Individual_Reflections

1.0 Introduction The Entrepreneurship in Practice module is taught with the purpose to educate the potential future entrepreneur to spot the opportunities, alert to recent market positions, proactiveness and writing up a clear and realistic business plan before starting new firms. My main objective to enroll this module was to explore practices and creativity in entrepreneurships to keep abreast with the fast changing business evolvement. This module does help me to understand more the real life situations in business world through SimVenture simulation. There are many concerns and risk when starting a new firm. This paper will describe the process of running the SimVenture business simulation by a group of future entrepreneurs. It will also discuss the experience and lesson learnt with the simulation, individual growth points as well as group dynamic reflection. 2.0 The Group Selection My group was teamed up by 4 ambitious entrepreneurs, there are few similarity among us which tied us together in the WOW group. We taken the Entrepreneurship and Creativity module last semester and go through the simplified version of Herrmann Brain Dominance Instrument (HBDI). The four sided model of thinking styles are metaphorically attributed to four regions of the brain and characterized as A-Logical, B-Organized, C-Interpersonal and D-Imaginative. I am the only one in the group with A-logical thinking quadrant while the other three of my team mates are D-Imaginative thinking quadrant. Source: Adapted from Innowiz Project, 2008. Figure 1: The Hermann Whole Brain Model Diagram The HBDI teaches us how to communicate with each other effectively by understanding their thinking style. It is important to understand his or her thinking style preferences as it will help to improved teamwork, leadership, customer relationships, creativity, problem solving and other aspects of personal and interpersonal development (Hermann International, 2012). Each of us are equip with different industry experience. Our group leader Mr. Chris is a civil engineer, he has more than 10 years experience in structural engineering design, construction project management and currently involve in supply chain management. Our team mate Mr. Gan was from accounting and finance background, he has more than 10 years experience working in finance industry. Another team mates Ms. Zoe are with biotechnology and health background, she has more than 5 year experience as an academic and clinical researcher. She is good in marketing activities and she has many year experiences in communicate and liaise with customers due to her job function. Me myself is a mechanical engineer, I have more than 4 years experience in supplier quality and currently working as a sales engineer. I am responsible for the production and supplier selection during the SimVenture Simulations as I have experience in manufacturing industry. 3.0 SimVenture Simulation SimVenture is a business simulation game which let the players to run a virtual company and learn about the business world and entrepreneurship. It provides a good real life experiences for future entrepreneurs to understand the business world where business owner are responsible to make decisions including production, marketing, finance and human resources. We as a team will run the SimVenture Simulation together for 3 years. Our strategy is to survive the business during 1st year, maintain the business stability in 2nd year and growing the business in 3rd year. At the end of the game, we are expecting to achieve a certain amount of profit from the business and position the company value as high as possible. 4.0 Experience with SimVenture Simulation 5.1 First Simulation We started up the simulation with high expectations to get profit and as much orders as possible in the 1st year as we are well prepare after many practices at home with SimVenture demo version. During the game start up, everything works well and our default product comes with good quality, good features, good style and average performances which suits our target market – Professional Services without the need to redesign our product. We analyze the market research and competitor research report carefully before select the right market to sell our product. We calculate the monthly order size for each market, customer expectation on the product, the price customer willing to pay as well as review competitor product features and selling price. Our leader Chris prepares a template for us to record the research data so we can review it all the time. We spend near to an hour for the first two months to analyze the data and discuss our strategy plan. We then conclude that our product spec is far better than what our target market required and our selling price is 5% below then what customer willing to pay. We are confident that our product will able to gain the market share with proper marketing promotions. Besides, we also organize training for business owner, employ some simple marketing promotions, employee recruitment, appoint the cheapest vendor with 30 days credit terms and conduct customer research for further analysis. With continuous marketing promotions, we start to receive orders from April onwards. However the order was not consistent and the situation becomes worst as the month going. Although there is orders from customer occasionally but the operating cost is always higher than the income due to high wages. Refer to periodical customer research report, customers always satisfied with our product design and selling price. Therefore we decided to increase 5% of the product selling price and we are confidence to retain our market share since the product price still below our competitor price. However, the outcome was negative where the orders drop to zero immediately. At last, we failed to survive and the business close down before end of 2nd year due to high operating cost monthly and poor cash flow. Below are some of the lessons learnt from the first simulation: * We should not hire any employee at early stage as the business capital is limited and high operating cost where more than 50% of the cost are use to pay for employees wages. * More training activities should organize for the business owner at early stage as there is no much activities need to do and more time available during the business starts up. Focus more on marketing, sales and communication training instead of production or finance training as this are the skills require in getting more sales orders. * It is not encourage doing marketing promotions too early unless the product design and selling price is firm. Direct marketing and personal selling is highly recommended during company start-up as