The Search For Sound Business Idea PDF

THE SEARCH FOR SOUND BUSINESS IDEA CHAPTER OBJECTIVE To assess and determine the best business idea Topics: Procedure in determining the best business idea Methods of searching for ideas Screening generated ideas...

THE SEARCH FOR SOUND BUSINESS IDEA CHAPTER OBJECTIVE To assess and determine the best business idea Topics: Procedure in determining the best business idea Methods of searching for ideas Screening generated ideas Organizational culture and creativity What is a Sound Business Idea  May be defined as the economic opportunity which is within reach of the entrepreneur and which will provide him a desirable value. THE PRODUCT OR SERVICE OFFERING MAY BE IMPROVED IN SOME TERMS OF:  1. Performance, like the chair that can carry more weight  2. Maintenance cost, like the car battery that requires less servicing than competing brands  3. Acquisition cost, like the latest low priced model of a certain brand of cellphone compared to competition  4. Salvage value, like the steeel filling cabinet that has a higher value and uses, like the fly paper that can also be used as mousetrap Different forms of Business Ideas  An old type of business can be professionalized.  A standard product can be customized.  New technology can be adapted to manufacture an old product.  Imported products can be replaced by local products.  Business operations can be internationalized.  Procedure in Determining Best Business Idea 1. Preparation of the list of business ideas a. Unanticipated means (person’s work, person’s hobbies, person’s acquaintances, and a chance event encountered by the person) b. Deliberate search (using search questions and idea prompting) 2. Screening of listed ideas 1. Market feasibility 2. Technical feasibility 3. Financing feasibility 4. Financial feasibility 3. Final Selection 1. Status quo 2. Shorter list 3. Zero listing Screening Generated Ideas  Market Feasibility  Positive indications: (1) stable and sufficient demand (2) potential competitive strength of the firm  Sources of Market Information (1) Prior studies of the market or related markets by the company (2) actual poll of population samples (3) negotiations with prospective customers to solicit orders Screening Generated Ideas  Technical feasibility – the business ideas must be easily converted to real products or services.  Financing Feasibility- there should be sufficient funds to finance operations.  Sources of funds: (1) proposed owner’s savings (2) relatives and friends (3) financing institutions Screening Generated Ideas  Financial feasibility - analysis of financial prospects of the proposed business idea (1) income statement – summarizes revenues, expenses, and profits over a given period (2) balance sheet statement – shows planned or expected financial position of the enterprise on a particular date. (3) cash flow statement – shows the planned or expected cash sales and or purchases. Final Selection 1. Final Selection 1. Status quo – means all business ideas listed passed the adapted criteria 2. Shorter list – means some of the ideas generated were eliminated 3. Zero listing – means all business ideas generated were eliminated. ORGANIZATIONAL CULTURE & CREATIVITY Characteristics 1. Encouragement for creativity and risk-taking 2. Rewards for creativity 3. Open communication 4. Allowance for errors 5. A climate for participation 6. Structural mechanisms that aid creativity 7. Training in the creative process 8. Flexibility