Learn about: 1. Introduction to Business Ideas 2. Definitions and Features of Business Ideas 3. Need 4. Aspects 5. Sources 6. Elements of Idea Generation 7. Idea Generation Techniques 8. How to Evaluate Ideas
9. Ideation Techniques, Catalysts and Inhibitors and Opportunity Maps 10. Feasibility Analysis 11. Converting a Business Idea into a Business Opportunity.
Business Ideas: Introduction, Definition, Features, Needs, Aspects, Elements, Techniques and Feasibility Analysis
Business Ideas – Introduction
A promising venture always starts with a brilliant business idea. Successful entrepreneurs are innovators or problem resolvers who come with ideas to fill the potential gaps in the market or handle an existing scenario with an alternative outlook to find the better and cheaper way of doing the things.
Once a business idea is conceived, the next step is to deliberate on the viability and the feasibility of the business idea.
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The entrepreneurs are the disruptive thinkers, offering innovative yet commercially viable ideas, later culminating in to successful business stories. For e.g. Fed Ex completely revolutionized letter posting mechanism through central sorting techniques and 24-hour operations across the globe.
Business Ideas – Definitions and Features
According to Webster’s dictionary, “an idea means what exists in the mind as a representation (as of something comprehended) or as a formulation (as of a plan).” An idea is the content of cognition or the main thing one is thinking about or intends to do. An idea may apply to a mental image or formulation of something seen or known or imagined, to a pure abstraction, or to something that exists in the mind of a person.
The celebrated economist, Joseph Schumpeter perceived an entrepreneur as a person having the willingness and the ability to convert a new idea or invention into a successful innovation. Those idea which have a value to the investor, customer and capable of generating a revenue model for a business, are business ideas.
In this context, the case of Japanese automobile company, Toyota is worth mentioning. Due to regular innovations and the zeal to provide utility to end consumers, they have emerged as the pioneers in developing eco -friendly high quality and safe cars for consumers.
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Unless an idea is relevant in the market place, having requisite feasibility, commercial viability and innovative content, it cannot be termed as business ideas. All ideas despite being innovative may not culminate into a viable business opportunity. Business ideas should be thoroughly tested and validated before resources are tied up in the business. The success of a business, in the first place rely heavily on robustness of sound business idea.
Features of Sound Business Ideas:
Unless an idea meets certain prerequisite it cannot be termed as business idea.
Following are the characteristics of a sound business idea:
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1. Fulfils a customer need – a problem is solved
2. Clear focus
3. Innovative
4. Unique
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5. Sustainable
6. Profitable in the long term
The development of new products and/or services usually focuses on improving “customer’s satisfaction”. Successful implementation of a business idea eventually leads to lowering of cost, while also passing on the benefits to the consumers in terms of lower product prices.
Business Ideas – Need
The business idea must be relevant to the entrepreneur. It should be based on a fact that the entrepreneur should be able to sell the product/service at a profit.
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The business idea should be selected so as to:
1. Enable entrepreneur to utilise the skills. An entrepreneur may have technical, market or any other skills. This gives much greater confidence in entering the market.
2. Enable the use of locally available raw materials for product or service. As compared to imported materials local materials are easy to procure and convert.
3. Help entrepreneurs make products that have a demand, but are not freely available in the market. It is potentially a good idea to start with a product that can be sold. In this case the entrepreneur has only to learn production technology and locate the sources of raw material.
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4. Enable use of any technical know-how of the entrepreneur or some specific machines, the entrepreneur is familiar with. If an entrepreneur has knowledge of some special manufacturing techniques, because of previous experience or otherwise it is easier for the entrepreneur to manufacture the product.
5. Enable the entrepreneur to solve a current problem existing in the market. Products may be available in the market but do not meet the demand fully or in a satisfactory manner. Sometimes an existing product is used in combination with another, which is not available. Attempts to solve such market problems do give rise to business ideas.
Business Ideas – 3 Aspects to be Considered
To persuade an investor to park the funds into a business idea, the following aspects should be considered:
1. End User’s Benefit:
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An entrepreneur should introspect and ask what the real customer benefit is, and what problems will be solved through his product or service? The key to marketing success is not ingenious product – rather it is the satisfied consumer. People buy products services to satisfy a need, or to solve a problem, e.g., food and drink, home, clothes or movie tickets-something that makes work easier, or enhancing their wellbeing or self-esteem, etc.
The first vital aspect of a successful business idea is to clearly describe what need will be catered to and how, i.e. in which form it will be catered to. This is also referred as a “Unique Selling Proposition” (U.S.P) by marketing practitioners.
2. Market:
A business idea can succeed only when it has commercial value, i.e. when the market accepts it. The second important aspect of a successful business idea is to identify how big the target market is for the product or service offered and how it differentiates itself from the products and services of competitors.
3. Revenue Mechanism:
The business idea should clearly reflect the manner in which the revenue will be earned along with the quantum of revenue to be earned by selling the product or service. The business so set up on the basis of such an idea, should not only be profitable but also sustainable in line with the legal, social and environmental challenges and expected compliances with the relevant laws.
Business Ideas – Several Sources
A business idea/project idea may be discovered from several sources.
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The ideas also originate in several forms:
A government-owned laboratory filing the most parents in the country; the chief of another government-owned laboratory defecting to the private sector; a resurgence in venture capital activity in the country, this time focused around the creation of IP (Intellectual Property); a continuation of the trend of multinationals putting down research laboratories and development centres in India; and a significant growth in patent-filing activity by Indian companies. Like all good ideas it grows and grew till it acquired a lite of its own.
Early on in the making of this, BT’s Twelfth Anniversary Issue, it became evident that this wasn’t just about multinationals setting research-shop in India.
Project identification is concerned with collection, compilation and analysis of economic data for the eventual purpose of locating possible opportunities for investment and with the development of such opportunities.
Opportunities according to Drucker are of three kinds – additive, complementary and breakthrough. Additive opportunities are those opportunities which enable the decision-maker to better utilise the existing resources without in any way involving a change in the character of business. These opportunities involve minimum disturbance to the existing state of affairs and hence the least risk.
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Complementary opportunities involve the introduction of new ideas and as such do lead to a certain amount of change in the existing structure. Breakthrough opportunities, on the other hand involve fundamental changes in both the structure and character of business. These opportunities involve minimum disturbance to the existing state of affairs and hence the least risk. The element of risk is greater in the case of complementary opportunities and is greatest in the case of breakthrough opportunities.
