Generalization of business ideas
- Entrepreneurs have the ability to see opportunities in whatever environment they happen to be
- They are sensitive to people’s needs
- They use people’s problems as opportunities of a business
- The entrepreneurs can use several methods to help generate and test new ideas.
2.3.1 Methods of Generating ideas or Business Opportunities
Focus groups – i.e where a moderator leads a group of peoples though an open , in –depth discussion through which new ideas are shared. Apart from generating new ideas, the focus group is an excellent method of screening ideas.
The brainstorming method allows people to be stimulating to greater creativity by meeting with others and participating in organized group experience.
When using brain storming the following rules must be obeyed.
- No criticism nor negative comments
- The wilder the idea the better ( freewheeling)
- Quality of ideas is desired
- Combinations and improvements of ideas are encouraged.
Problem inventory analysis
This method used individuals in a manner that it focus groups to generate new ideas e.g consumers given a list of problems in a general product category and discuss the various problems in each product category normally used to test new products.
Creative problem solving – is a method of obtaining new ideas by focusing on the parameters such as
- Brainstorming – group method of obtaining spontaneous ideas
- Reserve brainstorming – a group method of obtaining new ideas but by focusing on the negative i.e by finding fault.
- Brain writing – is a form of brainstorming which gives participants more time to think than brainstorming which dwells on spontaneous ideas the participants write their ideas on a special form.
- The Gordon method- is the method of developing new ideas when the individual are unaware of the problem.
- It ensures that the solution is not clouded by pre-conceived ideas or behavioral pattern
- Checklist method.- is a method of developing new ideas through a list of related issues
- Free association method. A new idea is developed through a chain of world association
- Forced relationship it is a technique that asks questions about an object or idea in an effort to develop a new idea it follows the following five steps
- Isolate the element of the problem
- Find the relationships between these elements
- Record the relationship in an orderly way
- Analyze the resulting relationships to find ideas pattern
- Develop new ideas from the pattern.
- Collective notebook method
Develops new ideas by a group members regularly recording ideas
- Attribute listing
Developing a new idea by looking at the positives and negatives.
- Big-dream approach
Developing a new idea by looking without constraints i.e think of the problem and its solutions I, thinking big.
Every possibility should be recorded and investigated without regard to all the negatives.
- Parameter- analysis
Developing a new idea by focusing on parameter identification and creative synthesis. Parameter identification involves analysis variables in the situation to determine their importance.
Some entrepreneurs have the ability to recognize a business opportunity which is fundamental to the entrepreneurial process as well as growing business. A business opportunity represents a possibility for the entrepreneur to meet a
large enough unsatisfied need that is worthwhile. The key to recognition of an opportunity lies in the knowledge ( education) and
experience gained either personal or through work by both The prior knowledge is as a result of the combination of education and
experience. The entrepreneurship needs to be aware of this knowledge and experience and have the desire to understand and make use of it.
The other important factors in this process include
- Entrepreneurship alertness
- Entrepreneurial networks
Those entrepreneurs who have the ability to recognize meaningful business opportunities are in strategic position to successfully complete the planning and development process and successfully launch a new venture.
Add Opportunity Identification
The sources of new ideas
Some of the more frequently used sources of business ideas for entrepreneurs include.
Potential entrepreneurs not only pay attention to potential customers but also monitor their potential needs through allowing the customers to express their opinions.
- Existing products and services
Through monitoring and evaluating competitive products and services.
- Distribution channels
Contact with members of the distribution channels since they are familiar with the needs of the market and give suggestions of new products and consumer needs.
- Federal government
Can be a source of a business idea through
1. The patent office which contains numerous product possibilities.
2. Official government magazines
3. Government regulatory bodies e.g KBS
4. Government shows and exhibitions
5.Research and development
Is the largest source of new ideas to the entrepreneur.
6.Education – i.e picking a given line of study e.g construction
7.Vocational training programmes and experience.
8.Personal hobbies especially for craft entrepreneurs.
9.Personal contacts and observations through.
- Newspapers and magazines.
10.Conducting surveys and interviews of the people around.
11.Other ways of generating business ideas
Definition of a Business Opportunity
A business opportunity may be defined as an attractive project idea with an entrepreneur accepts for investment on the basis of what is known about the possible success for the project
A real business opportunity can by distinguish from a mere possibility through the following two ingredients.
- A good market scope
- An attractive return on investment ( profit)
Qualities (Characteristics) of a Good Business Opportunity
The following are qualities of a good business opportunity.
1. Demand – there should exist a good market scope
2. Returns on investment – i.e the business should be sufficiently profitable.
3. availability of raw materials
4. Enough skilled people.
Evaluation of Business Opportunities (objectives of a pre-feasibility study)
Once a business opportunity has been identified one needs to confirm that it is viable through a pre-feasibility study.
The main objective of a feasibility study is to determine whether.
1. the investment opportunity is promising enough
2. The project is viable from the marketing manufacturing and other points of view.
3. Any aspect of the project that may be crucial to call for indepth analysis.
The Purpose of Pre-feasibility Study (Market Research)
To verify that the investment opportunity is promising enough to make a firm decision.
To confirm that the project is viable from the
- Manufacturing and
- Other points of view
To identify any aspects of the project that is critical or crucial enough to call for in depth analysis
To acquire comprehensive technical, economic and commercial data for the final investment decision.
To enable an in-depth study of aspects such as
- Market potential
- Technical requirements
- Managerial ability
- Financial projections and analysis
- Risks evaluation
- Business environmental analysis.
To enable sourcing reliable information such as
- Authorized publications
- Consultants openings.
To establish the final outcome of whether or not to proceed with the business.