Leeds University

Business School

Assessed Coursework Coversheet

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Module Code: LUBS5963M

Module Title: Entrepreneurship and Enterprise Creation

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Confidential

Part A

The fashion industry has been increasingly associated with unethical practice and
environmental degradation (Kozlowski et al., 2012). This has caused a shift in consumption
habits towards responsible channels for those individuals desiring to be environmentally
conscious (McNeill & Moore, 2015). The societal trend of sustainable fashion can come in
the form of resale; vintage fashion has arguably facilitated a movement to overcoming the
low-status stigma previously associated with this form of consumption (Gordon & Hill,
2014). The trend has been driven by a range of economic, critical and hedonic benefits,
encompassed around its inexpensive, sustainable and authentic nature (Guiot, & Roux,
2010). Furthermore, the rise of technological advances has laid a foundation for e-
commerce platforms, increasing the ease and accessibility of shopping for second-hand
clothing (Cassidy & Bennett, 2012).

The entrepreneur’s undergraduate research project investigated Generation Z’s motivating

factors and perceived barriers towards resale consumption, providing a personalised
understanding of individuals’ insights. Sustainability, price sensitivity and style were found to
be the core drivers, with sizing and quality concerns comprising the main barriers (Gill,
2020). These findings highlighted an opportunity to encompass both digital and physical
elements; providing a central base to integrate the two (Storefront, 2019). The peer-to-peer
marketplace application and its associated pop-up shops are driven by a desire to extend
the lifecycle of garments, whilst simultaneously empowering young entrepreneurs who
encompass the same morals. The opportunity will be outlined in relation to the elements of
the Opportunity Business Model. Societal, technological and personal drivers have been
highlighted above and the five dimensions will now be demonstrated (see Appendix 1 for a
visual summary).

Proposition

‘Giving clothes a new lease of life’. Initially viewing a map function, users can identify sellers
within their proximity, offering pick-ups from these locations. This reduces the transportation
footprint of distributing goods and the cost of postage creating value for particularly
environmental and cost-conscious users. Service Performance Innovation has occurred to
create these distinguishing features (Keeley et al, 2013). Centred around an omnichannel
experience, hubs will be identified where high numbers of active sellers are based for pop-up
shops, initially orchestrated in large university student communities. Sellers can showcase
their stock, providing a platform to support young entrepreneurs in expressing their upcycling
creativity, delivering physical retail experience and an opportunity to increase their reach of
consumers by gaining new followers (Storefron, 2019). For those buyers deterred from e-
commerce resale platforms due to fear in trust, an inability to try clothes on and return them,
garments can be viewed in a physical setting, checked for quality and size (Roux, 2006).
This amplifies the value of the offering by delivering the service through a unique avenue,
encompassed within ‘Channel Innovation’ (Keeley et al, 2013). Users will be rewarded with
‘kudos’ for their sustainability efforts through quantifying their contribution to reducing
ecological impacts, creating intrinsic value for environmentally aware individuals.
People

Drawing on surrounding networks, the entrepreneur has peers who have graduated with
degrees in computer science, marketing and business finance. The first contact will be
employed to code the application, with the latter two hired to digitally market and bookkeep
as part-time employment. The entrepreneurs retail experience will make them responsible
for the organisation and running of the pop-up shops. Furthermore, their familiarity of selling
and buying second-hand apparel has provided an understanding of the market from the
consumers perspective. This knowledge, alongside the identified limitations of competitors,
means they will oversee the development of the application to ensure the necessary
advancements are implemented. The entrepreneur will seek advice and funding from their
contacts with successful entrepreneurial experience (Appendix 2).

Place

The second-hand clothing industry is predicted to be 1.5 times the size of the fast fashion
industry within the next 10 years (Thred Up., 2019). Fernandez (2020) suggests there is an
opportunity for new entrants to position themselves in the resale market. The UK
experienced an increase of 18.3% in sales from 2018-19 (Sabanogula, 2020). Storefront
(2019) highlight growth in the retail industry requires creating synergies between the online
and offline markets, with pop-up shops providing the optimal environment for this fusion. The
concept of casual curiosity and nostalgic value are elements that drive consumers to shop
second-hand in a physical setting (Bowser et al., 2016). Pop-up shops meet these desires,
with the temporary nature capitalising on the fear of missing out and desire for exclusivity
(Storefront., 2019). They provide a tactile experience, which connects digital retailers to their
consumers (Rosenbaum et al., 2020). In 2014, the pop-up retailing sector in the UK turned
over £2.1 billion, predicted to grow by 8.4% in the following year (Cebr, 2014).

