Chapter 03

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New Business Creation and Existing Business:

CHAPTER- 03 New Business Creation and Existing Business

Creating A New Business:

Reasons for starting new business rather than buying existing business include the following: Invention of a new product or service that necessitates a new type of business. Freedom to select the ideal location, equipment, products or services, employees, suppliers, and bankers. Avoidance of undesirable precedents policies, procedures and legal commitments of existing business. Creating A New Business

Business Idea:

A business idea is a short and precise description of the basic operations of an intended business. A good business starts with good business idea. Before you can start a good business you need to have a clear idea of the sort of business you want to run. A successful business meets the needs of its customers whilst making profit. Business Idea

Business Idea:

Business Idea What is a Business idea?

Your business idea will tell you::

What product or service your business will sell. To Whom your business will sell. How your business is going to sell its products or services. Which need your business will fulfill for the customers. Your business idea will tell you:

Which type of business are you most suited for?:

You can also think about which main type of business you might be most suited to. There are four main types of businesses: Retailing Wholesaling Manufacturing Service providing Which type of business are you most suited for?

Retailing:

Retailing Retailers purchase ready made goods from wholesalers or suppliers for resale at a profit. Examples of retail businesses are grocery stores, hardware stores, clothing boutiques and stationary shops.

Wholesaling:

Wholesalers are larger dealers, who buy from producers (the people who make the products). They buy very large quantities of products which they break then into small quantities and resell to the retailers. Wholesaling

Manufacturing:

Manufacturing Manufactures are entrepreneurs who use raw materials, such as leather, food, Cloth or metal, and make new products out of these materials. Examples of manufacturing businesses are shoemakers, furniture-makers, dressmakers, and farm implements-makers.

Service providing :

Service providing Service providers are people who sell a particular service. For example transporters, hairdressers, bankers, laundries, delivery companies, building contractors, machine repairers, clearing service, and painters.

Generate Your Own Business Ideas:

Generate Your Own Business Ideas

Generate Your Own Business Ideas:

Brainstorming Visits to your local business area Investigating your environment Using experiences Generate Your Own Business Ideas

BRAINSTORMING:

BRAINSTORMING Brainstorming is a way of opening up your mind and helping you to think of many different ideas. You start with a word or topic and just write down everything that comes into your mind. You continue for as long as you can, putting down everything even if it seems irrelevant or odd. Good ideas can grow from vary strange beginnings.

VISITS TO YOUR LOCAL BUSINESS AREA:

Another way of discovering good business ideas is to look around your local area. Find out what type of businesses are already operating in your area and see if you can identity any gaps in the market. VISITS TO YOUR LOCAL BUSINESS AREA

INVESTIGATING YOUR ENVIRONMENT:

Resources from nature People’s abilities and skills Institutions Industries Import substitution Publications Trade fairs and exhibitions INVESTIGATING YOUR ENVIRONMENT

Resources From Nature:

Think what is a available in your area in abundance that could be made into useful products without harming the environment. Natural resources include materials from soil, agriculture, forest, mineral, desert, water etc. Perhaps there is a good clay soil for making bricks nearby. Such clay can be used for other business ventures such as making plates, cups of tiles. Resources From Nature

Peoples' Abilities And Skills:

Do the people in your area have some special skills that could be useful for a business? Are there people who are good weavers or carpenters? Peoples' Abilities And Skills

Institutions:

Are there schools, hospitals or government agencies in your area ? What kind of businesses can you think of that would serve their needs ? There are services they may require such as maintenance, repairs and cleaning, and there are supplies they may use such as stationary, furniture, cleaning materials, food or linen. Institutions

Industries :

Are there factories in your area ? What kind of business would they need ?Again, there will be services and supplies that they purchase. There may be a chance of getting subcontracted work. Subcontracting means doing a job for another business. For example, a building construction firm may subcontract the painting work on new houses they are building. Go and talk to people who work there. Industries

Import Substitution:

Can you think of anything that is imported that might be made locally? Import Substitution

Publications :

Printed material may help you find ideas. See if you can find a library in a local school or institution. Publications

Trade Fairs And Exhibitions:

Organizations hold trade fairs and product exhibitions which are meant to give people business ideas. Be sure to attend any you can. Trade Fairs And Exhibitions

USING EXPERIENCES:

Look at the list of your experiences and contacts which you compiled. Are there any possible business ideas that you can derive from your own past experiences/ Brainstorm for each type of experience. USING EXPERIENCES

OTHER PEOPLE’S EXPERIENCES :

OTHER PEOPLE’S EXPERIENCES Listen carefully to what people say about their experiences – they are all potential customers.

ANALYZE YOUR BUSINESS IDEAS AND SELECT THE BEST ONE:

Field research SWOT analysis ANALYZE YOUR BUSINESS IDEAS AND SELECT THE BEST ONE

FIELD RESEARCH:

By taking to customers, suppliers and members of the business community you can collect useful information about the factors that affect your business idea. You can have informal discussions and make observations or you can arrange more formal visits and interviews. FIELD RESEARCH

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SWOT ANALYSIS

SWOT ANALYSIS:

Once you collected the information from the field in terms of the opportunities and threats, now you can conduct SWOT analysis. It helps you to focus on possible problem areas and potential advantages of each idea. SWOT stands for Strengths Weaknesses Opportunities and Threats SWOT ANALYSIS

Inside The Business:

Strengths are the specific positive aspects which will give your proposed business an advantage over similar business ventures and competitors. It could be that you propose to sell a better quality product or to have a location which is more accessible to your customers. Weaknesses on the Other hand are the specific aspects that your business will not be good at. Perhaps your costs will be high because your business is located far form suppliers and you will have to pay more for transport. Inside The Business

Outside The Business:

Opportunities are ongoing potential developments around you that will be good for your business. For example it could be that the demand for the product you are proposing will increase because of growing number of tourists coming to visiting the country. Threats are probable events that may affect your business negatively. For example, that business idea could be so simple that other people may start similar businesses in your area and reduce your share of the market. Outside The Business

Business idea: Low price clothes shop Inside the business :

STRENGTHS WEAKNESSES 1. Good marketing skills  1. Monthly rent for the shop is high.  2. Once worked in a clothing shop  3. Have an eye for quality fashion  4. The proposed business site is close to both suppliers and customers  Business idea: Low price clothes shop Inside the business

Outside the business :

OPPORTUNITIES THREATS 1. The price of new clothes is unaffordable for many of the potential clients  1. There are plans to start a weekly market where low price clothes will be available.  2. Prices are going up all the time so more people will buy low price clothes  Outside the business

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