Neim - Case Study

8/8/2019 Neim - Case Study

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Srimad Rajchandra Instituteof Management and Computer

Application

Case Study onBARCLAYS

New Enterprise &Innovation Management

Arpita Patel (09 Mba 27)

Nisarg Shah (09 MBA 39)Devadatt Vyas (09 MBA 52)

Business Start Up


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Introduction

Barclays is a major global financial service provider. Itoperates in 50 countries and employees more than1,56,000 people.

In 2008, Barclays had an Income of 23 billion, generatingPBT only 6 billion.

Barcklays offer dedicated banking services for smallerenterprise called local business.

The case study looks at the challanges of setting up a

new business.


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Contd...

The starting point is the business idea. There many waysto coming with bright idea on the basis of marketresearch, customer demand.

Form of business: private, public, partnership, Frachiseeand whether to choose traditional business or E -commerce


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Contd...

Q -1 Set out the difference between sole trader,partnership and limited Company. And what are thebenefit and limitation of each type of ownership?


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Types of business

Meaning of sole trader:

A business owned by a single person that is not acorporation ,a limited company or anything else.

Advantages:

1) Easy to start and finish

2) Your own business

3) All of the profit

4) Privacy

5) Lower tax

6) Less paper work


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Disadvantages:

1) Personal liabilities2) Financial difficulties

3) Competitions

4) Lack of investor

5) Liability


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Meaning of partnership

Partnership consists of between two and 20 partnerpartnership are a common form of business.

Advantages :

1) Easy to from2) Availability of resources

3) Better decision

4) Flexibility in operation

5) Sharing risk6) Benefit of specialization

Disadvantages :1) Different goal

2) Lack of commitment

3) Liabilities

4) Lack of management


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Meaning of limited company

Limited company is legal entity .this type of incorporatedfirm which offers limited liability to its share holder butwhich place certain restriction on its ownership.

Advantages :1) Limited liability

2) Tax benefit

3) Continuity of business

4) Raising fund

Disadvantages:

1) Costly

2) Threat

3) Time consuming


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Q -2. Budget factor that a New Business take into

consideration :

Financial statement showing assets and liabilities, orincome and expenses that may be recognized in thefuture.

Proforma statements also can illustrate projectedearnings if a company were to merge with another, orsell off part of its operations.

Business firms often are asked to submit pro formastatements when making a loan application.


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Contd...

Its a business sells spectacles through online shop oneBay.

Tim got idea for an e-commerce business. He hasopportunity to increase amount of business by B2B &B2C e-commerce sales.

If a Tim has acceptance of the internet as businesscommunication platform which could benefits as-

Access broader customer base.

Lower transaction costs

Interactive nature of the internet will expand thevolume of e-commerce.


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Key factor consider to start new business for TIM

Finance and grants

Raising finance

Choose the right finance when starting up

Identify the right finance options for your business Expert financial advice

Choose and work with an accountant

Get help and advice about your debt problems

Choose an insurance adviser and present your risk Choose and work with a solicitor


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Managing finance

Financial planning and accounts

Manage your cash flow

Managing a business when economic conditions aretough

Insurance

Financial difficulty

Improve your cash flow Avoid insolvency

Finance and grants


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Projected Cash Flow

If the profit projection is the heart of your business plan,

cash flow is the blood. Businesses fail because theycannot pay their bills.

The point of this worksheet is to plan how much youneed before startup, for preliminary expenses, operatingexpenses, and reserves. You should keep updating it andusing it afterward.


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Contd...

Budget factor also consider assumption a business mayneed to make about variable factor such as, interest ratechanges or volume of sales.

A detailed budget plan with clear target will help give abusiness control by:

Ensuring money is spent on the right activities

Drawing attention to waste or loss


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Contd...

Before setting up new business there are important factorshould analyzed by the market research.

A business plan provide a forecast of cost & revenueover the planning period.

It sets out how sales will be achieved & how thebusiness is to be financed.

Many business fail in their first year trading. There aremany reason but typically ones include :

Lack of understanding of the market

Not analyzed financial alternative

Failure to secure adequate finance

Inaccurate estimates in constructing budgets.


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Contd...

Pro forma cash flow

Projected cash available calculated from projected cashaccumulations minus project cash disbursements.

Pro forma Balance SheetSummarize the project assets, liabilities, and net worthof new venture.


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Contd...

Break Even Analysis

In the initial stage of new venture it is helpful for theentrepreneur to know when a profit may be achieved.BEA is a useful technique for determining how manyunits must be sold or how much sales volume must beachieved in order to break even.


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Q- 3. key sources of finance to start up the business.

Owner's funds: Easily accessible, used at start-up andduring early expansion.

Friends and associates: Beware of mixing family/friendsand business, consider all possible outcomes and whatimpact that may have on your personal life. Ideal forstart-up, early stage/pre-trading and expansion.

Clearing banks: Overdraft and short/medium termloans, mostly to finance short term acquisitions such as

office equipment and support irregular trading patternsand cash flow shortfalls. All the news may be about thebanks not lending to business, but if you don't ask youdon't get!


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Contd...

Factoring/invoice discounting: Alternative cash flowmanagement tools, consider the potential impact on yourrelationship with your clients, there are potentialpositives and negatives associated with having a third

party involved in the accounts receivable process. Leasing/HP: Further support for short term capital

acquisitions, a good potential source of leverage butconsider all the taxation implications of each form of

leasing/HP finance. Merchant banks: Medium/long term loans - usually for

larger sums, and often more a case of who you know...


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Contd...

Grants and other government support: Usuallyrestricted geographically, by time or for specificindustries or purposes, another potential case of who youknow not what you know, and likely to exponentially

diminish with government cut-backs. Corporate venturing: Backers will be looking for a return

and this may impact upon your commercial decisions,again this can have both positive and negative

implications but go into it with your eyes open, you mayend up feeling like your working for someone else again!


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Q 3. suggest an idea that could turn into a business

proposion, how it be possible to finance the new business?

Owners Fund: - Owners fund is easy Accessible and it

is the best sources to finance the early business.

Friend and Associates: -

Grants and other Government supports: - Venture capital: -

Loan from Bank and Financial Institution: -

Finance from public: -


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Q 4. Based on Q-3, main difficlties that might

arise in trying to establish a new business.

Mostly the entrepreneur have bright idea to start the business but the

idea is stop when the question is the investment. owners fund and Fund from Friends and Associates have not arise

any difficulty in financing the capital. It is easy to get but most of the

people do not have enough money or property of their own to be selffunded.

Grants and other Government supports: - There is many procedures

to get grants from the government.

Many times owners not fulfill the procedures because he/she

dont know how to proceeds. Also government officers delays in procedures and payment of

grant.

Venture Capital: - Venture capital is good option when huge fund is

required but for that venture capitalist keenly analyse the business to

provide finance and it takes time.


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Contd...

Loan from Bank and Financial Institution: - It has many requirement

to fulfill like surety, mortgage, huge paper works.

When a person apply for the start up business loan, thebank authority show little respect about his small

business ideas and act like that the person will nevergoing to pay the loan. This kind of obstacles often makesthe situation hard for the young entrepreneur.

There are different financial organization but, they have

a higher rate which is not favorable for the smallbusiness.


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Contd...

However, not all of the problems of raising long-termfinance are imposed externally - some arise from theattitudes of the owners. It seems that many owners ofsmall businesses are unwilling to consider raising new

finance through the issue of equity shares to outsiders asit involves a dilution of control.

Documents

Neim - Case Study