Business Idea Generation

 

 

 

 

• Identify personal skills

• Screening of viable business ideas

• Selection of one best business idea

• SWOT analysis of best idea

 Identify your personal skills  [top]                                                                      

Before going deeper into business idea generation you need to test yourself as an entrepreneur in terms of your personal characteristics, situations and skills.

To help you decide if you are the right kind of person to start a business, think about each of the following factors. Decide for each one of them if it is strength or a weakness for you in running your own business. Now, test yourself with the following:

Assessment of entrepreneurial characteristics (example)

Are your strengths greater than your weaknesses?

The larger the number of strengths you have, the more you can feel comfortable to start your business. In case you have weaknesses with respect to the above entrepreneurial characteristics, be sure that there  is room to eliminate or improve them. Do you feel comfortable about starting a business after considering your strengths and weaknesses?  

 Yes:..........  No:..........

               Factors to strengthen yourself

Now, do you feel comfortable about starting your own business?   Yes:..........  No:..........

If yes, start generating your business ideas as outlined below.

 Screening of viable business ideas  [top]                                                        

The next step in establishing a new business is to select at least five to ten business ideas through brainstorming. You identify your project ideas, which seem feasible and profitable from your individual point of view. Brainstorming helps you make a first selection of business ideas and is like pouring all these ideas into a filtering funnel:
 

With the help of some basic criteria the three most promising business ideas are filtered before each of them is further scrutinised.

 Selection of one best business idea   [top]                                                     

The second stage adds quality to the first stage by adjoining different parameters related to economic judgements (market, skills, technology/equipment, raw material, availability of solvent demand, situations of competitors). After the above-mentioned parameters are evaluated and rated, new business start-ups can go into a finer crosschecking of the key variables (Critical Success Factors) affecting the success or failure of the project idea. 

Use the following parameters to come up with one best business idea. For easier decision making, it is possible to score each of the parameters as follows:

      Example for selecting one best business idea

          Scoring system: 5 - extremely high; 4 - high; 3 - average; 2 - fair; 1 - poor; 0 - absent.

Critical Success Factors (CSF)

After evaluating and rating these factors, go into a finer crosschecking of the key variables affecting the success or failure of the business idea. E.g. not just 'raw material' but seasonal availability of raw material, lack of standardisation of raw material, unpredictability of raw material supply.

Attention! CSF implies a critical success factor particular to the identified business, which is very important for the success of that specific business. If that certain factor is missing, is inadequate or is not properly taken into account, it can result in the total failure of the envisaged business idea. By making comparisons between the scores of the above parameters for each business idea, it is possible to choose one, which is viable. In this example, the second business idea may be the best one.

It is also important to see the following additional parameters in selecting the business idea:

• Ease of implementation criteria:

  • Whether the business can be started within a short  gestation period or reasonable preparatory period (such as three months) or not; and

  • The degree to which the entrepreneur can control unforeseen difficulties and commence operations;

  • The available financial and human resources.

• Risk exposure criteria:

  • Whether the product can readily be copied or imitated if found very profitable by others;

  • Competitors who have more resources and expertise may effectively retaliate if threatened by the new business;

  • The envisaged business may suffer from unforeseen factors such as unavailability of raw materials.

• Government priority and support criteria:

  • Is the envisaged business under government's list of priorities for promotion of investment and employment generation?

  • Is there a possibility of getting government support such as tax exemption or reduction, loan on reduced rate of interest or other supports such as market access, technical or advisory services?

The following format is presented as an example to show you how it is possible to generate one best business idea in a step-by-step way.

    Business idea generation

You need to check the rest of the business ideas in a similar way, followed by the selection of the best one.

 Test your business idea with a SWOT analysis   [top]                                 

You need to know whether the selected business idea is a competitive and profitable venture. One way to test a business idea is to do a SWOT analysis. A SWOT analysis is a technique to identify Strengths, Weaknesses, Opportunities and Threats of enterprises or projects whereby internal and external factors are considered. A SWOT technique can be applied to the functional areas of an enterprise as well as projects, products and services. For the purpose of starting a new business, the Strength, Weakness, Opportunity and Threat (SWOT analysis) deserve greater attention as it helps you evaluate or decide whether to start the business or not. 

• For strengths and weaknesses you look inside your business and your personal situations possibly affecting the business venture;

• For opportunities and threats you look outside your business and try to assess situations outside of your influence but which you can make use of or possibly avoid.

Outcome of the SWOT analysis will enable you to:

• Continue with the selected business idea and make a full feasibility study;

• Make changes to the business idea or;

• Drop the business idea completely.

In order to check the feasibility of your envisaged business idea, you need to make a SWOT analysis in terms of:

• Availability of market;

• Availability of raw materials and other supplies;

• Availability of appropriate equipment/technology;

• Technical skills;

• Organisation and management;

• Financial capacity and availability of appropriate loan facilities;

• Other external factors.

The following overview helps you take all the necessary aspects of the SWOT analysis into consideration:

        Coverage of a SWOT analysis

        Steps of SWOT analysis to evaluate your business

Now, take the case stated under the bakery example and do a SWOT analysis.

           SWOT analysis format