Generation Z are embracing the second-hand trend twice as fast as alternative cohorts, due
to their environmentally conscious desire, which can be met by pursuing the fashionable
vintage trend (Fernandez, 2020). Those currently dominating in the market adhere to
younger generation’s prioritisation of digital platforms, as a peer-to-peer marketplace does
not compromise their social status (YouthSight, 2020). They continue to seek advancements
in the industry since they have been constantly exposed to more choice in the marketplace,
providing evidence of scope for a new entrant (Wood, 2013). The second agenda of the
opportunity will target student communities, who can be categorised within this overarching
cohort and are already active resellers (Gill, 2020). These findings have highlighted a market
segment of sustainable and stylish members of Generation Z who are driving the growth of
the industry.

The pop-up shops will be used for the promotional launch, which have been found to have
an 80% satisfaction rate by creating brand awareness and generating loyalty to the virtual
element through the authentic approach (Rosenbaum et al., 2020). Student ambassadors
will promote the venture among their university network through word of mouth, distributing
leaflets and social media promotion. This activates a personal incentive to attract more users
to their own page, whilst simultaneously providing experience. The opportunity will be linked
to social media network Instagram as a stream of use and promotion. Environmentally
conscious Instagram influencers will be engaged with to promote the business. The core
product is the application, with the pop-ups being the supplementary service. Based on
competitors, pricing will be set at 10% commission per sale, plus a 5% transaction fee for the
secure payment through PayPal. The application will be available on the Apple app store,
and the six initial cities for the pop-up shops are Manchester, Leeds, Liverpool, Newcastle,
Bristol and Birmingham.

Table 1: Competitor Comparison

My business Depop Vinted Etsy

Service Peer-to-peer resale Peer-to-peer resale Online marketplace Online shop for
app and pop-up marketplace for second-hand handmade and
shops goods vintage items
USP Removal of A fusion of creativity Ability to swap items A unique platform
transportation and with artists, clothes of equal value and for handcrafters
postage via map sellers and jewellery sellers can ‘boost’ and entrepreneurs
function, pop-up makers items for increased to sell bespoke
shops organised sale chances items
Fee 10% (+ 5% PayPal 10% (+ 5% PayPal 19% 3.5% (+20% listing
fee) fee) fee)
Biggest UK UK and US Germany and France US
market
Users N/A 21 million (2020) 34 million (2019) 46 million (2019)

Incremental innovation has occurred to address the limitations of these competitors by

adapting the pre-established peer-to-peer marketplace business model.

Process

Figure 1: Process Map

Open applications Entrepreneur to Communicated to

App developer to & appoint student train through
code the IOS app app developer for
ambassadors instruction packs necessary
and phone calls advancements
ensuring execution
of job criteria
Login elements & Marketing assistant
profile editing engage with social
media influencers Customer service
for promotion and Print and distribute concerns reported
run our account leaflets direct to to entrepreneur for
File uploading & review
ambassador’s
search function
university address

Make available on
Apple app store Pop-ups to occur
Push notifications
Purchase inventory, in each of the 6
& messaging
rails and decor for cities, for 2 days,
pop-ups across a 2-month
Drop down function period
for organisation of
Secure payment users’ ‘shops’
management Entrepreneur to
enlist young
entrepreneurs for Transit to cities for
Quantify pop-up launch in
Map function via pop-ups
environmental sibling’s van
location services footprint for kudos
The business operations will be run from the entrepreneur’s garden office in Leeds, which is
unoccupied. Employees will work from here or remotely, depending on their residency and
the longevity of the coronavirus pandemic, yet Zoom meetings will facilitate a team dynamic.
A core element that provides value is the lack of requirement to manufacture physical
products. The peer-to-peer nature minimises the supply chain, with users themselves being
both the consumers and suppliers. The key relationship will be with the app developer, as
this is the most complex aspect of transitioning the opportunity into reality.

