EXECUTIVE SUMMARYThis report provides an analysis and evaluation of the nature, context,sources of finance, business model, business operations, and resourcemanagement strategies of both investigated firms; Bikeworks and ClipperAccounting Ltd based on interviews conducted. The analysis then leads on to severalrecommendations which would assist both firms in becoming more ethical and embraceeconomic, social, and environmental sustainability. Recommendations include;creating a website, giving customers a membership, educating youngentrepreneurs, employing more staff and collaborations with other firms.Further evidence to support the analysis can be found in the appendices. Thereport finds that there are challenges facing both SME’s which they will haveto overcome in the long term.
TABLE OF CONTENTS Introduction……………………………………………………..1BusinessOperations and Resource Management………..2Life-cycle positioning ofthe firms…………………………..2Business Models andOpportunities pursued…………….
3Sources of finance…………………………………………..4Summaryof recommendations……………………………4Conclusion…………………………………………………..5 IntroductionBikeworks is a socialenterprise. A social enterprise is a firm or an organization which usescommercial strategies to deliver a specific environmental or ethical mission.Bikeworks operates in a similar way to London’s Bikekitchen. The firm wasfounded to help solve multiple problems in the local Nottingham community byworking with refugees, mental health patients, troubled school kids and womenby repairing bikes.
Therefore, this is an ethical venture as it allows thesegroups of people to develop new life skills and helps them take their mind offdifficult situations they may be going through. Therefore, the firm allowsaccess to a leisure activity such as repairing and riding bikes which givespeople in Nottingham the opportunity to take a break. For this reason, the firmcan be described as a social enterprise due to their involvement in improvingthe quality of life for individuals in the community. Looking at the socialenterprise hybrid spectrum, Bikeworks can be described as non-profit withincome generating activities as the firm has mixed motives such as helpingpeople get experience and skills as well as acting as a leisure activity tohelp people take a break creating both social and economic value throughout theNottingham community. While part of the firm’s operations includes selling therepaired bikes which acts as a cash generating element of the enterpriserunning, making the social venture more sustainable.In addition toBikeworks, Clipper Accounting LTD was another firm that was investigated.Clipper Accounting was set up by Nadina Wallis who freelances her skills todifferent companies, practicing accounting and management. Nadina thereforeprovides a service to different companies for solely her own benefit and thereforeClipper Accounting can be described as commercial enterprise.
A commercialenterprise is a business which provides goods or services intended to achieve aprofit or other financial or industrial aspects. Therefore, the business allowsNadina to work and manage herself. So, there is a big difference in thebenefits of both social and commercial enterprise. BusinessOperations and Resource ManagementBikeworks have 4 paid members of staff and the rest is madeup of a group of volunteers. The business relies on individuals donating oldbikes 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 returnthey offer the volunteers training, lunch and staff events.Clipper accounting Ltd have one employee (Nadina) who isthe only resource within the business. She funds and pays for everything withinthe firm. Nadina is responsible for managing and directing teams in differentcompanies as a freelancer. Clipper account operate solely in person, having noonline presence, however this puts the firm at a disadvantage. An article byThis is money stated that “One million small businesses still haven’t forgedan online presence, losing the UK economy an estimated £8.
4billion and eachbusiness up to £20,000 a year”. This shows the loss in potential income ClipperAccounting is losing out on (Lawrie, 2017).Another issue withNadina’s commercial firm is that once she retires, the business will fail toremain as she has no employee’s. Therefore, the sustainability of the businessis low. Clipper Accounting need to consider the long-term existence of thecompany and Nadina should look at hiring employee’s or look for someone who cantake over the business once she retires. Life-cycle positioning of the firmsBikeworks is stillin the growth stage of the product life cycle with a sub center being developedin Beeston. The UK bike market is expected to increase by up to 18% by 2020creating an opportunity for Bikeworks to improve the firm’s performance (Mintel 2017). Incontrast Clipper Accounting Ltd is already established and doesn’t have plansto 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 forgrowth within the company. Business Models and OpportunitiespursuedBikeworks is a not for profitenterprise 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 andpeople from all kinds of background creating social value. The financial valueis then created by the funds received from repairing and selling bikes.Bikeworks therefore are more focused on value creation by creating value forthe Nottingham community while Clipper Accounting Ltd is focused on valuecapture. Value capture can be defined as the process of retaining an amount ofvalue provided in a transaction.
The firm offers value capture by utilizingNadina’s expertise and offering it to other firms in return for a fee. The firmalso creates value by using Nadina’s skills to help improve other firms. Bikeworks spotted a gap in the Nottingham market by taking inspirationfrom similar social enterprises in London who were being praised for preformingcommunity based projects. The firm then set up in Nottingham. However, for ClipperAccounting Limited Nadina was given the opportunity by taking over her mum’s business which gaveher a platform to start her own sole business doing what she wanted to do thesecond time around.Bikeworks should lookat taking a more sustainable venture by offering customers a membership. Thiscould be like London bike kitchens who offer a one-year membership for £18 andincludes 10% off everything in store including classes, parts and accessories.A similar membership offered by Bikeworks could help increase the long-termsustainability of the firm because customers dislike change and will avoidchange.
