1. 1.0 EXECUTIVE SUMMARY
Without the help and support of each partners, we could not complete this business
plan. We are particularly grateful to Miss Izza Mardhia as she being major source for us to
make sure all particulars in the business plan done standardized.
Generally the nature of our business is manufacturing chocolate. We choose to
manufacture chocolate because as according to some research, Malaysia is the fourth highest
per capita consumption of chocolate in the world at approximately 10 kg of chocolate per
annum and spend over RM100 per person. It is found that 90% of people consume chocolates
and 42% consumers are of age group 10-20 and 33% consumers are of age group 21-30, thus
prove that chocolate has a great scope in Malaysia. Having universal appeal, Malaysian
consumers purchase and eat confectionery on a regular basis.
We have chosen DABS Chocolate as the name of our business. Actually, DABS is
taken by each capital of partners‟name (Dayah, Adlina, Balkis and Syahirah). Our business
also has its own objective, which make more people like to eat chocolate. Our business will
operate at Kuah Town, Langkawi and other prime locations, where it accessibility is at its
most convenient for shoppers. If customers could not purchase from retail shop, we also
offers online services where customers could do their purchase in the comfort of their own
house, where the rest of ours competitors delivers a lackluster service. Chocolate
confectionery is very much a part of everyday life in Malaysia. Market estimates value the
total Malaysia chocolate market at about 375 million of which the white chocolate market
segment is currently valued at 12 million, almost 3% of the total chocolate market. This
clearly represented an area for future growth.
We produce variety of DABS Chocolate through research about types of chocolate that our
customers wants which are chocolate drinks, cooking chocolate, chocolate bar, sweets and
cosmetic chocolate that includes truffles, pralines, ganaches, nuts, fruit & liquor, caramel,
white chocolate, dark chocolate, milk chocolate and even chocolate shakes. All of these
chocolates are packaged in an artfully designed packaging which could only be described as
world-class. We are able to produce a large amount of quantity and will offer good quality
chocolate with reasonable price. Specially selected finest cocoa ingredients are only sourced
to manufacture our chocolate products to provide consumers the finest quality and taste of
rich chocolate aroma and smooth texture for a sentiment of total indulgence. Our products are
certified Halal by Halal Food Council International. Product innovation and quality customer
service are our long term key. We guarantee that our customers will satisfy with DABS
Chocolate and success in chocolate industry.
1

2. 2.0 DESCRIPTION OF PROPOSED BUSINESS
The basic activity of our business is producing and selling halal chocolates. Our
company produce, create new recipe and sell chocolates around the world. We produce
chocolates in variety types such as chocolate drink, chocolate bar, cooking chocolate, sweets
and cosmetic used. All the chocolates we produced will be sending to our own shop,
supermarkets, small company and salons. We will be creating new recipe to add more variety
of chocolate that we have produce.
Our company is focusing on manufacturing and retailing and will be located at Kuah
Town, Langkawi, Kedah since this place is one of the tourists‟ attraction place because there
are a lot of chocolate‟s shop there. Other than that, Langkawi also a free taxes place, so
peoples there are afford to buy chocolates.
Generally, our main customer is everyone since almost everyone in this world love
chocolate. Specifically, our main customers are different depends on the types of chocolates
we produce. For instance:
- Chocolate drinks = Families
- Sweets = Kids
- Chocolate bar = Everyone
- Cooking chocolate = Chef, housewives and bakers
- Cosmetic = Women and men
2

3. 3.0 INDUSTRY ANALYSIS
Industry analysis are very important to us in starting the business as for assess the
influence competitors level, external opportunities and threats in the business. Industry
analysis covered in four elements that are political, technology, economy and social cultural
environment. Rate of purchasing are more increasing from increment of population
Malaysian‟s citizen that are more increasing nowadays. Besides, changing of lifestyles are
brought to reach in the demand of foods that are healthy and nutritious.
In conformity with a government emphasis in healthy lifestyles, DABS Chocolate
take this opportunity to sell and offer variety of chocolate design based on low fat, low
calories, and non-dairy. Moreover, DABS Chocolate made chocolates in variety types such as
chocolate drink, chocolate bar, cooking chocolate, sweets and cosmetic used so everyone can
choose what to buy. DABS Chocolate also fulfill customer choices.
In addition, HALAL industry also gave a big opportunity in production of food
materials because majority of Malaysian citizens are Muslims. Because of that, our business
has a good opportunity and extensive to expand for future and to expand our business to
international level. Our business‟s location is also strategic.
Political environment is an environmental rules and regulation to preserve the
environment while producing goods and services for customer. It can make sure that our
business will operate smoothly without intervention and misunderstanding from under sit
authorities. Before open this business, we will apply for the business license. We get license
from Suruhanjaya Syarikat Malaysia (SSM). SSM will help a new company to register the
new business. Besides, registration of a new business has to be done within 30 days from the
date of commencement of the business.
Technology deals with industrial arts, applied science, engineering processes,
inventions or methods. It is a body of knowledge applied to produce goods. Technological
change takes two forms – pure intervention or creation and innovation. Our chocolates
business were influenced by technological development such as information and
communication technology (ICT). It was indentify as a market target. Our business use a mix
of advertising, personal selling, online promotion and public relations to promote our
products and services.
Facebook as our social network page to promote our product to the customers. We use
this social network because nowadays facebook has many users so it‟s easy to make business
with it and publish in it so that all the users of facebook will know about this company‟s
product.
•
Business Cards
•
Brochure
•
Flyers
3