Image 1: Example of the application format opening screen

ACTIVITY MESSAGES PROFILE POP-UPS

0.1MILES AWAY
MSG EMILY
FOLLOWERS

Image 2: Example of a user’s profile

Profit

In year one, the total commission from sales is expected to be £170,000 based on 22,800
users selling £50-£100 worth of apparel a month, which varies with seasonal trends. These
include an increase in sales during the months spent at university and a peak in December
due to the Christmas period. The initial costs in the first two months are £13,966 and will be
covered by the entrepreneur’s savings of £20,000. An investment loan, agreed with the
entrepreneur’s father, of £5,000 and £7,500 required in month three and four respectively,
will be repaid interest free in months ten and eleven. The closing balance for year one is
predicted to be £15,010 and can be viewed in the cash flow forecast (Appendix 3).
Breakeven will occur in month seven following £14,000 worth of revenue from commission
sales at 10% of £140,000 of output, to cover the total costs.
 Figure 2: Breakeven Analysis Graph
20,000

18,000

16,000

14,000

12,000
Cost / Revenue (£)

10,000

8,000

6,000

4,000

2,000

20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000

Revenue Fixed costs Variable costs Total costs
Output

The opportunity also creates social value by empowering young entrepreneurs.

In conclusion, the business opportunity will provide value to environmentally, cost-conscious

consumers and young entrepreneurs seeking a platform. There is a potential to be profitable
within the growing market. The next stage includes conducting primary market research to
clarify the necessary functions of the application and service, before beginning to build it.

Part B

This section will critically reflect on developing my business opportunity, including the
entrepreneurial learning which occurred to facilitate this process. I will build arguments on
exploring the theory, in relation to these elements, against my own practical experience.

I knew my opportunity would be driven by my personal values to ensure it had positive

implications on either the environment or society; I felt proud when I was able to achieve
both. My core goal of sustainability within the fashion industry meant I took a causal
approach to developing my opportunity. I identified the limitations of current resale platforms
and saw this as an objective opportunity to be exploited. Ardichvili et al (2003) suggest
increasing the likelihood of opportunity recognition can occur from ‘special interest
knowledge, general industry knowledge and prior knowledge of customer problems’. Based
on an accumulation of specialist understanding I have gained about second-hand clothing
through my undergraduate research project, working in retail and being an active user
myself, I was able to recognise the value to consumers. This supports Greene (2020), who
argues those with relevant industrial experience have the necessary information to aid the
identification of business opportunities. The opportunity perception within entrepreneurial
cognition allows a gap in the market to be recognised, whilst also aiding creativity (Blundel et
al., 2018). I believe I successfully adopted analogical reasons, taking the familiar concept of
second-hand shopping and applying it in a new context, by creating a fusion between the
online and offline world. I believe my industrial experience enhanced these cognitions,
allowing me to engage in replicative entrepreneurship. I will continue to exploit my
underpinning knowledge as I saw immense value in this process.

I believe I demonstrated creative qualities in my overarching idea, whilst also in the format of
my example application to translate my vision. Creativity was my highest score in the GET2
test and an element comprised within Trait Theory. My father shares this personality trait,
and while he was not an entrepreneur, he built a collapsing business into a success.
Therefore, it is difficult to distinguish whether this was an inherent quality or one I learnt from
him, baring question to the trait versus background debate. However, I also saw a key
difference between trait theory and my own experience come to light in relation to autonomy.
I was able to utilise on my low need for autonomy in a way that has guided my individual
development and that of my opportunity through my comfortability to delegate roles. This
became essential when determining the individuals, with their specialised expertise, I would
draw on to help construct my venture into its physical entity. By taking full control of all
operations, I believe I would be unable to deliver the same standards in a timely and efficient
manner. Instead, organising autonomy at a team level to reduce the decisional freedom
burden can allow the business to grow (Gelderen, 2016). This realisation taught me that
having low autonomy is not necessarily a negative quality, and I have confidence in
assigning responsibility in the future.

My risk-taking score was low, which I initially saw as justifiable for a working environment.
However, on a day-to-day basis or in my leisure activities this is not the case, highlighting
how my risk-taking capacity varies depending on contextual factors. This supports the
philosophical criticisms of trait theory, whereby stability is suggested to highlight personality
traits are reflective across all situations (Cope, 2005). Similarly, this demonstrates how the
theory omits the ‘dynamic learning process’ that can occur within entrepreneurship (Cope,
2005). For instance, I had a medium locus of control at the beginning of the process, which I
deemed to be as a result of my parental advice. Through the course of the assignment this
quality has developed, supporting my predictions about the likelihood of taking more control
if I saw my opportunity coming to light in alignment with my own passions. Therefore, the
social context of encouragement from my surrounding networking played a vital role in my
development, enhancing my self-confidence and agency to take control. Ultimately, this
improved my internal locus of control and I now have faith in the prospect of developing
certain qualities, which I will carry forward.

