Generating & Protecting Business Ideas

Business Experience

Experience from working in a particular market or industry.

Advantages:

• Better of understanding of what customers want
• Knowledge of competitors, pricing and suppliers 
• Less need for market research 
• Able to make more realistic assumptions in the business plan
• Industry contacts

Disadvantages:

• Doesnt have a fresh perspective
• Entrepreneurs that are new to the market might exploit approaches successful in other industries

Personal Experience

Comes from day-to-day dealings, hobbies and interests

Observation

Simplu observing what goes on around you

An entrepreneur will often decide what product/service to offer based on their own experience i.e. a product/service they are familiar with through a previous hobby/interest/job.

Advantages:

• Good knowledge of the features of the product/service
• Passionate and interested in the product/service so motivated to do well
• Good contacts in an established market
• May already have a good reputation within the market

Disadvantages:

• Is there room for another competitor?
• The entrepreneurs passion might not be shared
• Knowledge of the product/service isnt the only skill needed?

The entrepreneur might spot a gap in the market for unmet consumer needs.

Advantages:

• Basing product/service on customer needs
• Benefit of being first in the market
• No/little competition in the early stages of setting up their business when it is most vulnerable

Disadvantages:

• Entrepreneur will have little or no expertise in the market
• Is the gap real? Has somebody else tried to exploit and discovered why it doesnt work?
• Competition may enter quickly and capture the market share

A replication of a successful business formula. The franchisor licenses the use of trademarks and proven businesss ideas to the franchisee. 

Each franchise is owned and operated by a franchisee. 

However, the franchisor retains control over the way in which products and services are sold and marketed. They also control the quality and standards of the business.

Benefits:

• Franchisors can expand the business quickly
• Risk is shared - much of the cost is met by the franchisee
• Franchisee may have very good entrepreneurial skills which will earn the franchisor revenue

Pitfalls:

• Some franchisees become powerful as they acquire more franchises 
• Potential loss of control as to how the product/service is presented to the customer
• May be difficult to control quality as franchise network expands
• Litigation - a failed franchisee is a court case waiting to happen

Benefits:

• Able to sell an already recognised and successful product/service
• Take advantage of central services such as marketing, purchasing, training, stock control, accounting systems and administration provided by the franchisor
• Franchisor may have experience in the market that the fracnhisee can benefit from

Pitfalls:

• Proportion of revenue is paid to the franchisor
• Lack of control - franchisee has to follow the franchisors rules
• Right to operate might be withdrawn

Copyright - Protection given to books, plays, films and music. Does not protect ideas until they are fixed.

Patent - An exclusive right to use a process or produce a product, usually for a fixed period of time (up to 20 years). A patent protects new inventions, they way they are made, what they are made from and how they work.

Trademark - A word, image, sound or smell that enables a business to differentiate itself from competitors. A trademark can create loyalty amongst customers.