chapter-2

Starting the venture

• Generating business idea

• Sources of new ideas
• Methods of generating ideas
• Creative problem solving
• Opportunity recognition
• Environmental scanning
• Competitor and industry analysis.
Generating business idea
• Coming up with new and feasible business ideas is a crucial
initial step to becoming a great entrepreneur. For this reason,
there are several multi-billion entrepreneurs across the world
with testimonies and proof that they started off with an idea
and developed gradually into a thriving business. The real-life
scenarios have grown to become the some of the greatest
sources of business ideas and opportunities for both young and
established entrepreneurs and can work for anyone with the
desire to join the entrepreneurship world.
• 1. Interests and hobbies
• 2. Customer surveys
• 3. Brainstorming and dreams
• 4. Franchises
• 5. Mass media
• 6. Personal experience and talents
• 7. Trade fairs and exhibitions
Methods of generating ideas
• 1. Focus Groups
• 2. Brainstorming
• 3. Problem inventory analysis
• “SCAMPER”- A METHOD FOR IDEA GENERATION
Methods of generating ideas
• 1. Focus Groups – these are the groups of individuals providing
information in a structural format. A moderator leads a group
of people through an open, in-depth discussion rather than
simply asking questions to solicit participant response. Such
groups form comments in open-end in-depth discussions for a
new product area that can result in market success. In addition
to generating new ideas, the focus group is an excellent source
for initially screening ideas and concept.
Methods of generating ideas
• 2. Brainstorming – it is a group method for obtaining new ideas
and solutions. It is based on the fact that people can be
stimulated to greater creativity by meeting with others and
participating in organized group experiences. The
characteristics of this method are keeping criticism away; free
wheeling of idea, high quantity of ideas, combinations and
improvements of ideas. Such type of session should be fun with
no scope for domination and inhibition. Brainstorming has a
greater probability of success when the effort focuses on
specific product or market area.
Methods of generating ideas
• 3. Problem inventory analysis- it is a method for obtaining new
ideas and solutions by focusing on problems. This analysis uses
individuals in a manner that is analogous to focus groups to
generate new product areas. However, instead of generating
new ideas, the consumers are provided with list of problems and
then asked to have discussion over it and it ultimately results in
an entirely new product idea.
• The entrepreneur is not limited by only the three methods
presented in this article. There are other creative problem
solving methods and techniques that are also available.
SCAMPER ~ TECHNIQUES FOR INNOVATION
• SUBSTITUTE, SIMPLIFY
• COMBINE
• ADAPT
• MODIFY OR MAGNIFY OR MINIFY
• PUT TO OTHER USES
• ELIMINATE
• REVERSE OR REARRANGE
SCAMPER
• Alex Osborn, the originator of the brainstorming method, originally
came up with many of the questions used in the SCAMPER technique.
However, it was Bob Eberle, an education administrator and author,
who organised these questions into the SCAMPER mnemonic.
• The SCAMPER method helps you generate ideas for new products
and services by encouraging you to ask seven different types of
questions, which will help you understand how you can innovate and
improve existing products, services, problems and ideas. SCAMPER is
an acronym formed from the abbreviation
of: Substitute, Combine, Adapt, Modify (Also magnify and
minify), Put to another use , Eliminate, and Reverse. SCAMPER is
a lateral thinking technique which challenges the status quo and helps
you explore new possibilities.
• Substitute
• Find a part of your concept, product, service or process etc. that you could
replace with another to see whether it will result in improvements, such as
efficiency gains. This will help you test which alternative works better, like a
trial and error process. An example for a substitution would be an
automobile manufacturer using different composites for the frame to make
vehicles lighter.
• Combine
• Most of the time you don’t have to come up with something entirely new, but
the solution(s) actually already exists. One idea might not work alone, but
you could combine several ideas, processes or products into one more
efficient output. A great example for a combination of two different
products are cell phones with an integrated camera.
• Adapt
• As mentioned above, you probably already have the right solution to your
problem, you just don’t know it yet. Sometimes an idea that worked to solve
one problem, could also be used to solve a different problem. An example
for the successful adaption to a new situation is Netflix. The company
started out in 1999 as a DVD rent service, but unlike Blockbuster they
quickly realized that the future belongs to online streaming and changed
their business model. Netflix is now a serious competitor to traditional TV
networks, while Blockbuster went out of business in 2013.
• Modify
• Modify an aspect of your situation or problem, for example by magnifying,
i.e. exaggerating, them and see whether it gives you a new insight or
whether it adds any value. This will help you identify which part of your
process or concept is the most significant. An example for magnifying an
aspect would be an organization deciding to expand the production of one
product and focusing on that product.
• Put to another use
• This is very similar to “Adapt”, it’s about putting an existing idea or concept
to another use, i.e. using it differently than it was originally intended to.
• Eliminate
• The elimination might sound familiar to those that know about Lean or Six
Sigma. It’s about eliminating inefficient processes (‘waste’) with the goal of
streamlining them. An example for eliminating is Apple’s decision to not
include an optical CD/DVD drive in their MacBook Air to make them thinner
and lighter.
• Reverse
• Reverse the orientation or direction of a process or product, do things the
other way around, completely against its original purpose. Sometimes when
you reverse the way a product is used, it will help you see things from a
different perspective. For example, an organization that has always used
the top-down approach when making decisions, might find that they could
improve their decision making processes by adopting a bottom-up
approach.
creative problem solving

