BPP Unit 2: Search for Business Idea PDF

Unit 2. Search for Business Idea A business idea is a short and precise description of the basic operation of an intended business. Before you start a business, you need to have a clear idea of the sort of business you want to run. Your business idea will tell you: which need will your business fu...

Unit 2. Search for Business Idea A business idea is a short and precise description of the basic operation of an intended business. Before you start a business, you need to have a clear idea of the sort of business you want to run. Your business idea will tell you: which need will your business fulfil for the customers and what kind of customers will you attract? What good or service will your business sell? Who will your business sell to? How is your business going to sell its goods or services? How much will your business depend upon and impact the environment? A good business idea will be compatible with the sustainable use of natural resources and will respect the social and natural environment on which it depends. 2.1 Idea generation and choosing an idea Generating and choosing a business idea requires a structured approach that combines creativity, practicality, and market analysis. Here's a process to help you generate and select the right idea: 1. Idea Generation Start by exploring different sources for inspiration: a. Leverage Your Skills and Interests Skill Assessment: Reflect on your expertise, skills, and hobbies. A business built on passion is more likely to succeed. Networking: Engage with professionals in your field to uncover industry-specific opportunities. Example: If you have a background in graphic design, consider starting a design agency or creating design-related products. b. Solve a Problem Businesses often thrive by solving problems. Think about common issues people face in everyday life, or areas where products/services could be improved. Identify pain points in daily life or in a specific industry. Ask people around you about challenges they face. Explore industries that are growing or undergoing change Example: A subscription service for healthy snacks that are specifically tailored to people with dietary restrictions. c. Explore Trends Analyze emerging trends in various industries such as technology, health, sustainability, and more. New trends often indicate gaps in the market. Use tools like Google Trends, industry reports, and social media to spot popular topics.   Tapping into current trends can help you create ideas that are relevant and in demand. Example: The rise of sustainability could inspire an eco-friendly fashion line or a zero-waste store. d. Brainstorm with Others: Collaboration can lead to more ideas. Organize brainstorming sessions with friends, colleagues, or mentors to share perspectives and come up with new ideas. Attend networking events or join online forums. 2. Narrow down Ideas or Choosing the Right Idea Evaluate potential ideas based on these criteria: a. Evaluate Feasibility Consider the resources, skills, and infrastructure required to turn the idea into reality. Is it something you can realistically implement given your current resources (money, time, team)? Factors to consider: O Skills & Expertise: Do you or your team possess the necessary skills? o Capital: What is the initial investment required? Can you bootstrap or will you need external funding? O Legal & Regulatory: Are there any legal or regulatory challenges to starting this business? b. Measure Potential Impact How large is the market? Evaluate the potential size of your target market. Does the idea address a large enough audience or niche to generate sustainable profits? Will it make a significant impact? Factors to consider: O Market Size: Is the target audience large enough to sustain growth? O Revenue Potential: What are the revenue opportunities (e.g., pricing model, product sales, subscriptions)? O Longevity: Is the market likely to grow or shrink in the future? Example: A business idea focused on sustainable fashion may appeal to a growing market of environmentally conscious consumers, giving it high long-term potential. c. Align with Your Passion Do you care about the idea? Choose a business that aligns with your passion or interests. Passion often drives perseverance and creativity, which are key to overcoming obstacles in entrepreneurship.  Consider: Will you remain motivated and excited about this business over time? Does it resonate with your personal values and goals? Example: If you’re passionate about fitness, a business focused on personal training, fitness coaching, or gym equipment might be fulfilling. d. Test the Waters Before fully committing, try testing the idea with a small audience or in a small market. This will allow you to gauge interest and collect valuable feedback. Methods for testing:  Surveys or Interviews: Gather feedback from potential customers about your product/service.  Minimum Viable Product (MVP): Create a simple version of your product to test the market.  Pilot Programs: Run a small-scale version of the business to evaluate customer interest and feasibility. Example: If you're thinking of launching an online course, you could start by offering a free webinar to gauge interest and fine-tune your offerings. e. Prioritize Ideas Once you've evaluated your options, it’s time to prioritize. Consider both short-term and long- term potential, as well as the ease of implementation. Use simple scoring system to rank ideas. Use the following to prioritize:  Risk vs. Reward: What is the level of risk associated with each idea? What rewards could each bring in terms of profitability and impact?  