It is a foundation level module on Business Studies. The lecture is about how to spot new business opportunities.

1. Business Studies
Identifying Business Opportunities
University Foundation Programme

2. Scope and Coverage
• Generating Business Ideas
• Spotting an opportunity
• Research
• Market Mapping
• Franchises

3. Learning Outcomes
• At the end of the lecture, it is expected that
the learners will be able to:
• Understand how to generate business ideas
• Explain the process of spotting business
opportunities
• Understand the importance of quick market
research and market mapping
• Explain the concept of a franchise

4. Generating Business Ideas
• It is essential to spot a good business idea.
• Spotting a good business idea is at the heart
of successful entrepreneurship.
• This could be done if one has a good
understanding of consumer tastes and or
needs of the retail trade.

5. Martyn Dawes
• Both these qualities were exhibited by Martyn
Dawes.
• He spotted the opportunity for machines that
could automatically make higher quality
coffee.
• His ‘Coffee Nation’ machines in motorway
service stations and Tesco Express Stores
made him a millionaire.

6. Turning start-ups into world beaters
• Build it, sell it, retire, party. That's how Martyn
Dawes describes most entrepreneurs' idea of
a career plan.
– http://www.telegraph.co.uk/finance/businessclub
/9029114/Turning-start-ups-into-world-
beaters.html

7. Main Sources of Business Ideas
• Observation
• Brain-storming
• Thinking ahead
• Ideas from personal or business experience
• Innovations

8. Observation
• Observing new developments and changes
taking place around them and identifying
emerging trends of the demand for goods and
services.
• Martyn Dawes, machines in NY delis and
thought about their potential use in the UK.

9. Brain-storming
• Discussions and/or interviews with other
entrepreneurs on business issues, to seek
their views and suggestions.
• It is useful to tease out some ideas, no matter
how silly the ideas could be.
• Dispassionate discussion, followed by
appraisal of ideas might give way to some
workable idea.

10. Thinking Ahead
• Using ones intuition
• Be imaginative
• http://www.entrepreneurmag.co.za/advice/st
arting-a-business/launch/thinking-ahead-
smart-business-ideas/

11. Ideas from Personal or Business Experience
• Have you tried something similar before?
• Do you know how somebody is likely to react?
• Have you seen something done or could you
read about others' experiences with a
situation
• For example, you might notice that there is no
salad bar near your office, or the closest gym
is 3 miles away.

12. Innovations
• Innovations might come from discoveries. For
example, Pilkington’s self-cleaning glass that is
used in skyscrapers or
• Some clever re-working of existing knowledge
such as James Seddon’s ‘Eggxactly’ waterless
egg cooker (http://www.eggxactly.com/)

13. Spotting an Opportunity
• A common thinking might be that all the
opportunities and ideas have already been
exhausted from food to travel and any other
field.
• Is that the case?
• Human society is dynamic and this dynamism
gives way to new demands.
• Travel & tourism industry is an example.

14. Spotting New Opportunities
• Think about changes to society
– E.g., people are more conscious about their appearance
(body beautiful) – so cosmetic surgery, anti-ageing creams,
fashion clothing etc.
• Think about changes to economy
– E.g., Continuing economic boom in China might bring
opportunities for British brands such as Burberry, Cadbury,
Superdry.
• Think about local housing market
– Are people moving into or out of local areas? As this may
give rise or fall to local business opportunities.

15. Keys to Spotting Opportunities
• Small Budget Research
• Careful Market Mapping

16. Small Budget Research (1)
• Market research would be discussed in detail
at a later stage in this module. However, a
quick market research might give a lot of
useful insight, if for example you are planning
to buy a franchise of Subway in Cambridge.
• One might do a quick geographic mapping.
– You might like to identify the location of sandwich
bars and other fast food outlets.
– This might help you in identifying a suitable place
to locate your Subway franchise.

17. Small Budget Research (2)
• You might like to have a quick price
comparison, details of special deals and
details of student discounts.
• You might ask Subway to arrange for your visit
to some nearby Subway franchise and spend a
day to understand customer experience and
the way services are provided.
• Develop some market map.

18. Market Mapping
• Identify key features that characterise consumers
within a market.
– Examples in the market for women’s clothes would be
young/old and high fashion/conservative.
• After this, every brand should be placed on a grid.
This will reveal where the competition is
concentrated and may throw up some gaps in the
market.
– E.g., there might be an available niche for healthy
eating for younger customers.

19. High Failure Rate of Start ups
• Research shows that 70% of new businesses
survive for three years.
• New businesses require a huge amount of
planning, skill and luck.
• Reasons for high failure rate could be:
– Bad business idea
– Imitation
– Poor quality of product or service might put off the
customers
• The what is the way out?

20. Franchises
• According to NatWest Bank survey, failure rate of
franchises is 7 percent as 93% of franchises survive for
first three years.
• Class Activity: Work in Groups of 3
• Group A
– You are starting up an independent optician service,
discuss what you have to do?
• Group B
– You become franchisee of Specsavers, what will you get in
return for a franchise agreement?

21. Founding a Franchise
• How much time do you think is required to
start selling franchises of your business?
• Do you recognise this person?

22. SpecSavers
• Doug and Mary Perkins started SpecSavers in
Guernsey in 1984.
• Decided to sell franchises in 1988
• £140,000 needed to open a local branch was
spent by the franchisee, not the SpecSavers
• 5% royalty to be paid to Doug & Mary
• A start up fee £25,000 – 50,000 to be paid by
the franchisee. In 2010, the annual turnover
was £1,300 million.

23. Franchisor has to ….
• Establish
– A training programme
– A system of pricing
• Franchise right (£10,000 – 100,000)
• Store fittings (£50,000 – 250,000)
• Royalty fee (5%)
• Contribution (3-5%) towards national advertising
campaign
– A system of monitoring, to avoid damage to
reputation caused by poorly-run franchise

24. Benefits of Being a Franchisee
• A wonderful training opportunity
• Run a franchise for a few years, gain
experience on a variety of aspects of a
business such as marketing, buying, store
design, window display, staff management,
sales, stock control and accounting.
• Banks will treat you more favourably if you are
franchisee as compared to a new
entrepreneur.

25. Summary
• In today’s lecture, an effort was made to
explain how to generate business ideas and
also the process of spotting business
opportunities;
• In explaining the above ideas, we tried to
understand the importance of quick market
research and market mapping; and
• Explained the concept of a franchise and
learned key terms about franchise.

26. References
• Surridge, Malcolm & Andrew Gillespie, 2008.
AQA Business Studies for AS Level (3rd ed.),
London: Hodder Education. Unit 2.
• Turning Start-ups into World Beaters
• http://www.telegraph.co.uk/finance/businessclub/9029114/Turning-start-ups-
into-world-beaters.html
• Thinking Ahead
• http://www.entrepreneurmag.co.za/advice/starting-a-
business/launch/thinking-ahead-smart-business-ideas/
• Eggxactly
• http://www.eggxactly.com/