Learner Work

Learner name: Sally Jones Start Date: 14/11/2017 Hand-in deadline: 12/12/2017

BTEC Level 1/Level 2 Tech Award in Enterprise Component 1: Exploring Enterprises

Learning aims: A: Examine the characteristics of Enterprises B: Explore how market research helps enterprises meet customer needs and understand competitor behaviour C: Investigate the factors that make an enterprise successful

Task 1: The Characteristics of Enterprises Learning aim A: Examine the characteristics of Enterprises

Task 1 Introduction

The two local businesses I have chosen to research are Bow Blooms and Bath & Tiles Ltd.

Section A: The purpose, activities and aims of two contrasting local enterprises

Bow Blooms

Bow Blooms is a small florist business owned by Mary Bowing who is a sole trader of this micro-business. Because she is a sole trader Mary does not have a separate legal existence from the business. From a legal point of view, the business and the owner are the same. So Mary knows that she is liable personally for the business debts and that she may have to pay for losses made by the business out of her money. This is called unlimited liability and the major disadvantage of this style of ownership. At the moment Mary is not too worried about her business ownership and has some savings to support the business and she has made a profit for each of the three years she has owned the shop. She enjoys the fact that she can make decisions without asking anyone else but she often does work long hours.

Mary employs one part-time member of staff who works 10am-3pm Monday - Saturday. This person works full time when Mary needs to go on holiday and she plans so she does not book in too much work when she is away.

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The business is located in Baramoor which is a large densely populated village just 1 mile from Strongford Town centre in South Wales.

The village has a busy high street that as you can see from the map above1 is filled with just under 30 shops and services which are mostly small businesses run by local traders. The high street is popular with locals in the area. There is good parking in the area and rent and rates for businesses in Baramoor are much cheaper being out of the town centre.

Mary currently pays £9,000 a year for 840 square feet shop which is getting good trade. The shop has a sales area to the front and it has storerooms and a WC. The same size space according to my research in the nearest town would cost £24,000 a year2. The business benefits from being close to other large neighbouring villages around the edge of Strongford Town Centre. There are no other florists in Baramoor so Mary does not have any competition close by, and she is filling a gap in the market. In Strongford there are 4 florists and one is a larger florist who has a contract with Interflora but despite some competition locally Mary often has to turn away orders and the business is very successful at the moment, and she not experiencing any negative effects from her competition because she spotted a gap in the market in Baramoor for a local florist.

The business does not have an online presence but operates only from its physical business location – the shop. She does have a strong social media following with 1,780 members on the Facebook page and she does promote offers through this page. The business takes orders for floral arrangements for funerals and weddings and other occasions. Through a family connection she often does the flowers for a local golf and wedding venue in a neighbouring village, this large venue places weekly orders for flowers and at certain times of the year such as prom season she supplies all the venue flowers. She has a stock of flowers and arrangements available for ‘on the day’ purchases and she also stocks plants and in the summer, she sells bedding plants. Ornaments and vases are also stocked in the shop. She or her employee can deliver arrangements.

1 www.google.co.uk/maps/place/Baramoor 2 www.dabsonsproperty.co.uk/commercial-retail.php?page=2

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She has peak seasons which are at the times of year you would expect like Christmas, Valentine’s day, Mother’s day and Easter. In the summer wedding flowers take over as the popular service offered. Throughout the year funerals provide 3-10 orders per week. She usually delivers up to 10 miles away but wedding flowers can be delivered up to 30 miles for an extra fee.

When I asked Mary she said her mission statement was “Bow Blooms can cater for all your floristry needs”. As a small business, her main aim is to survive, and to make a profit. To achieve this, she tries to always produce high quality floral arrangements for all occasions as well as everyday floral displays and gifts.

One of her objectives is to provide high quality service is to provide all customers with a high standard of friendly, personal care to make sure that they continue to use her business. She makes time to visit the families who want funeral flowers to take orders and brides can come to shop. It is important to Mary that she offers a reliable service of quality and style but also her flowers are affordable, so she offers floral displays for all customer budgets and feels it is important to listen to customers needs. She also tries to make sure all her flowers are of the highest quality. She has daily deliveries to be sure they are fresh so when customers receive their bouquet or display it will last longer.

Mary tries to be an ethical business. Although cutting flowers is not seen as very ethical Mary knows that the supplier she uses actively supports fair conditions for flower growers from international growing regions and the Fair Flowers, Fair Plants3 which is recognised in the flower industry, human rights groups and trade unions.

Mary also makes sure she treats her member of staff in an ethical way. Mary’s employee is over the age of 18 and paid above minimum wage and she has a pension.