4. Kuah Town is the most important town on Langkawi Island. Though it is not an actual
city, local people from Langkawi refer to it as a city. Kuah is a nice and small town with a
relaxed atmosphere. Langkawi Island has a duty free status. Due the high population and
rapids developments, it has earned its own municipality. With the number of people who will
continue rising in 2015, it could increase the number of people in the local area, thus can help
the development of our company as there was an increase in the number of our customers.
We have seen this area have a high potential in development of our business. Our company is
targeting 50% of the population in residential area.
Besides, we always heard about recession on television, radio and newspaper. If there
is recession, business activities will be slow due to low demand from consumers.
Unemployment will rise and household consumption will drop as people will increase their
saving as a precautionary measure to face the uncertainty of the future. In response to
increasing demand from consumers, DABS Chocolate need to take remedial actions. During
recession, our company will offer discounts for every pack of chocolate the customer buy.
This reduction will improve the business climate as a whole, hence the economic situation
ultimately.
DABS Chocolate is located at Kuah Town, Langkawi. This location is a strategic
because our company surrounded by residential area, offices, school and supermarket. The
social-cultural environment consists of highly related aspects, such as demographics, religion
and cultural trends. There are business opportunities that exist in a society‟s popular culture;
business opportunities for customer and durable goods, retailing and services, leisure and
entertainment.
Majority of population in Kuah Town are Malay peoples. Our target is the Malay
peoples because there are high population of Muslim in Kuah Town. Besides, it was hard for
them to get a Halal product because there are less Muslim chocolate shop. Although there is a
lot of competition for the chocolate industry in Kuah Town, but most chocolates does not
emphasize the concept of halal and toiyibah. Employment opportunities are also increased
because of population in Kuah Town are increasing.
There are 4 companies that compete with DABS Chocolate either directly or
indirectly that are Dalshabet, Hellovenus Chocolate, Chocolate Haven and Dreamy Chocolate.
i)
ii)
iii)
iv)
Dalshabet
Hellovenus Chocolate
Chocolate Haven
Dreamy Chocolate
4

5. COMPETITOR
Hellovenus
Chocolate
Dalshabet




STRENGHTS
Selling a wide variety of chocolates consisting
types of flavour.
Give a good services
Popular
Variety of tastes, colours and appearance
WEAKNEASESS
 Varied food
menu
 The price are
too expensive
Chocolate
Haven
 Have a variety of chocolates design
 Selling various types of chocolates including
various types of design
 Still new
operates
Dreamy
Chocolate
 Have a great partnership with other companies
 The largest fast food market in the world
 Negative
publicity
Our aim in the future chocolate business is growing with improving sales from time to
time. Besides, our target market wants to develop throughout the state before 2020. In
addition, we want our business to be well-known and famous throughout Malaysia. We want
to recognize our name company which is „DABS Chocolate‟ throughout Malaysia. For
example, our company target to establish a branch of other shop to another place before 2015.
In addition, we want to introduce our company in other countries such as Italy. We know this
country was famous on making chocolates and they are very creative on making chocolate.
So, our future outlook for this industry is we want to introduce our chocolates so that
Malaysia will become recognizable abroad.
Before we start this business, we do analysis about the industry whether it‟s growing
or shrinking. We seen this business have potential to still growing and possible to have a
higher demand. This is because chocolate is a business opportunity that is relatively simple to
start, has high demand, and is hot right now.
Even with the tough economy, we know people nowadays love to spend money on
small things that make them feel good. People buy chocolates here, chocolates there. People
are getting a much higher return on investment on chocolates.
Even though chocolates are not one of life's necessities, they have become popular
because they symbolize one of life's little luxuries for those of us who are on a budget. For
example people can't afford to go on a big trip to China any more but they can afford a Rice
Flour Cupcake with Lychee Filling, Green Tea Icing and Mandarin Orange Garnish.
There are two type of risk that our company might faced. Firstly, it was limited
funding. Limited funding means that our company has limited ability to cover all the
company expenses. Our company also expose to liability expenses. It means expenses
incurred from coverings liability for damage to others of their property due to our company‟s
action.
5

