Sources of business ideas

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Sources of business ideas

  1. 1. Sources of Business Ideas
  2. 2. Moving Forward <ul><li>We have previously looked at why people may want to start up their own business and the risks and benefits that brings. </li></ul><ul><li>Now we will look at how a budding entrepreneur will generate a business idea and where they may be inspired. </li></ul>
  3. 3. Possible Sources <ul><li>Research suggests that the following are four major sources of ideas for entrepreneurs: </li></ul><ul><ul><li>Spotting Trends and anticipating their impact </li></ul></ul><ul><ul><li>Identifying a market niche </li></ul></ul><ul><ul><li>Copying ideas from other countries </li></ul></ul><ul><ul><li>Taking a scientific approach </li></ul></ul>
  4. 4. Spotting trends <ul><li>Tapping into what is happening in society around us or in the market and responding quickly to these changes. </li></ul><ul><li>E.g. Innocent Drinks </li></ul><ul><li>(1999) </li></ul>
  5. 5. Identifying a Niche <ul><li>Involves noticing something missing in the market or that can be improved on. </li></ul><ul><li>About spotting “Gaps”! E.g. Red Letter Days – experiences as gifts </li></ul>
  6. 6. Copying ideas from other countries <ul><li>Travelling to different countries and cultures enables entrepreneurs to pick up ideas that have worked elsewhere </li></ul><ul><li>E.g. Howard Shultz from Starbucks copied the coffee bar culture from Italy and adapted it for US. </li></ul>
  7. 7. Scientific Approach <ul><li>Some entrepreneurs spend time inventing new products. </li></ul><ul><li>Can take a lot of time to produce product but do benefit from short term niche market before the idea is copied, e.g. James Dyson made 5,127 prototypes before the final design. </li></ul>
  8. 8. Franchising A slightly different approach
  9. 9. Franchising <ul><li>This is when you purchase the right to sell a product or service. </li></ul><ul><ul><li>Or </li></ul></ul><ul><li>When a business (franchisor) gives another business (franchisee) the right to supply its product or service. </li></ul><ul><li>Some examples include: Burger King, McDonalds, Dynorod </li></ul>
  10. 10. Involvement Varies <ul><li>Some franchisors have a lot of involvement in how the franchisee operates e.g. McDonalds </li></ul><ul><li>Others may give more independence to the franchisor e.g. Toyota </li></ul>
  11. 11. Benefits of Franchising <ul><li>Least risk in starting business. </li></ul><ul><li>Usually established brands with proven success </li></ul><ul><li>Easier to get finance </li></ul><ul><li>Usually incur lower marketing costs </li></ul><ul><li>Franchisee usually has exclusive rights in area </li></ul><ul><li>Supplier relationships often already established </li></ul><ul><li>Franchisor offers support, training, advice </li></ul>
  12. 12. Drawbacks of Franchising <ul><li>Costs can be high, initial start up cost to get rights, then ongoing royalties and percentages of turnover </li></ul><ul><li>Other franchisees could give brand bad reputation </li></ul><ul><li>Agreements often have restrictions on how business must be run </li></ul><ul><li>Heavy reliance on success and methods of franchisor </li></ul><ul><li>Franchisees have to sign non-competition clauses </li></ul>

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