In the future, she is going to look at expanding the business as a business aim and maybe considering changing the business ownership to have a separate legal identity from herself.

Bath & Tiles Ltd

Bath & Tiles Ltd is a well-established bathroom supplier business in Castlehedge which is run by husband and wife Barbara and John Jones. The business is a private limited company which means the business has limited liability so Bath & Tiles Ltd has its own legal identity, not like Bow Blooms. This means that Barbara and John are not personally liable for the firm's debts but Mary would be for Bow Blooms. The business has always been a Ltd and is 35 years old this year but it has grown most in the last 4 years.

3 www.fairflowersfairplants.com/en/home-2

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The business employs 45 members of staff. These staff are sales staff, delivery drivers and fitters. They can plan and design your bathroom, purchase the materials and fit the bathroom, tile the area as well as an aftercare service. The business had 6 members of staff 4 years ago when they only sold bathroom suites and had to put customers in touch with local tilers and bathroom fitters. The business is the only supplier in South West Wales for two German bathroom suite manufacturers. The business does not operate online at all, but it has a website which takes ‘contact us’ requests.

The business has had a number of aims over the last 30 years. The only aim which has remained the same is to make a profit. Like Bow Blooms the business prides itself on the high-quality service it offers and also has this as a business aim. To Barbara and John it doesn’t matter whether the project is doing up an old bathroom or doing a major new bathroom, their standard of service is the same. Bath and Tiles owners say that they listen carefully to what people want and are happy to guide them through their project from start to finish.

The way people shop has changed a lot in the last few years and ecommerce is now made easy with ability to use your phone even to make purchases. The Telegraph4 reported in 2017 that the internet is fast ‘becoming the destination of choice for shoppers, heaping pressure on traditional retailers who are struggling to keep up with their online-only rivals’. In the bathroom industry businesses such as Victoria Plumb5 are online and the business has gone from strength to strength and has experienced rapid business growth6 without the costs of having physical retail shops.

This is a tough time for small local family businesses in this trade but inspite of this for the last 4 years the business aim at Bath and Tile Ltd was growth and to achieve this the business had objectives of sourcing new business premises which actually saw them move to a large showroom unit 2 years ago. The new site is 4 times bigger than the last showroom and lets them stock 400% more bathrooms meaning the time to deliver a bathroom has now been reduced a lot and they can take on more orders. The new site is in an industrial park with 3 other national bathrooms suppliers.

So, Bow Blooms chose to open in an area away from competitors, but Bath and Tiles opened in close to competition. This was a risk but they hoped being close to their competitors would work to their advantages as customers visiting the area for the big name brands would see their showroom and should the people who are potentially bathroom purchasers come in then Bath and Tile Ltd would offer a more customer

4 www.telegraph.co.uk/business/2017/01/08/online-retail-booms-high-street-struggles/ 5 https://victoriaplum.com/about-us 6 www.insightdiy.co.uk/file-download.asp?type=products&id=537

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centred and local approach which would hopefully win them custom. The business plans to achieve the aim of growth by opening 7 days a week, this has increased from 5.5 days to 6 days and now they have more staff this might be possible.

In the last year the business has had an aim to be more charitable and has sponsored a local football team and has two volunteers come in each week which have autism and the firm helps them to develop their social and employability skills.

The business takes it legal and ethical responsibilities seriously. All staff are in a pension scheme and the business offers a 20% friends and family discount for their staff. They follow all legislation for example the backroom staff have to have special manual handling training and license to drive the forklifts. The business has to follow health and safety legislation and the correct disposal of the materials such as the bathrooms they remove from customers’ homes.

Section B: The entrepreneurs who run these enterprises

Bow Blooms owner Mary was working in administration for a large business and was offered voluntary redundancy. She didn’t have a mortgage and her children had gone to university so Mary took the opportunity to look for a new hobby so when looking at courses at a local college she decided to take a floristry course. She didn’t imagine this would lead to her having her own businesses. During her course she was pleased and surprised with the feedback she received about her displays and started to take orders from friends and neighbours. Her reason for starting the business was because she liked her course, and her lecturer suggested she could run her own shop, so she then used some of her money she was given when she left work to start the business and hopefully make a profit.

For Bath and Tiles Ltd the start was different as Barbara’s father owned a bathroom showroom. Barbara was an accountant and her reason for this was she had a father who suggested this was a suitable career to support the family business, and because her husband John was a working for a large business as a tiler. The business is 35 years old but is only the way it is today since Barbara inherited the business and they decided to take the business further to one which could see a bathroom project through its full process. For John and Barbara, being their own boss and to continue the family businesses is their main reason. John could see that his father-in-law’s showroom-only business was successful but wasn’t able to follow through the whole service as the business then only sold the materials. John had the skills to expand the business at the time and it seemed logical to develop the business in this way. This is a bit different from Mary who was able to set up her business to follow what was her hobby since leaving work.

