Sustainable Small Business Development

One of the most crucial processes that a business cannot do without is business forecasting. Forecasting can be classified into two main categories, short term and long term, depending on the objectives that have been set. The procedure typically entails study and the application of pertinent data to produce significant conclusions about upcoming operations. For instance, a forecast can be used to estimate the size of the market over the long term or the level of short-term product demand. This means that forecasts are undertaken to determine the gap existing in the market between the desired state and current state and possible changes that might occur in the future (Dlabay, Burrow, & Kleindl, 2011). Demographic data is usually incorporated into such forecasts as it provides important data upon which a company can make informed decisions.

One of the most compelling reasons why companies should engage in forecasting is the need to mitigate adverse events which might result due to lack of foreseeing the situation in the future. In this regard, forecasts can used to determine changes in consumer behavior or the possible impact of changes in technology might have on a company’s operations. In addition, forecasts are used in the budgeting process as it is used to determine the amount of funds need to fund a certain level of operations. For business whose operations are seasonal, it is important that they actively engage in forecasting as that will make the difference at the end of the day.

Importance of Developing Formal and Informal Networks When Building a New Business Opportunities and Expanding into New Markets

Over the recent couple of years, networking has emerged as one most important low cost marketing business strategies. Networking as a business strategy simply refers to taking advantage of business contacts, referrals as well as introductions by well strategic partners as a means to market a company’s products and services (Ibarra, & Hunter, 2007). Networking is especially important where a company has an innovative product suitable for a particular market but is yet to develop the marketing capability to exploit the opportunities in the new market.

One of the key advantages of business marketing is the fact that the cost of marketing is usually reduced as a firm depends on referrals, positive introductions and exchange of contacts as main form of marketing. In addition, the strategy is especially important where a company lacks the capability to undertake their own marketing especially in a new market. Networking is also important as it helps to build strategic partners who may be instrumental in a company’s growth. Through networking, a company might discover an opportunity to expand business through an important acquisition or recommendation.

Importance of Knowledge Management in the Digital Age

The rapid change in technology has increased the focus on Knowledge Management in Organizations. This is because the rapid changes has increased the vulnerability of organization to theft of important business information such as intellectual property, and business secrets (Quinn, 2013). For software companies such as Google, Apple, Amazon, and Facebook among many others, the challenge is even more since leaks in key information about a product may lead to dire consequences. Because of this, a lot of energy, time and resources have been devoted to knowledge management.

Today, cyber theft represent one of the most serious problems that companies face in their effort to protect important information. The surge in the cases of cybercriminal activities in the recent past has made the work of knowledge management very difficult. Today, it companies are losing millions of data to criminals and rivals companies through cyberattacks. Some of them do end up losing sensitive information which is key to their business success. Because of this tough challenges, knowledge management is increasingly becoming important.

Two Risks Organizations Must Address to Mitigate Competitive Pressures

Although the idea of risk and risk management has been there for years, business are yet to master the art and science of risk mitigation. This is partly due to constant changes in the business environment which make it entirely possible to understand and contain risk. Because of this, organizations are advised to maintain a culture where risk management is part and parcel of the day to day operations. According to research, strategic risks account for about 60% decline in market capitalization while operational risks only contribute to about 30% decline while financial risks account for the remaining.

In this regard, a companies are advised to put much effort in mitigating strategic risks followed by operational risks if they are to survive, grow and develop. Today, rapid changes in consumer tastes and preferences and technological changes present one of the highest risks to many companies. Changes in consumer behavior requires that firms invest heavily in innovation and product development so as to develop and design products that meet customer tastes and preferences. This will also mean that companies invest in research to anticipate future consumer behavior. Today, one of the most successful companies invest heavily on research to determine the trend of customer tastes and preference. Those which fail to do so usually pay a heavy price as seen from the decline of Nokia when the company failed to migrate into smart market at the right time. Rapid changes in technology is another big challenge that firms face today. Having the right technology does not only mean quality products but also implies that a company can products will be affordable in the market. In addition, a good technology means that the rate of production is quite high. Because of this, it is easy to capture a big market, saturate it in time before moving to the next product.

Two Major Components of a Business Plan That Posit a Challenge to Complete and How the Issues Can be Overcome Using Technology

Preparing a financial plan represents one of the most difficult tasks in business planning process. Though many might assume it is just a matter of inscribing numbers, the process is highly involving as the figures must align with demand focus as well as capability of a company to turn the demand into sales. Where a company is entering into a particular market for the first time, the process is even trickier. It is important to remember that the estimation process usually takes into account the competitive forces and the ability of a company to compete (Diwan, 2011). In addition, factors such as consumer level of income, state of economy and recent trends in consumer behavior are usually considered when coming up with a financial plan. As part of the process, the revenue model must be given attention as a company might have a great product but lacks a proper and working revenue model. However, with the use of technology the challenges can be overcome especially when it comes to working the figures.

Since the financial plan is closely tied with the product and marketing process, then defining a market, the potential and strategy for growth is another difficult part of business planning process. Defining the market and how a company will be able to overcome stiff competition is especially important where competition stiff and products are not differentiated. In addition, this might important where a company is introducing a new product into the market. The various challenges in defining the market and focusing demand and growth can be overcome by using various analytical tools to analyze the market.

References

Ibarra H., & Hunter M. L., (2007): How Leaders Create and Use Networks. Harvard Business

Review. Web. https://hbr.org/2007/01/how-leaders-create-and-use-networks

Diwan P., (2011): Management Principles and Practices. Excel Books Publishers. New Delhi

Dlabay L., Burrow, J. L., & Kleindl B., (2011): Principles of Business. Cengage Learning Publishers. Boston

Quinn S., (2013): Knowledge Management in the Digital Newsroom. CRC Press. Burlington MA