Topic 2 Preparation & development of your business
An idea is the starting point for the development of a business;
The big challenge of a business woman is to identify a business opportunity and transform it into a successful business
- Unsatisfied needs
- or that can be met in a different and improved way (compared to existing solutions)
- New products;
- Improved products
- Complementary Products
In order to build a successful, sustainable business, the initial idea needs to be feasible. Some people may have a great idea for a business before they even start, others may need to spend some time to generate one that suits them.
In either case, it is very crucial to carefully develop the business idea, assess its viability and sustainability and complete it by conducting a preliminary market analysis and by developing your business model.
- Generate and develop your business idea
- Assess your business idea
Check out the 6 types of project objectives!
“The business idea is the starting point of all entrepreneurship. The business and the entrepreneur’s work is built around the business idea‟.
An innovative idea is:
“one that allows the development of a completely new solution (disruptive innovation), with the capacity to respond to a present need in the market, or of an improved solution (incremental innovation) in relation to already existing solutions”.
(IAPMEI)
The business idea is a concrete practical description of how the company plans to conduct profitable business activities. It concisely presents the key elements of the business:
- who is sold to,
- what is sold,
- what the business does and
- what kind of image does the business project to its stakeholders?
“What do you need to start a business? Three simple things: know your product better than anyone, know your customer, and have a burning desire to succeed.”
Dave Thomas, founder of Wendy’s
Identifying an idea for a new business is not an easy process!
…. Most importantly, it will be necessary to identify a product or service that people need and are willing to buy.
Ideas for the start-up of a new business could come from a number of different sources:
- Market trend analysis
- Solution to identified problems
- Gaps in the market
Ideas for new businesses can occur in all sectors of activity, including the more conventional ones
New and innovative business ideas
Please be inspired by watching the following videos with business ideas
Process: Develop project charter
Output: project charter
Process: Develop preliminary project scope statement
Output: Preliminary project scope statement
Process: Develop project management plan
Output: Project management plan
Process: Direct and manage project implementation
Outputs: Deliverables, requested changes, work performance information, implemented change request, corrective actions, preventive actions, defect repair
Process: Monitor project work
Outputs: Recommended corrective and preventive actions, forecasts, recommended defect repair, requested changes
Process: Integrated change control
Outputs: Approved and rejected change requests, approved corrective and preventive actions, approved and validated defect repair, deliverables, updates to the project management plan and scope statement
The most important thing is to clearly define the main subjects of the business. Already during the planning phase, it is important to learn to separate that which is relevant to the business from the irrelevant. Looking at the business idea from many different perspectives allows for an objective assessment and increases the probability of success. Therefore, it would be necessary to wonder if your business idea answer at some respect, the following questions.
- What exactly is new and creative about your business idea?
- How unique is the business idea?
- Can it be protected by patent?
- Who is the customer?
Read how to run a project kick-off meeting (with sample Agendas)!
Ideas are the key to innovation. Without them, there isn’t much to execute and because execution is the key to learning, new ideas are necessary for making any kind of improvement.
It’s obvious that ideas alone won’t make innovation happen, as you need to be able to build a systematic process for managing those ideas. The point of ideation isn’t just about generating tons of them but about paying attention to the quality of those as well.
‘He who controls the present, controls the past, He who controls the past, controls the future.’
George Orwell
In general, entrepreneurs identify more ideas than business opportunities
Typically, it is necessary to generate several ideas to being able choose the one that best capitalizes on an opportunity
- Brainstorming
- Focus groups
- Internet search
- Thing about a day in the life of a potential consumer
Please read more about :
- Criativity: new but appropriate solution to a problem or response to a situation;
- Innovation: successful commercialisation of new combinations (e.g. new materials, new processes, new markets and organisational models)
- business model innovation: it involves new ways of doing business, such as new delivery and supply processes, new structures or financial models;
- operational innovation: it involves new ideas that increase the effectiveness and efficiency of processes and functions
- product/service/market innovation: it involves the commercialization of a different product or service or introducing into a new market products or services that already exist in other markets,
# Discover some some tips on how to identify business ideas, powered by IAPMEI
The transformation of an idea into a viable business implies to structuring and organizing the business model, that should be coherent and complete. (IAPMEI)
The “business model” provided an integrated view of the process of identifying and use of resources, competencies and partnerships, to create and deliver value to its customers and shareholders.
