Entrepreneurship and Start-ups

03600201
Prof. Sharad Ganjegaonkar
Lecturer-Applied science, Diploma study
Entrepreneurship and Start-ups 03600201
 CHAPTER-2
Business Ideas and their implementation
Introduction business idea
1. Entrepreneurship is the ability and readiness to develop, organize and run a
business enterprise, along with any of its uncertainties in order to make a
profit. The most prominent example of entrepreneurship is the starting of
new businesses.

2. The entrepreneurial vision is defined risk-taking and is an indispensable part

of a nation’s capacity to succeed in an ever-changing and more competitive
Introduction business idea
1. idea means what exists in the mind as a representation (as of something
comprehended) or as a formulation (as of a plan).”

2. An idea is the content of cognition or the main thing one is thinking about
or intends to do. An idea may apply to a mental image or formulation of
something seen or known or imagined, to a pure abstraction, or to
something that exists in the mind of a person.
3. The celebrated economist, Joseph Schumpeter perceived an entrepreneur
as a person having the willingness and the ability to convert a new idea or
invention into a successful innovation. Those idea which have a value to the
investor, customer and capable of generating a revenue model for a
business, are business ideas.
Introduction business idea
1. Unless an idea is relevant in the market place, having requisite
feasibility, commercial viability and innovative content, it cannot
be termed as business ideas. All ideas despite being innovative
may not culminate into a viable business opportunity. Business
ideas should be thoroughly tested and validated before resources
are tied up in the business. The success of a business, in the first
place rely heavily on robustness of sound business idea.
Introduction business idea
Following are the characteristics of a sound business idea

:
1. Fulfils a customer need – a problem is solved
2. Clear focus
3. Innovative
4. Unique
5. Sustainable
6. Profitable in the long term
Introduction business idea
1. The development of new products and/or services usually focuses
on improving “customer’s satisfaction”. Successful implementation
of a business idea eventually leads to lowering of cost, while also
passing on the benefits to the consumers in terms of lower
product prices.
2. Business Ideas – Need
3. The business idea must be relevant to the entrepreneur. It should
be based on a fact that the entrepreneur should be able to sell the
product/service at a profit.
Introduction business idea
1. The business idea should be selected so as to:
2. 1. Enable entrepreneurs to utilize their skills. An entrepreneur may
have technical, market, or any other skills. This gives much greater
confidence in entering the market.
3. 2. Enable the use of locally available raw materials for products or
services. As compared to imported materials local materials are
easy to procure and convert.
4. 3. Help entrepreneurs make products that have a demand, but are
not freely available in the market. It is potentially a good idea to
start with a product that can be sold. In this case the entrepreneur
has only to learn production technology and locate the sources of
raw material.
Introduction business idea
• 4. Enable use of any technical know-how of the entrepreneur or
some specific machines, the entrepreneur is familiar with. If an
entrepreneur has knowledge of some special manufacturing
techniques, because of previous experience or otherwise it is
easier for the entrepreneur to manufacture the product.

• 5. Enable the entrepreneur to solve a current problem existing in

the market. Products may be available in the market but do not
meet the demand fully or in a satisfactory manner. Sometimes an
existing product is used in combination with another, which is not
available. Attempts to solve such market problems do give rise to
business ideas.
Introduction business idea
• Business Ideas – 3 Aspects to be Considered

• To persuade an investor to park the funds into a business idea, the

following aspects should be considered:
Introduction business idea
End User’s Benefit:
1.An entrepreneur should introspect and ask what the real customer
benefit is, and what problems will be solved through his product or
service? T.e key to marketing success is not – rather it is the satisfied
consumer. People buy to satisfy a need, o to solve a problem, e.g.,
food and drink, home, clothes or movie tickets-something that makes
work easier, or enhances wellbeing or self-esteem, etc.
2.The first vital aspect of a successful business idea is to clearly
describe what need will be catered to and how i.e. in which form it will
be catered to. This is also referred to as a “Unique Selling Proposition”
(U.S.P) by marketing practitioners.
Introduction business idea
2. Market:

A business idea can succeed only when it has commercial value, i.e.
when the market accepts it. The second important aspect of a
successful business idea is to identify how big the target market is for
the product or service offered and how it differentiates itself from the
products and services of competitors.
Introduction business idea
. Revenue Mechanism
The business idea should clearly reflect the manner in which the
revenue will be earned along with the quantum of revenue to be
earned by selling the product or service. The business so set up on the
basis of such an idea, should not only be profitable but also sustainable
in line with the legal, social and environmental challenges and
expected compliances with the relevant laws.
Business Ideas – Several Sources
A business idea/project idea may be discovered from several sources.
The ideas also originate in several forms:
A government-owned laboratory filing the most parents in the country;
the chief of another government-owned laboratory defecting to the
private sector; a resurgence in venture capital activity in the country,
this time focused around the creation of IP (Intellectual Property); a
continuation of the trend of multinationals putting down research
laboratories and development centers in India; and a significant
growth in patent-filing activity by Indian companies. Like all good ideas
it grows and grew till it acquired a life of its own.
Business Ideas – Several Sources
Early on in the making of this, BT’s Twelfth Anniversary Issue, it
became evident that this wasn’t just about multinationals setting
research-shop in India.

Project identification is concerned with collection, compilation and

analysis of economic data for the eventual purpose of locating possible
opportunities for investment and with the development of such
opportunities.
Business Ideas – Several Sources
Observing Markets

1. Careful observation of markets can reveal a business idea. Market

surveys can also reveal the demand and supply position for various
products. It is necessary to estimate future demand and to take into
account anticipated changes in fashions, income levels, technology,
etc. In this connection, it will be useful to ascertain whether the
demand is elastic or inelastic and whether the product is repeat
purchase or not.
Business Ideas – Several Sources
2. Attempt should be made to determine the trend of demand
and the composition and pattern of potential users of the product. A
survey of the available channels of distribution should also be made so
that the selling campaign can be properly planned well in advance of
the production. Advice of professional experts like dealers, commercial
consultants, bank managers, advertising agencies may also be obtained
to supplement product analysis and market surveys.
Business Ideas – Several Sources
3. Competition and price trends can also be found through
market surveys. From the data collected through market observation,
one can identify the products/industries which are in demand and
which require an increase in supply. A promoter can then find out the
most profitable line of business. For example, the scarcity of edible oil
prompted many firms to enter into the production/supply of edible oils
in India.
Business Ideas – Several Sources
Prospective Consumers
Consumer knows best what he wants and the habits/tastes which are
going to be popular in the near future. Contacts with prospective
consumers can also reveal the features that should be built into a
product/service. These days’ good business firms generally conduct a
survey among prospective consumers before choosing the product to
be manufactured.
These firms also conduct a market test of the prototype product before
launching it into the market. The customer is the foundation of a
business and it is he who keeps it going. Therefore, data on consumer
needs and preferences must be collected. Initially, a new enterprise
should concentrate on one or a limited range of products.
Business Ideas – Several Sources
. Developments in other Nations
People in underdeveloped countries generally follow the fashion
trends of developed countries. For example, video, washing machines,
micro ovens, etc. which are now the ‘in things’ in India were being
used in the United States and Europe before the eighties.
Therefore, an entrepreneur can discover good business ideas by
keeping in touch with developments in advanced nations. Sometimes,
entrepreneurs visit foreign countries in search of ideas for new
products/processes. Trade delegations of various chambers of
commerce, etc. visit foreign markets to explore foreign collaborations
and other types of business ideas.
Business Ideas – Several Sources
4. Study of Project Profiles

Various Government and private agencies publish periodic profiles of

various projects and industries. These profiles describe in detail the
technical, financial and market requirements and prevailing position. A
careful scrutiny of such project profiles is very helpful in choosing the
line of business. Technical and other types of experts may be employed
to carry out a specialised study of project profiles and to suggest the
most promoting projects/industries for further evaluations.
Business Ideas – Several Sources
Government Organisations

Several Government organizations nowadays assist entrepreneurs in

discovering and evaluating business ideas. Development banks, state
industrial development/investment corporations, technical
consultancy organizations, investment centers, export promotion
councils, etc. provide advice and assistance in technical, financial,
marketing and other areas of business.
The government also identifies the priority sectors for investment
through five-year plans, industrial policy resolutions, and guidelines for
the industry. In this connection government publications on trade and
industry can also be helpful in discovering business ideas. Items
reserved for the small sector will also indicate the potential areas.
Business Ideas – Several Sources
6. Trade Fairs and Exhibitions
National and international trade fairs are a very good source of
business ideas. At these fairs, producers and dealers in the concerned
industry put up their products for display and/or sale. A visit to these
fairs provides information about new products/machines. Negotiations
for the purchase, production, collaboration, dealership, etc. may also
be made at these fairs.
Business Ideas – Several Sources
. Attending Motivation Campaigns:

Entrepreneurial programs are organized periodically by the Public

Sector Commercial banks, Industrial and Technical consultancy
Industries Service Institute and the District Industries Centres
individually and in association with one another where also advice and
guidance are made available to the Interested participants/potential
entrepreneurs.
Some Other Sources of Business Ideas:
When a person wants to set up an enterprise the first action is to
generate ideas for products or businesses. Initially, it seems difficult to
be able to think of many ideas. Entrepreneurs should use as many
sources as possible for scanning product ideas from the environment.
Business Ideas – Several Sources
Sources of Business Ideas:
1. Observing the problems in the society
2. Discussion with other people
3. Looking through books
4. Visiting shops and attending trade shows
5. Information from Research institutes
6. Brainstorming.
Business Ideas – Several Sources
Generating Ideas

i. Brainstorming – It helps in generating a large number of product

ideas. It should be conducted by an expert and none of the ideas
mentioned be evaluated or judged. At this stage one should not worry
if the ideas is suitable or not.

ii. New ways of doing old things – A large number of products are being
made and provided in the market using traditional methods and
practices. One approach can be to examine if these can be made by a
different and newer method that gives the entrepreneur an advantage
over the older method.
Business Ideas – Several Sources
Sources of Business Ideas:
1. Observing the problems in the society
2. Discussion with other people
3. Looking through books
4. Visiting shops and attending trade shows
5. Information from Research institutes
6. Brainstorming.
Business Ideas – Several Sources
iii. Converting hobby into business – Some people are adept at doing
something or the other as a hobby or for use in the house only. It is
possible to use such skills to set up an enterprise. Hobbies like
photography, interior decoration, fashion designing etc., are often
developed as business ventures.

iv. Utilizing waste material – Conservation and environment

protections are presently getting a lot of attention. Recycling waste or
turning them into useful products are good product ideas. Presently
energy conservation products also have good potential.

v. Improving an existing product – An existing product can be improved

by using old techniques with more care or using newly developed
technology.
Activity Map of business idea
An activity map is a diagnostic tool to identify your organisation’s
competitive advantage. It connects your organization’s value
proposition to the activities of your organization that enable you to
deliver this value proposition better than any competitors.
Activity Map of business idea
An activity map is a diagnostic tool to identify your organisation’s
competitive advantage. It connects your organization’s value
proposition to the activities of your organization that enable you to
deliver this value proposition better than any competitors.
Activity Map of business idea
Drawing the activity map is not easy. However, once you have a good
one, it is a very insightful strategic tool. Use you activity map to:
• Make incremental decisions about whether a new idea or
opportunity fits the strategy. If the new opportunity does not
undermine any other aspect of the activity
• Communicate how every function and policy contributes to
the organisation strategy; you can also use it to cascade KPIs down the
organisation, linking with your Balanced Score Card
• Identify mis-fits. What do you do that undermines any part of
your activity map?
Activity Map of business idea
• Make decisions about the boundary of the organisation. It is a
strategic risk to outsource anything on your activity map since this is
the core of your competitive advantage. Anything not on this map is
context and can be outsourced and managed for cost effectiveness.
(Geoff Moore’s Core and Context)
• To make organisation decisions for new ventures or
acquisitions. If the activity maps of the businesses are very different,
combing them in the same organisation will create trade-offs, and they
are better off separate, even if this increases the cost base.
Activity Map of business idea
What do you do in the analysis?
1. Brainstorm a long list of unique/special aspects of your company.
Include many different types of things assets, resources, policies,
culture, and processes. Starting with brainstorming will help you avoid
missing things.
2. Then start with the most important differentiated benefit from the
Value Proposition
3. Then ask yourself “How do we deliver this?”. Draw the cause-and-
effect tree through several layers of cause and effect
4.Do the same for each differentiated benefit from the Value
Proposition. Note common causes
5.Combine the cause-and-effect trees to one map, linked by the
common causes
Activity Map of business idea
What do you do in the analysis?

