Problem Statement
Strength of a company is seen in its ability to grow in a sustainable manner. It therefore follows that every activity of Jensen Roofing should be focused on its sustainable growth initiatives. However, Jensen Roofing has some problems that may hinder its growth in the future. Of all the problems, lack of clear objective and goal for the company’s growth structure is likely to be the biggest hindrance to its growth. It is not just enough to create an organizational vehicle that will simply get the idea to the market because it must be based on the needed growth so as to achieve long term success. The main challenges of an entrepreneurship are based on the focus on the market, financial foresight or managing cash flow, and building a team before it is needed. Jensen’s growth is reliant on how the above mentioned areas are handled by its management.
The other issue is that Jensen has to compete with large, well-established motor manufacturers and to establish a customer base. So how should Jensen make use of his previous business experience and management skills to make his next step and succeed in making the business grow?
SWOT Analysis
Strength
Jensen’s strength is based on the experience of the proprietor Robert Jensen. Jensen has got a wealth of experience in the roofing business, which he acquired as a worker at Charles Hill Roofing, the largest roofer in the Lethbridge area. Notably, Jensen wants to compete with one of the most established companies, which has a large economy of scale. But his experience within the field of roofing business gives him a lot of advantage as he have had experience with customers with previous customers.
The company will be operating from a home of the proprietor. One of the benefits of working from home is that there’s no additional cost; it has a lot of convenience; and it can as well make easy schedules to ensure the proprietor and employees reach maximum time available for building of the resources. However, the weaknesses of working from home are quite numerous as will be explained in the next part of the analysis, weaknesses.
Weaknesses
Jensen is planning to be a sole proprietor. It then follows that he has to arrange for all the financial requirements as per or capital to make his business run smoothly. He plans to obtain a loan from a local bank so as to finance $15,000 the start-up. However, it is not certain if the banks will offer the loan considering the financial status of the proprietor. Basically, the proprietor is only able to provide $2,000 as part of the start up. This amount is insufficient to meet the need of the company’s sustainable growth. The complexity is that venture capitalists and financial institutions like banks do not lend money to sole proprietors, especially for start-ups. This may not go down well with Jensen as its main source of start-up capital is expected to come from the bank.
Although the proprietor has had a lot of experience in the roofing business, there is the lack of managerial expertise. There are many aspects of management that the proprietor may not be in a position to handle. Jensen has just completed a short entrepreneurial course. However, he does not have the managerial expertise that is needed to build a sustainable business.
There is likelihood of distraction from family issues as the employees will be in contact with the family members. Although this will be for a shorter period since the plans has indicated that the arrangement is temporary, it is likely to hinder many business opportunities that would have come their way due to wrong perception from other customers. The other issues that may arise are such cases as health and safety, tax implications, security, segregation, and the disturbance of the neighborhood and a lot of traffic movement in a residential area. Customers may not be impressed if the office address is not what they expected, that quality products should go with a prestigious office address. This may not work out well with profitability issue.
Opportunities
The opportunities for Jensen are numerous. The first is to identify its market niche so as to have designated customers to focus on. The current approach of targeting persons who owns houses, apartment buildings, warehouses, condo, or office building is not focused enough considering their pricing strategy. It is therefore possible for Jensen to develop a market segment with adequate expansion strategy. The higher price Jensen would be charging its customers for the services offered may not work to their advantage in the low-end market. Because the company’s competitors have a large economy of scale, it is possible for them to set as low prices as possible and still get enough profit out of their business.
Threat
There seems to be a shortage of legal protection for the business and its proprietor. Jensen as a business entity is only expected to operate once it has acquired business permit in the long run. This leaves the gap in the legal protection of the company and its intellectual property.
The other threat is in the fact that many of the company’s competitors are well established companies which do have a lot of resources to compete effectively through quality production and marketing. The targeted market is dominated by high profile operators with a lot of customer base. This phenomenon may prove difficult for Jensen to penetrate this congested market. It will therefore need a more strategic approach during market entry.
The Available alternatives
The management of Jensen will form an important micro environment that is necessary in order to achieve the success that it needs. The head of the company should have a designated role of overall policy work relating to the company. Under him are general managers who direct and coordinate functions that relate to the companies activities. Departmental heads also form part of the management of the organization. First, there’s a need for a decentralized management system, with every department given the opportunity to develop its unit staff to increase innovativeness. Without decentralization however, the company may not manage to integrate good management structure with innovation and production process. It is necessary to integrate management functions into the overall performance of the organization.