Investment vs. Return: Does the expected return justify the investment and time commitment required?  Alignment with Goals: Does this idea align with your long-term vision or personal goals? Example: You may find that one business idea offers faster entry with lower risks, but another could have a higher long-term potential. Consider both immediate and future goals when making your decision. Conclusion The search for a business idea involves both creativity and strategic thinking. By generating ideas through personal experience, market research, and innovation, and then evaluating those ideas based on feasibility, impact, passion, and market validation, you will be in a strong position to choose the right business idea. Testing and prioritizing ideas will help you focus on the most promising opportunities, setting you up for future success in your entrepreneurial journey. 2.2 Sources of Business Ideas Sources of new Ideas Idea: A thought or suggestion as to a possible course of action. Some of the more frequently used sources of ideas for entrepreneurs include?  Consumers  Existing product & services  Distribution channels  The federal government  Research & development 1. Consumers:  Entrepreneurs should continually pay close attention to customers; this attention can take the form of informally monitoring potential ideas & needs or formally arranging for consumers to have an opportunity to express their opinions.  New product or service idea may come from customer reaction to the present product and from expected product idea.  Care needs to be taken to ensure that the idea or need represents a large enough market to support a new venture. 2. Existing products & services: Entrepreneurs should also establish a formal method for monitoring & evaluating competitive products & services on the markets.  This may result in a new product or service that has more market appeal & better sales & profit. 3. Distribution channel: Members of the distribution channels are also excellent sources for new ideas because of their familiarity with needs of the market. They suggest new products & also helps entrepreneurs in marketing their newly developed products. 4. Federal government: Federal government can be a source of new product ideas in two ways: First: The files of the patent Office contain numerous new product possibilities, although the patents themselves may not be feasible they can frequently suggest other more marketable products ideas. Second: New product idea can come in response to government regulations. E.g. Occupational Safety & Health Act mandated that first aid kits be available in business establishments employing more than three people and must contain specific items that varied according to the company. R&H Safety sales company was developing such kits that allowed companies to comply with the standards of the act. 5. Research & development: The largest source of new ideas is the entrepreneur’s own R&D efforts. One research scientist in Fortune 500 company developed a new plastic resin that became the basis of a new product but the company was not interested.  He started making a plastic molded modular cup pallet as a new venture and build a company Arnolite pallet Company. External Methods of Generating New Ideas Even with such a wide variety of sources available, coming up with an idea to serve as the basis for a new venture can still be problematic. The entrepreneur can use several methods to help generate & test new ideas such as: Focus groups Brainstorming Brain writing & Problem inventory & analysis. 1. Focus groups: groups of individuals providing information in a structured format. For generating new ideas, the focus group is an excellent method for initially screening ideas & concepts. A focus group is a small, diverse group of people brought together to discuss and provide feedback on a product, service, or idea. The goal is to gain insights into customer preferences, pain points, and new opportunities.  Example: A startup aiming to develop eco-friendly packaging organizes a focus group with 10 participants, including small business owners, environmental activists, and consumers. Through discussions, they discover a high demand for compostable packaging for food delivery services. This insight sparks the idea to create a line of biodegradable containers tailored for restaurants. 2. Brainstorming: a group method for obtaining new ideas & solutions. It is based on the fact that people can be stimulated to greater creativity by meeting with others and participating in organized group experiences. Brainstorming is a group activity where participants share ideas freely to generate creative solutions. It emphasizes quantity over quality at first, allowing participants to think without fear of criticism. Such type of session should be fun with no scope for domination and inhibition. Brainstorming has a greater probability of success when the effort focuses on specific product or market area. Example: A tech company conducts a brainstorming session to identify new app ideas. Team members suggest various concepts like personalized learning apps, AI- powered fitness trackers, and mental health tools. After reviewing, they choose to develop a mental health app that uses AI to recommend relaxation techniques. 