Business ideas vs opportunities

Business ideas

1. BUSINESS IDEAS
VERSUS
BUSINESS
OPPORTUNITIES
1

2. 2
LESSON OBJECTIVES
On completion of this lesson students
should be able to:
Differentiate between business
ideas and opportunities
Identify sources for business ideas
Examine the parameters used to
screen business ideas

3. 3
LESSON OBJECTIVES
Analyze the macro/micro screening
methodology
Conduct a SWOT analysis of a
business opportunity
Explain the reasons why a new
business often fails

4. 4
WHAT IS A BUSINESS IDEA?
Mental impression
Vague belief
Fancy
Whim
Notion
Not necessarily workable

5. 5
SOURCES FOR IDEAS
Work experience (major source)
Hobby/vocational interest
Copy existing ideas
Brainstorming

6. 6
SOURCES FOR IDEAS
Systematic search/careful planning
Agencies & institutions
Yellow pages
Trade journals
Trade directories
Net-working

7. 7
SOURCES FOR IDEAS
Societal anomalies (e.g. exam
failure rates, high crime rate)
Trends & social practices (health,
fitness, technologyetc.)
Unfilled niches (demand greater
than supply)

8. 8
WHAT IS A BUSINESS
OPPORTUNITY?
Viable business idea
Workable idea
Innovation & creativity
Limited competition

9. 9
WHAT IS A BUSINESS
OPPORTUNITY?
High & consistent product demand
Value-added products/services
Positive industry analysis/trends

10. 10
NEW VENTURE ASSESSMENT
CRITICAL FACTORS
1.PERSONAL CHARACTERISTICS OF
THE ENTREPRENEUR
2.THE BUSINESS ENVIRONMENT
3.THE VENTURE ITSELF

11. 11
NEW VENTURE ASSESSMENT
PERSONAL CHARACTERISTICS
OF THE ENTREPRENEUR
Need for self-achievement
Need for independence
Risk-taking propensity
Work experience/knowledge

12. 12
NEW VENTURE ASSESSMENT
PERSONAL CHARACTERISTICS
OF THE ENTREPRENEUR
Managerial competencies
Wealth expectations
 Determination & commitment
Passion/drive

13. 13
NEW VENTURE ASSESSMENT
THE BUSINESS ENVIRONMENT
Government support
Level of bureaucracy
Ease of entry
Level of competition
CSM

14. 14
NEW VENTURE ASSESSMENT
THE BUSINESS ENVIRONMENT
Globalization/Liberalization
Barriers to entry
Life-styles & social trends
Credit availability
Availability of support services

15. 15
SCREENING THE IDEA
THE VENTURE ITSELF
a – Basic feasibility
Can the product/service work?
Is it legal?
What share of the market can the
company capture? By when?
What are the sales targets?

16. 16
SCREENING THE IDEA
THE VENTURE ITSELF
a – Basic feasibility
What are expenses likely to be? Can
they be met comfortably?
What are the profit expectations?
Are they attainable?
What are the growth prospects?

17. 17
SCREENING THE IDEA
THE VENTURE ITSELF
b – Competitive Advantages
What specific competitive
advantages will the product/service
offer?
Can these competitive advantages
be sustained?

18. 18
SCREENING THE IDEA
THE VENTURE ITSELF
b – Competitive Advantages
How are competitors likely to
respond?
Competitive advantages of existing
firms?

19. 19
SCREENING THE IDEA
THE VENTURE ITSELF
c – Potential Customers
Who are your customers?
How many customers are there?
What are their preferences, tastes
and buying habits?

20. 20
SCREENING THE IDEA
THE VENTURE ITSELF
c – Potential Customers
How much will they buy and how
often?
Where are these customers located
and how will they be serviced?

21. 21
SCREENING THE IDEA
THE VENTURE ITSELF
d – Marketing of the Goods &
Services
Who will perform the selling
functions?
Promotion strategies?

22. 22
SCREENING THE IDEA
THE VENTURE ITSELF
d – Marketing of the Goods &
Services
How will your prices compare with
those of the competition?
What distribution channels will be
used and how effective will these
be?

23. 23
SCREENING THE IDEA
THE VENTURE ITSELF
e – Production of the Goods &
Services
Will the company buy &/or make
what it sells?
Are sources of supplies available?
Are they available at reasonable
prices?

24. 24
SCREENING THE IDEA
THE VENTURE ITSELF
e– Production of the Goods &
Services
Are the needed
machinery/equipment readily
available?
How will quality be controlled?
How will waste, pilfering, spoilage
be controlled?

25. 25
SCREENING THE IDEA
THE VENTURE ITSELF
f – Staffing Decisions
Who will be hired? By when?
How will they be found and recruited?
How will they be compensated?
What labour laws will be applicable to
these employees

26. 26
SCREENING THE IDEA
THE VENTURE ITSELF
f – Financing the venture
How much will be needed to start
the venture?
How much equity is available?
How much debt will be required?
Where can loans be accessed?

27. 27
WHY NEW VENTURES FAIL
1.PRODUCT/MARKET ISSUES
2.FINANCIAL DIFFICULTIES
3.MANAGERIAL PROBLEMS

28. 28
WHY NEW VENTURES FAIL
PRODUCT/MARKET ISSUES
Lack of objectivity about the product
- too in love with the idea
Insufficient market research-product
life cycle considerations often ignored
Poor timing – pre-mature entry, or
late entry into marketplace

29. 29
WHY NEW VENTURES FAIL
PRODUCT/MARKET ISSUES
Lack of uniqueness – little or no
product differentiation vis a vis the
competition
Unclear business definition/mission –
waste of time & resources

30. 30
WHY NEW VENTURES FAIL
PRODUCT/MARKET ISSUES
Inappropriate distribution strategy
Over-reliance on one customer
Insufficient knowledge of buying
habits of customers

31. 31
WHY NEW VENTURES FAIL
FINANCIAL DIFFICULTIES
Initial under-capitalization
Assuming debt too early - debt
service problems

32. 32
WHY NEW VENTURES FAIL
FINANCIAL DIFFICULTIES
Poor estimate of costs and initial
working capital requirements
Unrealistic sales projections-
seasonality often ignored

33. 33
WHY NEW VENTURES FAIL
MANAGERIAL PROBLEMS
 Poor recruitment and selection of
staff
Weak management team -poor
guidance
Poor staff relationships -weak
team approach

34. 34
WHY NEW VENTURES FAIL
MANAGERIAL PROBLEMS
Productive time spent in conflict
management
High staff turn-over

35. 35
END OF PRESENTATION