The first part of the discussion deals with the sales plan of a a new launch of a business. The various financial strategy and mix have been stated in the report. The chosen business is a launch of a new electronic repairing business that deals with the service of the electronic devices of the local crowd. The focus is on the technique of funding that is crowd sourcing (LaToza & van der Hoek 2016). The benefits and the limitation of the stagegies have also been shown below.
The second part of the task mainly focuses on the analysis of the crowd sourcing. It is a new technique for acquiring fund opposing the traditional capital method of capital structure. The live campaigns and promotion helps in gathering the amount for starting the bunnies. The process involves convincing the crowd to make them contribute in the business. The pros and cons of this technique of funding has been shown in details.
Business concept
The following discussion deals with the setting of the financial strategy of a new start up business. The first step is to identify the type of the business that is going to be started. In the given case, the chosen service is a electronic gadget repairing business named “electro” which deals with the electronic gadget repairs and assistance. The launch of the company will consist of variety of repairing service of all kinds of gadgets and electronic devices in one roof. The target market is the college students and the office goers who need fast and easy repair of their devices while travelling. The company will provide variety of guidance and knowledge of the mobile phones and other gadgets to the customers who are in need of fast repair of their devices in their busy schedule. The revenue model includes the framework for generating revenues. It is a key component of the business model. It deals with pricing, value of the targeted customers and techniques for sales (McKenzie, 2017). In the given case, the price of each repair of the electronic devices varies from the problem faced by the customers. Although the price is kept pocket friendly as the targeted customers are for young generation like students and office goers. The sales promotion shall be through pamphlets, campaigns, local hoardings and through advertisement in social media. The uniqueness of the business is that it provides at one place all kind of repair service at reasonable price. This is the basic strategy of the business (Yang, et al. 2015).
Financial Plan for the proposed business and Mix of financing
The financial plan of the business will consist of various financing mix that include the capital structures. The main components are venture capital, debt, equity crowd sourcing and family assistance. In the given case, the company “electro” will not involve any debt and equity for its capital contribution. It being a small-scale firm and a new start up, the form will focus on crowd sourcing and family assistance (Gao, et al. 2015). The main advantage of crowd souring is that it involves saving of cost, improves speed of work and ability to interact with people with skills that may not be obtained from In-house team. Primarily, the firm will promote its business to its family members and acquaintances for fund, and then it will rely on the campaigns and promotion through social media. The young generation will be easily attracted through this procedure.
Reason for choosing the Financial Mix
The chosen financial mix consists of assistance from family members and crowd source. The promotion will be much easier and it would help in promoting the business as it involves live campaigns and attraction of the crowd (Mozafari, et al.2014).
Analysis of the chosen Mix-Advantages and disadvantages
It is a system of funding that mobilizes the group of people to contribute small amount of money and generate production, especially for the business start-ups, it is easy for them to collect the fund. Although, crowd source financing has no guarantee of the amount, there is always an uncertainty (Chen, et al 2014). If the crowd is not convinced with the offer, they may not contribution the production and capital.
Managerial and Leadership Implications
The management includes a sound planning of the live campaigns and the procedure of the promotion must be well managed. The “electro” must ensure that the leadership process is clear and there is no confusion. The focus should be made in acquiring goal and attraction of maximum number of backers so that the functioning is smooth (Kirby & Worner 2014).
Concept of crowd sourcing financing
The crowd sourcing refers to the obtaining of information, opinions, work from a large group of people who submit their feedback or data through internet, social media or any other smart phone apps. The people who are involved in crowd sourcing take the task on voluntary basis or they are working as freelancers (Hui & Gerber, 2015). An example of crowd sourcing can be the traffic apps that help the drivers to report the number of accidents and other incidents that happen in the roadway. This provides real time updated information to the app users.
The companies with the help of crowd sourcing, can market their work in any country around the world. It provides the business vast array of skills and expertise without spending the regular expenses involved in promotion. It involves breaking down of a large task or a job into smaller units in different locations .In most cases the task or the job taken requires thousands or more that that number of industries to involve. They can now with the help of crowd sourcing work on the job independently. The live campaign takes place from place to place to collect money for the business.