The business model describes the logic of creating, delivering, and capturing value by an organization
The design of the business model is an intermediate step between the validation of the idea and the preparation of the business plan: allow to clarify the path to follow
It should clearly describe how a business is structured, what kind of people are needed for that business and what roles they play in the business.
- what is the objective of the new business model?
- what new activities are necessary to develop in order to satisfy the customers’ perceived needs?
- how should these activities be related to each other in an innovative way?
- who could carry out each of the activities that are part of the business model?
- what new management processes could enable?
- how is value created through the new model for each of the parties involved?
It was proposed by Osterwalder and Pigneur in 2010- This model consists of a conceptual tool, in a simple way, all the necessary steps for the creation of value;
- It allows expressing the business logic of a certain company, through a relational vision between the processes and the business objective
- The model is composed of nine elements
Source: https://www.amazon.com.br/Manual-Empreendedor-Jos%C3%A9-Freitas-Santos-ebook/dp/B0977H9RGR/ref=sr_1_3?__mk_pt_BR=%C3%85M%C3%85%C5%BD%C3%95%C3%91&crid=3AJVO8JWSQBJN&keywords=susana+bernardino&qid=1664812214&sprefix=susana+bernardino%2Caps%2C156&sr=8-3
See other tips on how to use the canvas Model:
Entrepreneurship and Business Models (Marco Lamas)
Not all business ideas are promising and provide business opportunities!
Being attractive- Being temporally relevant
- Being durable
- Being anchored in a product/service that adds value to consumers
According to IAPMEI, to be able to implement an idea and turn it into a business, it has to have feasibility in the following different domains:
- Professional viability: Do I have skills?
- Commercial viability: Does the market exist?
- Techincal feasibility: Can it be done?
- Legal feasibility: Is it allowed?
- Economic viability: Is it profitable?
Businesses are not an island and must be analysed according to the circumstances that surround them!
The external environment refers to all the surroundings that are capable of influencing the creation of a market opportunity and the success of a given business
It’s is necessary to look to the external context, that include:
- The general environment, refers to a group of variables at a macro level capable of influencing positively or negatively the business
They include political, economical, social, technological, environmental and legal issues
- The task environment, is closer to the business, and includes the entities that influence or are influenced by it (stakeholders).
For example, it includes other business, consumers, financers, regulatory authorities, among others
To assess the general environment (external environment), it is useful to make the PESTEL analysis.
It consists of the diagnosis of the main trends, positive and negative, that exist in each of the following dimensions and that are capable of impacting the business
Political: The political context and changes in government policy
Economical: The economic context (e.g. interest rate, employment, etc)
Social: reflects the cultural values, habits and traditions of a given society
Technological: Reflects the technological progress of a society and represents the institutions and activities involved in knowledge creation
Legal: It concerns the laws and regulations that exist in a particular country in which the business intends to operate
Ecological: It refers to the environmental concerns and environmental imbalances in the market
The transational analysis allows to the analysis of The task environment
It involves the identification of the main stakeholders and the diagnosis of the main characteristics they show
- The identification of the main competitors and the characteristics of the main products/services offered
- The identification of the main customer groups and the main needs presented (and also umeet)
- Description of the main suppliers in the market and their working methods
- The identification of regulatory entities and their scope of intervention
Before starting a business it will be necessary to make an internal diagnosis of the business, reflecting in the resources and skills that the business has, as well as areas where there could be some constraints.
In other words, it is necessary to assess the main strengths and weaknesses that the enterprise has in comparing with other businesses
Source: Center for Social Innovation Ltd.