the effectiveness is high since there is direct contact with customer. * It is important to analyze the market report and target the right market to sales the product as well as increase the market share. * We hire two part time workers to work together to run the production as we wish to get more profit by running the production in-house. The lesson learnt from the decision make is it incurs high operating cost especially the wages and relocation cost while the orders we receive is fluctuated monthly and not sufficient to overcome the operating cost. I would suggest that initiate the recruitment activities only when the sales orders are stable for more than 6 months. * Many hours wasted during the simulations due to limited working space and the owner is stressed up. Furthermore, we are on tight budget and facing financial crisis after relocation. Lesson learnt is we need to consider the cost for relocation before we decide to run production in-house. * Outsourcing production activities is highly recommended due to limited time and limited working space available. Besides, it would also help to cut down the cost by running the production in-house. * Selecting vendors is another key factor to success in the business. We failed in the business as we appoint the vendor offer the cheapest price but overlook the 30days credit terms offer by the vendor which end up our cash flow is unhealthy. * Customer is very sensitive with the selling price. Therefore, selling price should not increase without any improvement in the design as it will frighten the customer off. * Poor cash flow is another cause of failure to us. Therefore, it is important to monitor the balance sheet as well as profit and loss report monthly. Apply financial help such as overdraft facility when necessary. * It is important to organize the credit control for the debtors. We failed the business as we overlook the credit control terms and it is usual that customer always not paying on time. 5.2 Second Simulation After many lessons learnt from the first business simulations, we are running well for the second simulation and getting more sales orders compare to first year. During the first 6 month, our group strategy is well organized and planned with some advice from Mr. Chris Mohan during the simulation. We restructure our strategy by focus more on training and marketing promotions as our target is to get orders, more orders means more income. We must survive for first year with healthy cash flow and we did it well at the end of first year. Unfortunately, our cash flow become poor again from fifth month second year onwards and once again we finished up the overdraft during 3rd year. Below are some of the mistakes we make and lesson learnt for the second simulation: * Although we have higher profit margin compare to first simulation, but still the number of orders we get is not enough to cover the monthly operating cost during second year. We need to have an average order of 90units per month in order to cover all the expenses. * Again, we failed due to high debtors amount and high creditors where both amount cannot balance up. Our cash floor was poor when comes to the end of 2nd year. * Marketing promotions is not effective enough to get the orders and our orders are fluctuated. We did not allocate any budget for major marketing promotions such as large size trade magazines and local newspaper which may be one of the reasons we fail to get higher orders monthly. * There may be few reasons which effect the efficiency of our marketing effort such as the business owner is in stressed condition which affect the working efficiency and lack of training activities. Lesson learnt here is more training should organize for the business owner in sales, marketing as well as communication with excellent skills level which will help to improve their working efficiency. * There is no well organize when employing distributor, we keep switching the distributor was another factor that wasted some of our money. 5.3 Third Simulation – WOW This is our final simulation after so many failures with lots of lesson learnt from the previous simulation to prevent the same mistakes happen again. Another though is we able to run the simulation faster every time when we start a new simulation as there is less argument among each of us as we have the same strategy after the lesson learnt. As usual, we do a strategic analysis and planning base on the market research report and competitor research report. But now we also analyze the profit margin for each target market by using the design tools available in the simulation instead of just focus on monthly order size which we never done before. From the lesson learnt, it shows that higher profit margin will generate more income and give us the flexibility to outsource production as well as employ distributor to generate more sales order. Besides, there is no fear to redesign the product second time when customer not satisfied with the first product design. Always remember customer satisfaction come first before we ask customer to buy our products. We decided to redesign our product in the seventh month of 1st year due to customer dissatisfaction with our product design after review the periodical customer research report. Our sales order then increase extensively after we launch the new product. Below is some of the strategic plan which brought us to success in the third simulation: * Analyze market research report and competitor report by look into monthly order size and also the profit margin for each market. * Optimize the profit margin by redesign the product to just meet what the target market needs. * Focus on sales, marketing and communication training for business owner. * Doing extensive marketing promotions during first year especially direct marketing, networking and advertising to gain product market share. Participate in exhibition & events and successfully get 320% increase in sales order. * Conduct customer research periodically and analyze the effectiveness of each marketing activities. Eliminate those ineffective marketing promotions (eg. personal selling not effective for corporations market). * Employ full time workers during 3rd year to run the production partially in-house in order to optimize the income when there is budget available and the cash flow of the company is healthy. * Monitor company cash flow and balance sheet monthly, make sure the credit is not more than the debtors. * Appoint vendor which offer 60days credit terms facilities. * Apply overdraft facilities from bank for backup purposes. After 36 month of business running, the company is now with £183,707 bank balance and £902,999 company value starting with just £10,000. 