 on 20th January under the Companies House of United Kingdom. SkinnyDip Limited is a private limited company that has been registered under the “Wholesale of telecommunication and electronic equipment and parts”. The company was founded by Richard Matthew Gold, Lewis Blitz and James Isadore Gold in 2011. All the three founders are now the active directors of Skinnydip Limited.

History/Background: The Gold brothers and their friend Lewis Blitz founded this company in London in the year 2011. They started with providing creative and fancy iPhone covers and cases, headphones and tech accessories. All the three friends were dedicated towards providing inspired and original products. All the designs and product range are unique and eccentric from other company products. After a year of its establishment, the company decided to enter the reality show called Dragons’ Den and pitch their business idea. The investors of Dragons’ Den confirmed to invest in Skinnydip after all the three owners impressed them. The company was able to sell more than 200,000 products within 18 months of its establishment. The company reinvested its profits and started expanding by getting into retail agreement with online retail companies like Asos.com, Topshop, River Island and Harvey Nichols. The company currently has around eight retail stores in most key locations. Earlier, the company clinched the investment for 30% equity of £120,000 from Peter Jones. However, this deal was turned down and the company settled for £120,000 for 20% equity. After appearing on the show and impressing the top entrepreneurs of United Kingdom, the business of the company flourished more (Skinnydip.com, 2017).

Its activity: Skinnydip Limited is a retail company that offers iPhone cases, Samsung phone cases, backpacks, bags, headphones, tech accessories, jewellery, sunglasses, stationeries and other fashionable products in both retail stores and online stores.

Business location: The registered office of the company is located in London, United Kingdom. The company currently offers its products and services in more than eight stores in main locations. The online trading of the company delivers products in more than 30 countries.

Strengths and weaknesses: With the retail stores located in the prime locations, the company is able to attract customers who have a preference for stylish and unique accessories that are handmade. Moreover, with its flourished online business, it has been able to gain more than 423,000 followers on Instagram, 18,800 followers on Twitter and 67,400 followers on Facebook. The special offer of student discount has given the company a large number of young customers. This reflects that the online business of the company is well established. Moreover, the innovative designs of the company have helped the business move forward in the most effective manner. However, the prices of the product are a bit towards the high end. Moreover, the official website of the company lacks proper company information (Skinnydip.com, 2017). Being a fashion retail company, the turnaround rate of the products is high, because of which the company faces difficulty to provide latest designs and innovative products and services. This negatively affects the profit margin of the company.

b) Compare the performance of your selected business with one of the following; (AC 1.2)

The comparison between Skinnydip and Wolf & Badger has been done below in order to evaluate the industry performance of the former company.

Basis of Distinction

Skinnydip

Wolf & Badge

Background

The company Skinnydip was established in the year 2011 as fashionable retail company which offers unique iPhone designed cases, different accessories, bags, headphones, etc.

The company Wolf & Badge was established in the year 2009, which offers wide range of products for kids, men, women and also offers home ware products.

Marketing

Skinnydip has been able to have a good influence on the customers by using strategy like student discount, promotional offers and active marketing activities on social media websites. The company recently collaborated with Coca-Cola to design their products and advertise their products with the iconic and heritage company like Coca-Cola (Bridge and O'Neill, 2012). However, the total number of followers and active buyers of Skinnydip is still less compared to other fashion retail companies.

Wolf & Badger previously focussed on providing different marketing messages to each customer, which suited their interests because of which it was able to gain loyal customers. Later, with effective marketing automation technique, it was able to market its products in a better way. Development of the online websites and other changes helped the organization to increase its revenue by 4% (Wolf &Badger.com, 2017). Moreover, the company is able to market its products and designs through its company-owned magazines.

Sales

With effective business strategy, the company has been able to generate a profit of £2.5 million for the year 2016 by selling its unique designs and innovative products.

Even though the company offers wide range of products and services, the company was not able to perform well in the year 2016. It incurred a loss of £2.3 million in 2016, which was more than the loss incurred in the year 2015 (Wolf &Badger.com, 2017).