As the element of risk increases, it becomes more and more important to precisely define the scope and nature of the project objectives and to select the best possible approach so as to minimise both resource consumption and risks and to optimise the return or gains.
Human mind has an infinite capacity to observe and to innovate and deduct. Observation is one of the most important sources of project ideas. The observant mind continuously comes across situations which can be utilised to develop investment opportunities. The observation may be made during the com of one’s routine occupation or otherwise. The dearth of a particular article or service may for instance lead to the development of an industry which can provide the article or service in short supply.
The availability of a specified type of raw material or skill may lead to yet another type of industrial activity. The observant mind is always on the lookout for opportunities which can form the basis for the development of new project ideas. Observation of the existing processes can sometimes lead to new opportunities and financially beneficial project ideas.
This would for instance be the case when a processing unit decides to manufacture machines which it has so far been using for processing purpose only. The process of deduction is on many occasions used to supplement and rationalise project ideas based on pure observations. In innovative units, it often becomes necessary to depend upon the deductive process for the development of new approaches to the solution of existing problems.
Trade and professional magazines provide a very fertile source of project ideas. The statistics and information given by these magazines and reports and records of professional bodies often reveal opportunities which can be eventually developed into investment propositions. It is very important for every person who is involved in the development of new investment opportunities to remain in touch with the latest developments in his own field of specialisation.
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It is also necessary for him to keep in touch with developments in order fields which may be horizontally or even vertically liked with his own line of specialisation. Study of technical and professional literature, besides keeping a person all in a running attitude (courant), also stimulates thinking and helps in the process of development of new project ideas.
Bulletins of Research Institutes are also a very fertile source of information for new project ideas and opportunities. These bulletins generally give the broad outlines of the new processes or products developed by research institution. However, the information made available in the research Bulletin may not be adequate for concretisation of ideas. Further correspondence with the research institute may become necessary.
In most developing countries where planned development has been accepted as an approach towards the removal of poverty the plan document published by the Government provides a very useful source of project ideas. The plan document generally analyses the existing economic situation in a country and also pinpoints the investment opportunities which fit into the overall planning effort. Considerable information can, therefore, be gathered from the plan document.
Departmental publications of various departments of Governments also provide useful information which can help in the development of new project ideas. These publications are either periodical in character or are issued on special occasions. The census document which is a periodical publication is a very useful source of information about the economic structure of the society and various trends in the growth of economy and purchasing power and can be used to develop new ideas.
The project idea is a user friendly concept of what a project should be like. It is the raw expression of the desire of the project sponsoring body to achieve something. The exact form in which the project idea is expressed is immaterial.
In order to avoid unnecessary communication between the project sponsoring body and the project formulation team, the project idea should indicate broad objectives of the sponsor and limit these in time, space, function and structure. In case no limitations are envisaged, the sponsoring body should state so and leave the project formulation team in no doubt about it.
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1. Observing Markets:
Careful observation of markets can reveal a business idea. Market surveys can also reveal the demand and supply position for various products. It is necessary to estimate future demand and to take into account anticipated changes in fashions, income levels, technology, etc. In this connection, it will be useful to ascertain whether the demand is elastic or inelastic and whether the product is repeat purchase or not.
Attempt should be made to determine the trend of demand and the composition and pattern of potential users of the product. A survey of the available channels of distribution should also be made so that the selling campaign can be properly planned well in advance of the production. Advice of professional experts like dealers, commercial consultants, bank managers, advertising agencies may also be obtained to supplement product analysis and market surveys.
Competition and price trends can also be found through market surveys. From the data collected through market observation, one can identify the products/industries which are in demand and which require increase in supply. A promoter can then find out the most profitable line of business. For example, the scarcity of edible oil prompted many firms to enter into the production/supply of edible oils in India.
2. Prospective Consumers:
Consumer knows best what he wants and the habits/tastes which are going to be popular in the near future. Contacts with prospective consumers can also reveal the features that should be built into a product/service. These days’ good business firms generally conduct a survey among prospective consumers before choosing the product to be manufactured.
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These firms also conduct a market test of the prototype product before launching it into the market. The customer is the foundation of a business and it is he who keeps it going. Therefore, data on consumer needs and preferences must be collected. Initially, a new enterprise should concentrate on one or a limited range of products. More products can be added to complete the line later on as the business becomes well established.
3. Developments in other Nations:
People in underdeveloped countries generally follow the fashion trends of developed countries. For example, video, washing machines, micro ovens, etc. which are now the ‘in things’ in India were being used in the United States and Europe before the eighties.
Therefore, an entrepreneur can discover good business ideas by keeping in touch with developments in advanced nations. Sometimes, entrepreneurs visit foreign countries in search of ideas for new products/processes. Trade delegations of various chambers of commerce, etc. visit foreign markets to explore foreign collaborations and other types of business ideas.
4. Study of Project Profiles:
Various Government and private agencies publish periodic profiles of various projects and industries. These profiles describe in detail the technical, financial and market requirements and prevailing position. A careful scrutiny of such project profiles is very helpful in choosing the line of business. Technical and other types of experts may be employed to carry out a specialised study of project profiles and to suggest the most promoting projects/industries for further evaluations.
5. Government Organisations:
Several Government organisations nowadays assist entrepreneurs in discovering and evaluating business ideas. Development banks, state industrial development/investment corporations, technical consultancy organisations, investment centres, export promotion councils, etc. provide advice and assistance in technical, financial, marketing and other areas of business.
Government also identifies the priority sectors for investment through five year plans, industrial policy resolutions and guidelines for industry. In this connection government publications on trade and industry can also be helpful in discovering business ideas. Items reserved for small sector will also indicate the potential areas.
6. Trade Fairs and Exhibitions:
National and international trade fairs are a very good source of business ideas. At these fairs, producers and dealers in the concerned industry put up their products for display and/or sale. A visit to these fairs provides information about new products/machines. Negotiations for the purchase, production, collaboration, dealership, etc. may also be made at these fairs.
7. Attending Motivation Campaigns:
Entrepreneurial programmes are organised periodically by the Public Sector Commercial banks, Industrial and Technical consultancy organisations, Small Industries Service Institute and the District Industries Centres individually and in association with one another where also advice and guidance are made available to the Interested participants/potential entrepreneurs.