Kind of business suitable for crowd sourcing Financing
The launch o the crowds sourcing campaign is suitable for start -up businesses and small firms that are in the need of fund. A proper market research, a sound business plan along with a successful promotion helps to generate the fund (Schulz, 2015). It is appropriate for the small business owners who have already failed with the traditional financing. Entrepreneurs who lack in funds or is not willing to generate from traditional funding method can take up this procedure, if marketed properly and run correctly, it can be a success for the enterprise even if the business is virtually unknown and has no financial track or record (Van Dusen & Wise, 2016)
Circumstances to prove that crowd sourcing financing appropriate for the business along with justification
The main advantage of crowd souring is that it involves saving of cost, improves speed of work and ability to interact with people with skills that may not be obtained from In-house team. The work is distributed and the time is saved. A huge task is broken down into segments so that each group can perform separately and with less amount of money spent from that spent on a full -time based employee (Manchanda & Muralidharan, 2014). It is a system of funding that mobilizes the group of people to contribute small amount of money and generate production, especially for the business start-ups, it is easy for them to collect the fund.
Limitation of crowd sourcing financing
The crowd source financing has no guarantee of the amount. There is always an uncertainty. If the crowd is not convinced with the offer, they may not contribution the production and capital (Ghezzi, 2017). The goal of the company will not be reached its goal, if sufficient amount of money is obtained.
Techniques to overcome the limitations
Running a successful crowd funding campaign requires a proper idea and an appropriate back up of the business the various techniques to overcome the limitation of crowd source financing:
Conclusion
Crowd sourcing has evolved into a great source of acquiring capital. An easy and effective method involves contribution from the backers who are interested in the incentive and rewards of the firm. The cost and the time are saved in this process. Through the emergence of social media, this process has become easy and is trending day by day. The new small scale company can now, easily allocate the task to various small units and get the production benefit
References
McKenzie, D. (2017). Identifying and spurring high-growth entrepreneurship: experimental evidence from a business plan competition. American Economic Review, 107(8), 2278-2307.
LaToza, T. D., & van der Hoek, A. (2016). Crowdsourcing in software engineering: Models, motivations, and challenges. IEEE software, 33(1), 74-80.
Yang, K., Zhang, K., Ren, J., & Shen, X. (2015). Security and privacy in mobile crowdsourcing networks: challenges and opportunities. IEEE communications magazine, 53(8), 75-81.
Antonenko, P. D., Lee, B. R., & Kleinheksel, A. J. (2014). Trends in the crowdfunding of educational technology startups. TechTrends, 58(6), 36-41.
Chen, Z., Fu, R., Zhao, Z., Liu, Z., Xia, L., Chen, L., … & Zhang, C. J. (2014). gmission: A general spatial crowdsourcing platform. Proceedings of the VLDB Endowment, 7(13), 1629-1632.
Gao, J., Li, Q., Zhao, B., Fan, W., & Han, J. (2015). Truth discovery and crowdsourcing aggregation: A unified perspective. Proceedings of the VLDB Endowment, 8(12), 2048-2049.
Ghezzi, A., Gabelloni, D., Martini, A., & Natalicchio, A. (2017). Crowdsourcing: a review and suggestions for future research. International Journal of Management Reviews.
Hui, J. S., & Gerber, E. M. (2015, February). Crowdfunding science: Sharing research with an extended audience. In Proceedings of the 18th ACM Conference on Computer Supported Cooperative Work & Social Computing (pp. 31-43). ACM.
Kirby, E., & Worner, S. (2014). Crowd-funding: An infant industry growing fast. IOSCO, Madrid.
Manchanda, K., & Muralidharan, P. (2014, January). Crowdfunding: a new paradigm in start-up financing. In Global Conference on Business & Finance Proceedings (Vol. 9, No. 1, p. 369). Institute for Business & Finance Research.
Mozafari, B., Sarkar, P., Franklin, M., Jordan, M., & Madden, S. (2014). Scaling up crowd-sourcing to very large datasets: a case for active learning. Proceedings of the VLDB Endowment, 8(2), 125-136.
Schulz, M., Haas, P., Schulthess, K., Blohm, I., & Leimeister, J. M. (2015). How idea creativity and hedonic value influence project success in crowdfunding.
Van Dusen, D. A., & Wise, J. A. (2016). U.S. Patent No. 9,461,876. Washington, DC: U.S. Patent and Trademark Office.
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