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Developing and Screening Business Plans
Transcript of Developing and Screening Business Plans
Techniques for Generating Ideas
Three techniques that people use to explicitly try to generate new business ideas:
2. Focus Groups
3. Library and Internet Research
• most common way to generate business ideas
• Technically, a brainstorming “ session is targeted to a specific topic about which a group is instructed to come up with ideas.
• Another effective approach to brainstorming is to use the three sources for new business ideas as a way of organizing the discussion.
• A flip chart or white board is typically used to record ideas.
•The gathering of 5 to 10 people who are selected because of their relationship to the issues being discussed.
•Typically involves a group of people familiar with a topic, who are brought together to respond to questions and shed light on an issue.
•Works best as a follow up to brainstorming.
•Conducted by trained moderators
•On some occasions, hybrid focus group methodologies are used to achieve specific insights and goals.
Library and Internet Research
•The best approach to using the library is to discuss your general area of interest with a reference librarian, who can point you to useful resources, such as industry magazines and trade journals.
•Internet research is important, if you are starting from scratch simply typing “new business ideas” into Google or Yahoo! “alert” using key words that pertain to your topic of interest.
1. To explore the 3 main sources of business ideas.
2.To describe some of the many means in which people generate business ideas
3. To communicate an explanation of the first screen test and the steps involved in its usage.
Developing and Screening
Philips vs Powell
Where Good Ideas Come From
-provides a medium for assessing the merits
upon which a business idea is based;
-allows one understand the practicality
of a business plan;
-it can be viewed as a first go at looking into
whether or not a business idea will work.
Strength of the Business Idea
•High potential business ideas are those that are timely in terms of their introduction to the business market.
•In order for them to be successful they have to make use of the
window of opportunity. The window of opportunity refers to the time
period in which an idea can realistically enter a market.
• One important aspect of the screening process is determining
whether or not the window of opportunity is open or close.
• The business idea should be one which creates value for people in
the market. If there is a similar product in the market which provides
the same value then it is going to be difficult unless customers are
dissatisfied with that product.
Industry Related Issues
• This is basically selecting the industry you want to pursue.
• Generally industries that are growing are more receptive to new businesses and are less crowded versus one which is at the opposite end of its life cycle.
Market and Customer Related Issues
• This is basically identifying the target market in which the firm will compete.
• A target market is a place within a larger industry or market segment that represents a narrower group of customers with similar interest.
• Most firms start out by selling to a specified market instead of selling to a
broad scope of individuals. They do this by identifying an emerging or undeserved niche within a larger market.
• Some firms while trying to infiltrate a target market, experiences a barrier
to entry. This is a condition which creates a disincentive for a firm to enter
another firm’s niche market through a number of ways including
economies of sales, product differentiation, unique access to
distribution channels and intellectual properties protection.
Founder/s Related Issues
• This is important in determining the combined
strength of the founding team and may even
affect the overall success of the product.
• A weak founding team with a good idea has a
higher risk of failing when compared to a
strong product team with a weak idea.
• The strength of a product team is reflected
by the level of experience, broad social
networks and the necessary skills as it
relates to new ventures.
One major problem faced by most firms when starting up is reducing
the start-up capital required. To reduce this cost some companies prefer to
lease occupancy and equipment rather than actually purchasing them.
• Another important aspect of a firm’s start-up is to have multiple revenue
drivers. This increases their income potential by providing several different
goods and services allowing them access to a wider share of the market.
However it is
also important for a firm not to lose sight of their original focus.
• The next issue of part 5 of the first screen is how fast the firm breaks even
on an investment. Businesses with fairly low initial investments will break even
faster and are at smaller risks than businesses with a large initial capital
investments or lengthy product development cycles.
• The final aspect of part 5 of the screening process deals with funding
the initial product. If all the firm has is an idea then they will experience
quite some difficulties in getting external investors to invest in just an
idea. However if the company is able to fund the initial product then
they stand a better chance of getting investors on board as they
have something tangible to show them.
Changing Environmental Trends
Gaps in the Marketplace