Accounting and Finance-Individual Business Report
Business Idea: Discount Audio Store
Introduction
After looking into the market and the current trends, it would appear that people have less time on their hands due to longer working hours, less leisure time, but more expendable income. My idea is to open an on-line discount audio store, where items are at competitive prices, and have a guaranteed delivery time, with personal service, offering to courier items out to suit the times of the people ordering. In this sense it overcomes the competition, offering such a personalised service. The main customer base for this company would be busy business people, with little time on their hands, but have time to browse the internet in the evening. It would however appeal to other people such as younger persons looking for cheap, quality hi-fi components. The products sold would be a large selection of audio equipment, including such items as DVD players, CD players, Amps, Radios, Speakers, and a small selection of specialist equipment. In order to assess the effectiveness of this business idea, I am going to look into the strengths and weaknesses:
Strengths:
• Lower premises costs-Due to the fact that it is an internet based company, a retail outlet will not be required, so premises costs will be rather low, comprising only of the distribution warehouse. The benefits of these reduced costs can be passed on to the consumers in the way of lower prices.
• Lower staffing costs-again, as there will be no retail outlet, less staff will be needed. The only staff being the people who process the orders and distribute them from the warehouse. In this way, costs are reduced, hence the customer receiving cheaper products.
• Overall costs-as it is an internet based company, the benefits gained through these reduced costs can be passed on to the consumer in the way of lower priced goods.
• Economies of Scale- Products can be bought in bulk, and the savings made from these purchases, passed onto the customer. This is all possible due to the fact that the operation is to be run from a warehouse, and there will be plenty of storage space available.
• Ease of use- the company is to be run as an internet site where people place their orders. The fact that this is and easy and safe way of purchasing equipment is strength in its own right.
Weaknesses
• Advertising- As it is on the internet, an extensive advertising campaign would be needed to get the company known.
• No passing trade-as there is no retail premise, there will be no customers who are ‘just passing’ and pop in to browse.
• Internet fraud-this is increasing due to the technological advances being made; money would have to be invested regularly to ensure it is kept at a minimum.
• Technical equipment will need to be regularly updated to keep [next page]