Managing Business Property - Essay Example

Running Head: Managing Business Property A Business Plan Academia Academia Research To plan a business in this modern, civilized and global world is no joke, the businesses have high failure rates and very few chances of success, it has been seen that manufacturing based businesses are very difficult to operate as they contain a lot of overhead costs, the production process, a complete monitoring of each and every unit, a large amount of human resource and specially a very big amount of working capital with high number of share holders with preferred stock and also a great risk of capital sunk, but on contrary if one thinks that service based businesses are easy to operate and have no fuss, than one must think again, yes there are exceptions but one is likely to find same fuss in the service based business as in manufacturing business. A service based business that is going to be discussed is “property business”, it sounds simple to hear it, but very difficult if all things are kept in mind while planning for a property business, the first impression that might appears after listening “property business” is perhaps small business, with simple operations though it can be very tough to operate it, the property business should be started keeping in mind following few factors. Location Property businesses provide pure services to the clients, the dealer performs the role of a middleman or a broker, there is a seller and a buyer, the seller or buyer contacts the dealer and the dealer responds to the seller or buyer on a particular property if available, though it has also been seen that people usually buy properties at their own and than sell it to buyers having buying power, so to get the buyer’s and seller’s attention the Location of the office is important as it should be in clear view to the clients or otherwise you should have done heavy investment in advertising to keep them aware. Operating Costs If the business is relocated than there must be so many reasons for that, one mentioned earlier might be location, the other one may be high overheads and perhaps a threat of bankruptcy, or may be the firm was unable to collect the receivables from clients and thus the firm was in loss, so the firm should reduce its operating costs, may be by eliminating employees, hiring people on commission basis rather than going for fixed salaries and so, it would definitely help the firm to operate itself with in the budget. Communication When the business consists of a lot of dealing than the communication side must be very strong, one can say that in such businesses it is all about to convince or persuade the clients, and let them know that there is no one providing better service, so communication is also an essential part in such business where one can find clients with poor behavior still one should have the skills to tackle the situation. Payment Terms In the past few decades numerous service based firms faced bankruptcy, the reason might just not only be the poor management but also poor money management, in such businesses the payment is done from the company’s own account and later on after receiving the money from the clients the property is handled over to them, one should avoid working on full credit terms or if working on credit terms than should keep a firm documentation process so that there are no extra costs or chances of failure. Capital Utilization If one can blame poor management for a business failure than improper utilization of Capital should be rated second, the amount asked for loan should be calculated very carefully as the amount has to be paid back, another drawback of the money taken from bank is that one has to pay the loan installment no matter if it is profit or loss, in the case of public financing from shares, it can give some relief as if it would be a loss than there is no need of paying the money to them, but why loss? So the proper utilization of capital is also essential in any kind of business. Advertising Advertising may be a suitable action in such business to keep the segment or target audience informed about the services but for more effective planning the company should also inform the people personally, such as informing well set organizations about making sales offices or similar in new areas through our property services, explaining the benefits of it, letting them understand the terms and conditions upon their willingness to buy such services and so on. Proactive Approach It sounds quite strange talking about being proactive in property business, though it is a very handy option when management sets goals but how could one be proactive in property business? Of course when buying property one must keep an eye on the value of that particular property else one should know about to what extent the price will go, would it increase or decrease so that there is no possibility of any further loss in near future if the property has been purchased by the company. So these above-mentioned points should be kept in mind while relocating the property business, now lets have some discussion on the fund raising. Fund Raising & proposal It is perhaps the most crucial stage in any business, asking for finance can be very risky from a bank, but on the other hand no body else would invest in a company which is relocated and has no big success previously, so it would be much better to ask the bank for help though there are numerous drawbacks in this scenario such as the payment has to be done even if the company has faced a loss unlike equity financing where if no profit would be earned than no need of any payment to stock holders. There are couple of good suggestions that should be followed, the company can do a proper research in the city it is being operated in, they should have complete information about the target audience, about their buying patterns and most importantly the level of their spending representing such sales. The company should now take into account all these important factors so that they can show it to the Bank, the bank requires a good idea from such businesses and here it is a good chance for the company to actually show how much serious they really are in business, but there are few drawbacks of it as well, all the banks around the world look for the same idea in entrepreneurs. In case of equity financing the biggest drawback is that the ownership is shared, after the taxation the remaining amount would have to be shared between the shareholders, but it is difficult to get shareholders and the companies usually look for financial intermediaries to arrange the shareholders for the company, the best way to do it is to make an effective portfolio of the company while highlighting the company’s strengths and overcoming its weaknesses or perhaps showing the creditors the current ratio, it can give some confidence to the creditor to invest in the company. The company can also show the good times profitability ratios to both the creditors and the bank along mentioning the reasons for failure later on, it is all about convincing the financers. Finance Management It acts as a motivation to all the related people in any firm of the world if the finance is utilized properly in every department of the firm, same case we have to work at in managing our property business. First lets have a look where the firm has lacked in previously that led to failure, it might be location, operating costs, communication, payment receiving terms, purchasing and most importantly advertising, firstly the setup is important though we cant actually utilize all the finances in locating the office but we can actually think about it on perhaps loan terms, or else rental would be a good idea though it also has disadvantages but to have a good location is a mandatory, the amount spent should be very low than the spending on purchases (property) if any, in order to operate the increasing costs the best thing that can be done in the favor of the company is to hire a manager who is extremely professional in operating the expenses, or can help company making big sums, it is related to the human resources, also communication is having similar characteristics as it also consist of effective human resources, the payment receiving terms are also somewhat related to the job of an effective manager who can make such policies that can help the firm in gaining collectables, which is again related to human resources, the big term is advertising, the spending on advertising should be this much that each and every business or household is aware of the firm’s services in a clear manner, of course communication has to do a lot with it, at times the firm would be hiring individuals on the commission basis which is again a handy option as there would be no fixed cost in it and they will be paid according to the work they perform or number of units they inform. Human Resource Employed As discussed previously, the role of human resource is the most important in such business, it is because of their efforts that the firm would be able to communicate their message to the household and business sector or more formally their target audience, the firm should actually emphasize on one man policy, one effective manager who is having the potential of being a leader and has all qualities that are available in at least a traditional manager (planning, organizing, leading and controlling), though it would be very handy if the manager is creative other than traditional but in such case he can take the investments of the firm sky-high to achieve his and organization’s goals, the manager would be responsible for now hiring each and every staff member, it is not a mandatory to have a human resource department in the firm as it is still newly established and seeking to make a place for them in the market. One very good point that can be raised here is that on the basis of human resource the firm can actually attack their competitors and no one of them would know what happened to them, it can be gathering information on the competitors pricing structure and than making or adjusting changes in price so that the other people would also get attracted toward our firm’s services, in such case none of1 competitors can do anything, because if they do than they can face loss, and most importantly it is a service providing industry where not much can be done in attracting customer’s mind except changing price and providing fewer more services such as maintaining good relations after the deal has been finalized, so all these works are possible through HR and so they require more attention. Read More