Some Other Sources of Business Ideas:
When a person wants to setup an enterprise the first action is to generate ideas for products or businesses. Initially it seems difficult to be able to think of many ideas. The entrepreneurs should use as many sources as possible for scanning product ideas from the environment.
Sources of Business Ideas:
i. Discussion with other people
ii. Looking through books
iii. Visiting shops and attending trade shows
iv. Information from Research institutes
v. Brainstorming.
Generating Ideas:
When an entrepreneur explores different sources of business ideas like talking to others, visiting shops etc., he should use different approaches like:
i. Brainstorming – It helps in generating a large number of product ideas. It should be conducted by an expert and none of the ideas mentioned be evaluated or judged. At this stage one should not worry if the ideas is suitable or not.
ii. New ways of doing old things – A large number of products are being made and provided in the market using traditional methods and practices. One approach can be to examine if these can be made by a different and newer method that gives the entrepreneur an advantage over the older method.
iii. Converting hobby into business – Some people are adept at doing something or the other as a hobby or for use in the house only. It is possible to use such skills to set up an enterprise. Hobbies like photography, interior decoration, fashion designing etc., are often developed as business ventures.
iv. Utilising waste material – Conservation and environment protections are presently getting a lot of attention. Recycling waste or turning them into useful products are good product ideas. Presently energy conservation products also have good potential.
v. Improving an existing product – An existing product can be improved by using old techniques with more care or using newly developed technology.
Business Ideas – Elements of the Good Idea Generation Process
It seems incongruous that good idea generation can be a process or that a process may lead to insight. However, if you examine the behaviour of people who regularly generate good ideas? Such as creatives in advertising – you will find that common patterns of behaviour do emerge and it is possible to make insight more likely.
Below are just some elements of the good idea generation process:
Element # 1. Read and study:
Read and study as many things about your industry or product and services. You need to investigate specific information of what you are going to sell. Keep up with current events and be ready to take advantage of business opportunities. If you read or watch the news regularly with the conscious intent of finding business ideas, you’ll be amazed at how many business opportunities your brain generates.
Keeping up with current events will help you identify market trends, news, fads, industry news- and sometimes just new ideas that have business possibilities. You need to have all information about your idea. For example, if you want to be involved in restaurant, you study everything about the subject matter in detail. If you want to start a business, you have to know what’s going on in your industry, what sells and at what price, etc.
Element # 2. Improve general knowledge:
Don’t limit yourself to only learn about things in your own industry. Learn as many topics as possible from other industries. It can be any topic. This enables you to think out of your own industry. Once you investigate and research enough, your mind is the storehouse of all the ideas you have studied. You have full knowledge of what to do next with your idea. And this is the main source to your creative ideas. All the knowledge you have learned so far is the raw materials to produce new ideas. Mix all the knowledge and generate the best one.
Element # 3. Brainstorming:
Brainstorming is one group method for generating both business solutions and ideas. It is most effective if performed within a criticism-free zone where group members are encouraged to freely contribute ideas during the brainstorming session. Brainstorming is a way in which you get out of your conscious self and become an idea machine. You take off your “judgment hat” and let any idea come to your mind. Many of the ideas you come up with won’t work for you, but you’re not looking for many ideas you’re looking for one or two ways to solve a problem or create an opportunity.
Element # 4. Think on does it make customers’ life easier or solve a problem?
Every product serves a purpose – successful businesses are rarely built on novelty value. Think on whether your idea is really going to solve the problem. How many products are there in the market for the same purpose? It’s crucial to be clear about how your product helps people or solves a specific problem. Again, market research will help loads.
i. Know what purpose your product serves?
ii. Make sure this responds to a market gap.
iii. Market research.
Element # 5. Think on; is there a market for your idea?
Very thorough market research is an absolute must for new business ideas. Market research can prove invaluable in determining your idea’s potential. You can gather information from industry associations, Web searches, periodicals, federal and state agencies and so forth. A trip to the library or a few hours online can set you on your way to really understanding your market. Your aim is to gain a general sense of the type of customer your product or service will serve-or at least to being willing to find out through the research process.
Growing markets are going to appeal more to investors and provide better business opportunities.
i. Do thorough market research.
ii. Smaller profit margin requires greater demand.
iii. Growing markets are preferable.
Element # 6. Checking out the competition:
Your aim is to understand what your competition is doing so you can do it better. Maybe their service is poor. Maybe their product has some flaws-something you’ll only know if you try it out yourself. Or maybe you’ve figured out a way to do things better, smarter, more cost-effectively. Market yourself or your product in a way that is completely unique from your competition. Look around at what they’re doing and do something different. It’s actually easier to do this than it sounds. It just takes a little thought, preparation, trial and error. But no matter what, dare to be different.
That can be disheartening if you’ve already spent X amount of hours in the idea stage, plus X amount of hours on market research-only to find that you’re not quite ready to get started after all. But taking the time to refocus your energies and determine why your idea needs some tightening is the best predictor of future success.
Element # 7. Analysis:
Analyze the business idea from three perspectives – company, customer, and competitors.
Here’s what he looks at for each of the four issues:
(a) Company – Think of your idea in terms of its product/service features, the benefits to customers, the personality of your company, what are your promises and commitments to the customers?
(b) Customers – There are three different customers you’ll need to think about in relation to your idea – purchasers (those who make the decision or write the cheque), influencers (the individual, organization or group of people who influence the purchasing decision) and the end users (the person or group of people who will directly interact with your product or service).
(c) Competitors – Think about the competitors, some competitors are good in innovation; some are in setting pricing etc. You must be able to beat the competitors by thoroughly analyzing their core competencies. Their placement within each level is based on how often your business would compete with them and how you would tailor your messages when competing with each of these groups.
Element # 8. Think on the viability of the idea?
Unless you have lots of your own money to pour in, you need a business that can operate cheaply to begin with and one that doesn’t require dozens of staff. At the initial stage to make the idea practical it should be the economic one. It should not involve number of resources that is difficult to arrange. Your business will only work if your product is technologically possible and manufacturing costs are feasible. Otherwise even if your idea is the best one but if it is not under the reach of maximum people then it is of no use. Work out who would make it and for how much.
i. Be realistic.
ii. Low starting costs and fewer staff are more likely to work.
