The Language of Small Business Texts and Vocabulary Training (for students of Economics) Part 1. Учебное пособие

You and your Ideas

pany. He prepares a formation scheme, gets a board of directors together, obtains the services of solicitors, accountants, bankers and stockbrokers, pays the expenses of drawing up and issuing a prospectus and generally makes himself responsible for starting the company.

3.man. – an increase in the rank and responsibility of an employee.

Venture, com, – a business or a business deal, in which there is some degree of risk, which is accepted in the expectation of making a profit: to start a new venture – to open a new business;

A commercial venture – a deal made in the usual course of business

Syn.: enterprise, speculation, adventure

v. – to risk money in business in the expectation of making a profit.

Joint venture, fin.:

1.a partnership, usually temporary but sometimes becoming permanent, formed by two or more persons or companies co-operating in some special business activity in which there is some risk of loss, but a reasonable hope of profit. The parties in the venture share the costs and the profits in agreed proportions. This arrangement exists in banking, insurance and publishing.

2.the expression is also used for a company formed jointly by two or more companies.

Risk capital – capital open to considerable risk of loss. Syn.: venture capital

CЈ: security capital- capital that is safely invested, with little risk of loss.

Gamble, v.:

1.to risk money in the hope of making a profit.

2.to play a game of chance with money; to bet on sporting events: to gamble at cards/on horse-races/in the casino.

Owner-manager=managing owner

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The Language of Small Business

Syn,: sole proprietor – the one and only owner of a business. He provides all the capital, bears all he risk. And in return receivers all the profits. Such a concern is called a one-man business, although the proprietor may employ a number of people.

Benefit:

1.something to one's advantage, interest or profit.

2.man. – something given to an employee in addition to his salary or wages, to save tax or to encourage hard work (fringe benefit).

3.inscu. — money, usually an allowance, paid under an insurance policy for some kind of losses, or given by the government to people who cannot earn by working, such as disability, industrial injury, maternity, sickness, unemployment and death benefits.

Definitions of terms

Рисковой капитал – рискованное капиталовложение; ха- рактерно для прогрессивных в техническом отношении от- раслей экономики; предоставляется обычно небольшим фир- мам в расчете на быструю окупаемость и сверхприбыли.

Совместное предприятие – деловое сотрудничество, пред- полагающее совместное управление и распределение рисков и доходов между предприятиями-участниками.

Vocabulary drill

1.The company has prospered under his chairmanship.

2.We must not fail to get the contract.

3.The bank has failed.

4.He was fired the next day.

5.We have given Mr. Smith promotion to the grade of sales supervisor.

6.Investing in equities is a gamble.

7.He gambled his fortune on buying a farm but lost everything when the crop failed.

8.He got this job as he has the benefit of University education.

9.The rate of exchange was to my benefit.

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You and your Ideas

Summary

1.Самый необычный аспект организации своего собст- венного бизнеса состоит в том, что вы сами принимаете решение о том, имеете ли вы необходимые качества и способности, чтобы добиться успеха.

2.Проанализируйте то, чего вы ожидаете от своего пред- принимательства и каких целей надеетесь достичь.

3.Не преуменьшаете ли вы проблемы и трудности, кото- рые возникают у владельцев бизнеса?

4.Попытайтесь воспользоваться помощью специальных курсов и агентств, чтобы восполнить свои слабости.

5.Не отказывайтесь от начинания своего предприятия лишь потому, что у вас нет оригинальной идеи. С хо- рошим руководством и многообещающим рынком вы- ношенная идея может быть успешной.

6.Набросайте пару идей, прежде чем прорабатывать их подробно. Выберите наиболее перспективную и со- ставьте подробный бизнес-план до начала предприни- мательства.

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The Language of Small Business

UNIT 2.

Who will buy?

By now you have probably narrowed down your shortlist of ideas. You may know which market you want to enter; you may have got your eye on a product which you think has potential. What you must do next is to study your prospective marketplace in detail. Researching the marketplace comes before raising money, making profit and cash flow forecasts, finding premises or any of the other steps you have to take to form your business.

This is especially true if you need to raise money for your proposed business and have to produce a business plan. You will not obtain financial backing from anyone unless you can show with confidence that you understand the structure of your market and have a clear idea of where your product will be positioned compared to the competition. The crucial questions are – who will be your customers, why will they buy from you and how much can you sell.