Together John and Barbara had good knowledge an understanding and have made the business successful. John had knowledge of the bathroom fitting industry and actual

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technical skills of tiling to support the business development and Barbara brought a different set of skills through business planning and her financial skills. Also the couple have a strong and passionate mindset. They never want a customer to be just satisfied but they want to exceed expectations. They look for inventive or innovate ways to meet customer needs often requiring patience and problem solving to make the customer happy and they take great pride in the service they provide. To deliver the highest quality to some of their business clients they have used their enthusiasm and confidence to get exclusive stocklist contracts with high-end suppliers. They demonstrated excellent communication and negotiation skills to do this and customers from across the UK come to this showroom to get these high-quality bathrooms.

To achieve the recent goal of growth and filling a gap in the market for a local business that could supply and fit to order the company had to take risks and manage these, so it was important to have a strong resilient mind set and to be able to ensure their staff were also invested in the vision for the future. They have increased the number of staff that work for them massively to be able to work on multiple jobs at the same time and all bits of the installation and they could also go after corporate bookings with more skilled staff. As they planned to move, time management skills were really important as they had to plan the move over 5 months and set up and pay rates at the new place while still working out of the old place.

Mary has the mind-set of an entrepreneur as she is organised and focussed and this has helped her to meet the needs of setting up a new business and filling a gap in the market. She has a passion for flowers and had learnt new technical skills on her course but she did lack knowledge of the industry and of running a business so she has to go out to find support and help to make her vision work. She was lucky to have her own money to start the business but she had to be resilient and very motivated to make the business a success. After years of working for a large company she had good interpersonal and communication skills which were important because they let her ask questions and get information from others. A key part of running the business is her time management, and prioritising tasks as some days there can be 5 or more floral displays that need to be created and the flowers are delicate and should be handled as little as possible and kept cool. Planning the order that the displays are made in to meet the delivery schedules is really important for the business success and the most important skill Mary uses each day to make sure the business a success and fills the gap for a local florist in the market.

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Section C: How the characteristics of the enterprise and the entrepreneur have influenced it achieving its main purpose

Bath and Tiles Ltd

There are a number of personal characteristics plus characteristics of the business which have made the business so successful. Bath and Tiles Ltd carries out a number of activities as a small family run business. The small size of the business helps the success of the business as the husband and wife couple have a strong set of values. To be successful they believe in giving great customer service. Taking time in getting to know their customers and listening to their needs lets them offer a better service for their customers so that they'll to want Bath and Tiles Ltd to fit their suite and then they are more likely to leave a positive review and recommend their services to others. They feel it’s their good communication skills and their passion to deliver the best service that lets them stay ahead of their competition.

Bath and Tiles Ltd sells bathroom fixtures and fitting goods but it also a design and fitting services from its showroom as you can see from the picture on the left. The business is different to others in the fact that

the majority of their customers are not regular repeat customers and due to the high price and hopefully because the products last a long time a customer may use the service a maximum of three times in their

lifetime but despite this it is still really important to keep customers happy as the reputation of the business is key to getting other customers. There are some corporate companies which the business

supplies such as hotels in the area and restaurant chains who are regular repeat customers and they also need to feel that their needs are being met.

The husband and wife used their skills and knowledge in accountancy and the bathroom and tiling industry to grow their business. Sir Alan Sugar when interviewed for a business start-up online resource7 said that ‘only taking risks on things you understand is key to business success’ which is what John and Barbara done.

Despite their understanding of the industry the new ideas for the business transformed how the business operated which required courage as the business never previously installed the bathrooms, or had as many staff, or worked with luxury brands. They had a vision that their showroom would meet every budget so needed to go after the luxury brands. Since the transformation of the business model the annual profits increased by 18% in the beginning and in the last three years the net profit increased by nearly 40%.

John and Barbara feel that the business ownership structure being a Ltd has helped them to get their vision to make the business successful as they felt more confident making changes. To reduce the risk of failure the changes made were based on the research they did looking at their competitors and they listened to customers who were in the market to buy a bathroom but decided not to purchase from their business, they

7 https://startups.co.uk/lord-alan-sugar-i-only-take-risks-in-things-i-understand/

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used this information when the customers did not buy from them. This is called a proactive approach and it allowed the business to grow.