Element # 9. Refine and Narrow:
Refine your raw idea until it’s up to your satisfaction. You can always do your own research on the raw idea by asking questions to target market to test the feasibility of the idea and how to improve the idea further. Your idea ought to be able to satisfy a very precise need and be readily acceptable once it comes into fruition. Refining will take care of any general indicators and concentrate on the core of the business idea.
Element # 10. Can it generate profit?
Work out how you’d make your product and how much you’d sell it for. You need enough profit left over to sustain a business. Factor in employees’ salaries, expenses, administration costs, labour, transport and material costs. The smaller your profit margin, the more demand you need to make up for it. Talk to manufacturers to find out about costs.
i. Work out all costs.
ii. Compare with estimated sale price.
iii. Smaller profit margin needs higher demand.
Element # 11. Is there room for growth?
You could gradually offer a bigger range of products, set up business in new locations, make ongoing improvements to your service and reach more customers. Look to web technology for ways to evolve. It’s best if plans for growth correspond with how the market working in looks set to develop over the next few years.
Basically new idea is a combination of old ideas. You need to have enough old ideas to come up with new ideas. That’s why constant reading and observation are important.
Business Ideas – Top 13 Idea Generation Techniques: SCAMPER, Brainstorming, Mind Mapping, Focus Groups, Problem Inventory Analysis and a Few Others
It is beyond doubt that sound business ideas lay the foundation for the lucrative business.
Business ideas can be generated from the following sources:
Technique # 1. SCAMPER:
It is an idea generation technique that makes use of action verbs as a stimulus to generate the business idea. This checklist technique was developed by Bob Eberie. Through this technique people are aided to generate ideas either for product modification or for developing a new product. SCAMPER is an acronym word, where each letter in it, indicates an action verb which in turn signify for a quick call for a creative idea.
i. S – Substitute
ii. C – Combine
iii. A – Adapt
iv. M – Modify
v. P – Put to another use
vi. E – Eliminate
vii. R – Reverse
Technique # 2. Brainstorming:
In this process, large number of solutions for a specific impending problem (idea) is sought from the participants. While stressing on the large number of ideas, participants are allowed to speak about their ideas freely without fear of criticism or sarcasm. Even bizarre/weird ideas are considered with open hands.
In fact, the crazier the idea, the better it is. Frequently, ideas are worked together to nurture one good idea, often indicated by the slogan “1+1=3”. Brainstorming generally involves employees, prospective entrepreneurs, customers or even group of people. The typical brainstorming group can include six to ten participants.
Technique # 3. Mind Mapping:
Mind mapping is a graphical technique developed by Tony Buzan, a UK researcher, who developed this technique so that mind is provoked to imagine connections between various pieces of information or ideas. In this technique, first each fact or idea is written down and later connected by curves or lines to its minor or major (previous or following) fact or idea, thereby creating a web of relationships.
It is used in brainstorming, project planning, and problem solving. The intent behind this technique is to capture attention and to gain and frame information to enable sharing of concepts and ideas.
To get started with mind mapping, the participant just has to write a key phrase or word in the middle of the page. Then, he must write anything else that comes to his mind on the very same page.
Technique # 4. Focus Groups:
It is a guided activity where the participants are already informed about the situation/ product or service or being users themselves. People are selected for this activity based on their insights or relationships so as to extract business ideas through open and frank discussion.
Participant are generally five to ten in numbers, selected from either employees, customer base, or are a research group having requisite knowledge about the topic. There is a moderator who keeps the discussion live on the underlined topic so that viable ideas can be found out.
Technique # 5. Problem Inventory Analysis:
Problem Inventory analysis though seems similar to focus group method, yet it is somewhat different from the latter in the sense that it not only generates the ideas, but also identifies the problems the product faces. The procedure involves two steps – One, providing consumers a list of specific problems in a general product category.
Two, identifying and discussing the products in the category that, suffer from the specific problems. This method is found relatively more effective for the reason that it is easier to relate known products to a set of suggested problems and then arrive at a new product or an idea.
However, experiences available suggest that problem inventory analysis method should better be used for generating and identifying new ideas for screening and evaluation. The results derived from product inventory analysis need to be carefully screened and evaluated as they may not actually reflect a genuine business opportunity.
For example an experiment by a company, General Foods’ to introduce a compact cereal box in response to the problem that the available boxes did not fit well on the shelf was not successful, as the problem of package size had little effect on actual purchasing behavior. Therefore, to ensure the better if not the best results, problem inventory analysis should be used primarily to generate product ideas for evaluation.
Technique # 6. Synectics:
Synectics is another kind of creative idea generation and problem solving technique developed by William J.J. Gordon and George M. Prince. In this technique, interest is provoked in those areas, of which the subject may not be aware of. It is a manner of approaching problem-solving and creativity in a rational manner. This study endeavors to examine the creative processes while they are in progress.
According to J. J Gordon, three vital assumptions are central to Synectics research:
i. It is possible to describe and teach the creative process.
ii. Invention processes in sciences and the arts are analogous and triggered by the very same “psychic” processes.
iii. Group and individual creativity are analogous.
Technique # 7. Storyboarding:
Storyboarding is sought to create a visual story to explore or describe a particular problem/ situation. In this activity, creative people are allowed to represent information obtained during research in a lucid manner. Cork board is used to depict pictures, quotes from the user, and other relevant information to explain a particular scenario. This enables the listeners to imagine and comprehend the relationships and relevance between various ideas, possibly giving way for a plausible solution.
Technique # 8. Role Playing:
In the role playing technique, each participant can take on a personality or role different from his own. As the technique is fun, it can help people reduce their inhibitions and come out with unexpected ideas.
Technique # 9. Customer Advisory Boards:
Organisation in order to assess customers wants, preferences, dislikes, and problems develop and organize customer advisory boards. At such boards, customers are allowed to voice suggestions, challenges and problems faced so as to chalk out the strategy to deal with them, often leading to creating a refined or altogether a new product or service.
Technique # 10. Attribute Listing:
It is an analytical approach to identify new forms of a system or product by recognizing possible areas of improvement. Initially, it is broken into parts, finding the physical features of each component along with its all functions being studied, to know how much to alter/enhance a particular product. It is primarily done to assess whether recombination of the components would damage or improve the product.
