2.1 Sources/Opportunities for Finding Business Ideas
Human creativity and innovation is at the core of what we are. Larger organisations tend to have research and development departments, whereas with smaller companies it really relies on the individual.
Internal methods of generating business ideas can stem from members of staff, or brainstorming sessions. External methods involve getting feedback from customers.
Another method is purchasing a franchise which gives the business the rights to sell a product or provide a service under the trading name of another, already established business. This way you don't need a new idea or even to develop it, you take on an existing business model.
With a franchise arrangement, the person that buys the franchise (the franchisee) pays the owner of the franchise (the franchisor) a fee, and probably a percentage of future profits or turnover. Turnover is the total amount generating in sales in one financial year.
As older ideas are replaced with better ideas, there is a constant need for innovation. In fact, if a business only generates new ideas and does not have innovativeness, it would eventually fall behind its competitors.
Innovation takes into account the importance of finding new ways to use an old idea. It also explores various ways to make products more efficient, affordable and beneficial to the consumers and the business.
But:
"Why are there so many good ideas which end up in the dustbin?"
The answer is simple, because many seemingly good ideas are impractical in reality. For example, the product may be too expensive to be viable. Other ideas simply don't have the expected broad demand as first anticipated.
It's often the case that an idea is perfectly viable but the entrepreneur is limited on funds, or his marketing fails to take of as it should, or maybe his competitors marketing is superior and hence, more effective.
Ideas for products and services need to be practical, reproducible and economical. They need to have the right appeal.
Launching a product
From the time a business idea is conceived, to the time the product hits the market, a considerable amount of planning and investment needs to be implemented. After spotting a gap in the market, this idea can then be developed. This is where it becomes a design process that outlines all its functions, properties and characteristics. New and innovative ideas must pass various test phases and be screened further by various categories of people in order to make sure it's perfect and ready to hit the market in grand style.
When a product or service has passed various test stages, it's ready for production and manufacture (implementation). Assuming it's a product, the business then decides on:
Full-scale production only commences when the above points have been decided by the business.
Activity 6 - What is a franchise and what do you think are the advantages and disadvantages of running one?
A franchise is a business model, which has proven to be successful, that you can purchase from a franchisor in order to operate under their brand. There are numerous advantages as well as disadvantages. Obviously, the main advantage is that you don't have to do any testing, planning or developing, as this is done for you. Another is that success has a;ready been proven, otherwise they wouldn't be offering it as a franchise. On top of this, with most franchises, you will receive profit and loss account, balance sheets and other financial projections with your targets set out for you. Also, you will usually get access to the companies supplier which offers competitive pricing, and sometimes a proven successful marketing strategy.
Of course there are disadvantages. These include the fact that you must work extra hard to ensure you can access the correct part of the market as there are other business exactly the same as yours competing. Also, there is a serious amount of starting capital needed as you will have to pay the franchisor a significant sum, as well as a healthy dividend out of your profits each year.
But:
"Why are there so many good ideas which end up in the dustbin?"
The answer is simple, because many seemingly good ideas are impractical in reality. For example, the product may be too expensive to be viable. Other ideas simply don't have the expected broad demand as first anticipated.
It's often the case that an idea is perfectly viable but the entrepreneur is limited on funds, or his marketing fails to take of as it should, or maybe his competitors marketing is superior and hence, more effective.
Ideas for products and services need to be practical, reproducible and economical. They need to have the right appeal.
Launching a product
From the time a business idea is conceived, to the time the product hits the market, a considerable amount of planning and investment needs to be implemented. After spotting a gap in the market, this idea can then be developed. This is where it becomes a design process that outlines all its functions, properties and characteristics. New and innovative ideas must pass various test phases and be screened further by various categories of people in order to make sure it's perfect and ready to hit the market in grand style.
When a product or service has passed various test stages, it's ready for production and manufacture (implementation). Assuming it's a product, the business then decides on:
- The amount of units to be produced
- Where the raw materials needed can be acquired and produced
- Who is actually going to produce the item? Perhaps 'in-house' or sub-contacted.
- How much will the item cost to produce?
- How much can we sell it for?
Full-scale production only commences when the above points have been decided by the business.
Activity 6 - What is a franchise and what do you think are the advantages and disadvantages of running one?
A franchise is a business model, which has proven to be successful, that you can purchase from a franchisor in order to operate under their brand. There are numerous advantages as well as disadvantages. Obviously, the main advantage is that you don't have to do any testing, planning or developing, as this is done for you. Another is that success has a;ready been proven, otherwise they wouldn't be offering it as a franchise. On top of this, with most franchises, you will receive profit and loss account, balance sheets and other financial projections with your targets set out for you. Also, you will usually get access to the companies supplier which offers competitive pricing, and sometimes a proven successful marketing strategy.
Of course there are disadvantages. These include the fact that you must work extra hard to ensure you can access the correct part of the market as there are other business exactly the same as yours competing. Also, there is a serious amount of starting capital needed as you will have to pay the franchisor a significant sum, as well as a healthy dividend out of your profits each year.
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