John and Barbara’s excellent service and business success also relies on the entrepreneur’s skills in time management. They have large multinational competitors who can fit bathrooms quickly which is a threat to the family run business but with planning and timing they can schedule everything to be efficient service which is key to success. Without the ability to plan all the appointments with customers and manage the ordering processes the times they could not offer fittings of their bathrooms because it requires careful planning and time management. They need to accurately know the fit times by listening to their employee’s expertise in how long they think it will take install the bathrooms so they can manage their customers expectations of when they will be finished. Manging lots of fittings at the same time and monitoring stock level so they have steady stream of stock is a key part of the success of the business and requires their time management.

A strength of the business is that customers are always impressed by the choice the Bath and Tiles Ltd can offer which is helped the success of the business over its past 30 years. They can order from a wider variety of stockists than even some large DIY store suppliers. In recent years the business has increased the number of suppliers it works with and has included a number of luxury brands and exclusive stock like some leading German brands which has helped them to growth. Being a stockist of these brands has given them a larger number of customers. Getting excellent deals with the suppliers is really important for the business profit margins and success. Work with suppliers relies on the excellent interpersonal skills and confidence, plus showing them their strong passion for service. These characteristics are the most important ones Barbara and John feel add to the success of the business as the business relies on the range and quality of their stock and this in turn means they must have a good relationship with suppliers and customers which requires their excellent interpersonal skills.

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Task 2: The Characteristics of Enterprises Learning Aim B: Explore how market research helps enterprises meet customer needs and understand competitor behaviour

Task 2

Section 1: The design and use of market research in two local enterprises

It is important to find out what the needs of your customers are to meet demands and sales. A business does market research to help identify gaps in the market and business opportunities plus they should know about market trends and that customer needs can change following new fashions or changing economic conditions to continue to make the business a success.

Bow Blooms did some primary market research when it first opened. This was good because it let Mary work out what sorts of prices customers would be prepared to pay. To do this research Mary made up bouquets and asked people on the street for their opinions as to what she could charge, she also asked people about their favourite flowers and what they would like to see her sell in her shop. She asked these questions face-to- face and all the research was qualitative research, she asked the questions from a questionnaire and completed the forms and she did this for nearly 60 people. She also visited lots of florists and suppliers up to 40-miles away to get an idea for what they sold and the prices they charged for event flowers, and she recorded this information as notes to support her business plan. Knowing what customers wanted was important in setting up the business, and Mary keeps asking her customer’s opinions when they come into the ship so she knows she is meeting their needs.

As a member of British Florist Association8 Mary gets monthly updates and has can go onto an online support system which gives her secondary research about what is popular and developments in floristry and this informs some of the decisions she makes in the shop. Knowing what her competitors are doing is important to Mary as she is a small business and needs to be sure she keeps her customers and not lose them to other florists.

Bath and Tile Ltd do very similar research to Bow Blooms, they monitor what their competitors charge to support their business to meet customer needs and understand competitor behaviour and also use primary research as they ask every customer who comes into the shop wanting a new bathroom to complete their questionnaire. They have designed this form by themselves based on years of experience as an easy way to get all the information they need in one go. Although they are now a successful business they still need to know what customers want if they are to keep them.

They also get lots of their secondary research from their subscription to lots of trade magazines to see what is popular and get information such as The Installer9 which provides the latest news, product and training information to the plumbing industry and this gives them a good understanding of the market demands.

8 www.britishfloristassociation.org/ 9 www.installeronline.co.uk/

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All customers when they have had their bathrooms finished are asked to complete a short questionnaire over the phone or by post or email which produces mainly quantitative research as it asks the customers to ‘rate out of 8 the level of service received at different points on the customer journey’. They also allow customers to provide qualitative responses and sometimes these go on their testimonial pages on their website, this is an example of one. “As we are in our eighties we found that we were not able to use the bath and overhead shower any longer. We had attempted to find a suitable company but we were not impressed by their lack of interest. A long-standing friend had used Bath and Tile Ltd to upgrade two bathrooms and was delighted with the service and products received. We contacted the company who immediately sent out a staff member who appraised our situation and then produced a drawing on their new in-house design system giving us the benefit of seeing how our bathroom would look when finished. We received undivided attention when we visited their impressive showroom. Work on our bathroom proceeded perfectly and as a result we have a bathroom which we are really proud of and enjoy relaxing in. We would highly recommend Bath and Tiles Ltd to anyone wanting a new bathroom as you are guaranteed 110% service and satisfaction and a competitive price too.”

Section 2: The effectiveness of market research for Bath and Tiles Ltd

Bath and Tiles Ltd use a questionnaire to make sure it meets the needs of their customers.

A copy if the first page of the questionnaire is on the left.