3. Problem inventory & analysis: A method for obtaining new ideas & solutions by focusing on problems. This analysis uses individuals in a manner that is analogous to focus groups to generate new product ideas. However, instead of generating new ideas themselves, the consumers are provided with list of problems and then asked to have discussion over it and it ultimately results in an entirely new product idea.  This method involves identifying problems in existing products or services and analyzing available resources (inventory) to create solutions. Steps: 1. Identify common customer complaints or inefficiencies in a market. 2. Assess available resources, skills, or technologies. 3. Propose solutions that address the identified problems. Example: A clothing retailer receives frequent complaints about inconsistent sizing. By analyzing its inventory and supply chain, the company decides to introduce a custom- sizing feature powered by AI body measurement tools. This innovation not only solves the problem but also attracts a broader customer base. 4. Creative Problem Solving:  Creativity is the act of turning new and imaginative ideas into reality & is an important attribute of a successful entrepreneur. CPS is a structured approach to generating ideas and solutions by combining analytical and creative thinking.  While creative problem solving is the method for obtaining new ideas focusing on the parameters. Creativity tends to decline with age, education, lack of use, and bureaucracy.  Hidden creative potential can be stifled by perceptual, cultural, and organizational factors.  Creativity can be unlocked by using any of the creative problem- solving techniques. Example: A delivery service faces delays due to traffic congestion. Using CPS, they redefine the problem as "How can we ensure timely deliveries despite traffic?" Brainstorming leads to the idea of partnering with bicycle couriers for short-distance deliveries. This solution reduces delays, cuts costs, and improves customer satisfaction. Brainstorming Brainstorming business ideas is a dynamic process that blends creativity with strategic thinking. Brainstorming is a creative technique designed to generate a multitude of ideas to address a specific problem or explore opportunities. It can be conducted individually or in groups, with participants sharing and building upon each other's thoughts. The primary objective is to foster an environment where ideas flow freely without immediate judgment or criticism, encouraging the exploration of unconventional and innovative solutions. Here are some effective techniques to help you generate and refine potential business concepts: 1. Mind Mapping:  Start with a central concept and branch out into related ideas, tasks, or concepts. This visual representation helps in exploring various facts of a potential business idea.  Mind mapping is a powerful technique for organizing thoughts, solving problems, brainstorming, and studying. It helps visualize and structure ideas in a way that’s easy to understand. 2. SCAMPER Technique:  This method encourages you to Substitute, Combine, Adapt, Modify, Put to other uses, Eliminate, and Reverse aspects of existing products or services to spark innovative ideas. I. S – Substitute  Replace a component, material, or idea with another. Example: Using plant-based materials instead of plastic.  II. C – Combine  Merge ideas, materials, or functionalities to create something new. Example: A smartphone with a built-in projector. III. A – Adapt  Adjust or modify something to fit new uses or environments. Example: Adapting solar panels for wearable technology. IV. M – Modify  Change the size, scale, or intensity of something. Example: Creating a compact, foldable bicycle for urban commuters. V. P – Put to Another Use  Find alternative uses for an idea or object. Example: Using shipping containers as modular housing units, Furniture from scrap material. VI. E – Eliminate  Remove unnecessary parts, features, or processes. Example: A minimalist phone focused solely on calls and texts. VII. R – Reverse (or rearrange)  Change the order, direction, or approach of something. Example: Rearranging a restaurant kitchen for efficiency. 3. Freewriting: Freewriting is a writing technique used to generate ideas, overcome writer’s block, and encourage creativity. It involves writing continuously without worrying about grammar, spelling, structure, or coherence. The goal is to let ideas flow freely and explore thoughts without self-censorship.  Key Features of Freewriting i. Continuous Writing Write without stopping for a set time (e.g., 5-15 minutes). Don’t pause to think, correct, or edit. ii. No Rules Grammar, punctuation, and organization don’t matter. Focus on expressing ideas rather than perfection. iii. Stream of Consciousness Write whatever comes to mind, even if it seems irrelevant or random. Allow thoughts to flow naturally. iv. Private and Non-Judgmental  Freewriting is for yourself. There’s no pressure to share or produce polished work. 4. Brainwriting: To collaboratively generate structured ideas for a specific problem or goal. Process –  Each participant write down ideas independently in response to a defined problem.  Idea are shared with others & participants build on each others ideas.  It’s a group activity designed to minimize social presence & maximize collective creativity.  Conducted in a group but with initial individual input.  Structured, goal – oriented collaboration.