6. 4.0 LOGO
4.1 company’s vision
DABS Chocolate company‟s vision is to be recognized as a company that produce
Halal and healthy chocolate
4.2 MISSION STATEMENT
DABS Chocolate‟s mission is to be the best company that provides all types of halal
chocolate all over the country. DABS Chocolate will complete in the basis of high quality
products and services that will ensure superior customers satisfaction in all market where it
serves. DABS Chocolate is committed to providing its customers, employees and suppliers
with an atmosphere of participation that involves them in the process of continuous
improvements.
6

7. 4.3 COMPANY OBJECTIVES
To achieve DABS Chocolate‟s mission, which is to be the best company that provides
all types of halal chocolate all over the country, we made some objectives to realise the
mission.
The objectives are to attain the lowest price so that everyone can afford to buy our
products and maintain the highest quality product. We also use only the finest and halal
ingredients and materials to produce our product, starting with the selection of cocoa beans &
ending with good quality packaging materials. It is the quality of the cocoa beans, which is
used, that gives the chocolate the taste.
Other objectives are to achieve sustainable financial profitable growth, increasing
value for stakeholders and expanding opportunities for our employees. We will manufacture
using only the finest quality fairly traded chocolate while promoting business practices that
respect the environment and dignity of others.
Last, but not least, our objective is to be a responsible company that works to serve
and promote the common good.
7

8. 5.0 MANAGEMENT PLAN
Our company, DABS Chocolate is a partnership company. Partnership is a business owned
by two or more persons carrying out the business with a common of sharing the profits and
losses according to the agreed formula. Each partner had contributed RM 55,000 for the first
capital. We also agreed to divide our profits and losses equally. DABS Chocolate‟s partners
are :
1) Nor Adlina binti Mohd Zainuri (General Manager)
2) Nurul Syahirah binti Asrul Effendi (Financial Manager)
3) Nur Hidayah binti Ardzemi (Human Resource Manager)
4) Siti Balkis binti Zulkufli (Marketing Manager)
The salaries to be paid for each manager are:
JOB
GROSS
EPF
SOCSO
DESIGNATION
WAGES
CONTRIBUTION CONTRIBUTION
(RM)
(9%) (RM)
(5%) (RM)
GENERAL
10,000
900
500
MANAGER
FINANCIAL
8,000
720
400
MANAGER
HUMAN
8,500
765
425
RESOURCE
MANAGER
MARKETING
7,500
675
375
MANAGER
8
NET
WAGES
(RM)
8,600
6,880
7,310
6,450

9. GENERAL MANAGER
FINANCIAL MANAGER
Full Name : Nor Adlina binti Mohd Zainuri
Age : 28 years old
Address : No. 70 Jalan Wira 29 Taman
Perwira 42500 Telok Panglima Garang,
Selangor.
Academic Qualification :
-Bachelor‟s Degree in Business
Administration
-Diploma in Business Management (UiTM
Kedah)
-Sijil Pelajaran Malaysia and Penilaian
Menengah Rendah (Sekolah Agama
Menengah Tinggi Tengku Ampuan
Rahimah.)
Experience :She helped her parents by
managing the family business for 3 years.
Expertise : She is very responsible,
confident and capable in managing business.
Full Name : Nurul Syahirah binti Asrul
Effendi
Age : 28 years old
Address : 1541 Bagan Jermal, 12300
Butterworth, Penang.
Academic Qualification :
-Bachelor‟s Degree in Accountancy
-Diploma in Accountancy (UiTM Kedah)
-Sijil Pelajaran Malaysia and Penilaian
Menengah Rendah (St. George‟s Girls‟
School)
Experience :Worked as an Account Auditor
in Shinhwa Company for almost 3 years.
Expertise : She has the important qualities
(analytical, communication, mathematical
and organizational skills) needed for a
financial manager.
HUMAN RESOURCE MANAGER
MARKETING MANAGER
Full Name : Nur Hidayah binti Ardzemi
Age: 29 years old
Address : Kampung Masjid Mukim Sungai
Laka, 06010 Changlun, Kedah
Academic Qualification :
-Diploma in Accountancy (UiTM Kedah)
-Degree in Human Resource Management
-Sijil Pelajaran Malaysia and Penilaian
Menengah Rendah (SMK Changlun)
Experience : Worked as a Human Resource
Coordinator for 2 and a half years.
Expertise :She‟s able to balance the
strengths and weaknesses of different options
and decide the best course of action. Many of
her decisions have a significant impact on
workers or company.
Full Name : Siti Balkis binti Zulkufli
Age: 29 years old
Address : 1097-B Kampung Padang
Gelanggang, JalanSanglang, 06150 Ayer
Itam, Kedah
Academic Qualification :
-Diploma in Accountancy (UiTM Kedah)
-Bachelor‟s Degree in Business
Administration
-Sijil Pelajaran Malaysia (Kubang Pasu
Science School)
-Penilaian Menengah Rendah (SMK
Sanglang)
Experience :Worked as a Marketing
Executive in SM Entertainment for 2 years.
Expertise :She has knowledge of a wide
range of marketing techniques and
concepts.
9

