The Economic Development Strategic Plan of 2006 states that the UK is steadily moving towards the formation of a knowledge-based economy focusing on high technology, flexible workforce and innovative work solutions. The recent years have seen a growing increase in economic growth centred on social justice.
The UK Economic Indicator argues that since 2004, there has been a significant increase in the gross domestic product of the country. Official figures cite the reason as a concentration of business growth in key economic sectors of the country. The rate of Company formation and growth has risen in the UK, especially in Wales and Northern Ireland. The Office of National Statistics in the UK states that modern infrastructure and a relaxing of trade regulations have encouraged young entrepreneurs to start new companies. Consequently, the UK economy has diversified with creative companies coming to the fore.
The Britain Investment House classifies companies into four types in decreasing order of popularity among the UK entrepreneur class.
Private company limited by shares including Community Interest Companies
Private Companies limited by Guarantee including Right to Manage Companies and Commonhold Associations
Private Unlimited company
Public Limited Company
The UK Companies Act states that a company has to be established by two people. More than 54 percent of entrepreneurs preferred to start Public Limited Companies. These type of companies offer more freedom in making company policies and guarantee shared liability among all public investors.
In order to start a company, an entrepreneur has to focus on two vital strategies of making a business plan and embarking on market research.
What is Market Research?: Market Research is defined as the process of gathering, compiling and analysing data, trends and figures about various economic sectors. Market research aims to understand the potential benefit or loss to be incurred in opening or developing a company in a specific field. Usually market research is undertaken by company founders or partners to study the sales figures, profit and loss rates and decide whether opening a company in that proposed line of business is indeed beneficial. In a nutshell, the basic question asked and answered in market research is, ‘whether opening a new manufacturing or IT company will benefit me? Will starting this new product prove beneficial?’
Thus, for every entrepreneur it is important to have a solid body of market research for guidance in business endeavours.
What is a Business Plan?: It is described as a business blueprint or map identifying and outlining clearly the course of action to be undertaken by the company in a specified period of time. A sound business plan is a necessity for every entrepreneur. It includes:
Company goals and strategies
Company market and financial forecast
Company risks and marketing policies
Expected profit figures
Target consumer base
A well-developed business plan is based on good market research. Market research helps the entrepreneur to draft a good and feasible business plan. The facts and analysis put forward by market research help in formulating the direction of a business plan. The business plan is usually needed for financial purposes and employee needs. It is used to measure the success or failure of a business venture. Thus, a business plan is a communication tool for entrepreneurs starting a new company or establishing a new line of business in an existing company.
More than 25 percent of entrepreneurs established financial companies, dealing in public shares and bonds. According to the Economic and Development Strategy, the popular and profitable key economic sectors are:
Finance and Business Services: There is a strong representation of the financial and business companies in the UK. Wales has more than 16 percent of financial companies. The business and financial services include the trading, investment and real estate sector. The UK Economic Indicator states that to open a financial company is highly beneficial in the future. It states that the financial sector is booming and will become a profit-oriented economic sector by 2010.
Film, TV and Multimedia Industries: More than 12 percent of entrepreneurships exist in the media sector. Initially established as sole proprietorships, these media business ventures have tripled in size and investment. A primary reason is the rise in entertainment demand across the UK. These industries are highly profitable employing more than 20 percent of the country’s population. Many Universities offer skill-based programs of study in multimedia encouraging college graduates to get together and float a media public limited company.
BioScience and Health Industries: There are more than 500 bioscience multi-national corporations across the UK. The Office for National Statistics indicates that these bioscience corporations initially started out as sole proprietorships established by college graduates. These later transformed into public limited companies. Today, these companies boast of a strong research base and foreign collaboration. Statistics indicate that the UK health industry including the pharmaceutical industry accounts for more than 48 percent of the gross domestic product.
Food Production/ Processing and Technology Services: These industries are highly diversified including:
Machinery and Packaging industries
Transport and Distribution industries
Food and Research industries
The profits generated by these industries form a major chunk of the gross national product i.e. more than 51 percent. It has also spread into the services sector employing more than 35000 people in Wales.
Thus, it is advisable for an entrepreneur, based on detailed market research, to establish a public limited company in the financial sector. Other economic sectors which do not yield as much profitable returns are the IT, Communication, Engineering and Manufacturing sectors.