MODULE 3

Are you ready to learn today?

WEEK FIVE AND SIX In this module, you will how
to generate and how to
What is It ? identify a sound business
idea.

We’re you able to identify the terms being asked? Let’s see how they are related in our
lesson.

Needs and Wants: Business Opportunity

Everyone has his or her own needs and wants. However, these needs and wants are considered
differently by us. We have different concepts of the things that we need and we want. However, it is
important to be able to identify and classify as to which are our needs and wants as knowing this may
present a good business opportunity.

Basic needs are things that are essential for us and our wellbeing. These are the things that we
cannot do without. These include:
 Basic commodities for consumption,
 Clothing and other personal belongings,
 Shelter, sanitation, and health,
 Education and skills-generation,
 Relaxation and leisure

The needs and wants of people are the basic indicators of the kind of business that you may engage
into. The knowledge for the needs and wants can serve as a measure for the success of your business idea
as you will have an idea which product or service will generate more demand from your target market.
The needs and wants of people are the basic indicators of the kind of business that you may engage
into. The knowledge for the needs and wants can serve as a measure for the success of your business idea
as you will have an idea which product or service will generate more demand from your target market.

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BBUSINESS ENTERPRISE AND SIMULATION Developed by: Rebecca M. Tripulca 1 of 5
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 Generating Ideas for your Business
You can also generate sound ideas for your business by considering different factors such as the kind of
people that you want to cater, their needs and wants, lifestyle, culture and tradition, and social orientation that they
belong. There are different ways by which you may generate ideas for your business. These include:

1. Examine the existing goods and services . Are you satisfied with the product/service? What do
other people who use the product/service say about it? How can it be improved? Improving an existing good or
service may generate a good business opportunity for you. You can improve the materials used in producing the
product. You can also introduce new ways on how the product can be used, making it more useful and adaptable to
the customers’ many needs. Improving or enhancing an existing product or service is known as innovation. You can
also invent a new and improved product or service to replace the existing ones.

2. Examine the present and future needs. Look and listen to what customers, institution, and
communities are missing in terms of goods and services. Sometimes, these needs are already obvious and
recognized immediately. Other needs, on the other hand, are not as obvious since they can only be identified in the
future and in the event of certain developments in the community.

3. Examine how the needs are being satisfied. Needs for the products and services are referred
to as market demand. To satisfy these needs is to supply the products and services that meet the demands of the
market. The term market refers to whoever will use or buy the product or service, and these may be people or
institutions such as other businesses, establishments, organizations, or government agencies. There is a very good
business opportunity when there is absolutely no supply to a pressing market demand. Businesses or industries in
the locality also have needs for goods and services. Their needs for raw materials, maintenance, and other services
such as selling and distribution are good sources of ideas for business.

4. Examine the available resources around you. Observe what materials or skills are available
in abundance in your area. A business can be started out of available raw materials by selling them in a raw form and
by processing and manufacturing them into finished products. The work and experience that you may have will
provide you with business opportunities to acquire the needed skills which will earn for you extra income, should
you decide to engage in income-generating activities. With your skills, you may also tinker around with various things
in your spare time and invent new products.

5. Read magazines, news articles, and other publications on new products and
techniques or advances in technology. The internet also serves as a library where you may browse and
surf on possible businesses. It will also guide you on how to put the right product in the right place, at the right price,
at the right time. Listing of possible businesses to set up in an area may also be available from banks and local non-
government organizations.

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 Selecting the Right Business Idea
According to Bautista (2014), once you have started identifying the business opportunities within your reach,
you can eventually see that there are various possibilities available for you. However, it very unlikely that you will
have enough resources to pursue all of them at once. Hence, you have to know which one to choose.

You have to select the most promising one from among hundreds and one ideas. It will be good to do this in
stages. In the first stage, you should screen your ideas to narrow them down to about five choices. In the next stage,
trim down the five choices to two options. In the final stage, choose between the two and decide which business
idea worth pursuing (Bautista, 2014).

Bautista (2014) stated that in screening your ideas, examine each one in terms of the following factors:

 How much capital is needed to put up the business?

How big is the demand for the product/service? Do many people need this product/service and continue to
need it for a long time?

 How is the demand met? Who are processing the products/services to meet the need (competition or
demand)? How much of the need is now being met (supply)?

 Do you have the background and experience needed to run this particular business?

 Will the business be legal, not going against any existing or foreseeable government regulation?

 Is the business in line with your interest and expertise?

Scanning the Market

Ed Crowley (2007) defined market scanning as the process of continually and actively monitoring the
external environment in order to identify customer needs, anticipate competitive actions, and, identify technological
changes which will provide new market opportunities or market disruptions. You must constantly be probing and
exploring the external environment to identify significant changes and explore competitive activity.

The following list from Jobber Academy (n.d.) provides a non-exhaustive overview of the different factors
one must consider in the Market Scanning. These factors are known as the PESTLE factors:

 Political factors usually involve things that impact your business from a government or legal
standpoint. Political is similar to legal and social, but is a bit different, as political factors seem to change more often.
Some examples are:

 Income Tax and other taxes

 Minimum wage laws
 Union influences
 National and local policies

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 Economic factors are financial fluctuations that are typically out of your control. For example, interest
rates go down meaning your business loan cost more last year than it will this year. Some other examples
include:

 GDP loss or growth

 Inflation rates
 Company debt o Income of potential customers in your area
 Employee salary trends in the service business industry

 Social factors refer to the cultural norms and attitudes of your targeted demographic and that of your
employees, partners, competitors, etc. For example, an increase in demand of ‘green energy’ use can affect
the energy source you use to power your equipment and vehicles. Other factors are:

 Customer age
 Cultural norms and traditions
 Population growth or decline
 Service career attitudes o Diversity
 Religious influences o Public health and safety

 Technological factors have a direct impact on the cost of doing business and the efficiency of your
business. Falling behind on technological trends, using outdated equipment or software, and examining the
technological barriers your business faces to enter a new market all fall within this category. Other factors to
consider include:

 Automation opportunities
 centives, like tax credits
 Better equipment coming on the market
 Service business software updates
 Improvements to mobile devices and other communications

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 Legal factors will directly influence the company’s operations of your service business right now. Some
legal factors can also determine your final cost of doing business and impact demand for your company’s
services. These legal factors include:

 Consumer protection laws

 Various insurance laws and mandates After studying the lesson in

 Environmental factors refer to anything that can impact your business from an ecological or
environmental standpoint. This part of the analysis will matter more for some industries than others. For
example, if you own a landscaping business, you’ll need to concern yourself with the weather every single
day, while plumbers can work indoors. Other environmental factors may include:

 Environmental impact of service business practices

 Geography o Access by road, rail, air
 Waste management
 Local attitudes towards pollution

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