BUSI 603 Week 2 Group Discussion Board Forum 2 Example

Group Discussion Board Forum 2: Industry and Market Analysis

BUSI 603 Entrepreneurship, Group Discussion Board Forum 2 (thread and 2 replies)

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The venture, its founder, the local counts and survey results, and the classmates' plans are composites written for this sample, and the assigned topic stands in for the course's own; the research cited is real, and the requirements follow Liberty's public course guide for BUSI 603.

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Steward Ledger Services competes in the outsourced bookkeeping and payroll services industry, but its target market is narrower: congregations and small ministries with fewer than 250 regular attendees within 50 miles of Lynchburg, Virginia. Allen (2016) distinguishes the industry, all firms offering a similar service, from the target market, the specific customers a new venture can reach and serve well, and that distinction shapes every number below.

The founder's count from denominational directories and county listings found about 410 congregations within 50 miles, of which roughly 260 fall under the attendance threshold. In a survey of 42 treasurers and pastors from those churches, 31 reported that a volunteer keeps the books, 19 said their payroll filings had produced at least one penalty notice in the past three years, and 12 said they would consider paying $350 to $500 a month for a service that handled bookkeeping, payroll and giving statements. Applying that share, 12 of 42 or about 29%, to 260 congregations suggests about 74 likely prospects. At an average fee of $425 a month, that is a reachable market of about $377,000 in annual revenue. Winning a third of those prospects over three years, about 25 clients, would bring in roughly $127,000 a year, enough to support the founder and one part-time associate.

The need is real, but the stronger evidence is what happens to small organizations when financial controls fail. Petrovits et al. (2011) studied nonprofits that disclosed internal control problems and found that such problems were more likely in organizations with fewer resources and less financial expertise, and that disclosure was followed by reduced donations. A church that suffers a payroll penalty or an embezzlement loses money once and trust for much longer, which gives treasurers and finance committees a reason to pay for outside help.

Competition falls into three groups. Local CPA firms offer reliability but often charge more than small churches can afford and rarely specialize in church accounting. National church-management software providers offer donation tracking and reports but leave the bookkeeping to the church. The largest competitor is the status quo: a willing volunteer. Steward Ledger's position is a specialist service priced below a CPA firm that removes the work from the volunteer. Dencker et al. (2009) found that founders who brought knowledge of their business into the venture were more likely to see it survive, partly because they learned faster once it opened; the founder's eight years as a church bookkeeper is the venture's main defense against being new. Finally, in a sample of Swedish start-ups, Delmar and Shane (2003) saw that founders who wrote a plan early, before most other organizing steps, lowered the odds that the venture would be disbanded and moved faster on product development and other activities; that is why this analysis comes before any marketing money is spent.

Reply to Jasmine

Jasmine, your market analysis for the construction-site coffee trailer is detailed, especially the count of active commercial permits in the county, which gives you a documented base rather than a guess. I would push you to think about how much your industry, mobile food service, will shape your profits compared with the choices you make within it. McGahan and Porter (1997), analyzing the profitability of thousands of business segments, found that industry membership explained a meaningful share of differences in profit, but that factors specific to the individual business explained more. That suggests your competitive position, contracts with contractors, reliable early hours and a menu built for crews, will matter more than the general economics of food trucks that your analysis emphasizes.

That said, your competitor list leaves out the most direct substitute: the convenience store on the way to the site. Crews already stop there, and it opens at 5 a.m. Shepherd et al. (2000) found that new ventures facing markets they do not know well carry a higher risk of failure, and that founders can reduce that risk through their own experience and by learning quickly. Your framing experience is that kind of protection, but a week of watching where crews buy coffee before work would tell you how strong the convenience store's hold is and what would make them switch. I would add a column to your competitor table for price per cup and time required, since time is likely what crews value most. Which sites are you planning to approach first, and do you know when each project is scheduled to finish?

Reply to Caleb

Caleb, your market analysis makes a strong case that college athletes need more food than they can easily get, and your segmentation by sport and season is thoughtful. The figure I would test is your demand estimate. You reported that 64% of the athletes you surveyed said they would subscribe, and you used that percentage across the conference's roster to size the market. Survey interest is a weak predictor of purchase, and research on new founders suggests the problem goes beyond surveys.

Cassar (2010) compared nascent entrepreneurs' expectations with what their ventures later achieved and found that they were overly optimistic, with sales and employment forecasts that exceeded actual results. Hmieleski and Baron (2009) found that higher dispositional optimism among founders was associated with weaker venture growth, particularly in dynamic environments, because optimistic founders tend to overestimate demand and underreact to bad news. Neither finding means your idea is weak; they mean every founder, including me with my own church bookkeeping estimate, should build in a correction before committing money.

A practical correction would be to apply a conversion rate from comparable services rather than the survey response, run your financial plan at one-third of the surveyed interest, and treat any pilot results as the real estimate once you have them. Presenting both the surveyed figure and a conservative figure will also make the plan more credible to any lender who reads it. Would the athletic department share data on how many athletes currently buy meal plan upgrades? That number might be a better proxy for paying demand than the survey.

References

Allen, K. R. (2016). Launching new ventures: An entrepreneurial approach (7th ed.). Cengage Learning.

Cassar, G. (2010). Are individuals entering self-employment overly optimistic? An empirical test of plans and projections on nascent entrepreneur expectations. Strategic Management Journal, 31(8), 822-840. https://doi.org/10.1002/smj.833

Delmar, F., & Shane, S. (2003). Does business planning facilitate the development of new ventures? Strategic Management Journal, 24(12), 1165-1185. https://doi.org/10.1002/smj.349

Dencker, J. C., Gruber, M., & Shah, S. K. (2009). Pre-entry knowledge, learning, and the survival of new firms. Organization Science, 20(3), 516-537. https://doi.org/10.1287/orsc.1080.0387

Hmieleski, K. M., & Baron, R. A. (2009). Entrepreneurs' optimism and new venture performance: A social cognitive perspective. Academy of Management Journal, 52(3), 473-488. https://doi.org/10.5465/amj.2009.41330755

McGahan, A. M., & Porter, M. E. (1997). How much does industry matter, really? Strategic Management Journal, 18(S1), 15-30. https://doi.org/10.1002/(SICI)1097-0266(199707)18:1+<15::AID-SMJ916>3.0.CO;2-1

Petrovits, C., Shakespeare, C., & Shih, A. (2011). The causes and consequences of internal control problems in nonprofit organizations. The Accounting Review, 86(1), 325-357. https://doi.org/10.2308/accr.00000012

Shepherd, D. A., Douglas, E. J., & Shanley, M. (2000). New venture survival: Ignorance, external shocks, and risk reduction strategies. Journal of Business Venturing, 15(5-6), 393-410. https://doi.org/10.1016/S0883-9026(98)00032-9