10. General Manager
-Nor Adlina binti Mohd
Zainuri-
Human Resource
Manager
-Nur Hidayah binti
Ardzemi-
Finance Manager
-Nurul Syahirah binti
Asrul Effendi-
Marketing Manager
-Siti Balkis binti Zulkufli-
ORGANIZATIONAL STRUCTURE
General Manager
General managers are often the highest-level employees in a business, and their authority is
sometimes exceeded only by chief executive officers. So, their most necessary requirement is
leadership. They must be able to coordinate resources, including money, time and people, and
to make decisions by assessing different options. They often juggle several tasks at the same
time, and must be able to complete them on schedule. Interpersonal skills are important
because they interact with employees, vendors and customers. Finally, they must be able to
organize and direct business operations and to communicate their goals, issues and policies
clearly and persuasively.
Human Resource Manager
Human Resource Managers may have responsibility for workforce planning or work for one
or more directorates (for example surgery, day care or accident and emergency) where they
will provide Human Resource support and advice to the general manager responsible for that
directorate. This might involve advising on the redeployment of staff from a ward that is
closing or advertising strategies for the recruitment of new staff. HR managers may have a
responsibility for a particular group of staff such as all medical staff working within an NHS
trust.
Finance Manager
Financial managers are responsible for the financial health of an organization. They produce
financial reports, direct investment activities, and develop strategies and plans for the longterm financial goals of their organization.
Financial managers typically do the following:
Prepare financial statements, business activity reports, and forecasts
Monitor financial details to ensure that legal requirements are met
Supervise employees who do financial reporting and budgeting
Review company financial reports and seek ways to reduce costs
Analyze market trends to find opportunities for expansion or for acquiring other companies
Help management make financial decisions
10

11. Marketing Manager
Human resources managers typically do the following:
Plan and coordinate an organization‟s workforce to best use employees‟ talents
Link an organization‟s management with its employees by handling questions,
administering employee services, and resolving work-related problems
Advise managers on organizational policies, such as equal employment opportunity and
sexual harassment
Coordinate and supervise the work of specialists and support staff
Oversee an organization‟s recruitment, interview, selection, and hiring processes
Handle staffing issues, such as mediating disputes, firing employees, and directing
disciplinary procedures
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) is a process with the aim to embrace responsibility for
the company's actions and encourage a positive impact through its activities on the
environment, consumers, employees, communities and stakeholders, apart from maximizing
profit. It applies to all business entity. With social responsibility, business can win trust and
respect from employees, customers and societies.
Below are our company‟s activities which applies the concept of Corporate Social
Responsibility :
1) Giving RM20 voucher to the customer who bought our products more than RM60.
2) Every customer who joined our membership club will get free chocolate bar.
3) Donate RM 50000 to the orphanage every year to support their live.
11

