Opening a new business is always a challenging prospect. Many factors can influence the success or failure of a new business. Access to capital is an example of a significant influencing factor. There are also environmental factors that must be taken into account. The immediate competition in the environment, for example, can influence factors such as pricing and product differentiation. When starting a new bookshop in a shopping mall, for example, the strategies used will depend upon issues such as other businesses of the same type in the mall, and the pricing strategies that they use to sell their products.
According to Richards (2010), the first factor to take into consideration when starting a new business is access to capital. This is then also the primary consideration when opening a bookshop. Capital is, for example, required to purchase the books to be sold in the shop as well as to hire the premises for setting up the shop. These prices will then also influence the pricing strategy for the books being sold.
A further important factor is what Richards (2010) refers to as "access to people." For a bookshop, a specific type of worker will be required. First of all, workers need to be willing to commit a number of hours per day to selling books at a salary that the store owner can afford. Furthermore, such a worker will need to have a certain skill set. In addition to being a good salesperson, the worker will have to possess a wide knowledge of reading material, as well as being able to acquire the knowledge necessary to answer customer questions regarding books being sold at the store. The worker will also have to be able to liaise with writers to organize book readings and book signings.
Technology is a third factor that is important when starting a new book store. This is closely related to the factor of "access to people." Workers at the bookshop will have to have a certain amount of technological prowess. Computer technology can, for example, be used to create a database of available books, books to be acquired, and customer enquiries after books to be available in the future. Furthermore, the Internet can be used to liaise with book suppliers in order to maintain an up-to-date basis of stock to satisfy customers.
Richards also notes that unanticipated environmental changes, such as natural disasters or economic shifts, could impact the functioning and success of the bookshop. Being inside a shopping mall, some of these unforeseen events can be mitigated by the size of the building and the differentiation of the products offered within the general premises. People who come to the mall to buy clothing, for example, could be inspired to buy books when passing the book store without having planned to do so. This can work to the advantage of the business.
According to Neblett (2010), competitors are also an important factor when opening a new book store. Before opening the store, the owners should make a thorough investigation of the material environment. The first, and most important, factor is the existence of other book stores within the premises. The owners should also investigate factors such as the type of books being offered by the stores in question.
When there are other books stores, for example, the owner of the new book stores should investigate ways of differentiating the products or services offered by the new store being opened. One idea is to offer competitions or specialize in certain types of books. The risk involved in the latter, however, is that the customer base could be considerably smaller than for a general book store. To mitigate such a risk, the potential customer base for a certain type of book can be investigated.
In terms of competition Neblett (2010) suggests that two specific ways to achieve a competitive edge is by means of cost leadership and differentiation. These are particularly important in a case when there is immediate competition from other book stores within the mall in question. Before opening the store, the owner therefore needs to make a thorough investigation of the pricing strategies used by the competitor. This can then be used as a guide for the store's own pricing strategy in order to obtain a competitive edge.
Product differentiation can be approached in the same way. The main concern is to offer customers a product that is different from the competition, but that yet satisfies a particular demand experienced by customers. To achieve this, an investigation must be made of both the competition and potential customers. Customers can for example be interviewed to obtain information regarding demands that are not met by current book stores in the mall. A further possibility is to obtain information regarding book stores in other malls that are satisfying particular demands that are not met by the mall in question. In this way, customers who habitually visited other malls for the purpose of meeting these demands can be attracted by the new store being opened.
Customers are then a further important environmental factor to consider when opening a book store. Before starting the book store, potential customers and their demands need to be investigated. As mentioned above, no specialization or differentiation can occur without a thorough understanding of customer demand. Customers from a certain environment, for example, might demand certain types of books. This can be used to achieve specific advantage over competitors in the same market.
Customers are therefore also an important factor when creating potential differentiation elements such as competitions, special appearances, or events to promote the products at the store. A relatively conservative, religiously oriented market, for example, might be unwilling to participate in events such as tarot readings. It is therefore important to be aware not only of customer demands, but also of the type of customer that will generally be served by the store.
A less immediate, but no less important, environmental factor is the supplier. The time it takes for books to arrive at the store, for example, will affect the ability of the store to meet customer demands within an acceptable time frame. If another book store has a supplier that can deliver within a quicker time frame, it is likely that customers will frequent such a store more frequently than the new store being opened. When contracting suppliers, the store owner must therefore ensure that products can be supplied in a sufficient quantity and time frame to satisfy the customers of the particular environment in question.
Neblett also notes the importance of political and social factors when offering products to customers. Potential customers might, for example, generally hold particular political views, which could influence their demand for certain types of books. The new store owner should be aware of these to maximize the store's potential earning power. On the other hand, the store should also strive not to alienate potential customers by advocating any particular political or religious view, even if this is the general view of most potential customers. Instead, as wide a selection of books as possible should be offered in all categories. An awareness of political climate, however, can help to determine the particular volume of books to buy within a certain genre or topic.
The social factor is important, as social and corporate responsibility is a very good way to connect with the buying public. Today, many businesses use their social responsibility in order to promote their products or services. Being socially responsible in terms of contributing to charities or becoming involved in charitable events is one of the most important ways of convincing the public that a business is not solely concerned with sales and profit, but that it is also concerned with alleviating suffering and improving the world for everyone. Social responsibility could extend to any type of non-profit, charitable work, including work towards animal charities or environmental entities. Importantly, this type of responsibility can also be used as a marketing and differentiation tool.
This is also a factor that can best be implemented by investigating the particular market within which the book store will function. Customers' particular social concerns can for example be investigated. A farming customer base might be concerned with animal charities, while customers from an environment with several schools might be more concerned with educational and child charities. Another way to achieve particular edge in the market is to obtain information regarding the type of charities supported by other businesses in the mall. The book sore can then choose a charity that is different from these. This will demonstrate not only the owner's sense of social responsibility, but also his or her ability to critically evaluate the specific charities to support.
According to Business Resource Software, Inc. (2010), an environmental factor of particular importance is the store's ability to implement the latest technology within its premises. Today, technology is one of the most important factors in the success of any business. Many businesses, for example, offer Internet…