Business
Ideas
Generating and evaluating business
ideas is an important step in the in the business planning and the entire
entrepreneurial process. ( Coulter,2005)
The
idea of starting a business normally crosses to people’s minds at different
times. Whether an individual is entrepreneur, limited company or a small
business; the ideas for business be it about finding the new opportunity for
business to how to generate a new income and develop the idea remain the same
(Business idea.com) accessed on 28th June 2011
Most
businesses regardless of their size start with the intention to make money.
However, selling the product and finding the customers is only one aspect,
understanding the business strategy, business financing, outsourcing product
and market research and the most cost efficient ways of achieving these issues
are the fundamental basics of the business. In order to get this information
into reality into a structured format is what makes the essence of business
planning to be of paramount importance inter alia.
Generating
business ideas is an innovative and creative process. It sometimes takes
sometimes, not only in the beginning stages of the entrepreneurial venture but
also throughout the life of the business(Coulter,2005)
According
to (Coulter,2005),Ideas of businesses have various sources; firstly, it could
be from personal interests or hobbies where the owner of the business would
start his business. Many entrepreneurial ventures were formed because of the an
entrepreneur’s love of doing something. Such hobbies could be singing, music,
baking, swimming. A succeful entrepreneurial business might be built around personal
interests in a particular product or activity.
Business
ideas may emanate from work experiences, skills and abilities. By tapping into
the knowledge of an industry or market gained by working in it, an entrepreneur
can pinpoint areas of potential opportunity. For example, if you have
travelled, you have undoubtedly seen those suitcases with wheels. Now wasn’t
that the great idea! It was created by Travelpro Rollerboard, because in his
job as an airline pilot he was he was constantly carry his bags from one place
to another and he was looking for a more convenient and comfortable way of
doing so. In the process of using his work related experiences and knowledge,
he not only created a new product but also a new industry.
The
third source of business idea could be to look at products and services
currently available, both familiar and unfamiliar ones. What products do you
use every day? Do they do all that you wish they could do? What about the
products you are familiar with and apply them to those unfamiliar ones. So one
can sport the business opportunities by looking at the unfulfilled niches in
the familiar and unfamiliar products which are currently in use.
The
final source of business ideas is the external environment. There are certain
to be opportunities, positive trends or changes that provide unique and
distinct possibilities for innovating and creating value. In the
entrepreneurial context, you just have to look for them. These opportunities
can be found in the technological, societal culture, demographics, economics,
and legal political sectors(Ibid)
Why Evaluating Business Ideas?
Before
taking any idea and document it in the
business plan, it is far important to evaluate it, in order to see the validity
of one’s business idea.
It
is important to evaluate business ideas because every entrepreneur has his own
unique reasons behind pursuing an entrepreneurial venture. This means every
entrepreneur has decisions to make against their own goals. Therefore ideal
business idea for individual entrepreneur should be evaluated against what is
important to the entrepreneur.
In
addition to that, evaluation of business ideas is important because all ideas
are not created equal. Some ideas of the entrepreneur has the chance of
succeeding than others. By evaluating at their strength and weaknesses of each
idea, the entrepreneur can come up with good assessment of the better decision
of a good business idea among various alternative of ideas.
On
top of that the evaluation of business idea is important because of reality of
limited resources. Most entrepreneurs have limited amounts of money, time,
people, or other resources that will be needed to pursue their entrepreneurial ideas. By
evaluating the ideas, the entrepreneur will make sure his choice make the best use
of the limited resources.
Lastly,
evaluating of business ideas is important because due to desire to minimise
risk and maximize returns. Naturally one would like to have less amount of
uncertainty while getting the biggest payback from entrepreneurial decisions
and actions. Therefore this is done so as minimise risk exposure while
maximizing the possible amount of payoffs.(Ibid)
How can Business ideas be
evaluated?
Evaluation
of the business ideas revolves around personal, capital and market place considerations.(Coulter,2005)
In
an entrepreneurial venture, the entrepreneur is the important element around
which all other decisions and actions happens. The personal considerations
include issues like readiness, capabilities, passion for what one is doing, ability
to handle ambiguity and uncertainty, hardworking, realistic picture of the
proposed venture potential, continual analysis and self education of the
venture (Ibid)
A
market consideration factor is also another important element in the evaluation
of the business ideas. The entrepreneurial idea will have to be competitive and
dynamic marketplace. Consequently, the choices the entrepreneur make needs to
be made with an eye to the market. The customer is the alpha and Omega of the
business; The more market driven is the venture, the greater the chance of
success.(Burns,1999).
The
most important issues to be considered here is who are the potential customers(not
just who, but how many), what similar or
unique product features does your proposed idea have in relation to what is
currently on the market; where will your customers purchase your product;
Consideration on your price, calculation on breakeven points and the ideas on
how the business and products can be promoted or advertised.(Coulter,2005)
In
addition to the above evaluation criteria, capital consideration is also an
important element in the evaluation of viability of the business idea. Every
entrepreneur will require funds in starting and growing his business venture.
The most vivid question is where will the funds come from?
The
entrepreneur’s personal sources can be good source of financing. Moreover,
other sources can be personal savings, home equity, Cash proceeds from the sale
of personal assets, life insurance loan, Personal loans, Loans from family
or friends and financial
institutions.(Coulter,2005)
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