Technique # 11. Morphological Analysis:
Morphological analysis has to do with recognizing the structural aspects of a problem and studying the relationships among them. For example – Imagine the problem is transporting an object from one place to another by way of a powered vehicle.
The significant dimensions are- the kind of vehicle (cart, sling, bed, chair); the power source (internal-combustion engine, pressed air, electric motor); and the medium (air, hard surface, rails, rollers, oil, water). Thus, a cart-kind of vehicle moving over rough surface with an internal-combustion engine to power, is an automobile. The expectation is that it would be possible to determine some novel combinations.
Technique # 12. Forced Relationships:
In this technique, completely different ideas are joined together to create a new idea. Due to different outcomes resulting from different combinations very often worthy ideas are generated, while some of them have future viability also. For e.g. I-Watch a smart watch, created by Apple Inc. while combining the features of a traditional watch with other real time applications, offers a novelty to its users.
Another e.g. can be seen in the case of electric cars, where the future seems very promising, as the idea of having greener and cleaner means of transportation, culminates into having place and time utility. (TESLA INC. is world’s leading organization engaged in making electric cars and other utility vehicles).
Technique # 13. Reverse Brainstorming:
This technique is also sometimes called “negative brainstorming,” It is a process which turns typical brainstorming technique into upside down situation.
Rather than asking the participants to find the ways for solving a problem or coming up with great ideas for improving a process or achieving a goal, they are asked to brainstorm different ways to completely undermine a process or make it impossible to achieve a goal. Through this, all the pent-up negative thoughts are allowed to flow to the surface. This leads to assess the reasons for the possible failures or bottlenecks.
Accordingly tools are developed to find out the possible solutions. One of the best ways to envision the process of reverse brainstorming is to compare it to a typical brainstorming process.
For instance, following sets of questions can be examined:
i. Typical brainstorming question – How can we increase sales? Improve customer service?
ii. Reverse brainstorming question – How can we decrease sales so that the sales figure comes to zero?
iii. Typical brainstorming question – How can we increase our market share in the competitive market?
iv. Reverse brainstorming question – How can we ensure that our market share is reduced to abysmally low levels?
Business Ideas – How to Evaluate Ideas: List of Questions and Checklist
Whether you want to start an online or offline business, the first thing you need to do is find out whether your product or service will sell. The first step to finding that out is to research the supply and demand of the market. Ideally you want a product or service with high demand and low competition. There are many resources with which you can accomplish that. But, before we get to that, always remember that a business idea is not a business opportunity until you go through the evaluation procedure and judge it to be feasible.
1. Define your product or service. Be specific in your definition. What exactly will be your prospective customers? How will it be produced and/or provided? How will it be delivered to the customer? How much will it cost? What are the options? What is the warranty?
2. Ask Around –
First, bounce your ideas off your family and friends.
Here is a list of good questions to ask:
i. Have you ever heard of this product/service before?
ii. Would you buy this product/service?
iii. If yes, what is the maximum that you would pay for it and how often would you buy it?
iv. If no, why not?
v. If you can design this product/service, how could you make it better?
Be prepared to receive many different kinds of answers. Don’t get discouraged if some of them are negative; you can’t please everyone.
Ask Some Experts:
There are many free resources available to you.
Here are just a few:
i. Micro Small and Medium Enterprises (MSME) – This is a government sponsored organization that helps small businesses with loans, paperwork, education and others services.
ii. Chamber of Commerce – Most towns and cities have a local Chamber of Commerce to help you with your small business.
When you speak with experts, prepare for and expect hard questions. Make sure your thought process is streamlined. Don’t forget survey your potential customers. Develop a list of questionnaires and get as many people to answer them as possible.
3. Analyze the impact of idea (product) on the environment. Today government, customers and investors have become very serious about environment. They are very sensitive about the product that is having bad impact on the environment. Customers try to purchase environment friendly products. Eyen government may ban the product that is not good for customers’ health or for the environment.
4. Describe your customers. Who will, buy your product or service? Why will they buy from you rather than your competitor(s)? It is not only customers, but competitors as well, that will determine the success or failure of your new business idea. Securing customers in today’s cluttered marketplace is difficult and requires creativity and plenty of hard work. Identifying your customer base and attracting them to be potential customers is first and foremost. Keep in mind the old axiom “People don’t plan to fail. They fail to plan.”
5. Identify your competitors. Learn about their products, services and company. Learn how they do business. You can get plenty of information from the company through annual reports, financial statements, industry publications/reports and marketing materials. Get information from their customers what unique they get from the company. Analyze the competitor’s marketing strategies, their methods of promotions. Those information will tell you what they think are the advantages of their products to the customers. Is your product or service better than that of the competitors?
6. Define your competitive advantage. Competitive advantages exist when the company is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus competitive advantage enables the company to create superior value for its customers and superior profits for itself.
What makes your product or service better than your competitors’ offering? You can gain a competitive advantage in a multitude of ways. You could offer cheaper prices, better quality, faster service or a longer warranty. Perhaps you have a proprietary technology or method of doing business that provides your business with a competitive advantage.
7. To be successful, you must be able to sell your product or service at a price that covers the costs directly associated with producing and delivering that product or service to your customers plus contribute towards paying other operational costs not to mention providing a profit to the business.
8. How will you communicate the availability of your product or service to your prospective customers? Internet advertising, direct mail, outbound telephone calls, radio, television, print advertising, trade shows and outdoor bill boards are all tools a business can use to educate and inform prospective customers about the availability of your product or service. Selecting a particular tool depends upon the type of product, market and customers to whom you want to communicate. So select a particular or combinations of tools for your product or services.
9. Describe the things that could go wrong to negatively impact your business. Loss of suppliers, insufficient profit, product defects, customer dissatisfaction and better competitors are examples of things that could go wrong. What might go wrong with your business? How will you handle those problems should they arise?
10. SWOT Analysis –
SWOT stands for strengths, weaknesses, opportunities and threats. Many companies use SWOT analysis to make business decisions. Putting your business ideas through the SWOT test will help you clarify and develop your idea.
Strengths and weaknesses are considered controllable/internal factors while opportunities and threats are considered uncontrollable/external factors.
