What is business and entrepreneurship
Topic: The role of a business idea in starting a company
Section: Free Business Planning Essays
Type: Abstract | Size: 184.3K | Downloaded: 63 | Added 03. 1. 6 at 03:45 | Rating: 0 | More Abstracts
2 Sources and methods for generating business ideas. 7
3 Development of a business idea for a new enterprise. 12
List of sources used. 21
Every business starts with a business idea. Choosing a business idea is one of the most important steps in starting your own business.
An idea is the potential of entrepreneurship. A well-formed idea can define an entrepreneur's activities for life. However, more and more new ideas are required to continue entrepreneurship.
The purpose of this paper is to define the role of a business idea in the creation of a firm.
To achieve this goal, it is necessary to solve the following tasks:
- consider the concept of a business idea;
- explore sources and methods of generating business ideas;
- develop a business idea for a new venture.
How to evaluate a business idea? In general, what should be the evaluation of an idea for a business and what are the main questions and answers that need to be formulated at the stage of analysis and development of the project? In a previous publication, we examined the concept of a business idea and listed the main criteria by which one can conduct an initial assessment and analysis of the viability of a project. But the topic of how to define these criteria has not been disclosed. What questions need to be asked and what answers need to be obtained to determine the likely success of the project? We will talk about this today.
Business idea evaluation
In general, generating ideas for business, and especially in the field of innovation, is a very creative process. It is not enough to have only narrow technical, marketing or purely commercial knowledge. Often, it is necessary to go beyond the generally accepted stereotypes and clichés. You need to have imagination and courage to look at things from completely new angles and not succumb to popular opinion. And it doesn't matter what kind of innovation we are talking about. Whether it's a new product, service, or the introduction of innovative technologies and business building methods.
In order to test a business idea for viability, sometimes it takes a lot of time. No one can possess the full completeness of knowledge in absolutely all spheres of life. Therefore, for a comprehensive and competent analysis of the project, it is useful to involve various experts and specialists from those areas of knowledge in which the author of the idea is not fully competent.
In order to get a more complete picture and conduct an initial assessment, you need to analyze the main criteria for a business idea that we discussed in the last publication.
But the question remains - how to use these criteria? What questions do you need to ask yourself and the assistants involved for a comprehensive analysis of the project?
Key questions and answers for evaluating a business idea
- How interesting is the new product or service to the market and consumers? This is one of the key questions that needs to be dealt with first. Sometimes, the author of the idea is so captivated by the emotions of his "brilliant idea" that he forgets who and why the object of his idea is being created. The good news is that this question should be asked before all other tests of the idea begin. Because if the result of the project is not interesting to anyone and it will be impossible to sell it, then who needs such an idea? In this case, we are no longer talking about business. And wasting energy, time and money on fruitless projects is simply stupid.
- What skills and knowledge are required to implement an idea? The author of the idea needs to be very critical and objective in assessing his own abilities and skills. In what the author of the idea suggests, you need to understand as well as possible. Of course, individual specialists in various areas can always be involved in the implementation of the project. Ideally, when a whole team of like-minded people is working on a project. But in the main essence of the project, the author must be a professional. Because those who do not understand the main issues of their business rarely succeed. Also, you need to analyze and compile a list of those experts and project participants that will be required for the successful implementation of the idea for the business.
- What resources and technologies are needed to implement the idea? When evaluating a project, you need to immediately analyze with the help of which technologies it will be implemented and what resources (including material) are needed, for example, for production. Assessing the feasibility and feasibility of a business idea, you need to understand well the objective feasibility of the project. There are situations when the idea itself is very promising. And in the future, indeed, it can bring great profits. But within the framework of the currently existing technological or production capacities, it is simply impossible to implement it. In addition, you need to make a preliminary assessment of the costs associated with the implementation of the idea. So that it does not happen that the cost of, for example, the production of a product will be much higher than the potential profit in a foreseeable acceptable time frame.
- What are the key benefits of a business idea? Whatever it is about - a product, service or business system, they must clearly stand out from the competition. Especially if the business itself is not a completely new direction, and the idea is only in a new "packaging" or presentation of this business. The characteristics of the object of an idea for a business should not only be better than competitors, but significantly, head and shoulders above. It makes no sense to open the n-th store or produce some kind of device if they are not fundamentally different from hundreds of others that already exist on the market. In order for an idea to be successful and a business to “take off”, you need a zest, a key feature that will radically set this business apart from others.