Business opportunities result from needs that are not met or can be met in a different and improved way compared to existing solutions.
The objective is to ensure that there is a market for the solution, that the market is available to join the solution and that it has dimension to make the project viable economically.
In order to succeed, enterprises need to be able to reach their customers so that they buy their service or product.
However, first you need to be able to accurately identify who your customers are, you can then think about how your service or product is addressing their needs.
Using this information, you should then also be able to think about how to construct a competitive advantage so that people buy from you rather from a competitor.
- Customers: they are the heart of the business model
- It is important to know
- who you are creating value for
- identify the characteristics of the customer segment(s)
- understand the role played by potential customers and different people involved in the buying process (decision-makers, consumers, buyers, influencers, users)
- The market is considered to be the set of publics able to influence the volume of consumption of a product/service
- It is not always easy to identify the market in which the new business activity can be included
« A trader, whatever he is, is no more than a servant of the public, or of a public; and receives a payment, which he calls his “profit,” for the provision of that service. Thus, all the people who serve should seek to please those who serve. To do this, it is necessary to study who the merchant intends to serve – but study it without prejudices or anticipations; not on the principle that others think like us, or should think like us-because they do not generally think like us-but on the principle that if we want to serve others (whether to profit from it or not), we are those who have to think like them: what we have to see is how they actually think, and not how it would be nice or convenient for us they think. »
Fernando Pessoa (Portuguese poet)
- The market is the “arena” where the company’s plans will be carried out.
- It is very important to define the market for the new product in terms
- of size, stage of development, types of customers and competitors.
- Some of the questions to answer before creating the business will be the following:
- How many customers are there and what is their influence on the market?
- What is the size of the market or the annual consumption of the product related new business?
- How can we assess the size of the market (for exempla, the level of consumption of the product in a given city, country, group of countries or worldwide or, alternatively, in well-defined customer segments with certain characteristics)?
- Creating a successful business means having the capacity to establish an exchange relationship between the company and the market.
- There must be at least two people involved in the transaction
- All parties have something of value to the other parties
- All parties must be able to communicate and deliver
- Both parties are free to accept or reject offersC
- The business women will be interested in the operations since: the price charged on the market is higher than the cost of producing the product or service
- Consumers will be available to buy the product as long as the perceived value of its consumption/use is higher than the price they have to pay
The development of the business idea can be done in stages by addressing each question one by one. While it may seem logical to start with the ‘Who?’ question, in order to in order to clearly define who the customer of our business is.
In many cases it is more productive to narrow down the customer segment the business aims to serve. Identifying the potential customer base’s needs will then help with the development of the product or service offering.
The following figure is a good example of how you can break down this process and produce the results in a helpful visual manner.
- There are several publics that constitute a market and that will be important to understand before creating a new business:
- The final customers, who are the people who will actually consume the product or service
- The purchares/buyers, Who are the people who pay for the product and carry out the purchase transaction
- In many cases the consumer and the buyer may be exactly the same person.
- However, in some deals they often are not.
- For example, in the case of a toy business the consumer (children) and the buyer (parents, relatives, etc) are different and have different needs.
- In this case, it will be necessary to know the profile and needs of both so that the business can be successful.
- The same situation may occur in a company where the buyer is the purchasing director and the consumers are the users
- The purchasing process may also be influenced by other actors who are able to influence the purchasing decision and the volume of business that the company will be able to achieve.
- Prescriber – person who indisputably determines the product to which the buyer has to submit (for example, Doctors, veterinarians, etc.)
- Preconizer – person who recommends, but does not impose (for example, a hairdresser, etc.)
- Opinion leader, that by their notoriety or specific knowledge of a sector, they can influence the consumers’ perceptions
- “word of mouth”, which is disseminated in the market and on social platforms;
- Distributors, wholesalers, central buying offices, retailers, etc., that may influence the buyer behavior and in addition may or may not be more inclined to have the products/services available in their commercial establishment; Understanding which needs and issues are valued by these agents will be important for the success of the business
It will be important to understand how customers interact with different influencers in their buying process.