Step 1: Step 2: Step 3: Step 4: Step 5:

Clarify Ideate Develop Implement Evaluate
Step 1: Clarify
• To clarify is the critical step of recognizing the existence of a
gap between the current state and a desired state. This can also
be thought of as having need awareness, which occurs when
the entrepreneur notes a gap between societal or customer
needs and actual circumstances. Clarifying the problem by
speaking with clients and developing a detailed description of
the problem brings the specifics of a problem to light. Failure to
identify the specifics of a problem leaves the entrepreneur with
the impossible task of solving a ghost problem, a problem that
is fully unknown or unseen. To establish and maintain credibility,
an entrepreneur must clarify the problem by focusing on solving
the problem itself, rather than solving a symptom of the
problem.
Step 2: Ideate
• To ideate is the step of the creative problem-solving process
that involves generating and detailing ideas by the
entrepreneur. After collecting all information relevant to the
problem, the entrepreneur lists as many causes of the problem
as possible. This is the step in which the largest variety of ideas
are put forth. Each idea must be evaluated for feasibility and
cost as a solution to the problem. If a farm does not have clean
water, for example, the entrepreneur must list causes of toxic
water and eliminate as many of those causes as possible. The
entrepreneur must then move forward investigating solutions to
bring the water back to a safe state. If, say, nearby livestock
are polluting the water, the livestock should be isolated from the
water source.
Step 3: Develop
• To develop is the step in which the entrepreneur takes the list of
ideas generated and tests each solution for feasibility. The
entrepreneur must consider the cost of each idea and the
obstacles to implementation. In the preceding example, adding
a chemical to the water may not be a feasible solution to the
farmer. Not every farmer wants additional chloride or fluoride
added to the water due to the effect on both humans and
livestock. These tradeoffs should be addressed in the feasibility
assessment. The farmer might prefer a filtration system, but the
cost of that solution might not be practicable. The entrepreneur
should identify and assess alternative solutions to find one that
is most cost-effective and feasible to the customer.
Step 4: Implement
• To implement is the step in which the solution to the problem is
tested and evaluated. The entrepreneur walks through the
planned implementation with the client and tests each part of
the solution, if a service, or thoroughly tests a developed good.
The entrepreneur implements the solution and goes through a
structured system of follow-up to ensure the solution remains
effective and viable. In the water example, the solution would
be reducing runoff from toxic insecticides by adding prairie
strips, buffers of grass, and vegetation along banks of streams.
Step 5: Evaluate
• To evaluate is the step in which the final solution is assessed.
This is a very important step that entrepreneurs often overlook.
Any fallacy in the implementation of the product or service is
reassessed, and new solutions are implemented. A continual
testing process may be needed to find the final solution. The
prairie strips, buffers of grass, and vegetation along banks of
streams chosen in the farming water example should then be
analyzed and tested to ensure the chosen solution changed the
content of the water.
Opportunity recognition
• Opportunity recognition is actually a process that's found in the
way that individuals and businesses with an entrepreneurial
mindset approach new business ventures or ideas. In many
ways, it is a constant brainstorming in which individuals look for
''new and improved ways'' of addressing problems. It could be
a brand new business idea or even new products or services
that fulfill customers' needs and expectations.
SWOT ANALYSIS