From the current structure, the decision making level will be solely done by the proprietor. Although this is the fastest way to make a decision, it calls for less deliberation hence the likelihood of having sometimes uninformed decision-making process. The decision making structure at the company need to be more decentralized through the line managers once they are put in place. The overall manager therefore makes the overall decision regarding implementation and evaluation of policies that have been recommended by the various teams.
Because the designated source of start up capital is not certain, Jensen needs to have other likely sources put in the plan. Borrowing from friends and relatives is one of the alternatives that may be readily available for Jensen. Because the money needed is a little bit much, Jensen has the option of approaching angel investors. These are people who are willing to be part of the businesses that have better prospects in the future. They are ready to commit themselves to the business by contributing money for start-ups as a form of investment. To help Jensen get the arrangement started, he needs to get access to organizations which act as intermediaries between angel investors and business owners. Jensen can submit the complete business plans, which will then be matched and submitted to prospective investors with funding interests in specifics in specific plans.
The Stakeholder View strategic model takes a critical look at the company’s both inside and outside an organization that have clear interest in the decisions made by the company (Lowe & Marriott, p. 117). It is necessary to manage stakeholders as a means of enhancing strategic management and also carrying out stakeholder analysis. There is a need for adequate stakeholder analysis. The first and the most important stakeholders of the company are its customers, whose needs should be analyzed for the sustainable growth of the company. If a customer is treated fairly with high quality products and services, he or she is likely to return for more services, hence beneficial to the company.
The risks return factors Paradox is an important factor to consider in this Jensen’s case. The expected results between risk and positive outcome are difficult to come across since measuring outcome is never easy (Farhoomand, p. 231). This is one of the factors regarding risks in Companies that need to be analyzed. Jensen Roofing will have to spread its risks in a variety of products thus ensuring that a positive outcome becomes achievable. The other alternative is to develop a plan to have the business premise situated outside his home.
Recommendations
Jensen needs to have a management team that has experience and skills to kick start the business. This will lead to sustainable growth of the business and management of resources. While it may be assumed that a big and experienced management team is not a must for a business that is just starting off, decisions which are based on commercial judgments will need skilled manpower, especially in the management front. Good management team will speed up innovation and creativity in an organization.
The proprietor can control the intellectual property for its usage and this may encourage creative minds to develop quality products and protect them from imitation. Intellectual property also helps people own both physical and intellectual property. Basically, intellectual property gives protection of ideas but at times it needs an elaborate idea before protection issue may arise. It is always preferable to use copyrights and trademarks. These provide very effective forms of protection. It may be appropriate to avoid divulging essential knowledge and keeping trade secrets within the confines of the company needs and desires.
For Jensen to grow in a sustainable manner, there’s a need to obtain premises although doing that may be costly as presented by Jensen’s business club. It is often suggested that business premises never have the right premises, as they are usually too small or too large and they could always be in a more convenient and strategic manner to accommodate the entire content of the business. The reason for this is that for a business yet to be started or a growing business, there is only a shorter period of time when the building is working at its optimum capacity.
To effectively work and make things easy for expansion possibility, renting can be taken as an option. Basically, renting does not tie up capital like it would be purchasing the property. One major advantage of renting is that it will increase flexibility for rapidly growing business. Since the cost of renting houses vary significantly depending on the location, it is logical to site a relatively cheaper location that would not eat much into the capital designated for start-up. In choosing the location or house to be rented, space and costs become the most important criteria. It is noted that the high cost of space will mean that the new venture will need to only go for the size they mostly need now to cut on the cost.
Lastly, the source of income for the sustainable growth and start-up will either boost success or lead to failure. Other than targeting the local banks for start-up capital, Jensen would be more favored if they approached government grants. Grants are sometimes available and involve neither interest and capital repayment nor does it involve giving equity stake in return. However, for sustainability, it is not advisable for Jensen to change its strategy simply with an intention to get grants. This is more so when the grants come with certain conditions as concerns clauses. To facilitate the vetting of credit worthiness, small firms must prove to be proactive, and be ready to implement good credit management. This will also accompany proper invoicing to eliminate potential disputes.
Works Cited
- Farhoomand, Ali. Small Business Management and Entrepreneurship: a Casebook. Hong Kong. Hong Kong University Press, 2005.
- Lowe, Robin & Marriott, Sue. Enterprise: Entrepreneurship and Innovation: Concepts, Contexts and Commercialization. New York. Butterworth-Heinemann, 2006.