This analysis can be systematised through an influence map, such as the one illustrated here
|
Influencers |
Phases of the purchasing process |
||||
|
Awareness raising |
Consideration |
Purchase |
Experience |
Recommendation |
|
|
Husband |
X |
X |
X |
X |
X |
|
Children |
X |
X |
|
X |
|
|
Family |
|
X |
|
X |
|
|
Colleagues at work |
|
X |
|
|
X |
|
Friends |
|
X |
|
|
X |
|
(…) |
|
|
|
|
|
Source: entrepreneur’s manual
- Other companies, in this case here we are dealing with industrial products and the Business-to-Business market (B2B)
- Final consumers, where we are dealing with a business to consumer market (B2C)
- the B2B market is generally composed of a smaller number of industrial buyers (compared to B2C); each of the customers, considered individually, may have a significant importance in the company’s sales volume; the purchasing process involves a more individualised process, involving a negotiation more tailored to the characteristics of the specific consumer; Communication may involve more personal means such as direct marketing and sales force
- In the B2C market there is a larger number of customers, whose individual weight of purchases from each of them in the company’s sales volume tends to be very small. Some aspects such as promotional prices, packaging and mass advertising may be especially relevant for this type of consumer;
- The real consumers, who already consume the products/services of a certain industry
(real market) - Potential consumers, who do not yet consume the products of that industry but may do so in the future
(potential market)
The simultaneous consideration of both types of consumers can leverage the chances of business success, since the new company will not have to limit itself only to the existing real market
- The market as a whole can be very wide and comprise consumers with very different needs.
- Considering the market as a whole, it will be very difficult for the business to meet the needs of all consumers in an efficient way
… It is not possible to please Greeks and Trojans
- Therefore, the market should be divided into smaller groups, bringing together customers with needs that are closer to each other.
- This process of dividing the market into smaller groups that are more similar to each other is called segmentation.
Each identified market segment behaves in the same (or at least similar) way or have similar needs, so they can be served more efficiently and effectively by the new business ( for example, in terms of product features, placement, communication strategy or price)
- their needs require and justify a differentiated offer;
- they are contacted through different distribution channels;
- require different types of relationships;
- have substantially different profitability;
- they accept to pay for different aspects of the offer.
- Mass Marketing (Segmentation level 0): The business deliberately ignores the differences between consumers, targeting the so-called “average consumer; a single generic product is used to serve the entire market
- Targeted Marketing (Segmentation level 1): Identification of groups of some size and similar characteristics, which allows better adjustment of price, distribution and communication and reduces competition;
- Niche Marketing (Segmentation level 2): Identification of a group narrower than a segment (sub-segment), whose needs are not being well served. They are small in size, difficult to detect and are not being well served. They are exploited by highly specialised companies, and allow to charge possible higher prices.
- Individualized Marketing (Segmentation level 3): It allows the provision of a unique response in a one-to-one logic. Includes, for example, handmade made-to-order products; nowadays, new technologies also permit mass customisation
- In order to divide up the market by grouping consumers with similar needs, it will be necessary to use certain criteria, which are called segmentation criteria
- The type of criteria to be used will differ according to the market to serve, namely whether it is aimed at mass consumption (B2C) or at other companies (B2B).
- it will be necessary to identify the criteria that are most relevant to the business and best able to explain consumer behaviour towards the product or service
- In the next slides are summarized the main segmentation criteria.
- Sometimes businesses have to use multiple criteria for market segmentation
- For more information consult the entrepreneur’s manual
- After diving the market into diferent segments, according to the chosen segmentation levels and criteria, it will be necessary to choose one more segment with which the business will work
- The chosen segment(s)n are called the target audience;
- After that, it is necessary to define the marketing policy for each of the chosen segment(s);
Working on the basis of market segments brings many advantages to the business.
- identify market opportunities easier;
- develop the right product for each target market;
- adapt prices, distribution channels and advertisements for the selected market;
- reach the market more efficiently;
