In business there are no guarantees for success. Skills, knowledge, great motivation and honest evaluation of ability to carry out and then manage the operations are just some of the requirements that determine the probability of the successful project. Success is never automatic and does not rely on luck. There are no ways to foresee or eliminate all of the risks that might affect successful operation of a new business. However detailed planning, thorough analysis and well-carried out organization create good potential for a new business. In the provided case study, we will assess the probability of success for Icedelights franchise in Florida. Analysis will be done through evaluation of each step in the decision making process, close study of a financial data and Business plan as well as the examination of risks in case of failure.
Mark, Paul and Eric are young second year students with limited to no relevant experience of how to run their own business, especially in the food retail industry. Their eagerness to run their own business is understandable; however, enthusiasm is often not enough without necessary knowledge, skills and abilities. From the very beginning when idea of starting up the business took hold, it was obvious that there was no clear picture of how the future business will look like. The market for operating was not defined, and the list of targeted industries was rather spread. The three knew, however, the size of the company they were looking for (was defined sales volume) as well as the level of commitment they were prepared to give (minimum). Such approach of determining the type and area of business has long proved to be out of date. Considering that none of the three had ever owned the business, they should first get a clear picture of what is really like to run a business. Some ideas could be gained rough talking to friends or colleagues in the university who already have their businesses. The next thing they should do is honest and accurate assessment of strengths and weaknesses as potential business owners. Apart from the size of the sales volume, founders should also identify who they future customers will be, how their needs will be met and what the three would like to provide them with: products or services. Minimum level of responsibility will not guarantee a profitable running even a news agent kiosk, and if the three were looking for a company with 5 to 10 million sales volume they should be prepared to roll up the sleeves for very hard work and immense time commitment during six or even seven days a week.
The decision to purchase an Icedelights franchise might sound reasonable, as it is generally less risky than running a start up. The opportunity of being given a well-working business model, training, assistance with finding real estate and other support outweighed the fact that large size of the finance was required (825.000). In addition, the failure percentage of franchisees of a well established company within first 3 years was much less as opposed to a brand new business.
Though becoming franchisee seems to be easier and less risky, I believe that Mark, Paul and Eric have not investigated properly all of the business opportunities. Plus they should have gathered as much information as possible to ensure that the choice they did was the best suitable for them. Considering the lack of experience, smaller and less costly deal should be considered as an alternative. Even when decision of franchising was taken, it feels that franchise opportunities in other industries were not examined well. In addition to that, initially, retailing was not even in their specification sheet, meaning that the choice of becoming a franchisee came almost "out of the blue". Though some of the friends of Paul's family recently purchased the franchise for Oregon and California, there is no information on whether someone actually talked to the people already operating in the business the three were...
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