This way they learn what the customer wants. There is a section of the questionnaire which askes the customers what research they have done or for any other quotes they have received.

This allows them to see what their competitors have offered and if they can do better than their competition.

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They use the customer responses to plan the bathroom to meet their needs. Doing this type of research is effective as their reviews and feedback they receive is between 98%- 100% satisfied when they are asked to review the service.

To investigate competitor behaviour Bath and Tiles Ltd staff do mystery visits at their competitors stores and showrooms to see what services they provide and use this to make what they do better. These visits are an example of primary research. When they visit their competitors or phone them to get questions answered to try and find out what their competitors do and sometimes they do visits to look at the price and quality offered by competitors and sometimes ask questions about the availability of the bathrooms. To research competitors they also use internet research of large businesses such as Victoria Plumb.

Bath and Tiles Ltd also use secondary research to understand customer needs and the websites and reports they use provide both quantitative and qualitative results. The most recent publication the business have used to inform their business decisions is the Bathroom Purchase Behaviour Report from the Trend Monitor website10. This has helped them understand what motivates customers buying a bathroom, what brand awareness they have why they choose the business they purchased from.

Task 3: Exploring Enterprises Learning aim C: Investigate the factors that make an enterprise successful

Task 3

Section 1: The impact of internal and external factors

Four in ten small companies don’t make it five years11 so a new business would not be measuring success using this five years as a benchmark. Other measures of success could include looking at the business financial performance. Using the income statement to measure the profitability of a business and comparing the performance during a certain period to see if its improved could be used as a measure of success. You could measure the success looking at the balance sheet which shows your business’s financial health, measuring how much you owe and own and seeing if you have improved your financial health. Other businesses may measure business success on customer numbers, sales growth, product diversification, market share percentage or customer satisfaction scores. Many businesses may start out with the aim of breaking even as the first measure of success.

However a business chooses to measure success it’s clear that they must be liquid and having good cash flow. Things that could influence this are often outside the business and its important to remember that a “business does not operate in a vacuum”12. A business must act and react to what happens outside the business control and these

10 https://trend-monitor.co.uk/shop/Bathroom-Purchase-Behaviour-Consumer-Insight-Report-No- 2-p89055811 11 http://smallbusiness.co.uk/business-failure-four-ten-small-companies-dont-make-five-years- 2533988/ 12 https://www.tutor2u.net/business/reference/external-environment-introduction

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things that happen outside the business are known as external factors and can have a massive impact on the success of a business.

There are many external factors to consider and these may have a negative influence (bad), but it could also be possible that the impact is positive (good).

Changes in the cost of energy, raw materials, borrowing, premises

These are all costs for a business and if they increase then the businesses will be paying more out, and so will have less to spend or invest. uSwitch in 2017 said that from April 2017, seven major suppliers announced energy price rises - some as much as a 10% increase13. At the end of 2017 the 0.25% rise in Bank of England base rate to 0.5% was the first rise in borrowing costs for a decade which means many mortgages will rise in cost14. These are just two examples of how Bow Blooms and Bath and Tiles Ltd could experience bigger costs as a result of changes in the external environment. Bow Blooms must get its raw materials at the absolute best price and to do this Mary sometimes needs to use lots of suppliers. She must shop around as the profit margin on certain products is quite small for example on products such as pre-made bouquets. If costs increase Mary would have to increase her prices and customers are likely to go elsewhere such as large supermarkets who can benefit from economies of scale and sell pre-made bouquets at competitive prices. Mary also has to pay rent so if rental prices increase this could cause cash flow problems for the business as it’s an increased outflow. Bath and Tile Ltd have pre-arranged and carefully negotiated supplier contracts but it is important that they look for the best rates for their bills and borrowing arrangements if they want to make a profit.

Changes in costs of marketing or selling

Businesses need to budget what they pay out on marketing and selling because whilst these activities support building sales revenue they have costs that could have a negative effect if they are too high. Both Bow Blooms does not spend that much on marketing but Bath and Tile has spent out more in recent years on various activities and a new website to look professional and compete, and this effects its profits which could affect success.