- What is the potential and scalability? A business idea doesn't have to be a thing in itself. A promising business idea must have significant development potential after launch. Especially when it comes to the ability to scale the business. For example, first opening one store, then 10.100, launching an international network or franchise, and so on. In other words, it is important to look for a strong multiplier that will allow the project to grow not only qualitatively, but also quantitatively. Thereby, increasing the amount of potential profit. Modern business has long been striving for transnationality. Therefore, business ideas that have a strong and calculated multiplier will have a significant advantage in the eyes of potential investors.
- What audience and what markets is the idea aimed at? It is extremely difficult to come up with an idea that works equally well in all markets and is universal. Even such "monsters" of global business as McDonald's and Procter & Gamble faced problems when they did not fully analyze the entry into new markets and regional specifics. For example, McDonald's, at one time, had quite tangible difficulties in France only because the brand's policy did not provide for the presence of alcoholic beverages in the assortment. And the French, in turn, could not imagine visiting a catering establishment without drinking 1-2 glasses of wine. Therefore, when evaluating an idea for a business, you need to think not only about the local markets for its application, but also about more global issues. At least at the initial stage of the project launch, it is necessary to clearly define for which target audience and which markets the object of the idea is intended for. And what restrictions may be initially inherent in the product or service, which may further impede scaling.
- What is the size of the market in which the implementation of a business idea is planned? This point is often overlooked by young entrepreneurs. In a fit of passion for the innovative qualities of their idea, they forget to calculate the possible implementation volume. Conventionally, it makes no sense to launch an idea worth a million dollars if the market capacity in which this idea will be implemented is only 100 thousand. No matter how great a new product or service is, and no matter how outstanding qualities they may have, if there is simply no one to acquire them, then you will never get your million in profits. You need to either look for other markets, or change your business idea. The volume of the market must be calculated in advance in money and pieces (or transactions, if we are talking about services).
- What disadvantages and negative factors does the idea have? In this matter, you need to be as honest and objective as possible. No matter how attractive a business idea may seem to you, if it contains at least 20-30% of negative factors or consequences that may result in some kind of problems in the future, then it is better to refuse it. Launching a new product, service or business in general is, in itself, a rather risky process. And various "force majeure" and so will be enough. Therefore, it is not worth increasing the risks if, even at the stage of evaluating a business idea, you see some possible problems in the future.
- What is the product cost and project launch cost? It is clear that detailed financial and economic calculations are already the prerogative of the next stage - drawing up a business plan. But nevertheless, even during the initial assessment of an idea for a business, it is necessary to at least roughly calculate the cost and estimated costs of launching the project. To do this, you can use the analogy method and take data from open sources, which in their parameters are similar to your business idea. The author of the idea should have an approximate idea of how much money he will need and whether he has enough money. It may be necessary to raise investments or apply for business loans to develop a project and launch a product. In any case, there is no escape from the financial component and at least minimal calculations at the stage of evaluating an idea for a business.
- What are the payback periods and how long will it take to launch the project? In any business project, it is important to understand not only the cost and revenue side. And be sure to link to deadlines and schedules. Otherwise, you may find yourself in a cash gap situation due to unaccounted for time for project implementation. This is important not only if it is planned to attract investors, but also when the project is financed from its own funds. Even at such an early stage, as evaluating an idea for a business, it is already necessary to at least roughly calculate the payback period and the time required to launch the project. Of course, more detailed calculations can be made already in the process of drawing up a business plan, but general time guidelines should be at the beginning of the journey.
These are the questions and answers that need to be analyzed when evaluating a business idea. Depending on the specific object of the business idea, the list of these questions, of course, can vary and differ significantly. But, in any case, the main thing that needs to be understood at the initial assessment stage is the feasibility of implementation and the commercial result of the project. If you see these two points positively, you can proceed to a more detailed analysis of the idea and drawing up a business plan. And in our next publications, we will return to the topic of evaluating business ideas and talk about the various methodologies that are used to generate and test business ideas for viability.