• The purpose of the scan is the identification of opportunities

and threats affecting the business for making strategic business
decisions.
• As a part of the environmental scanning process,
the organization collects information regarding its environment
and analyzes it to forecast the impact of changes in the
environment. This eventually helps the management team to
make informed decisions.
 SWOT Analysis
• The internal environment offers strengths and weaknesses to
business while the external environment brings opportunities and
threats. The four influencing environmental factors known
as SWOT Analysis are:
• Strength – an inherent capacity of an organization which helps
it gain a strategic advantage over its competitors.
• Weakness – an inherent constraint or limitation which creates a
strategic disadvantage for a business.
• Opportunity – a favorable condition in the organization’s
environment enabling it to strengthen its position.
• Threat – an unfavorable condition in the organization’s
environment causing damage to the organization.
Components of a Business Environment
Micro Environment
• Customers and Consumers
• Competitors
• Organization
• Market
• Suppliers
• Intermediaries
PESTEL Analysis

• 1] Political
• 2] Economic
• 3] Social
• 4] Technological
• 5] Legal
• 6] Environmental
Industry analysis
• Industry analysis—also known as Porter’s Five Forces
Analysis—is a very useful tool for business strategists. It is
based on the observation that profit margins vary between
industries, which can be explained by the structure of an
industry.
• The Five Forces primary purpose is to determine the
attractiveness of an industry. However, the analysis also
provides a starting point for formulating strategy and
understanding the competitive landscape in which a company
operates.
Porter’s Five Forces Analysis

• The framework for the Five Forces Analysis consists of these

competitive forces:
• Industry rivalry (degree of competition among existing
firms)—intense competition leads to reduced profit potential for
companies in the same industry
• Threat of substitutes (products or services)—availability of substitute
products will limit your ability to raise prices
• Bargaining power of buyers—powerful buyers have a significant
impact on prices
• Bargaining power of suppliers—powerful suppliers can demand
premium prices and limit your profit
• Barriers to entry (threat of new entrants)—act as a deterrent against
new competitors
• feasibility analysis is designed to assess whether your
entrepreneurial endeavor is, in fact, feasible or possible. By
evaluating your management team, assessing the market for
your concept, estimating financial viability, and identifying
potential pitfalls, you can make an informed choice about the
achievability of your entrepreneurial endeavor. A feasibility
analysis is largely numbers driven and can be far more in depth
than a business plan (discussed in The Business Plan). It ultimately
tests the viability of an idea, a project, or a new business. A
feasibility study may become the basis for the business plan,
which outlines the action steps necessary to take a proposal
from ideation to realization. A feasibility study allows a business
to address where and how it will operate, its competition,
possible hurdles, and the funding needed to begin. The business
plan then provides a framework that sets out a map for
following through and executing on the entrepreneurial vision.
Market feasibility
• A market analysis enables you to define competitors and quantify
target customers and/or users in the market within your chosen
industry by analyzing the overall interest in the product or service
within the industry by its target market. You can define a market in
terms of size, structure, growth prospects, trends, and sales potential.
This information allows you to better position your company in
competing for market share. After you’ve determined the overall size
of the market, you can define your target market, which leads to
a total available market (TAM), that is, the number of potential
users within your business’s sphere of influence. This market can be
segmented by geography, customer attributes, or product-oriented
segments. From the TAM, you can further distill the portion of that
target market that will be attracted to your business. This market
segment is known as a serviceable available market (SAM).
Project report for New Business - Format

• Below is the sequence of standard format which should be

followed while preparing new business project report:
• Background of the business
• Customer's profile
• Long and short term Corporate Objectives
• To perform a viability assessment of the proposed new business ideas in
terms of marketability, technical feasibility, financing and authorities
• To be able to prepare a relevant business plan
• To recognize fundamental startup issues
Financial feasibility
• A financial analysis seeks to project revenue and expenses (forecasts come later in the full business
plan); project a financial narrative; and estimate project costs, valuations, and cash flow projections.
• The financial analysis may typically include these items:
• A twelve-month profit and loss projection
• A three- or four-year profit-and-loss projection
• A cash-flow projection
• A projected balance sheet
• A breakeven calculation
• The financial analysis should estimate the sales or revenue that you expect the business to generate. A
number of different formulas and methods are available for calculating sales estimates. You can use
industry or association data to estimate the sales of your potential new business. You can search for
similar businesses in similar locations to gauge how your business might perform compared with similar
performances by competitors. One commonly used equation for a sales model multiplies the number of
target customers by the average revenue per customer to establish a sales projection:
• T×A=ST×A=S
• Break-Even Assessment
• Profit and Loss Synopsis
• Fund Flow Summary
•