Governmental changes

Two governmental changes which could occur are the introduction of new regulations, or changes in taxation. If any new laws are passed, they could be affected by them and so businesses should keep up to date for example the government changed the pension rules for employers in 2012 and now employers, by law, have to pay at least the minimum amount into the scheme. This is an example of a relatively new law that the Bow Blooms and Bath and Tile Ltd need to follow and it is a cost to both businesses but Bow Blooms has always incorporated this as a cost as it started trading after this was introduced but for Bath and Tile Ltd they had to manage this additional cost. Every year the Government announces its budget which could affect the business directly or indirectly and at the end of the day could influence business success. Sometimes the cost of living increases as prices of everyday products may increase so people have less

13 https://www.uswitch.com/gas-electricity/guides/gas-electricity-prices/ 14 https://www.theguardian.com/business/2017/nov/02/interest-rate-rise-bank-of-england-homeowners- savers

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money to spend for example on things you don’t have to buy such as flowers or may reduce what they can afford, and this could negatively affect Bow Blooms. Sometimes the government announces plans like this year’s personal allowance and ISA increase which may mean people have more money left to spend. This is important to Bath and Tile Ltd as updating a bathroom is for most people is a luxury item so if the customers have more money they are more likely to consider making expensive purchases.

Competitors

If a business does not keep up with who their competitors are and what they are doing, they could find themselves losing customers and reducing market share and they would be less successful. Retaining customers so they don’t go to competitors or customer loyalty is often key to business success but in the case of Tile and Bath Ltd they are the type of business where loyalty isn’t key but customer satisfaction for positive testimonials and feedback is needed to set them apart from competitors. Bow Blooms spent a lot of time researching their competitors and she knows how they operate and what they charge as she can’t afford to lose customers as they are in quiet a competitive market.

Consumer confidence in the economy

‘Findings in August showed spending by British consumers is growing at the weakest rate in almost three years, as households squeezed by rising prices tighten their belts’15 and is evidence of consumer confidence is low which is worrying for retail businesses as Bath and Tiles Ltd is considered as selling luxury items or in the case of Bow Blooms people may choose cheaper flowers if consumer spending is low. The UK is currently in a state of economic uncertainly and experiencing a weak pound as the decisions are made regarding the UK leaving the European Union (BREXIT) which means people may be less likely to spend on luxury items as they are worried about their jobs. As well as this the housing market in the UK has also seen house prices drop which may worry people as they have bought during a time that means they might lose money if they sell their houses. Low house prices could be good for Bath and Tile Ltd is this means more people may be able to buy homes so may fit new bathrooms but this may not be the case as many people may be forced to stay in their current homes as they would lose money on if they sell, but this too could be good too for Bath and Tile Ltd as more people could want to do home improvements. The whole country has been in great economic decline due to recession with small and large businesses suffering or even declaring bankruptcies which result many are forced to reduce their operations or close entirely and making people redundant. If unemployment increases families don’t have much money to spend on luxuries. The opposite of a recession is a boom, and this creates more jobs and means people have more disposable income and money to spend.

Changing consumer behaviour

Consumer behaviour has changed over the last few years, and lots of these changes have occurred because of technological advancements. The internet lets people have access to businesses all over the world, so people have more choices than ever before, and more information to make those choices. Brand loyalty and repeat purchases are not

15 https://www.theguardian.com/business/2017/aug/24/uk-consumer-spending-incomes-squeeze-investment

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so common as people want low prices not brand names. Bow Blooms faces competition from online-only brands such as Bunches in a similar fashion to Bath and Tile Ltd facing competition from online-only brand Victoria Plumb.

Understand changes in consumer legislation, sales and labelling of products and the misuse of information

Businesses must follow legislation and keep up to date as consumers have basic legal rights, for example the Sale and Supply of Goods Act 1994 says that all products have to be of a 'satisfactory quality'. This means the product has to be safe, last for a reasonable amount of time, must work and be fit for their intended purpose so both businesses must ensure they follow this. A new development is that there is going to be a Data Protection Bill which will update data protection laws for the digital age it was introduced to the House of Lords on 13 September 201716 so businesses such as Bath and Tile who keep customers data need to make sure they process the data properly and protect is otherwise they could end up with large fines and a damaged reputation if they sell or give out customer information without permission. There are a number of pieces of legislation to protect consumers and guides available from websites such as Which17 .

External factors are outside the business control and businesses can only react to them. However, there are factors which are internal within the company which impact the success and approach of operations and unlike the external environment, the company has control over these factors. These are some internal factors to consider:

Understanding the market

The market includes customers, suppliers and competitors and knowing these can increase your chances of being a successful business. Customers are the ones buying from your business so getting to know customer characteristics, what they enjoy, how much they will spend, what they need and want means you can supply products and services that will be popular with their target market. Bow Blooms and Bath and Tile ltd do research of their customers/target market to meet the needs and wants which is very important as they both have lots of competitors both with local retail premises and online only companies. Both businesses take an active interest in their competition so that they can understand if there are any opportunities they are missing or if there is a competitive advantage over others in the market that they can take.