Knowing the number of customers is not the only information yielded by studying the marketplace. Perhaps, more importantly, you should be able to obtain information about what your potential customer needs. This, in turn, should aid you to angle your product or service to satisfy the greatest demand. It is much easier to persuade people to purchase something they already want; educating a market to buy your product if the market has expressed no great desire for it can be a long haul.

Who will buy?

Knowing which market and which product is only the start of the work you need to do before you will be able to begin selling. First, you have to research the market. You are not simply looking for lots of

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Who will buy

statistics and information to blind potential backers with information. You need the details to help you plan your business strategy.

It would be a mistake to assume that you have an equal chance of selling to every customer in your market. If it is that sort of market, it implies that you are looking for volume sales. In turn, this suggests a market which is very sensitive to price levels and in which it is difficult to sort out one product from another. If this is the sort of business you are planning, think carefully. Few small businesses have the resources to make a success of this.

Basically, you should be looking for a niche in your proposed market which allows you to charge a reasonable price and so maintain reasonable profit margins. To achieve this, your product needs to be clearly distinguishable from the competition. In marketing jargon, this is called product differentiation.

The purpose of your research at this stage is to look for that niche. This process is called market segmentation. In everyday language, it means looking for a group of customers within your target market which has common characteristics, tastes and features, if you can find such a group, it allows you to tailor your product to meet their particular needs.

Once you have sorted out the groups, you must look at the competitive position. Are there already suppliers to that group of people? The existence of competition does not mean that you should not try to enter the market, but it does mean that you need to be able to offer customers some additional benefit in your service or product, and it must be a benefit they want.

For a small firm, a strong attraction of using this market segment approach to sales is that you may be able to achieve a dominant position in that segment. This could mean becoming the market leader with its attendant advantages of selling more at a higher price.

If your business is on a smaller scale (perhaps only yourself or a couple of employees), it still makes sense to look for a niche to exploit, because of the advantages it offers in being able to keep your prices above rock-bottom level.

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The Language of Small Business

There are several different ways of grouping people. These include looking at potential customers by examining facts about their life, such as where they live or the kind of work they do. Or a more satisfactory way of grouping could be based on how they behave when they are deciding to buy a product, such as whether price makes a substantial difference to their buying decision. Use the step- by-step analysis (see below) to help you sort out groups or segments.

What makes a useful Market Grouping?

The fact that you can identify a group of people with similar tastes in your target market does not necessarily mean that you have unlocked a source of sales for your product. To be useful, a market grouping needs to have certain characteristics. In the first place, the segment needs to be big enough to give you the living you require, you must also be able to differentiate it from other groups, so that its size can be measured. Another necessary characteristic is that the segment must be easy to reach. There is no point in selecting a target group which is difficult to reach. If it is, you will experience problems getting your message across or supplying the product because of location. Finally, the group must have common features which actually lead to similar buying decisions.

A Step-by-Step Analisis

to Identifying Market Groupings

1.Is your target market a consumer market? Or is it an industrial or professional market? If it is a consumer one, go to 2; if it is industrial or professional, go to 11.

2.Look at family and personal factors. Would age, sex, family size or marital status form the basis of different groups?

3.Is your product the sort which relies on supplying a local area? Location may be an important feature of a group.

4.Look at social class. Could this be important for your product?

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Who will buy

5.Can you distinguish groups of potential customers on the basis of how much or how little they use or buy your product? Could your product be tailored to appeal to heavy or light users?

6.Are there psychological or social factors at work? Could the product appeal to those wishing to 'better themselves'? are lifestyles important? Would prospective customers be likely to 'follow the crowd' or want to be seen as stylish?

7.Could there be snob or prestige appeal? Some customers like to think they are getting the best.

8.Price could be a feature which distinguishes one group from another. Is there an element of value for money in a target group's make-up? Some people go for the cheapest, no matter what. Most customers would say that they want good value for the money they spend.

9.How do the potential customers buy? Local shop, large supermarket or store? Mail order? Can you create a niche out of distribution methods?

10.Now go to 16.

11.What type of industry will you be selling into? You could specialize in one industry or profession (called vertical marketing).

12.How big are the companies or business you are likely to sell to? Size can mean different procedures in buying and in frequency of purchasing. Can you create a distinguishing product benefit from the need to satisfy large, medium or small businesses?