Examples of Strengths:
i. Superior expertise in an industry
ii. Patent protected product
Examples of Weaknesses:
i. Weak supply chain
ii. High learning curve
Examples of Opportunities:
i. Product/service is in high demand
ii. Changes in regulation
Examples of Threats:
i. Many established competitors
ii. Changing technology threaten to make product/service obsolete.
11. Checklists for idea evaluation –
In normal business life there are always a lot of business ideas but only few of them turn out to be business opportunity and even less turn into a profitable venture. This approach is most appropriate when deciding on starting a business. When there are more than one possible business idea and one needs to decide which one to follow we score business ideas (e.g., ideal ,idea2, idea3) by assigning a rating from 1 to 4 for each question, with 4 being highest. After we score the ideas we sum the total and select the idea with the highest score. Following are the checklists for evaluating an idea.
New Idea Evaluation Checklist:
1. Is your idea legal?
2. Please describe in detail the nature of the idea.
3. On what technologies is this idea based?
4. Who will be the customers for this product?
5. Does it need packaging?
6. What benefits will it bring the customers?
7. What is the approximate price range of the product/service?
8. What companies are currently competing in this market?
9. How will the product rank against competing products in terms of price/performance?
10. Is there just one product or a line of products?
11. What is the customer’s perception of the current products?
12. Which distribution channel do customers prefer?
13. What is the market size for this new product?
14. What is the lifecycle of the product or service?
15. What is the market growth rate?
16. Does your idea fit into a trend?
17. How much will it cost to get your idea to market?
18. What regulatory threats/trends will influence this market?
19. How many customers are there in the market by segment? (Geography, type of company, industry, application, etc.)
20. What is its environmental impact?
Business Ideas – Ideation Techniques, Catalysts and Inhibitors and Opportunity Maps
Idea generation implies the methods used for coming up with thoughts that can use an identified opportunity. There are various methods that can be used for coming up with ideas.
Following are some of the more commonly used ideation techniques:
1. Focus Groups:
A focus group is a way of interviewing a group of people on a specific topic to gain farther insights about the topic. It is usually moderated by the interviewer or the researcher who would like to get this information. The group composition is relatively homogeneous. This technique is broadly used by companies to get ideas on packaging, new features, benefit analysis of a product or feature and also improvement initiatives.
2. Brainstorming:
Brainstorming techniques are used to generate as many ideas as possible on a certain topic. The greater the number of ideas better is the result. Typically, people who come into a brainstorming session tend to be a very heterogeneous mix, of about eight to fourteen people. As the intention is to generate as many ideas as possible, the heterogeneity encourages differing perspectives and outlook.
3. Creative Writing:
This technique is typically used when lot of literary strength is available about writing around that topic. Various people are brought in or encouraged to write about a topic from their perspective; around the objective that is stated or a problem or a challenge that is posed. Creative writing is free flow in nature. It is left to the person trying to jot down the ideas that come to his or her mind during the process that is most important.
4. Wish Lists:
Wish lists method is generally used to collect ideas especially from a potential customer environment. People could be asked at random to name what they would like to see as a product or a feature that could address a particular problem. Wish lists are very useful in product development scenarios where absolutely unheard of or new ideas about situations or products can be gathered.
5. Ideal Scenario:
Ideal Scenario technique requires the participants to imagine a future situation or solution which in their definition will be an ideal solution to the problem or challenge at hand. They may be asked to imagine and describe it in words. At times to increase the creativity quotient, people may also be asked to create visuals either as a collage or a painting that would describe the future looking scenario of what will be the ideal solution.
6. Campaigns:
Campaigns are used to initiate idea generation around a problem or a challenge. They could use various forums or events to collect ideas and reward some of the best ideas that they get, and thereby gaining access to many ideas. One can make use of campaigns routinely in aspects of harnessing creative ideas around tag line creation, logo creation where the challenge is open to many people.
7. Introspection:
This is yet another idea generation technique, wherein one takes time off from general activities to just thinking about the topic at hand. This is done in solitude without any external influence or interaction. Whatever ideas come to the mind are jotted down.
8. TRIZ:
TRIZ is acronym of Russian phrase ‘Teorija Rezbenija Izobretatelskib Zadach’ and literally means ‘Theory of inventive problem solving’. This method was identified by a Russian engineer in the navy who went about reverse engineering old discoveries and inventions. As per this method there are various combinations or principles that can be used to arrive at a solution for a problem. TRIZ is used widely to arrive at product innovation.
9. Time Machine:
The time machine is another interesting approach. In this approach people are asked to travel a few years forward from now to imagine the situation that they could be in with respect to the challenge under consideration. The imagined scenario can be then worked upon to lead to some current ideas.
10. Catch-Ball:
Catch-ball technique has its origin from Japan. Catch-ball is a method of throwing an idea to individuals or a group. They then add something to that idea and pass it over to the next individual or group. In this way the idea evolves or improves. In this method over a period of such passes the idea is expected to take a particular shape.
11. Scientific Method:
The other common method is the scientific method of researching to come up with newer ideas. It is a very evolutionary method, wherein a particular idea is taken and subjected to experimentation to seek its evolution to the next level. This is typically done in R&D centres wherein starting with the raw ingredients an attempt is made to evolve the final composition by trial and error method.
An entrepreneur could find this to be quite an expensive proposition. However, there are industries like pharmaceuticals, petrochemicals, biotechnology, etc., where this is the only available option to come across solutions to existing or identified challenges.
Ideation Catalysts and Inhibitors:
There are factors that enable and inhibit ideation.
Some members of these two categories are:
Catalysts:
i. Being resourceful
ii. Being knowledgeable
iii. Fresh thinking or child like ability to think without barriers
iv. Open mindedness to happenings in the ecosystem
v. Tolerance for error
vi. Acceptance of failure
vii. Increase in the variety of people and experience
viii. Belief in oneself
Inhibitors:
i. Belief that creativity or ideation cannot be learnt
ii. Fear of failure
iii. Pressure to align and think in a programmed fashion
iv. Greater importance for reputation
Idea to Opportunity Maps:
After identifying opportunities that could best suit one’s personal and professional profile, ideation techniques can be used to come up with many ideas in the specific opportunity space.
Once the entrepreneur comes out with a list of ideas, then every idea tied to the opportunity under consideration becomes known as an Idea to Opportunity Map (I2O Map). One opportunity could have many ideas associated with it.