Keeping customers satisfied

For both Bow Blooms and Bath and Tile Ltd they feel customer satisfaction is a key to their business success. Both businesses pride themselves on customer satisfaction. Bath and Tile ltd use a survey to meet customer expectations and use feedback to measure how their products or services supplied have met or were better than a customer's expectation. They rely on customers passing on their good experiences to get future custom.

16 https://www.gov.uk/government/collections/data-protection-bill-2017 17 https://www.which.co.uk/consumer-rights/regulation

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Effective planning and financing

Poor cash flow is one of the major things that make businesses fail so effective planning and financing is the key to success. Businesses need to forecast their ups and downs throughout the year and plan for these. Bow Blooms has highlighted that there are very busy times of year which have high amounts of orders, so you must plan for these by buying materials and in the case of Bow Blooms they take on additional help for Valentine’s Day and Mother’s Day. Both businesses need to buy their stock to complete orders before they are paid in full, so they take deposit for large orders and part payments until delivery of the flowers or fitting of the bathroom to help protect them from any cancellations and support their planning and financial forecasting and protect them from cash flow shortages and perhaps failing.

Marketing and promoting the enterprise

“Marketing your business is a key ingredient in your success strategy. Without marketing, nobody will know about your business or what you offer to the market18.”

As both businesses are small they must work on making themselves known. Bow Blooms has a very successful Facebook page which gives her free marketing and promotion and she doesn’t do much else but Bath and Tile Ltd spend a lot of money on marketing and promoting including sponsorship deals with local sports clubs, businesses cards, trade fairs, leaflet drops, keeping a professional website, newspaper adverts and they sponsor roundabouts (they have their business name advertised on large roundabouts in the town). Mary at Bow Blooms has grown quickly since opening and a part of this success she thinks is because of positive promotion through her Facebook page and word of mouth advertising. Bath and Tile Ltd have increased their number of customers in recent years so working towards their goal of business growth which they have been successful in achieving through the move to a larger place, offering more services and bigger customer numbers.

Unforeseen human resources cost

Despite being small both companies offer their employees £89.35 per week Statutory Sick Pay (SSP) if they are too ill to work and this could be paid for up to 28 weeks. This is potentially huge cost to them especially if they have to pay others to fill in for the sickness. As well as this for a very small business like Bow Blooms if Mary is off sick or her member of staff is this can cause a huge problem as she may not be able to open the shop or do her orders which could damage her reputation so she does plan for this by having a small number of people she can call on for some support.

Section 2: Evaluating internal and external factors

A situational analysis is an examination of internal and external factors affecting a business which means the owners of the business can get a better understanding of the factors that will influence its future. One method of analysis is using SWOT. This looks at

18 https://www.bigbusinessevents.co.uk/2017/04/19/4-reasons-why-marketing-is-important-for-your- business/

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the business strengths and weaknesses as well as the external opportunities and threats. I am going to do a SWOT and PEST analysis for Bow Blooms.

SWOT

Strengths:

The most important strength for Bow Blooms is Mary’s commitment to high quality service. A fantastic range of fresh flowers are available, and Mary takes time to listen and get to know her customers wants and needs. She follows what the customers wants for their flowers which can be delicate when planning funeral arrangements and she is sensitive to deliver the best services within the customer budgets so has to manage expectations. This high level of customer satisfaction means customers say to others that they had a good experience and they give positive word of mouth by recommending Bow Blooms to others. This is a second strength of the business, she receives good reviews and positive recommendations and these are key to her success so far. Often people may not be directly a return customer, but she has return customers in the form of families where sisters/friends/bridesmaids of previous customers have come to her to do their flowers because of the arrangements they have seen at other functions. It is the large functions such as weddings that are most profitable for the business and are going to keep the business a success so having good reviews for these larger events is a great strength to her business and helps contribute to its success so far. Booking a regular slot to provide function flowers at a large venue locally is not something she is aware her competitors do locally so is a competitive advantage.

She does get some walk-in business as a result of her good location which has no competitors in the very near the vicinity, so she filled a gap in the market in Baramoor. She keeps up with competitors offering similar services and where at all possible tries to be more competitively priced than some others as her costs are less for shop rent because it is very reasonably priced.

Mary has a set of unique skills from her previous employment which has helped with the success of the business, and she tries to keep up to date with current trends with her reading her trade magazines.

Weaknesses:

Mary is quite new to running her own business and while she has had good advice and success so far but the next steps to sustain and grow the business are very unknown and this is her biggest weakness. She doesn’t pay much attention to marketing and relies on word-of-mouth and Facebook. She doesn’t have a marketing plan or marketing budget, her shop front is not very attractive, she has a basic logo which could do with updating and her van she delivers flowers with does not have a brand or logo on the side. She could maximise on this but currently hasn’t had the time to look at this. And this leads to the second weakness which is she is currently working to maximum capacity and whilst she is making a profit which Mary describes it good but she does put in up to 75 hrs in a week and this could cause a problem long term as Mary could become stressed and overworked.