13.Will one group of potential customers require quicker or more frequent deliveries than others?

14.Price could well create different market segments in industrial or professional users.

15.Will one group of customers be looking for a higher level of after-sales care or maintenance? Could this be your distinguishing product feature?

16.Consider what other categories might apply to your market. Each market will have its own specialized characteristics apart from the general ones listed above.

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The Language of Small Business

17.Now look to see if there is a group with more than one of the characteristics listed above. This could define your target group or segment even more closely.

What do you know about likely Customers?

To help you understand your potential customers, and to help you sell to them, you need to know a range of information about them. If it is a business you are selling to, you need to have information on the organization and buying policies. Investigate the other suppliers to your customers and acquire and analyse information on the services and products bought by them.

Why will they buy?

Before you can answer this question, you have to find out what your customer wants. What are the benefits and features of a service or product which your target group rates most highly? Research is essential to establish this.

Once you have the framework of your customer needs, you can begin to vary your service or product with the aim of meeting those customer wants and needs more successfully than any other supplier. There are a number of ways in which your sales package (that is, your product/service plus a range of other sales features of your business) can be altered to achieve the desired objective, these include:

•appearance: what material is the product made of? Does it look stylish?

•How about the colour? How is it packaged or presented? All these can be changed to match your target customer profile. If appearance is an important feature for your target group, it may be worth using a design consultant to help you achieve this;

•delivery time: if speed of delivery is important to your potential customers, concentrate on how you can improve your delivery times;

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Who will buy

•maintenance: does your target market look for very prompt attention tofaults? Or very frequent maintenance visits? Whatever it is, adjust your strategy to allow for this;

•performance: identify the main requirement – for example, it may be speed, reliability or a low level of noise. This sort of consideration should be taken into account when you specify your product, if it is already past the specification stage, can it be altered?

•quality: this is rather an ethereal topic, as quality can be subjective, existing in the eye of the beholder. Or it can be objective, for example, the evenness of the stitching. You can create an impression of quality by building up the image or reputation of the product to suggest this. The appearance of quality tends to depend on all the variables of a product: appearance, service, packaging, reliability, performance and so on.

By adjusting your service/product in this way to meet the wants and needs of your target market, you are trying to establish that you have at least one unique feature which your competitors don't have. You can use this as the basis of your selling message to persuade people to buy. Your target market will purchase the product if you convince them that it meets the need which they have, conscious or unconscious. Of course, if your competitors already meet these needs, it is difficult to see what additional benefit your product can offer, but usually there is something.

It would be a mistake to believe that buyers act in a rational way, comparing products and choosing their purchase on the basis of some organized assessment. Even in an industrial market, buyers are affected by a number of emotional factors, sometimes not openly admitted. These can include wanting to be like someone else, to be considered stylish or a leader, or to be liked. Your potential customers may also want the best, a change, or to improve their personal standing. They may be trying to outdo the competition or to gain revenge on another person or business. So, if you do not believe your product can be differentiated in practical benefits, can it be distinguished in emotional ways?

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The Language of Small Business

One possible way you could think about your target market is to consider how they would match up to the range of cars available. The variety of cars available is very wide; each car model has tried to establish its niche and it is possible to categorize buyers in your target market by the car you imagine they are most likely to buy. For example, if your market is likely to buy a Citroen 2 CV, you can picture them as young, wanting something cheap and cheerful and not minding the lack of comfort. If is if a Rolls-Royce segment, your customers are looking for the ultimate in prestige, comfort and specification. A BMW is an executive car, indicating business success and achievement; the car is stylish and luxurious. A Volvo implies solid dependability. And so on.

Once you have a mental picture of what your target group is looking for in a car, you might be able to use this picture to adapt your service or product to meet those same needs.

How much will they buy?

This is the third question which market research should help you answer. You cannot plan your business unless you have some estimate of how much you are going to sell and when that is likely to happen. You need this data to help you formulate your sales and cash forecasts.

The level of sales you can make over the years depends on:

•the market size;

•the market structure;

•the market share you can establish (and the competition you face);

•the market trends, that is, whether it is growing, static or declining;

•the investment in time and money to sell your product. You need to be able to forecast how much you need to put in to get sales established and how long this will take. Many business failures occur because this is underestimated.

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