5.0 Group Dynamics We were team up on the first day of class to complete the SimVenture simulation and presentation work together. All of us are from different professional background which we believe that we are the best team ever as we have members with experience in sales & marketing, accounting & finance as well as supply chain and manufacturing. It is challenging to work in a group as everyone has different point of view and it is not easy to get mutual agreement before continue to run a month in the simulation especially during our first two simulations. Mainly due to everyone have different strategy to run the business, for example we use near to an hour to argue on the strategy plan before we have the same agreement. Besides, we also have lots of argument and disagreement especially during the first simulations as the business is not running well and each of us having different ideas to recover the business. However the situation turns better during the final simulation as we have the same though after the lesson learnt. Mr. Chris is a strategic thinker, may be this is why he make a change in his job function from civil engineering to supply chain management. He always thinks out of the box and look for long term plan. This is why we able to came out an idea to switch from computer business to invent new health care product business by applying our company technology to the new product when we drafting the business plan presentation. Besides, he also prepares a template for us to record the simulations research report data so we can review it all the time. With his leadership capabilities, we keep improving as the days go on and finally success in our final business simulation. Ms. Zoe is a peace maker in the team as she does not like to see the team members arguing at the same time not benefits to each other as well as to the simulation. She is the one which cool down the situations by supplying us chocolates and get everyone back on track again. Besides, she also helps to organize the minutes and summarize our decisions for the three simulations. She acts as a supporter throughout the session. During the simulation, she is responsible to analyze our target market and propose the best marketing promotions to employ as she has experience in marketing. Mr. Gan is an emotional type of person as seen, he is inpatient when feeling stress. It happens when the simulation business is in a critical situation where everyone is stressed up and it is hard for him to accept others idea at that time. However, he is a good controller as well and sometimes even helps us to relax by suggesting a short break. Mr. Gan is good in finance controlling where he will be responsible to monitor the balance sheet and cash flow during the simulations. Besides, he also helps up in doing the forecasting and applying overdraft facility for our business. Without his advice in the finance section, I believe we will not able to survive for more than a year in the first two simulations. He also helps up the team in budgeting the cost and expenditure for our business plan presentation. 6.0 Individual Learning and Growth Points After going through this module and the SimVenture simulation process, it would best describe myself as an analytical thinker. I am a mechanical engineer and working as supplier quality engineer for the past four years where most of my time are dealing with production in manufacturing industry. This is why the team positions me to responsible for production activities. I always base on figure and facts to make final judgment and not a risk taker. This is how I contribute to the team by doing the calculation and analyze the market research report and competitor report. Then suggest the team to select the right market to target base on the results. I am also responsible to do planning for the production either running in-house or outsourcing. The biggest mistakes that I make during the first simulation was suggesting the team to run the production in-house and employing new workers to cope with future orders. However, we overlook the high wages as well as the relocation cost and cause the company having financial problems. Therefore our business ends up having negative balance in the bank and close down. Through SimVenture simulation, it gives me and my team a very good overview on how the business world in real life situation looks like. Business is not about profit and loss but there are many factors to look into when running a business such as finance and accounting control, company space and location, marketing activities, human resource as well as sales strategy. All the factors are inter-related and there is high risk that the business will fail without proper business planning. Furthermore, trusting is also important in running a business. You have to trust your working partner and of course your customer. One of the lesson learnt from SimVenture simulation is we need to give a reasonable credit control to customer or else you will lose the customer if your credit term is too strict which may frighten them off. This is just like we hardly will choose a supplier which needs us to pay immediately as it did not give us any flexibility and use up all our business cash. Last but not lease, working with my teammates indeed is a good experience and challenging. We learn a lot from each other and even stay till early morning to run the simulation. We learn how to motivate each other when we were stressed up, planning skills and many more. Arguing or disagreement is not an issue for us or damage the team spirit as we are actually sharing the experience or ideas and select the best solution to encounter the problems. 7.0 Conclusion It was indeed a pleasant journey to work with a team from different professional background and this has been a positive learning curve for me. Entrepreneur in Practice was a great module for us to experience the real life business world with the invention of SimVenture simulation. It is good to experience the failure now through the business simulation so we will not repeat the mistakes again when we are the entrepreneur in near future. The lesson learnt from the first two simulations is a great input for us and this is how it actually brought us to success in the final simulation. Furthermore, we also learn from each others during the simulation process and business plan presentation preparation as well as learn to think out of the box which make us different from others group. Last but not least, it was a great module to study for my MBA. 8.0 References Innowiz Project. (2008). ‘Hermann Brain Dominance’. Downloaded from http://innowizproject.blogspot.in/2008/05/herrmann-brain-dominance-instrument.html as at 01 July 2012.