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EXECUTIVE SUMMARY

This report provides an analysis and evaluation of the nature, context,
sources of finance, business model, business operations, and resource
management strategies of both investigated firms; Bikeworks and Clipper
Accounting Ltd based on interviews conducted. The analysis then leads on to several
recommendations which would assist both firms in becoming more ethical and embrace
economic, social, and environmental sustainability. Recommendations include;
creating a website, giving customers a membership, educating young
entrepreneurs, employing more staff and collaborations with other firms.
Further evidence to support the analysis can be found in the appendices. The
report finds that there are challenges facing both SME’s which they will have
to overcome in the long term.

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TABLE OF CONTENTS

Introduction……………………………………………………..1

Business
Operations and Resource Management………..2

Life-cycle positioning of
the firms…………………………..2

Business Models and
Opportunities pursued…………….3

Sources of finance…………………………………………..4

Summary
of recommendations……………………………4

Conclusion…………………………………………………..5

 

Introduction

Bikeworks is a social
enterprise. A social enterprise is a firm or an organization which uses
commercial strategies to deliver a specific environmental or ethical mission.
Bikeworks operates in a similar way to London’s Bikekitchen. The firm was
founded to help solve multiple problems in the local Nottingham community by
working with refugees, mental health patients, troubled school kids and women
by repairing bikes. Therefore, this is an ethical venture as it allows these
groups of people to develop new life skills and helps them take their mind off
difficult situations they may be going through. Therefore, the firm allows
access to a leisure activity such as repairing and riding bikes which gives
people in Nottingham the opportunity to take a break. For this reason, the firm
can be described as a social enterprise due to their involvement in improving
the quality of life for individuals in the community. Looking at the social
enterprise hybrid spectrum, Bikeworks can be described as non-profit with
income generating activities as the firm has mixed motives such as helping
people get experience and skills as well as acting as a leisure activity to
help people take a break creating both social and economic value throughout the
Nottingham community. While part of the firm’s operations includes selling the
repaired bikes which acts as a cash generating element of the enterprise
running, making the social venture more sustainable.

In addition to
Bikeworks, Clipper Accounting LTD was another firm that was investigated.
Clipper Accounting was set up by Nadina Wallis who freelances her skills to
different companies, practicing accounting and management. Nadina therefore
provides a service to different companies for solely her own benefit and therefore
Clipper Accounting can be described as commercial enterprise. A commercial
enterprise is a business which provides goods or services intended to achieve a
profit or other financial or industrial aspects. Therefore, the business allows
Nadina to work and manage herself. So, there is a big difference in the
benefits of both social and commercial enterprise.

 

Business
Operations and Resource Management

Bikeworks have 4 paid members of staff and the rest is made
up of a group of volunteers. The business relies on individuals donating old
bikes of any sort which they then repair and then sell on to consumers.
Bikeworks main asset is its volunteers who help build the bike and in return
they offer the volunteers training, lunch and staff events.

Clipper accounting Ltd have one employee (Nadina) who is
the only resource within the business. She funds and pays for everything within
the firm. Nadina is responsible for managing and directing teams in different
companies as a freelancer. Clipper account operate solely in person, having no
online presence, however this puts the firm at a disadvantage. An article by
This is money stated that “One million small businesses still haven’t forged
an online presence, losing the UK economy an estimated £8.4billion and each
business up to £20,000 a year”. This shows the loss in potential income Clipper
Accounting is losing out on (Lawrie, 2017).

Another issue with
Nadina’s commercial firm is that once she retires, the business will fail to
remain as she has no employee’s. Therefore, the sustainability of the business
is low. Clipper Accounting need to consider the long-term existence of the
company and Nadina should look at hiring employee’s or look for someone who can
take over the business once she retires.

 

Life-cycle positioning of the firms

Bikeworks is still
in the growth stage of the product life cycle with a sub center being developed
in Beeston. The UK bike market is expected to increase by up to 18% by 2020
creating an opportunity for Bikeworks to improve the firm’s performance (Mintel 2017). In
contrast Clipper Accounting Ltd is already established and doesn’t have plans
to expand further. Hence being in the maturity stage of the product life cycle.
Reason being because of Nadina’s small capacity which reduces the potential for
growth within the company.

 

Business Models and Opportunities
pursued

Bikeworks is a not for profit
enterprise which aims to be a community asset and to be accessible to everyone.
They aim to have an educational impact on society, helping all generations and
people from all kinds of background creating social value. The financial value
is then created by the funds received from repairing and selling bikes.
Bikeworks therefore are more focused on value creation by creating value for
the Nottingham community while Clipper Accounting Ltd is focused on value
capture. Value capture can be defined as the process of retaining an amount of
value provided in a transaction. The firm offers value capture by utilizing
Nadina’s expertise and offering it to other firms in return for a fee. The firm
also creates value by using Nadina’s skills to help improve other firms.

 

Bikeworks spotted a gap in the Nottingham market by taking inspiration
from similar social enterprises in London who were being praised for preforming
community based projects. The firm then set up in Nottingham. However, for Clipper
Accounting Limited Nadina was given the opportunity by taking over her mum’s business which gave
her a platform to start her own sole business doing what she wanted to do the
second time around.