12. 6.0 PRODUCTS AND PRODUCTION
Our DABS Chocolate are produce by following steps:
Step 1: Roasting and Winnowing the Cocoa
The first thing that chocolate manufacturers do with cocoa beans is roast them. This develops
the colour and flavour of the beans into what our modern palates expect from fine chocolate.
The outer shell of the beans is removed, and the inner cocoa bean meat is broken into small
pieces called "cocoa nibs."
The roasting process makes the shells of the cocoa brittle, and cocoa nibs pass through a
series of sieves, which strain and sort the nibs according to size in a process called
"winnowing"
Step 2: Grinding the Cocoa Nibs
Grinding is the process by which cocoa nibs are ground into " cocoa liquor", which is also
known as unsweetened chocolate or cocoa mass. The grinding process generates heat and the
dry granular consistency of the cocoa nib is then turned into a liquid as the high amount of fat
contained in the nib melts. The cocoa liquor is mixed with cocoa butter and sugar. In the case
of milk chocolate, fresh, sweetened condensed or roller-dry low-heat powdered whole milk is
added, depending on the individual manufacturer's formula and manufacturing methods.
Step 3: Blending Cocoa liquor and molding Chocolate
After the mixing process, the blend is further refined to bring the particle size of the added
milk and sugar down to the desired fineness. The Cocoa powder or 'mass' is blended back
with the butter and liquor in varying quantities to make different types of chocolate or
couverture. The basic blends with ingredients roughly in order of highest quantity first are as
follows:
12

13. Milk Chocolate - sugar, milk or milk powder, cocoa powder, cocoa liquor, cocoa butter,
Lethicin and Vanilla.
White Chocolate- sugar, milk or milk powder, cocoa liquor, cocoa butter, Lethicin and
Vanilla.
Plain Dark Chocolate - cocoa powder, cocoa liquor, cocoa butter, sugar, Lethicin and Vanilla.
After blending is complete, molding is the final procedure for chocolate processing. This step
allows cocoa liquor to cool and harden into different shapes depending on the mold. Finally
the chocolate is packaged and distributed around the world.
As we compare our company product with some other company‟s product, the chocolate may
seem to be same as other chocolates existing in the market but it has a distinct taste of its own
and also the main difference is the marketing strategy and the profit margin ensured. As we
know if strong competitors are already exist in the market, it gets really very tough to enter
into the market. Instead of all these if we give value for money product to the customers, we
can definitely compete with the competitor‟s and can draw the positive attitude of the
customer towards the product.
13

14. 7.0 MARKETING
TARGET MARKET
Through the research that has been make, an effective performance of business operation is
to make sure the customers are satisfied with products or service.
Our target market is the younger generation, children and also middle age groups who like
chocolate.
Age : (5-18)
(19-30)
Gender: (boys and girls) Chocolate Bar,Sweets, Chocolate Drinks
(women) Chocolate Bar, Chocolate Drinks, Cooking Chocolate,Cosmetic
Chocolate
Income : ( RM 1400- RM 5600 or above)
Interest : Female
PRODUCT CHARACTERISTICS
Market research carried out among chocolate consumers found that consumers associated a
unique intimacy with dark chocolate. Popularity of the product in market testing was
attributed to several key features including flavour, sweetness, a creamy aftertaste and a meltin-your-mouth texture. These identified features would later be incorporated into the
product‟s brand image and advertising.
Legal Description: DABS Chocolate
Ingredients: Full cream Milk, sugar, Cocoa Butter, Cocoa Mass, Milk Solids, Emulsifies (Soy
Lecithin, 476), Flavours.
Milk Chocolate contains Cocoa Solids 26%, Milk Solids 28%
Allegen statement: Contains Milk and soy, may contain traces of wheat, Egg, Peanuts and
Tree Nuts.
Nutritional information is applicable to the 220 g DABS Chocolate block. Also available in
135g, 350g and 500g sizes.
PRICING
Our company provides better quality of chocolate at competitive prices. DABS Chocolate is
cheaper than Dalshabet which is an added benefit to the company. The prices of each DABS
chocolate depends on the types of chocolate and flavor. We use natural flavour that will
satisfy our customers.
14

15. Types of Chocolate
Chocolate Drinks
Sweets
Chocolate Bar
Cooking
Chocolate
Cosmetic Chocolate
Price Of DABS Chocolate
Price of Dalshabet
RM 15.00 per each
RM 1.30 per each
RM 20.00 per each
RM 1.50 per each
Big: RM 7.50 per each
Medium: RM 5.00 per
each
Small: RM 3.50 per
each
Big: RM 7.80 per
each
Medium: RM 4.80
per each
Small: RM 3.00 per
each
RM 17.00 per each
RM 20.00 per each
RM 35.00 per each
RM 40.00 per each
DISTRIBUTION
Because our business is providing chocolates to customers, that means we should make easy
to our customers to get our products. Our products will be sold through retail outlets. Our
distribution strategy is follow:
Manufacturing
Distributor
Retailer
Customer
We manufacture and then sell through our chocolate shop.
Manufacturing
Retailer
Customer
PROMOTION
This is vital part of our marketing strategy. It is important to us make known to the customer
about our services. Therefore, we plan to introduce our business through the:Launching: On the first day operation,we give trial and sampling chocolate.
Pamphlet: Distribute to our customer, it tells more about services offered like place
where sell our chocolate, types of chocolate and other services.
Business Billboard: To promote mechandise, make locations premises known by the
public.
Advertise: On television, newspaper and popular magazine with large Malaysian
female audience.
15