5. Combine the cause-and-effect trees to one map, linked by the

common causes
6. Iterate – use post-Its or a whiteboard, and shuffle to make links
clearer. Best to do this as a team exercise, bringing in people from
diverse parts of the company.
7. Sense check:
a. From your brainstorming – is there anything important missing from
your map?
b.Can you explain the business logic behind every cause-and-effect
relationship?
c. Does it fit with your intuition?
Business plan
Business plan
• Definition: A written document describing the nature of the
business, the sales and marketing strategy, and the financial
background, and containing a projected profit and loss statement
•
• A business plan is also a road map that provides directions so a
business can plan its future and helps it avoid bumps in the road.
The time you spend making your business plan thorough and
accurate, and keeping it up-to-date, is an investment that pays big
dividends in the long term.
Business plan
What do you do in the analysis?
1. Brainstorm a long list of unique/special aspects of your company.
Include many different types of things assets, resources, policies,
culture, and processes. Starting with brainstorming will help you avoid
missing things.
2. Then start with the most important differentiated benefit from the
Value Proposition
3. Then ask yourself “How do we deliver this?”. Draw the cause-and-
effect tree through several layers of cause and effect
4.Do the same for each differentiated benefit from the Value
Proposition. Note common causes
5.Combine the cause-and-effect trees to one map, linked by the
common causes
Business plan
Your business plan should conform to generally accepted guidelines
regarding form and content. Each section should include specific
elements and address relevant questions that the people who read
your plan will most likely ask. Generally,

A business plan has the following components

Business plan
Title Page and Contents
A business plan should be presented in a binder with a cover listing the
name of the business, the name(s) of the principal(s), address, phone
number, e-mail and website addresses, and the date. You don't have to
spend a lot of money on a fancy binder or cover. Your readers want a
plan that looks professional, is easy to read and is well-put-together.
Include the same information on the title page. If you have a logo, you
can use it, too. A table of contents follows the executive summary or
statement of purpose, so that readers can quickly find the information
or financial data they need.
Business plan
Executive Summary
The executive summary, or statement of purpose, succinctly
encapsulates your reason for writing the business plan. It tells the
reader what you want and why, right up front. Are you looking for a
$10,000 loan to remodel and refurbish your factory? A loan of $25,000
to expand your product line or buy new equipment? How will you
repay your loan, and over what term? Would you like to find a partner
to whom you'd sell 25 percent of the business? What's in it for him or
her? The questions that pertain to your situation should be addressed
here clearly and succinctly.
The summary or statement should be no more than half a page in
length and should touch on the following key elements:
Business plan
Executive Summary
The executive summary, or statement of purpose, succinctly
encapsulates your reason for writing the business plan. It tells the
reader what you want and why, right up front. Are you looking for a
$10,000 loan to remodel and refurbish your factory? A loan of $25,000
to expand your product line or buy new equipment? How will you
repay your loan, and over what term? Would you like to find a partner
to whom you'd sell 25 percent of the business? What's in it for him or
her? The questions that pertain to your situation should be addressed
here clearly and succinctly.
The summary or statement should be no more than half a page in
length and should touch on the following key elements:
Business plan
• Business concept describes the business, its product, the
market it serves and the business' competitive advantage.
• Financial features include financial highlights, such as sales
and profits.
• Financial requirements state how much capital is needed for
startup or expansion, how it will be used and what collateral is
available.
• Current business position furnishes relevant information
about the company, its legal form of operation, when it was founded,
the principal owners and key personnel.
• Major achievements points out anything noteworthy, such as
patents, prototypes, important contracts regarding product
development, or results from test marketing that have been
conducted.
Business plan
Description of the Business
The business description usually begins with a short explanation of the
industry. When describing the industry, discuss what's going on now as
well as the outlook for the future. Do the necessary research so you
can provide information on all the various markets within the industry,
including references to new products or developments that could
benefit or hinder your business. Base your observations on reliable
data and be sure to footnote and cite your sources of information
when necessary. Remember that bankers and investors want to know
hard facts--they won't risk money on assumptions or conjecture.
Business plan
Description of the Business
The business description usually begins with a short explanation of the
industry. When describing the industry, discuss what's going on now as
well as the outlook for the future. Do the necessary research so you
can provide information on all the various markets within the industry,
including references to new products or developments that could
benefit or hinder your business. Base your observations on reliable
data and be sure to footnote and cite your sources of information
when necessary. Remember that bankers and investors want to know
hard facts--they won't risk money on assumptions or conjecture.
Business plan
Description of the Product or Service The business description can be a
few paragraphs to a few pages in length, depending on the complexity
of your plan. If your plan isn't too complicated, keep your business
description short, describing the industry in one paragraph, the
product in another, and the business and its success factors in two or
three more paragraphs.
When you describe your product or service, make sure your reader has
a clear idea of what you're talking about. Explain how people use your
product or service and talk about what makes your product or service
different from others available in the market. Be specific about what
sets your business apart from those of your competitors.
Market Analysis
Market Analysis
A thorough market analysis will help you define your prospects as well
as help you establish pricing, distribution, and promotional strategies
that will allow your company to be successful vis-à-vis your
competition, both in the short and long term.
Begin your market analysis by defining the market in terms of size,
demographics, structure, growth prospects, trends, and sales
potential. Next, determine how often your product or service will be
purchased by your target market. Then figure out the potential annual
purchase. Then figure out what percentage of this annual sum you
either have or can attain. Keep in mind that no one gets 100 percent
market share, and that a something
Market Analysis
USP (unique selling proposition) is.