Bikeworks should look
at taking a more sustainable venture by offering customers a membership. This
could be like London bike kitchens who offer a one-year membership for £18 and
includes 10% off everything in store including classes, parts and accessories.
A similar membership offered by Bikeworks could help increase the long-term
sustainability of the firm because customers dislike change and will avoid
change. Consequently, increasing customer loyalty to the firm. This could then
be the difference between customers buying bike parts from Bikeworks rather
than another bike store. Therefore, sales revenue would increase.

Bikeworks should also consider a collaboration with
workplaces in Nottingham to encourage workers to cycle to work. A survey by CV
library (UK’s leading independent job board) found that 29.1% of workers admitted
to gaining weight due to their current jobs, leaving them feeling unhappy
(Thomas, 2018). Therefore, creating an opportunity for Bikeworks to exploit by
collaborating with some of these workplaces and giving workers incentives such
as discounts on bikes and accessories to encourage them to cycle. This would be
considered as an ethical venture as the firm would be pushing workers to become
fit and active and as a result they would be happier in their workplace and
more likely to increase performance. According to an article from cycling UK,
individuals age 30-39 and 40-49 covered the most miles cycling in the UK,
showing the suitability of targeting workplaces (Cotterell, 2012).

Clipper accounting could
offer in-kind donations to become more ethical. An in-kind donation is a contribution
of products or service that may include time rather than cash (Mariotti and
Glackin, 2016). Nadina could support initial startups of other SME’s by using her
knowledge and expertise of managing business’s. An article in the Entrepreneur
identified a common set of reasons which lead startup enterprises to fail.
These included; “a lack of good mentorship” and “a Lack of general and
domain-specific business knowledge: finance, operations, and marketing”
(Henry, 2017). Clipper accounting possess
the knowledge to advise and mentor startup firms therefore the business could
take an ethical approach and start mentoring young entrepreneurs who lack this
business knowledge. This would provide young entrepreneurs a platform to
develop their businesses. However, the firm may face a challenge in managing
workload as Nadina is the only employee. Further evidence to show how effective
support to SME’s comes from Innovate UK who found that “there were significant
gaps in knowledge and understanding of some basic business concepts” in some
SME’s, concluding that SME’s often needed support which they weren’t aware of
(Innovate UK, 2013).

 

Sources
of finance

Bikeworks receives several donated bikes from the public
which are then repaired and sold to customers throughout Nottingham. This
assists them in paying bills and wages. The firm also qualifies for several
funding due to its various social impacts such as helping refugees, mental
health patients, troubled school children and reducing congestion by encouraging
people to cycle. However, the firm are not reliant on grants making them more
sustainable. Bikeworks receives more income in the winter compared to the
summer due to weather conditions. The proposal to offer customers a membership
would add a revenue stream to the firm and due to the firm having seasonal
demand for products in the summer compared to the winter, a membership would
guarantee steady income for the year while also encouraging customers to cycle
in Nottingham. Leading to an increase in sales revenue during the winter.

Clipper accounting is self-funded by Nadina Wallis. They
have no running costs, as Nadina only needs to pay for her trading license once
a year. Her income comes from other businesses who pay for her skills and
experience. Since the EU referendum, business environments have transformed and
this has left small and medium sized business with fear as there is low
business confidence due to the instability of the market. A survey by Bizdaq
found that 36% of SME’s were less confident about the future of their business
after the EU referendum. Showing the existence of uncertainty within the UK
market (Watts, 2017). Consequently, affecting demand for Nadina’s expertise. As
a fall in business confidence means firms are less likely to pursue new
projects and investments and since a percentage of Clipper accountings income
comes from offering project management to different firms, sales revenue could
decrease because of a fall in demand for the firm’s assets.

Summary
of recommendations

In summary, Bikeworks these sustainable and ethical
ventures such as creating a membership to encourage consumers to buy their
needed parts at Bikeworks. In addition to this, a collaboration with workplaces
in Nottingham to encourage people to cycle to work would generate a lot of
recognition for the firm and raise awareness of what the firm is trying to
achieve. Both ventures would mutually help Bikeworks become more sustainable as
a social SME. Furthermore, clipper accounting limited would benefit by creating
a website, hiring more employee’s and assisting new SME’s in their start-ups.
These recommendations would help build awareness of the brand and bring in more
clients in the long term.

Conclusion

In conclusion, there are significant similarities and
differences between the challenges and contextual factors facing both SME’s.
For Bikeworks their challenge is overcoming seasonal demand as that has caused
instability for the firm as they rely on income during warmer seasons.
Additionally, Clipper Accounting loses out on potential clients by not having
an online presence and not having a greater capacity within the firm. However,
recommendations provided throughout the report would assist the firm in
becoming more sustainable and ethical. Ethics and sustainability are so
important in SME’s as they assist growth and performance by creating a positive
brand image which can; attract investors to the firm and keep share prices
high, attract employees who want to work for the firm which would reduce recruitment
costs and therefore allow SME’s to find talented employee and help attract more
clients, increasing their performance.

 

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