For example, if one has identified ‘working professionals not having access to healthy wholesome breakfast’ as an opportunity, many ideas can be associated with it like a chain of healthy breakfast stores near IT parks, a serve-at-desk option or a stall in the cafeteria. All the three ideas are mapped to the single opportunity.
Each of these is called as an I2O map. Now an I2O map has its own demands on implementation and limits of returns it can provide. The next step is to weigh the I2O maps against a set of criteria that will allow the entrepreneur to recognise those that are best suited in terms of commercial and personal gains.
Evaluation of Idea to Opportunity Maps:
Every idea selected for the opportunity represents an Idea to Opportunity Map (I2O Map) for us. Instead of evaluating only the idea, we would be evaluating the idea in the context of the opportunity to select the more suitable ones for further processing.
Similar to the opportunity evaluation sieve, this sieve is also made of certain imperatives, namely:
1. The economic imperative
2. The cultural imperative
3. The social imperative
4. The personal imperative
1. The Economic Imperative – This imperative addresses the viability of the I2O map and the entrepreneur’s capability and willingness to go ahead with the venture. It weighs each of the I2O Map for clear customer definition, possible cost of execution, industry nuances, alignment of economic gains with entrepreneurial aspirations and the value proposition offered by it.
2. The Cultural Imperative – The second aspect is the cultural imperative. It is important to take the I2O Maps’ capability to cater and leverage to the cultural nuances of the potential customer segment. Also it provides an early check to see if there are any alignment issues with respect to cultural aspects of the potential market that is to be served.
3. The Social Imperative – It is important to understand if the I2O map is socially acceptable or would give rise to some concerns. Trying to understand the possible reactions of the social ecosystem to the I2O map, levers of support and roadblocks could go a long way in the successful implementation of the venture.
4. The Personal Imperative – The personal imperative are the questions that are to be answered by the entrepreneur or the founding group about their view on the I2O map. This enables an early check to see if the entrepreneur would be excited enough to persevere doing the business represented by the I2O Map across the highs and lows of the entrepreneurial journey.
From Idea to Business:
The I2O map or I2O mapping process helps in increasing the chances of success of potential enterprise and entrepreneur drastically. But it is also important to understand that I2O map by itself cannot become the base for writing the business plan. An I2O map can only tell us that there is a potentially viable way to exploit the opportunity. The next step between I2O map evaluation and business plan formulation is called business modelling. Business Modelling will help us understand and ascertain the economics of the business and its operation nuances.
Business Ideas – Feasibility Analysis: Need and Elements
Feasibility Analysis refers to the process of examining the viability of a business idea. It means assessment of the potential and practical applicability of business idea. It is not just concerned with product or service but it is study of business viability as a whole. Feasibility analysis helps in identifying possibility, practicality, capacity and achievability of the project.
A prospective entrepreneur having creative and innovative idea must conduct feasibility analysis. It may not only add vitality to the viability of the underlying business proposition but also add vision to the business opportunity.
The following points equips an entrepreneur to decide if he should continue with the existing business idea or not:
1. Is this business possible?
2. Is this business practicable?
3. Probability of success of business in future?
4. Do I have access to all the resources required to start the business?
Feasibility analysis helps to critically analyze the business concept in detail. It requires use of both primary as well as secondary data.
Primary data can be collected from potential customers, industry experts etc. while secondary data can be collected through previous studies (if any), published sources, reports and feedback taken by other firms.
1. Feasibility analysis helps in providing guidelines for preparing business plan.
2. Through feasibility study, Shortcomings/gaps if any can be detected and measures can be taken to resolve them.
3. It helps in understanding the viability of the concept or business idea.
4. It boosts up the confidence level of an entrepreneur w.r.t the business idea.
5. It reduces the chances of business failure.
6. It apprises entrepreneur about the risk involved.
7. It Saves an entrepreneur from potential business loss and instills the prospects of success driven by hard work and risk taking capability.
8. It also ropes in the confidence of potential investors.
Elements of Feasibility Analysis
Feasibility analysis includes study of various aspects of a business. It includes identifying product viability, technical feasibility and commercial feasibility.
Following are some of the important aspects that should be considered by an entrepreneur while conducting a feasibility analysis:
1. Product/Service Feasibility Analysis – Give Example:
It includes studying various aspects of product/service to be provided to customers. The main aspect to be examined here is testing the desirability and demand for product/service.
In order to test the desirability, one needs to examine following factors:
i. What excites consumer about the product. What attributes makes him desire a product? Is it look of the product, is it the fragrance, do users provide importance to size and shape of the product (e.g. soaps).
ii. What need does the product satisfy?
iii. Does it fill a gap in market?
iv. Does it solve customer’s problem?
v. Not only these, it also includes the study of right time to introduce a product? Is there any particular occasion when people buy/try new product e.g. during the time of Diwali, Wedding Season etc. For example, during wedding season there is not only wide range of Indian clothes available in the market but there is also increase in related products like ornaments, footwear’s etc.
So in order to test desirability and demand for the product, concept testing is done at this stage. Under this, description about product/service is mentioned and shared with potential customers, industry experts to solicit their responses. Their feedback on the same, provides insights about the viability of a product. It provides answers to questions like preferences/dislikes about the product, suggestions that can be incorporated to improve the utility of the product.
Given the volatile nature of the market, these days forecasting the demand for the product is not an easy task. Therefore start-ups can go for “Buying Intention Survey”. It helps entrepreneurs identify/ estimate the demand for a product in the market in future.
An entrepreneur may use questionnaire for this and distribute it among targeted markets. It gives them an indication about intention of customers to buy the product. Any modifications required in the product may be brought to the notice of the entrepreneur at this stage. It improves chances of successfully launching the product in the market.
2. Industry Analysis/Target Market Accessibility (Primary Search, Secondary Search):
Industry refers to groups of firms producing similar or substitute products/services.
An Entrepreneur should conduct feasibility analysis to find, industry attractiveness for the product. Various parameters can be used to study an industry like demographic characteristics of the target group, growth pattern in industry, number of firms competing against each other, profit margins, entry barriers in the industry etc.
Industry is considered attractive enough if profit margins are high, number of competitors are low and firm’s life cycle is in initial stages. This gives lot of scope for the firm to venture in the industry and innovate.