We hope you enjoy this post and find it helpful in evaluating business ideas. Please write in the comments what other questions you consider useful and necessary at the stage of working out a business idea. Also, we remind you that you can always ask your questions about business in our Business Club of Ukrainian entrepreneurs. And you can place free ads for business about your ideas and startups on the business bulletin board # 1 in Ukraine - BusinessMarket.
Business is an English word, and it means “business”. In our country, the term is understood more broadly: this is the name for everything, from fruit trade in a tent to global corporations.
Starting his own business, an entrepreneur wants to improve the quality of life - not to depend on the employer, on the availability of vacancies in the labor markets. Greater earnings, which means a transition to a new level of life and prosperity. Many businessmen want to become managers, expand their opportunities and potential.
Business is different in different countries. However, there are uniform rules - the owner is registered with the state control authorities. He fixes his status as an entrepreneur in the service of taxes and fees, undergoes inspections by SanPin, fire safety, and so on. That is, it becomes a legal, transparent enterprise.
The main types of independent organizations and enterprises
Private companies are divided into 3 types:
- Small-scale business
- Medium-sized entrepreneurship
- Large independent structures
What is called a small scale business?
Small business is an independent organization of production or services, at its own expense, at its own risk. Opening 1 stall selling newspapers, or a small workshop producing plastic bags, a fruit tent - these are the distinctive features of this scale.
Usually the first steps in working for oneself begin with small things - the owner does everything himself at first, he is the director of the company, accountant, cashier. Often he works as an unskilled employee - as a loader, security guard, cleaner.
Small opportunities force a person to do this, an attempt to avoid the cost of payments. Plus, the confidence that everything is done as it should. Often, the entrepreneur is pushed to this by the fear of stealing money or products of production by other small employees.
At the beginning, money rarely comes in as planned. Since the organization is taking the first steps in its development, it is still unknown to the broad masses. Another lion's share of earnings is "eaten up" by the cost of advertising, the purchase of equipment, consumer products, or consumables.
Business concept is a key factor in modern business success.
Developing a business plan starts with a vision of the future business
A business concept is a conceptual description of a key business idea, a business format that gives a company an edge over competitors. The business concept is an integral part of the company's strategy - the key idea around which and for which the company's strategy is detailed. A business concept can include a new product, a new marketing approach, or the delivery of an existing product.
The business concept is the bridge between the idea and the business plan.
A business concept is the identity of a company in a competitive product market.
Important aspects of the business concept:
- Needs / Demand
- Consumers / Distributors
- Offers of Goods and Services
- Core Competence
- The level of competition.
If you do not have a business concept, then your efforts to develop a business plan are not sustainable.
The first step in the process of drawing up a business plan is to develop an idea, an accurate business concept.
It is not enough just to know what product or service you want to sell. You must be clear about who and what constitutes your target market, what trends, opportunities and risks affect the industry. You also need to have a very clear understanding of who your main competitors are and how effectively they are meeting the needs for your target market.
The competitiveness of modern business depends on the competitive strength of the business concept.
For most, business and entrepreneurship are synonymous. However, economic sciences share these concepts. The article will help you understand the distinctive and similar features, find a practical application of this information.
Definition of terms
The official interpretation of the concept of entrepreneurship can be obtained from the legislation of the Russian Federation. This is the constant sale of goods or services carried out by a person at his own peril and risk to make a profit in the prescribed manner with registration with state bodies. Entrepreneurship is an activity that should be:
- Legal (registered).
- Commercial (profitable).
- Self-reliant (the ultimate beneficiary is an entrepreneur).
To understand what business is, let's turn to the English-Russian dictionary or to the works of representatives of the western school of economics. This is any activity aimed at generating income.
How business differs from entrepreneurship
SP is a priori engaged in permanent activities and conducts it legally. The sphere of the second economic concept includes one-time and non-permanent transactions.
Research in the Western School of Economics is actively carried out not only by its representatives. Business is viewed from the point of view of political technologies, as a psychological aspect of human life, a social mechanism - therefore there are many definitions. In sociology, the key aspect is the benefit of society, and in psychology, the satisfaction and comfort of the organizer.
Entrepreneurship is divided into spheres: