S.1 ENT LESSON.Business ideas and sources

An introduction to business ideas and opportunities

1. Business Ideas

2. Many big and large businesses started as small business ideas which an entrepreneur had in mind. After getting many ideas the entrepreneur selects the best business opportunity basing on the available resources and carries out a market survey to assess the success of the business.

3. What is a business idea?

4. A business idea is any thought that an entrepreneur may come up with for the purposes of developing it into a business to satisfy an identified need in the community.

5. Identifying business ideas

6. Picture 1

7. Picture 2

8. Picture 3

9. Picture 4

10. Picture 5

11. Activity 1 Identify the business idea taking place in each picture 1-5. Describe the problems each business idea solves in your community.

12. Expected response Picture 1 Retail Shop. Picture 2 Mobile Money. Picture 3 Banana Selling. Picture 4 Transport. Picture 5 Cutting Grass.

13. Problem solved. Picture 1 solves a problem of luck of basic requirements/commodities in our communities. Picture 2 solves a problem of money transfer. Picture 3 solves a problem of hunger/starvation. Picture 4 solves a problem of transport and employment. Picture 5 solves a problem of overgrown grass and bushes.

14. What are the sources of business ideas?

15. Existing people’s problems Scanning the environment and develop a business idea out of existing problems in the surrounding communities. An entrepreneur examines how best those problems can be solved through provision of the required goods or services to the people while gaining profits out of the business ideas generated.

16. Technical skills and experience. Business ideas can be developed basing on the technical skills, knowledge and experience of an entrepreneur. These may even be acquired after some long-time involvement in business. E.g. a doctor starts a clinic, an employee in a carpentry workshop may start his own carpentry workshop.

17. Personal contacts. One can get business ideas from his or her personal contacts. These may have been in the same line of business in which one may be intending to join or not but share ideas. Discussions or interviews with others expose the entrepreneur to different situations and scenarios, hence pick up the business idea to develop into a business.

18. Personal interests and hobbies. An entrepreneur can get a business idea from an activity he or she likes to do most especially during his or her free time. A person who likes sports a lot can start a sports academy.

19. Developments and changes in communities Observations of the developments and changes taking place in and around different communities to identify the challenges coming up and the needs that are becoming important to fill the gap by introducing a new business.

20. Press and media information. An entrepreneur can generate a business idea from reading the newspapers or magazines, listening to radios and from watching the television and internet. This is because most developments, policies or priorities are communicated and published through media.

21. Trade shows, exhibitions and companies Attending or visiting trade shows and exhibitions allows an individual to meet distributors and manufacturers where one can get useful information that can become a business idea.

22. Creativity and innovation. This is the use of creative minds and innovative skills. Entrepreneurs may think of new businesses that could be introduced into the market.

23. Generating business ideas.

24. How to generate business ideas from the environment. A good entrepreneur studies the ongoing problems in an environment and thinks of ways to improve the situation by using his or her qualities.

25. Generating business ideas from a school environment Use your school environment as a source to generate five business ideas based on the existing problems and record them in the table below. School problem Business idea 1 2 3 4 5 Activity 2

26. Apart from the existing problems in the environment, business ideas can also be generated when an individual travels to different parts of the country or world and gathers some information about what can be taken on as a business. Press and media are other sources of business ideas. Already existing business in the community can be used to generate other business ideas by listening to customers’ complaints and getting their opinions.

27. From the different sources of business ideas discussed above, you can now generate your own business ideas in the next activity.

28. Generating business ideas in a trading centre Activity 3 Visit a nearby trading centre and critically observe the environment to generate some business ideas basing on: Improving on already existing businesses in that trading centre. Businesses you have ever found in other places which are not there.

29. Selection of a good business idea. Entrepreneurs consider certain factors when selecting a good business idea. This helps them to ensure that the business will be profitable.

30. Activity 4 Explain with relevant examples, how each factor determines the selection of a good business idea.

31. Factors that influence the selection of a good business idea. 1. Availability of market. One should select a business idea that has many people who are willing to buy the product or use the service, so that it can lead to a profitable business. For example, a pork joint may not be established in a Muslim community.

32. 2. The financial resources required. The financial resources required to avail the products or services to the targeted customers should be considered. For instance, the cost of raw materials, labour, machinery, selling and distribution costs required, among others.

33. 3. Skills required An entrepreneur should choose a business idea that fits his or her skills and experience.

34. 4. Passion or interest One should choose a business idea that enables him or her to do what they love or like and enjoy to do.

35. 5. Availability of inputs One needs to select a business idea for which he or she can get inputs required for its operations. Such requirements include; land, labour, capital, raw materials, transport and communications facilities.

36. 6. The extent of risk involved In selection of a good business idea, there is need to assess the extent of risks that may occur in that business and how they can be managed.

37. 7. Technological requirements. One should choose a business idea that is easy to implement using the available and appropriate technology.

38. 8. Legal requirements or government regulations One should select a business idea that fits within the government policies that affect the business. For example, setting up a business in a wetland or a forest reserve is against the law.

39. Activity 5 Identify three business ideas from a range of sources in your community. Select the best business idea for your community and give reasons for your selection.

40. Case study Read the case study and answer the questions that follow

41. Responses Akello assessed the problem of: A big gathering for a long day during a hot dry season. Hence a problem of hunger and thirst. Factors before selection of the business idea. The available resources in terms of money she had saved. The weather conditions in the environment. Her personal skills and experience. Number of expected people or market.

42. iii. Other business ideas: Drinks business Selling of umbrellas Selling of hats/caps Selling ice cream iv. Qualities she possessed: Information seeker Hard working Persistence Commitment. Creative and innovative. Independent.

43. v. Lessons learnt: Being creative. Need for saving. Being innovative. Being hard working. To seek information and advice. Being persistence.

44. Decision tree Whenever a decision is taken, there are alternatives that are foregone. A particular choice or decision made can affect the entrepreneur either positively or negatively.

45. Decision tree When a correct decision is taken or a correct choice is made, you win but you lose when a wrong decision is taken or made.

46. Decision tree The same thing happens in selecting the best business idea which involves analysing a variety of factors. To do this, we use a tool known as a decision tree.

47. Decision tree What is a decision tree? A decision tree is a tool used by an entrepreneur when selecting the best business idea out of the many.

48. Just as one would climb a tree with many branches but selects one branch which leads to the fruit, so is choosing a good business idea. In choosing a good business idea, different courses of action are monitored to choose a path that leads you to success.

49. How to create a Decision tree Start with your objective or big decision at the top of a root. Draw your arrows. Attach leaf nodes at the end of your branches. Evaluate risks versus rewards.

50. Business idea Idea A Idea B Noncompetitive. Skills not available Low market competitive Skills are available High market potential DECISION TREE Moderate risks. Low inputs available Low returns on investment Low risks Inputs are available High return on investment Select the best business idea and give reasons why High startup capital Low startup capital

51. Activity 6 Using a decision tree, select three business ideas from the business ideas generated from a trading centre and choose the best idea. Give reasons for your selection.

52. Business Opportunities

53. Introduction An entrepreneur may have many business ideas in mind that he or she intends to explore. But considering various factors such as available inputs like capital , land , labour , raw materials , transport and communication facilities , then selects the most suitable business opportunity and develops it into a business.

54. What is a business opportunity? It is a selected business idea. A business opportunity is a well thought business idea that can be turned into a profitable business. When several business ideas are evaluated, an entrepreneur selects one chosen to be the best. That becomes a business opportunity.

55. A business opportunity is an identified situation or chance that can be turned into a real and profitable business. An opportunity is the evidence that the entrepreneur’s idea can be turned into reality. The business idea you selected in the previous activity is now your business opportunity

56. Business opportunities start as ideas, which are generated by entrepreneurs. Entrepreneurs always look at any situation with the question “Where is the opportunity in this?” Then after this, the entrepreneur starts thinking, dreaming and generating ideas about possible businesses that can be made of that given situation.

57. Characteristics of a good business opportunity Note that a good idea is not necessarily a good business opportunity. So many people have started new products and new businesses, but statistics show that very few businesses ever celebrate their 1 st anniversary. Just like you cannot have everything you want, not all spotted business opportunities can be turned into profitable businesses.

58. So, a good business opportunity must have certain characteristics that makes it the best. Use the next activity to understand the characteristics of a good business opportunity.

59. Activity Using the characteristics of a good business opportunity presented in the diagram; Explain each characteristic of a good business opportunity giving relevant examples where possible. Differentiate a business idea from a business opportunity.

60. Characteristics of a good business opportunity Availability of resources Acceptability in the market Availability of market Moderate or low start-up capital Creativity and innovations Availability of required skills competitive Return on investment Risks involved