You'll also have to describe your positioning strategy. How you

differentiate your product or service from that of your competitors and
then determine which market niche to fill is called "positioning."
Positioning helps establish your product or service's identity in the
purchaser’s eyes. A positioning statement for a business plan doesn't
have to be long or elaborate, but it does need to point out who your
target market is, how you'll reach them, what they're buying from you,
who your competitors are, and what your USP (unique selling
proposition) is.
Market Analysis
How you price your product or service is perhaps your most important
marketing decision. It's also one of the most difficult to make for most
small business owners, because there are no instant formulas. Many
methods of establishing prices are available to you, but these are
among the most common.
• Cost-plus pricing is used mainly by manufacturers to assure
that all costs, both fixed and variable, are covered and the desired
profit percentage is attained.

• Demand pricing is used by companies that sell their products

through a variety of sources at differing prices based on demand.

•
Market Analysis

•Competitive pricing is used by companies that are entering a market

where there's already an established price and it's difficult to
differentiate one product from another.

•Markup pricing is used mainly by retailers and is calculated by adding

your desired profit to the cost of the product.
Market Analysis
Competitive Analysis
The purpose of the competitive analysis is to determine:
•the strengths and weaknesses of the competitors within your market.
•strategies that will provide you with a distinct advantage.
•barriers that can be developed to prevent competition from entering
your market.
•any weaknesses that can be exploited in the product development
cycle.
The first step in a competitor analysis is to identify both direct and
indirect competition for your business, both now and in the future.
Once you've grouped your competitors, start analyzing their marketing
strategies and identifying their vulnerable areas by examining their
strengths and weaknesses. This will help you determine your distinct
competitive advantage.
Market Analysis
Competitive Analysis
The purpose of the competitive analysis is to determine:
•the strengths and weaknesses of the competitors within your market.
•strategies that will provide you with a distinct advantage.
•barriers that can be developed to prevent competition from entering
your market.
•any weaknesses that can be exploited in the product development
cycle.
The first step in a competitor analysis is to identify both direct and
indirect competition for your business, both now and in the future.
Once you've grouped your competitors, start analyzing their marketing
strategies and identifying their vulnerable areas by examining their
strengths and weaknesses. This will help you determine your distinct
competitive advantage.
Market Analysis
Financial Components of Your Business Plan
After defining the product, market and operations, the next area to
turn your attention to are the three financial statements that form the
backbone of your business plan: the income statement, cash flow
statement, and balance sheet.
The income statement is a simple and straightforward report on the
business' cash-generating ability. It is a scorecard on the financial
performance of your business that reflects when sales are made and
when expenses are incurred. It draws information from the various
financial models developed earlier such as revenue, expenses, capital
(in the form of depreciation), and cost of goods. By combining these
elements, the income statement subtracting cost of goods and
expenses from revenue to arrive at a net result, which is either a profit
or loss.
Market Analysis
Balance sheets are used to calculate the net worth of a
business or individual by measuring assets against
liabilities. If your business plan is for an existing business,
the balance sheet from your last reporting period should
be included. If the business plan is for a new business, try
to project what your assets and liabilities will be over the
course of the business plan to determine what equity you
may accumulate in the business. To obtain financing for a
new business, you'll need to include a personal financial
statement or balance sheet.
Market Analysis
Balance sheets are used to calculate the net worth of a
business or individual by measuring assets against
liabilities. If your business plan is for an existing business,
the balance sheet from your last reporting period should
be included. If the business plan is for a new business, try
to project what your assets and liabilities will be over the
course of the business plan to determine what equity you
may accumulate in the business. To obtain financing for a
new business, you'll need to include a personal financial
statement or balance sheet.
References
1. https://www.researchgate.net/publication/
301659818_Introduction_to_Entrepreneurship
2. https://www.cmu.edu/swartz-center-for-entrepreneurship/education-and-
resources/project-olympus/pdf/entrepreneurship-101.pdf
3. http://sim.edu.in/wp-content/uploads/2018/11/Entrepreneurship.pdf
www.paruluniversity.ac.in