THE SEARCH FOR A SOUND
BUSINESS IDEAS
CHAPTER IV
This chapter will teach you the ways to discover a winning
business idea by identifying which one can and will work for
you, and how to narrow down your options and evaluate the
feasibility of your final choice.
Finding a good idea is easy, what’s difficult is having
determination to start and see the venture through the end. Most
aspiring entrepreneurs spend too much time worrying despite of
having unique and good concept for their business. The result is
that opportunity, that great product or service you are thinking of
, is already been taken by another entrepreneur who is more
daring than you. Once, you’ve through, act on your idea, do not
waste time. Be realistic and start something you believe you can
do.
A. BEFORE SEARCHING FOR BUSINESS IDEA
The starting point for developing new business
ideas lies inside the prospective entrepreneur
rather than in the marketplace, laboratory,
business plan etc. You are the critical component -
it is your strengths and weaknesses which should
dictate the areas in which to seek ideas and the
likely scale & scope of your business. At the end
of the day, support for your business by financiers,
suppliers, customers etc. will also be a vote of
confidence in your abilities to make it successful.
WHAT ANGLE ARE YOU COMING FROM? ARE YOU:
An inventor who has a product/service idea?
An innovator who has developed a new
product/service?
Out of work and want to create a job for yourself?
An entrepreneur who wishes to create a business?
A manager who wishes to develop a business?
Be especially aware that inventors and innovators
does not necessarily make good business people.
EDUCATIONAL BACKGROUND
Any (special) business or technical
qualifications?
Do you have a knowledge of finance &
marketing
FINANCIAL STRENGTHS
Have you access to personal or family funds or
finance from other sources?
How much, how easily, what conditions and
when?
How long could you survive without any
(regular) income while your business develops?
COMMITMENT
Why do you really want to start a business?
Are you in reasonable health?
Have you any/many family commitments?
Does the family fully approve of your
proposal to set up your own business?
Are you willing to relocate/commute in order
to pursue a business possibility?
EXPERTISE & INTERESTS
Do you have insights into any business sectors or
trades?
What are you good at or like doing?
Do you have a hobby/interest/talent which
could become the basis of a business?
PERSONAL QUALITIES
Are you a resourceful, energetic and motivated person?
Have you a capacity to take lots of knocks and bounce back?
Are you realistic and practical? Are you a hard worker?
What do you dislike doing?
Prior experience
Where have you worked before?
Have you done anything special, exceptional or unusual?
What work-related skills or expertise do you have
EXTERNAL CONTACTS, RESOURCES ETC.
What contacts have you in finance, business etc.
Have you or your family access to any under-
utilized resources.
Do you know people who might help give you
a start?
2. FINDING THE BUSINESS IDEA
When looking around for business ideas, bear in mind
that these could be based on any of the following
approaches:
A manufactured product where you buy materials
or parts and make up the product(s) yourself.
A distributed product where you buy product
from a wholesaler/MLM, retailer, or manufacturer.
A service which you provide.
OBSERVE CONSUMER BEHAVIOR:
What do people/organizations buy ?
What do they want and cannot buy ?
What do they buy and don't like ?
Where do they buy, when and how ?
Why do they buy ?
What are they buying more of ?
What else might they need but cannot get ?
LOOK AT CHANGING EXISTING PRODUCTS OR SERVICES WITH A
VIEW TO:
Making them larger/smaller, lighter/heavier, faster/slower
Changing their color, material or shape
Altering their quality or quantity
Increasing mobility, access, portability, disposability
Simplifying repair, maintenance, replacement, cleaning
Introducing automation, simplification, convenience
Adding new features, accessories, extensions
Changing the delivery method, packaging, unit size/shape
Improving usability, performance or safety
Broadening or narrowing the range
Improving the quality or service.
BE ON THE LOOK OUT FOR:
Emerging Trends
For example, the population within your area may
be getting older and creating demand for new
products and services.
Expanding Market Niches
For example, local industries may be outsourcing
more of their services.
TRY THE FOLLOWING APPROACHES TO LOCATING IDEAS AND
SUGGESTIONS:
Ask people for their ideas
Use one idea to spark a better one
Read relevant trade magazines (local, national and foreign)
Skim through trade directories (local, national and foreign)
Above all, open your eyes wide and try to spot the obvious
gaps. By all means be inventive, imaginative and original
in your thinking but stay market- and consumer-orientated
rather than product-obsessed. We all know stories about
people inventing a better mousetrap and never getting a
nibble from the market!!
C. ASSESSING BUSINESS IDEAS
Once your short-list has been developed, you will
need to start devoting substantial time to
assessment, research, development and planning.
For a start, you could pursue the following tasks:
1.Discuss products/services with prospective customers
Would they buy from you, at what price, with what frequency etc.?
Why would they prefer your products to the competition?
Find out what they really think - there is a danger that people will tell you what
they think you would like to hear. Listen carefully to what is being said; watch
carefully for qualifications, hesitations etc.; and don't brow beat respondents with
your ideas - you are looking for their views.
2.Assess the market using desk & field research
How does the market segment (by price, location, quality, channel etc.)?
What segments will you be targeting?
How large are these segments (in volume terms) and how are they changing?
What are the price makeups/structures?
What market share might be available to you bearing in mind your likely prices,
location, breath of distribution, levels of promotion etc.?
3. Analyze your competition
Who are they and how do they operate?
Are they successful and why?
How would they react to your arrival?
What makes you think that you could beat the competition?
At whose expense will you gain sales?
4. Consider possible start-up strategies
Will you be able to work from home or part-time?
Will you seek a franchise or set up as an in-store concession?
Will you start by buying in finished products for resale as a precursor
to manufacturing?
Will you contract out manufacturing?
Will you buy an existing business or form an alliance?
Could you lease or hire equipment, premises etc. rather than buy?
5. Set ball-park targets and prepare first-cut
financial projections
6. Prepare a simple action plan
Cover the first year of operations to highlight the
critical tasks and likely funding needed before the
business starts generating a positive cashflow. This
is critical especially if you have to undertake
significant product or market development or need
to give credit to customers.
6. 7. Critically examine ideas from all angles
Can I raise enough money?
Can I get a premises/staff etc.
Will the product work?
How will I promote and sell?
Think through possible problems. What would
happen if sales took twice the expected time to
develop while costs escalated?
D. FROM BUSINESS IDEA TO BUSINESS PLAN
Having firmed up on a specific idea and conducted
preliminary research, you have several options including the
following:
Undertake more detailed/specific market research.
Do further product research, development, testing etc.
Review and refine your proposed start-up and
developmental strategies.
Draft a detailed or outline business plan.
Prepare financial projections.
Start looking around for the key resources - people,
money. premises, partners etc.
MOST PROBABLY, YOU WILL START ADDRESSING ALL
THESE TASKS IN PARALLEL RATHER THAN
SEQUENTIALLY. OTHER ISSUES WHICH YOU MAY NEED
TO START THINKING ABOUT INCLUDE THE
FOLLOWING:
Select a company or business name, logo etc.
Decide how you will start trading - limited company, sole
trader etc.
Enquire into any licenses which might be needed, or
regulations to be complied with.
Think about where the business will be located.
Look for professional advisers (lawyer, accountant) and a
bank.
Consider likely telephone/communications needs.
BEAR IN MIND THAT, TO DEVELOP A SUCCESSFUL BUSINESS,
YOU MUST:
Define precisely the nature of the business
Offer clearly identifiable products or services
Tap a real need or generate a demand for your
product/service
Operate within your expertise and resources
Have realistic targets and have reasonable
expectations
Keep everything as simple and straightforward as
possible.