She needs a marketing plan and long-term business plan to work out where to take her business in the future, potentially she needs to take on extra staff or an apprentice but this would make her costs more and she would need to think again about some of the

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prices she charges. Another big weakness is her lack of space, the business can run efficiently in the space she has, but if she wants to expand and take on other staff she may not have the space for them to be making their displays at the same time as she does her display orders so she may need to investigate unit/warehouse space at an additional cost.

Opportunities

Bow Blooms has recently started to consider using portable chip and pin payments using a small hand-held device with a phone as a much cheaper cost than the terminal she had installed and pays for monthly. This opportunity to use current technology means she could now become portable and take card payment outside of her business which means she could look to attend wedding fayres and other markets in the summer months. Attending fayres and shows is not something she has looked into doing yet as she felt she was too inexperienced and amateurish to do this but now this is a very real opportunity she could investigate as she has grown in confidence and has an extensive portfolio she could look to attend wedding fayres and getting even more wedding bookings could increase her success and keep her trading. She has got a good social media presence on Facebook but could seek to use other social media platforms to improve her business.

Threats:

There is a thought that business rates will increase in the area which if they do this is an additional cost she will have to cover. In addition, there are a number of places on the high street which are facing increased competition as a Greggs and Costa has opened which has reduced the trade to some locally independently owned businesses. If the local businesses should stop trading the units may become occupied with another florist that would be a competitor to Bow Blooms and she sometimes worries this could happen.

Some of her competitors in the nearest town have contracts with Interflora and online websites allowing them to sell in more ways than just the shop front and this is not something she is able to consider doing and this is a competitive weakness of her business.

There are additional concerns about the wider economy on her business as the UK is still not certain what will happen after BREXIT and as a number of the flowers Mary wants to stock are from abroad this could have implication on what she is allowed to buy and the costs she pays. BREXIT is likely to have an impact on her business but she doesn’t know how much.

Another analysis tool a business can use of a PEST analysis. This looks at Political, Economic. Social and Technological external factors and their effect on a business. The PEST analysis helps you predict or plan for how these factors could affect the performance and activities of a business in the long-term and is used with the SWOT analysis.

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PEST Political – there is political instability. There has been a recent election which saw the Conservative party re-elected but with a smaller majority. The political relationships with countries abroad is also a problemat with BREXIT and the new president in USA so trade arrangements are up for discussion and this could have an bad effect on the business. There is a lot of talk about the threat of war with many countries currently testing nuclear missiles, this could have major implications on the business if any sort of war was to break out. Other political implications including tax guidelines, trade regulations, safety regulations, and employment laws could also affect businesses.

Economic – Economic factors like inflation, interest rates, exchange rates, economic growth, the unemployment rate and policies could all affect Bow Blooms. The suppliers she gets her flowers from all over the world with flower growers in Europe and across the rest of the world so if exchange rates change this can lead to problems for the business especially as recently the pound has not been doing very well and you get less euros for a pound and this means some of her flower costs have gone up for example tulips and other flowers which are usually grown abroad. Inflation can affect the business because if there is inflation this means there is an increase in the price of goods and services which means if everyone is having to pay more for the things they buy then this can reduce the money they have left to spend every month so buying treats, spending extra for quality or buying luxuries becomes unaffordable and Bow Blooms is not selling a vital product needed every day like milk and as a result people will spend on essentials like food and spend less on things like flowers which means she could receive less revenue and this could become a problem for the business.

Social – The business can look at customer demographics, culture, lifestyle attitude, and education to try and understand consumer needs and what they want from the product. Bow Blooms did do some research when they opened looking at customer attitudes and opinions, their budget and buying patterns. A business such a florist goes though fashion trends with wedding bouquets changing from old fashioned long trailing bouquets to small bunches of wild flowers like is currently popular and these trends are sometime influenced by celebrities and fashion so to be successful. Mary needs to be aware of the trends and offer what is popular.

Technological - Technological advancements, availability of the internet, the way we communicate, and replacement technology/solutions are all important technology related actors for Mary to consider.

There is the possibility of looking at two other factors for a PESTLE analysis where the L stands for legal and the E for environment. The environmental factors are really important as changes in weather and climate could affect flower growth and could mean bad harvest for flower growers so and less flowers are available and so more expensive but most flowers are grown in polytunnels, so the weather is becoming less of a problem.

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