16. 8.0 FINANCIAL PLAN
Sales Forecasts and Income Statements for a three-year-period.
PARTICULAR
CAPITAL:
SYAHIRAH
ADLINA
HIDAYAH
BALKIS
WATER AND ELECTRIC
ADVERTISING EXPENSES
PURCHASES
SALES
LAND AND BUILDING
MACHINERY AND FACTORY
MOTOR VEHICLE
ACCUMULATED DEPRECIATION:
LAND AND BUILDING
MACHINERY AND
FACTORY
MOTOR VEHICLE
RENT
GENERAL EXPENSES
SALARIES AND WAGES
INVESTMENT BANK WEEN
CARRIAGE INWARD
CARRIAGE OUTWARD
DEBTORS
CREDITOR
BANK BALANCE
RETURN INWARDS
RETURN OUTWARDS
BAD DEBTS
DISCOUNT ALLOWED
DISCOUNT RECEIVED
OPENING STOCK
CLOSING STOCK
DRAWING:
SYAHIRAH
BALKIS
ADLINA
HIDAYAH
2010
2011
2012
95 000
90 000
95 000
90 000
14 200
5 400
178 450
267 700
450 000
100 000
98 000
100 000
100 000
105 000
103 000
15 000
5 600
180 000
300 000
450 000
100 000
98 000
110 000
100 000
105 000
150 000
15 500
6 000
200 000
350 000
450 000
100 000
98 000
22 500
45 000
67 500
5 000
4 900
3 500
4 750
60 000
40 000
7 400
5 850
20 750
39 030
10 000
9 800
3 500
5 000
60 000
15 000
14 700
3 500
5 500
75 000
50 000
8 350
6 550
30 000
45 300
30 780
1 600
1 300
9 050
6 550
11 500
35 000
65 800
1 200
880
8 740
5 870
9 770
25 750
52 780
8 000
6 000
25 000
40 500
22 570
1 450
1 000
9 000
6 000
10 000
27 550
58 270
30 640
29 000
32 000
30 000
16
35 000
33 000
36 800
35 400

17. 1, 865
060
1, 964 240
2, 307 680
Market Risk
Current market conditions and trends pose a risk to new businesses. According to an article
on Inc.com, “if industry trends are moving away from your product or service or if potential
customers are already locked up by competitors, it will be difficult to gain customer
momentum.” Market can affect new businesses depending on the nature and location of the
business, prospective competition and product pricing. Markets that are overly saturated with
the same products and services can be detrimental to a new business‟ ability to gain
significant market share.
Business owners can effectively manage market risk by performing a market analysis, which
helps determine the market potential for their particular product or service. A marketing plan
can help define marketing areas as well as uncover customer needs. Properly identifying
market risk is necessary to manage and/or avoid the risk all together.
Financial Risk
The financial standing of a business can often make or break a company‟s ability to succeed.
New businesses face significant financial risks. New business owners often fail to plan
financial projections or create working budgets. It is necessary for new businesses to
determine if their product or service is strong enough to support the financial obligations of
the business.
A lack of startup funds poses a considerable threat to new businesses. Sufficient capital is
necessary to pay for the owner‟s living expenses until the business turns a profit. In addition,
most businesses need inventory, equipment, office supplies and marketing materials to run
effectively. Entrepreneurs who are unable to secure financing often dip into personal savings
or overextend credit cards to fund their new business venture. Personal financial success is
often tied to the success of the new business. If the business does not succeed, a new business
owner could possibly face financial ruin.
Management Risk
The organizational structure of a new business, or lack thereof, is another risk in starting a
new business. New business owners with little or no management experience face significant
challenges in running a successful company. Entrepreneurs who hire inept managers run the
risk of hurting important business functions as well as the overall bottom line of the
company. Managers are often charged with overseeing the day-to-day operations of a
company. Ineffective management can have an adverse effect on sales efficiency, quality
control and customer service.
17