3. Technical Feasibility/Concept Test:
Technical feasibility is study of most appropriate technology to be adopted by business to transform business idea into easily marketable product. Under this, factors like technology to be used, production process involved, type of raw materials needed, ideal size of plant to be installed and equipments required are assessed.
Also factors like manpower requirement, funds needed to support use of latest technologies, cost involved in developing or buyout along with implementation, are judged for success of business.
4. Commercial Feasibility/Business Concept:
Commercial viability is the study of viability of business idea on commercial scale. It is possible to develop environmentally sustainable as well as useful products, yet such products may not be commercially appropriate. Therefore, it is imperative to conduct commercial feasibility test before taking the final decision to commence the production of a product.
A commercial feasibility facilitates an entrepreneur to identify following relevant factors:
i. Manufacturing cost of production over short run and long run.
ii. Anticipating demand for product in near future and in long run.
iii. Competition level in the market.
Higher cost of production, intense competition level and inefficiency in operations can pose serious threats for firm in long run. One should either be able to fight these challenges to survive or should scrap the project at its planning stage only to avoid wastage of time, resources, manpower and capital.
Assessing financial feasibility of the product involves study of various costs aspects related with carrying of the project.
Under financial feasibility firm identifies following factors:
i. Cost of the Project-Fund Required to Start Sustain Initial Losses:
Cost of project primarily includes capital budgeting expenditure on acquisition of capital assets like land and building, plant and machinery, furniture and fixture and other long term revenue yielding assets. It is a long term commitment of substantial amount therefore decisions for investment in these types of assets should be taken carefully. Investments in long term assets are irreversible in nature and expose the firm to substantial risks.
ii. Working Capital:
Estimation of Working capital requirements should be done with utmost care as both over investments as well as under investments in working capital can hamper routine nature activities to great extent. Having insufficient working capital will lead to liquidity crunch and will stall the business activities while excessive investments in working capital will block the funds that will undermine the profitability.
iii. Break Even Analysis:
Break-even level is that level of activity at which a firm is able to meet all the variable costs out of its revenue. Identifying the possible sales volumes at which break-even level will be achieved is important for working of business, as it indicates the stage till which firm will continue to make losses. Break-even level will give an idea about resources and time required to reach that particular level of activity,
iv. Projected Income Statements:
Finance is the backbone of any business. Future sales are projected and revenue charts are prepared to assess the inflow and outflow of funds in the business. Projected income and expenditure statements reflect the magnitude of gap between the income and expenditure so that the difference between the two can be bridged by arranging for funds or deploying excess funds in lucrative avenues.
Business Ideas – Converting a Business Idea into a Business Opportunity
A business idea germinates and to convert into a business opportunity it is to be scrutinised carefully.
1. Preliminary Evaluation and Testing of Ideas:
Once business ideas are discovered, screening and testing of these ideas is done.
The following considerations are significant in the evaluation and testing of business ideas:
It refers to the possibility of producing the product. Technical feasibility of an idea is judged in terms of availability of necessary technology, machinery and equipment, labour skills and raw materials. The advice and assistance of technical experts may be necessary to judge the technical feasibility of various business ideas.
A cost-benefit analysis is required to ascertain the profitability of the ideas. An elaborate study of market conditions and prevailing situation is made to assess the viability and prospects of the proposed project. This is known as feasibility study of the project. A number of calculations have to be made about the likely demand, expected sales volume, selling price, cost of production, break-even point, etc. The services of market analysis and financial experts may be necessary for this propose.
There is a difference between a business idea and a business opportunity. While the idea for a product or service may be workable (technically feasible), the proposed business built on this may not be profitable. It is normal for an entrepreneur to have several ideas that have to be rejected before finding one that is not only workable but worthwhile. In order to judge the workability and profitability of the proposed business, feasibility analysis has to be conducted.
2. Detailed Analysis:
After preliminary evaluation of the idea, the promising idea is subjected to a thorough analysis from all angles. Full investigation is carried out in the technical feasibility and economic viability of the proposed project. Financial and managerial feasibility of the idea are tested.
At this stage a lot of information is required. Consultations with experts in various areas of the industry may be necessary to carry out the detailed analysis. Due care should be exercised at this stage because the idea is finally accepted or rejected at this stage.
After the evaluation of a business idea is completed, the findings are presented in the form of a report known as ‘feasibility report’ or ‘project report.’ This report helps in the final selection of project. It is also useful for procuring licenses, finance, etc. from governmental agencies.
3. Idea Selection:
The feasibility report is analysed to finally choose the most promising idea.
Generally, the following considerations influence the selection of idea for a product or service:
i. Products whose imports are banned or restricted by the government.
ii. Products which can be exported easily and profitably.
iii. Products whose demand exceeds their supply so that there exists ready demand.
iv. Products in which the entrepreneur has manufacturing and/or marketing experience.
v. Parent ancillary relationships, i.e., the product is to be manufactured for a parent company.
vi. Products which showed high profitability.
vii. Products based on the expansion or diversification plans of existing forms of the family/ friends/relatives.
viii. Products which ensured specific advantages. The advantages might accrue because of the scale of the industry or the location of the factory or technology of manufacture.
ix. Products favoured by the country’s industrial/licensing policy, e.g., delicensed industries.
x. Products for which incentives and subsidies are available.
While considering these various factors — market, owner’s own experience, policy and incentives — an entrepreneur would generally come across a mix of some encouraging and some discouraging factors with reference to every product. It therefore, becomes necessary to analyse and compare the pros and cons. A selection matrix may be prepared for this purpose.
Many more items can be added for such comparison. The matrix indicates the type of diverse data that needs to be collected for each project. It also throws light on how each item can hold out some encouraging and some discouraging factors. The entrepreneurial selection needs to take all these factors into account.
4. Input Requirements:
Once the promoter is convinced of the feasibility and profitability of the project, he assembles the necessary resources to launch the enterprise. He has to choose partners/collaborators, collect the required finances and acquire land and buildings, plant and machinery, furniture and fixtures, patents, employees, etc. Decisions have to be made about the size, location, layout, etc. of the enterprise. The form of ownership organisation has to be selected.
According to Shubin “the firm is launched by assembling and organising the physical facilities, developing operation and production processes, advertising its product and initiating a sales promotion campaign, recruiting labour and accumulating inventories.”