Human Resource

The human resource of Skinnydip is very creative, innovative and dedicated towards their work. The directors of the company are supportive and continuously seek to get better opportunities for the company. The interns in the company are well trained and the designers are appreciated well for their hard work. The blogs about the work of the employees and preferences of the customers attracts more customers to the official website (Neti, S., 2011). However, there are no separate columns about the designers or the partners.

The company highlights the work of all its designers and they have created a separate column for their designers on their official websites. The other staffs are independent and dedicated towards their work that focuses on executing their work in an ethical and unique manner.

Table 1: Distinction between Skinnydip and Wolf & Badger

(Source: Created by the author)

Considering the aforementioned difference between the two companies, it can be said that Skinnydip has to focus on developing its official online websites and its relation with its designers. The company has the scope of expanding its business and variety of products to attract more customers.

Task 2

a) Recommend with justification, appropriate actions to overcome the weaknesses. (AC2.1)

As the industry performance and company information of Skinnydip Limited was compared with another similar company called the Wolf & Badger, it was observed that the former company lacks behind in certain areas. Since Skinnydip is into retail business, it is essential for the company to overcome its weaknesses and develop new strategies to sustain in the competitive market (Storey, 2016). Given below are the recommendations that can be incorporated by Skinnydip in order to perform in a more efficient manner in the industry-

  • In order to develop its official websites, the management of the company should look for better content and focus on providing company details and highlighting the work of their designers.
  • By adding value proposition, team pages, carousels and better website navigation system, Skinnydip can improve the overview of its website and impress its customers.
  • In order to gain more customers and increase the total number of active buyers, the company can keep their customers updated with latest products. Mailing and posting on social media about promotional offers can also increase the number of potential customers.
  • By expanding the business further and selling the products on other online retail companies like Amazon, Argos, eBay, prezzybox, buyagift, etc., Skinnydip can enhance its sales revenue. Moreover, using the innovative ideas, the product range can also be expanded.
  • As the price of the products is a bit of high range, the company should develop new pricing strategy, which can match the purchasing power of its customers and also generate the same level of profit for the company (Zortea-Johnston et al., 2012).

Hence, by incorporating the above-mentioned recommendations, Skinnydip can improve its current business performance and compete with other businesses from the same industry.

b) Analyse ways in which the existing performance could be maintained and strengthened (AC2.2)

Skinnydip is a fashion retail company, which provides unique and innovative products in 30 countries through both online and offline stores. Established in 2011, the company has been able to boost its sales during its initial tenure of business. However, with other companies entering the same sector, Skinnydip’s sales went down. The website appearance, promotional techniques and other marketing strategies of other companies was better than Skinnydip. Hence, the company should focus on improving its website, introducing better promotional offers, developing new pricing strategies, giving more importance to the work of the designers and focussing on understanding the business strategy of other companies from the same industry (Schaper et al., 2014).

Along with offering student discount, the management can also provide discounts to those buyers who purchase on a regular basis. Using the method of newsletters, emails and even magazines to reach the customers and make them aware of the trending and upcoming products and services. The pricing strategy can be changed effectively if the management of the company is able to conduct proper research about similar products in the market. Taking feedback from the customers about the quality, range and price of their products and service can also provide them an idea about the customer demands, needs and satisfaction level. Restructuring the current business process can help Skinnydip to improve its performance, expand its product range and attract more customers with its customer-centric approach.

c) Suggest new areas in which the business could expand with reasonable justification. (AC2.3)

Considering the previous performance of the Skinnydip, it has been seen that the company was able to outperform all other retail companies during the first year of its establishment. That was only possible because the company used the right approach and technique to reach its customers and offer them the unique products. With growing competition in the fashion retail sector, Skinnydip was unable to cope with other companies. As other fashion retail companies, highlighted the work of their designers and employees, the customers were more impressed and inclined towards their websites (Burns, 2010). Since Skinnydip has a separate section for ‘blog’ on their official websites, it should also create a separate section for the designers and promote their work. Moreover, the company does not have a weekly or a monthly magazine like other fashion companies. By hiring new professional fashion writer and editors, the company can publish its new magazine to advertise and market its products and services.

Along with this, it is essential for the company to expand its product range to homeware, menswear and kidswear. This would help the company to explore a new market and attract more customers. Moreover, Skinnydip’s return policy requires the customer to send to the product to specific company warehouse, which becomes difficult for some of the customers. By hiring new delivery executives and developing new return policies, which would allow pick and drop return facility, the company would be able to provide hassle-free service to the customers (Hilmersson, 2014). Since there are certain issues with Skinnydip’s official website, it reflects the low conversion rate for which the company should focus on using the technique of SEO and better website navigation to attract more customers.

Task 3

a) Give your assessment on existing business objectives and plans. (AC3.1)

The current objective of Skinnydip of the company is to target the niche market by offering creative and innovative product that match with the emerging trends and yet includes the unique perspective of the Skinnydip designs. The new business plan of the organization is expand internationally and target the U.S. market and the Japanese market. Considering the objectives and future business plan of the Skinnydip Limited, it can be concluded that the company is focussed on improving its business operations and market performance. Their main strength is their designs and creativity, which provides the Skinnydip a competitive edge over other fashion retail companies (Malhotra and Temponi, 2010). However, the company has still not decided to expand its products or develop new pricing strategies. Instead of just targeting the niche market, the management of Skinnydip should propose a plan to reach all types of customers.

Before targeting and expanding in the Japanese and U.S. market, it is essential for Skinnydip to evaluate the market trends and research about the consumer needs of those two countries. This would help the organization to understand what type of pricing strategy and approach should be used in order to successfully execute the business plan. The finance department of Skinnydip should create effective budget that can allow the company to manage its resources and utilise it effectively in its expansion process. Considering its new marketing strategy of collaborating with Coca-Cola, it can be concluded that with such similar strategies the company would be able to gain a better market share and attract more customers (Aremu and Adeyemi, 2011).

b) Review business plans and suggest areas where changes can be made. (AC3.2)

Skinnydip looks forward to expand its business and its product range in order to attract more customers and make their business scale larger. As mentioned by one of the directors of Skinnydip, the company has been fortunate since its establishment as were to get the attention of the customers from the very beginning and they also impressed many successful businesspersons along the way. With continuous advise, encouragement and support, the company could boost its growth and was able to collaborate with companies like Topshop and Coca-Cola. However, the company still lacks the proper approach to reach the customers and in product variety for which the company should develop proper strategies. Along with this, it is essential for the company to invest in hiring new professionals and efficient workers who can contribute towards the expansion plan (Gill and Biger, 2012).

These strategies would help the business to grow and enhance its scalability. As per the new plan, Skinnydip would redesign its official website with the use of SEO and effective website navigation system. The website would also have a separate column for the designers, which would accredit their work and provide the customers the details about the innovation level of the company. Since, Skinnydip has decided to expand in the U.S and Japanese market, no market entry option has been selected. The management of the company should give the workforce the opportunity to suggest new ideas and methods, which can be applied to the current business operation strategy to strengthen its new business plans (Ackermann, 2012). Moreover, researching about the taste and preference of the people from United States and Japan is essential so that the company can produce and offer the products and services accordingly.

c) Prepare an action plan to implement the changes. (AC3.3)

The action plan for Skinnydip Limited has been given below which can be used to implement changes in the existing business operations-

Action Plan

For the year 2018

Aims and Objectives

Activities

Success Criteria

Time Required

Resources Required for the activities

1. Expanding the business

Skinnydip looks forward to expand its business in new type of markets like United States and Japan; attract more customers from different parts of the world.

Do extensive market research and understand the current scenario of those markets

Assess the customer needs of the U.S and Japanese

Evaluate the demand of similar product in the new markets.

Coordination from the current designers, workers and management team

Finding customers after establishing in new markets

6 months

Effective business strategy for expansion

Professional Market research team

High Capital that can be utilised to set up the new business

2.Widening the current product range of the company (Kidswear, Menswear and Homeware)

Taking suggestions from all the employees and designers

Researching about the consumer needs and considering them while developing strategy for new product development.

Utilising the capital of the company effectively to expand the product range (Achtenhagen et al., 2010)

Gaining the attention of the customers after introducing the new product range in the market

Hiring new and professional employees for selling the new products in the new markets

6 months

Plan the product development as per the business scalability and resources

Knowledge about the Kidswear, Menswear and Homeware

Market survey feedback from the existing customers

High Capital Requirement

3.Redeveloping the official website

Including the new column of designers and providing the opportunity to the young talents to highlight their hard work; Making the website more accessible and easy to use for the customers. This would be done to increase the conversion rate and popularity of the brand (Terziovski, 2010).

