“Something New!

”
A Case of an Entrepreneur
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Two years back, Amir a young business graduate with high ambitions and dreams in his
eyes, decided about starting a business. His strong desire for independence had brought
him to this conclusion. Amir was very passionate and keen to start a “Fast Food
Restaurant”, because of the new escalating trend of eating out that was prevailing in the
society. He discussed his plans with his parents and persuaded them to lend him some
money. With his personal savings of Rs.150,000 generated from a job that he did while
studying and a loan of Rs.350,000 from his father, he managed a handsome capital of
Rs.500,000 for bringing his plans into action. Amir also had the option of having a
partnership with his friend, who was willing to help but Amir had not given this option a
second thought as he wanted to do everything on his own.

With a capital of Rs.500,000, Amir was sure that he would be able to establish a
successful and profitable business. Amir developed his business plan and started the
venture having a Focus Strategy. His target market was teenagers and youth of the
society. The specific characteristic in his strategy that would give him the competitive
advantage was the appearance and overall environment of the restaurant that would
attract customers. When it came to choosing a location, Amir rented a place in the posh
locality of the city. The rent expense was very high but Amir compromised on that. There
were many other cafes and fast food restaurants in the surroundings and they were doing
great business. His father once pointed out that he should not have chosen this place as he
would have to face a lot of competition here but Amir negated his father’s reservation on
the basis of belief that he has the right strategy to survive in this competitive market.

Amir spent days and nights decorating his restaurant. He hired the best interior decorator
of the city to give the place an exciting and eye-catching look. He spent a huge amount of
money on the imported floor tiles, furniture and other appliances. Amir always believed
that it is the outlook that matters the most. Secondly, he launched a very aggressive
advertising campaign for his fast food restaurant. He used electronic, print and outdoor

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modes of advertisement for this purpose. As a result, he had used a major portion of his
capital resource on the exterior and interior of the place and on the promotion campaign.

Finally, when he opened the restaurant, he received a welcoming response from the
public and earned a reasonable amount of profit. He was lucky, not to have faced any
problems initially. Amir was overjoyed from his success. Unfortunately, the success
period lasted only for six months. The profit margin started declining afterwards and
consequently, by the end of the first year, the business came to breakeven point. This
happened mainly because his competitors copied his idea of having an attractive
appearance and Amir’s strategies no longer gave him the competitive advantage.
Secondly, there was monotony in the restaurant’s menu card and no new dishes were
being offered. At this point, Amir should have shown some flexibility and changed his
strategies and should have come up with new and exotic dishes but he stuck to the old
ones and did not change despite the declining sales.

Amir’s restaurant could have survived even then, but there were certain stumbling blocks
that came in the way. They were;
 high rent expense

 heavy maintenance charges on the imported appliances

 average revenue

 mounting competition

 decreasing customer demand

 deteriorating market reputation

He suffered loss during the second year. The root-cause behind this was his wrong
strategies but he had not realized this at the time. Despite all this, Amir was so much
dedicated to his business that he did not think of discontinuing the business. Instead he
took a loan of Rs.200,000 from his uncle, after many convincing arguments, paid the
expenses, reinvested the remaining amount in the business and started off with a new

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spirit but the same old strategies. During this time period, an old friend of Amir, who had
done a two year course of business management from U.K and was currently working in
a multi-national firm as a senior planning officer visited him. During an informal
meeting, Amir told his friend about his business situation and they discussed all the
aspects. Amir’s friend conducted an overall analysis of the venture and came up with the
solution that the need of the hour was to develop new business strategies. Both the friends
decided to formulate new and effective business strategies that would draw the attention
of young customers and take the business to the recovery stage. Now Amir’s ultimate
goal was to devise such new strategies that would transform this business into a
successful entrepreneurial venture.

Discussion Questions
Q1: What were the major mistakes Amir did while starting his business?
Q2: Amir possessed some of the characteristics of a successful entrepreneur. What are
they?
Q3: What are the traits of a successful entrepreneur that Amir lacked?
Q4: What type of strategies do you think Amir should now adapt?