Consequently, increasing customer loyalty to the firm. This could thenbe the difference between customers buying bike parts from Bikeworks ratherthan another bike store. Therefore, sales revenue would increase.
Bikeworks should also consider a collaboration withworkplaces in Nottingham to encourage workers to cycle to work. A survey by CVlibrary (UK’s leading independent job board) found that 29.1% of workers admittedto gaining weight due to their current jobs, leaving them feeling unhappy(Thomas, 2018). Therefore, creating an opportunity for Bikeworks to exploit bycollaborating with some of these workplaces and giving workers incentives suchas discounts on bikes and accessories to encourage them to cycle.
This would beconsidered as an ethical venture as the firm would be pushing workers to becomefit and active and as a result they would be happier in their workplace andmore 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 couldoffer in-kind donations to become more ethical. An in-kind donation is a contributionof products or service that may include time rather than cash (Mariotti andGlackin, 2016). Nadina could support initial startups of other SME’s by using herknowledge and expertise of managing business’s. An article in the Entrepreneuridentified a common set of reasons which lead startup enterprises to fail.
These included; “a lack of good mentorship” and “a Lack of general anddomain-specific business knowledge: finance, operations, and marketing”(Henry, 2017). Clipper accounting possessthe knowledge to advise and mentor startup firms therefore the business couldtake an ethical approach and start mentoring young entrepreneurs who lack thisbusiness knowledge. This would provide young entrepreneurs a platform todevelop their businesses. However, the firm may face a challenge in managingworkload as Nadina is the only employee. Further evidence to show how effectivesupport to SME’s comes from Innovate UK who found that “there were significantgaps in knowledge and understanding of some basic business concepts” in someSME’s, concluding that SME’s often needed support which they weren’t aware of(Innovate UK, 2013). Sourcesof financeBikeworks receives several donated bikes from the publicwhich are then repaired and sold to customers throughout Nottingham.
Thisassists them in paying bills and wages. The firm also qualifies for severalfunding due to its various social impacts such as helping refugees, mentalhealth patients, troubled school children and reducing congestion by encouragingpeople to cycle. However, the firm are not reliant on grants making them moresustainable. Bikeworks receives more income in the winter compared to thesummer due to weather conditions. The proposal to offer customers a membershipwould add a revenue stream to the firm and due to the firm having seasonaldemand for products in the summer compared to the winter, a membership wouldguarantee steady income for the year while also encouraging customers to cyclein Nottingham. Leading to an increase in sales revenue during the winter.
Clipper accounting is self-funded by Nadina Wallis. Theyhave no running costs, as Nadina only needs to pay for her trading license oncea year. Her income comes from other businesses who pay for her skills andexperience. Since the EU referendum, business environments have transformed andthis has left small and medium sized business with fear as there is lowbusiness confidence due to the instability of the market. A survey by Bizdaqfound that 36% of SME’s were less confident about the future of their businessafter the EU referendum.
Showing the existence of uncertainty within the UKmarket (Watts, 2017). Consequently, affecting demand for Nadina’s expertise. Asa fall in business confidence means firms are less likely to pursue newprojects and investments and since a percentage of Clipper accountings incomecomes from offering project management to different firms, sales revenue coulddecrease because of a fall in demand for the firm’s assets.Summaryof recommendationsIn summary, Bikeworks these sustainable and ethicalventures such as creating a membership to encourage consumers to buy theirneeded parts at Bikeworks. In addition to this, a collaboration with workplacesin Nottingham to encourage people to cycle to work would generate a lot ofrecognition for the firm and raise awareness of what the firm is trying toachieve. Both ventures would mutually help Bikeworks become more sustainable asa social SME.
Furthermore, clipper accounting limited would benefit by creatinga 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 moreclients in the long term.ConclusionIn conclusion, there are significant similarities anddifferences between the challenges and contextual factors facing both SME’s.For Bikeworks their challenge is overcoming seasonal demand as that has causedinstability for the firm as they rely on income during warmer seasons.
Additionally, Clipper Accounting loses out on potential clients by not havingan online presence and not having a greater capacity within the firm. However,recommendations provided throughout the report would assist the firm inbecoming more sustainable and ethical. Ethics and sustainability are soimportant in SME’s as they assist growth and performance by creating a positivebrand image which can; attract investors to the firm and keep share priceshigh, attract employees who want to work for the firm which would reduce recruitmentcosts and therefore allow SME’s to find talented employee and help attract moreclients, increasing their performance.