By using SEO and better tools, the company can enhance its conversion rate

Considering the suggestions of the staffs about the designer detail section

Using the right content to accredit the work of the employees and attracting customers.

Being able to promote the organizational activities in a better manner

Motivating the employees and designers to work harder

Being able to attract more customers after modifying the website

3 months

SEO, Google Analytics, Google Keyword Planner, Hootsuite, MailChimp, etc., (Kitching et al., 2015)

New professionals for developing the website

Content writers for writing about the new designer column

4. Developing new product return policy and modifying the marketing strategy

This would help the organization to gain the confidence of the customers and attract the potential customers at the same time.

Consulting with all the members of the organization and management to change the current return policy of the company

Changing the marketing strategy to make the customers aware of the new business activities, new product range and product innovation

Successful implementation of new return policy

Positive Feedback from the customers about the new shopping experience

High conversion rare and pay-per-click

6 months

Different marketing tools

Customer Survey on new return policy

New delivery executives for providing pick and drop return service

Table 2: Action Plan for Skinnydip Limited that can implement the changes in the current business plan

(Source: Created by the author)

Task 4

a) The impact of the proposed changes will have on the business and its personnel. (AC4.1)

Changes

Impact on management

Impact on Personnel

1. Expanding the business

Expanding business will have both negative and positive impact on the management. The negative impact will be developing pressure regarding management of new policies (Storey, 2014). On the other hand, the positive impact will be division of work with which the management could finish their duties more responsible way.

Expanding the business will increase work pressure on individuals working in the organization.

2.Widening the current product range of the company (Kidswear, Menswear and Homeware)

Increasing the product range will increase sales and profitability.

Widening current product range Will increase responsibility of the personnel and they could imply their personal skills in developing management of new products (Storey, 2014).

3 Redeveloping the official website

Redeveloping the official website will help in gaining more customers’ feedbacks by which management could be helpful in developing their services (Storey, 2014).

Redeveloping the official website will divide workload of personnel and employee in IT team should be more efficient to management all the new operations.

4. Developing new product return policy and modifying the marketing strategy

Product return policy and modification in the marketing strategy will help the management to understand current trends and demands in the market.

Developing new product return policy and marketing strategy will guide the personnel in which way they should work to mitigate customers’ expectation level (Storey, 2014).

Table 3: Analysis of impacts of changes in the organization

(Source: Created by Author)

b) The plan for how the changes will be managed in the business. (AC4.2)

The plan for how the changes will be managed in the business to get efficiency is listed below,

Management Support for Change

The management should be careful about the proposed changes and should have a critical and analytical viewpoint regarding impacts of those changes in the organization. This means management support should be there during the implementation and formatting of the changes in their organization (Saaty and Kearns, 2014).

Employee Involvement

The management should encourage employees to develop their engagement in implementing changed policies. The management could encourage employees by exhibiting the fact that, these organizational changes will benefit them in a better way and both the customer and employee satisfaction could be achieved through these changes (Saaty and Kearns, 2014).

Communication the changes

The management should do proper communication of all the changes happening in the organization. Effective communication with all the departments and employees will develop understanding regarding the changes and better understanding will reflect efficiency of the workforce and productivity of the organization.

Implementation of the KPI

Through help of this method, the management could track the effectiveness of all the changes after implementation. After arrival of the results, management could examine the determined results with the present results and in this way; the outcomes will explain what the actual profitability level of this organization is and list out if any modifications are needed in the proposed changes or not (Hassan et al., 2014).

c) The improvements in the performance of the business over the past two years (AC4.3)

The last two years’ annual report of Skinnydip has been analysed based on parameters like cash at bank and profit and loss reserves. This is represented by the trend line, which reflects the improvement or downfall in the business performance within the last two financial years.

Cash at Bank

Small Business Enterprise img1

Figure 1: Trend line showing the change in ‘cash at bank’

(Source: CompaniesHouse, 2017)

As per figure 1, it can be seen that Skinnydip was able to reserve £484,117 more cash in 2016. This proves the increased liquidity level of the company.