Sarasvathy (2001) argues the causal approach is more strongly related to entering an
established industry, enabling evaluation of the market based on the existence of
information. Initially I developed an idea, which was positively received when discussed with
my surrounding network. However, this arguably creates a potential assumption that
demand may be larger than reality, encompassed within the cognitive bias of belief in ‘law
of small numbers’ (Blundel et al, 2018). Therefore, I conducted secondary research, finding
that the market was contracting, highlighting e-commerce elements were necessary. This
stressed the ease of contracting tunnel vision following positive reactions. If my idea was
actually implemented into the diminishing market, the success of the venture would be at
risk. This process demonstrated the importance of becoming aware of potential biases and
ensuring their removal. Allowing for feedback that leads to refinements of the service,
alongside competitive analysis, are aspects
encompassed within the causal logic (Fisher, 2012). Therefore, evaluation is essential
despite opportunity discovery (Lumpkin et al., 2004). In light of Blundel et al (2018)
Entrepreneurial Learning Cycle, the OBM proved beneficial in scrutinising my idea once I
assessed the ‘place’ aspect in more detail. This new venture context analysis improved my
entrepreneurial understanding. Modifying aspects through adapting my idea based on
relevant secondary research was a fundamental turning point in strengthening my concept,
highlighting the importance of learning during the entrepreneurial process. I will ensure a
continuation of market research is conducted to feedback into my established
entrepreneurial thinking.

I found the profit element the most complex and difficult. It was, at times, frustrating and
disheartening, which also made me question my strength as an entrepreneur. Blundel et al
(2018) suggest the attainment of ‘practical skills, knowledge and understanding’ from
education can develop entrepreneurship. This assignment, coupled with previous modules,
overall analytical learning and the foundation of my peers supported my ability to learn how
to conduct my financial recordings. Formal education is also argued to have a ‘positive
association with business start-ups’, potentially because it provides social capital (Burns,
2016). This became evident with the individuals comprising my team. I believe my education
has shaped my values, linking back to how I sought to address a socio-environmental issue,
whilst also advancing my skillset to optimise on reflection, feeding into the journey of
learning. My parents have provided me with a great deal of social capital through their
network, who I have drawn on as advisors for my opportunity. Findings have highlighted
parental resources for ‘business advice, help and support’ are evident, with conclusions that
female entrepreneurs draw on their parent’s
socio-economic resources more than males (Schoon & Duckworth2012). These align with
my experience, demonstrating the strength of background influences, yet also learning from
these individuals, which contributed to my entrepreneurial development process.

In conclusion, I believe my background, experience and education had a larger impact on

the development of my opportunity compared to the elements of Trait Theory. My experience
highlighted these defining qualities are not always necessary and can be developed through
learning. Ultimately, learning throughout the entrepreneurial process, and having confidence
in the gradual development, was fundamental to the success of my development and that of
my venture.
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ebook

Appendix 1: Visual Representation of OBM

PROPOSITION: Giving clothes a new lease of life.

PERSONAL: Experience and understanding of the
resale industry coupled with a desire to facilitate
sustainable fashion and empower young
entrepreneurs.
PEOPLE: Surrounding network drawn on with
expertise in app development, marketing and
finance. Advisors with successfully entrepreneur
experience.
SOCIETAL: More conscious consumers driving the
sustainable fashion trend, which can come in the form
DIMENSIONS

of resale. Occurring following links to conventional

shopping and unsustainable practice.

DRIVERS
PLACE: Stylish, sustainable, cost-conscious
members of Generation Z are the market segment
with Depop being the main competitor. An
opportunity for new entrants and fusion between
digital and physical world.
COMMERCIAL: -
PROCESS: Structured as a team, key relationship
with the app developer. Enabled through zoom
meetings or working from office space.
LEGAL: -
PROFIT: Net profit at the end of year one predicted
to be £12,110 with breakeven occurring in month 7.
Social value generated from supporting young
entrepreneurs.
TECHNOLOGICAL: Increased ease and accessibility
of purchasing second-hand garments through rise of
the internet facilitating e-commerce platforms.

Appendix 2: Entrepreneurs Network

Person
Person
Person
Funding
Marketing

Resources
Founder
App
Person Person
developer
Advisers

Bookkeeper

Person
Person

(Adapted from Conway & Jones, 2012)

Appendix 3: Cash flow forecast

Appendix 4: Assumptions for cash flow forecast