Profit and Loss Reserves

Small Business Enterprise img2

Figure 2: Trend line showing the change in ‘profit and loss reserves’

(Source: CompaniesHouse, 2017)

As per figure 2, it can be seen that the company was able to generate more revenue in the year 2016. The positive trend shows the high profitability level of Skinnydip Limited.

Conclusion

The small business enterprises have played a very significant role in the development of the UK economy. The prospects and innovative idea by the SMEs have impressed all the customers and large-scale business organizations to introduce unique products. The concept of innovation in small business enterprise has been explained with the help of a company called Skinnydip Limited. The company had won the investment for impressing the investors on the reality show Dragons’ Den. The investors were impressed as the directors of the company stated how well they did in their initial 18 months of establishment. The main strength of the company was the unique and innovative designs of the phone cases, bags, accessories and jewelleries. The assignment also covers the details about the weaknesses of the company, which can be handled with the given action plan.

Reference List

Achtenhagen, L., Naldi, L. and Melin, L., 2010. “Business growth”—Do practitioners and scholars really talk about the same thing?. Entrepreneurship theory and practice, 34(2), pp.289-316.

Ackermann, S.J. ed., 2012. Are small firms important? Their role and impact. Springer Science & Business Media.

Aremu, M.A. and Adeyemi, S.L., 2011. Small and medium scale enterprises as a survival strategy for employment generation in Nigeria. Journal of sustainable development, 4(1), p.200.

Bridge, S. and O'Neill, K., 2012. Understanding enterprise: entrepreneurship and small business. Palgrave Macmillan.

Burns, P., 2010. Entrepreneurship and Small Business: Start-up. Growth and Maturity. Palgrave Macmillan.

CompaniesHouse (2017). Companies House service. [online] Beta.companieshouse.gov.uk. Available at: https://beta.companieshouse.gov.uk/ [Accessed 14 Nov. 2017].

Gill, A. and Biger, N., 2012. Barriers to small business growth in Canada. Journal of Small Business and Enterprise Development, 19(4), pp.656-668.

Hassan, S., Li, F., Sahak, M.F., Perumal, M., Ghani, A. and Yusoff, M., 2014. The successful implementation of key performance indicator system in a telecommunications company. International Postgraduate Business Journal, 6, pp.95-110.

Hilmersson, M., 2014. Small and medium-sized enterprise internationalisation strategy and performance in times of market turbulence. International Small Business Journal, 32(4), pp.386-400.

Kitching, J., Hart, M. and Wilson, N., 2015. Burden or benefit? Regulation as a dynamic influence on small business performance. International Small Business Journal, 33(2), pp.130-147.

Malhotra, R. and Temponi, C., 2010. Critical decisions for ERP integration: Small business issues. International Journal of Information Management, 30(1), pp.28-37.

Neti, S., 2011.Social media and its role in marketing. International Journal of Enterprise Computing and Business Systems, 1(2), pp.1-15.

Saaty, T.L. and Kearns, K.P., 2014. Analytical planning: The organization of system (Vol. 7). Elsevier.

Schaper, M.T., Volery, T., Weber, P.C. and Gibson, B., 2014. Entrepreneurship and small business.

Skinnydip.com (2017). Skinnydip London. [online] Skinnydip London. Available at: https://www.skinnydiplondon.com/ [Accessed 14 Nov. 2017].

Storey, D.J., 2016. Understanding the small business sector. Routledge.

Storey, J., 2014. New Perspectives on Human Resource Management (Routledge Revivals). Routledge.

Terziovski, M., 2010. Innovation practice and its performance implications in small and medium enterprises (SMEs) in the manufacturing sector: a resource‐based view. Strategic Management Journal, 31(8), pp.892-902.

Wolf &Badger.com (2017). About Us | Wolf & Badger. [online] Wolfandbadger.com. Available at: https://www.wolfandbadger.com/uk/pages/about/ [Accessed 14 Nov. 2017

Zortea-Johnston, E., Darroch, J. and Matear, S., 2012.Business orientations and innovation in small and medium sized enterprises. International Entrepreneurship and Management Journal, 8(2), pp.145-164.

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