Learning Outcomes • Upon completion of this chapter you should be able to: • Outline how entrepreneurs get ideas for business • Identify and explain internal and external sources of new product or service ideas • Explain the stages in the new product or service development process
Sources of Business Ideas for Entrepreneurs and Business Start-ups • Brainstorming • Solve a problem that exists, e.g. Dyson vacuum cleaner • Spot a gap in the market • Copy an idea from another country • Family and friends
Franchises • A franchise is a business arrangement where one business (franchisor) sells the right to use its products and its brand name to another business (franchisee) • Examples include: Supermacs, McDonalds, Subway, Dominos Pizza, Chopped.
Advantages of Franchises • The idea already exists. • The brand name may be well established. • The franchisor provides support and training. • Costs such as marketing can be shared between the franchisees. Disadvantages of Franchises • A negative response to one franchise might affect all. • Disputes over the balance of power between the franchisor and the franchisee.
Forms of Business Ownership • When establishing a business, an entrepreneur will need to decide on the legal structure of the business. • Ownership structures in Ireland include: • Sole trader: owned and managed by one person • Partnership: between two and twenty owners • Private limited company: set up by between 1 and 149 people called shareholders
Sources of New Product Ideas for Existing Businesses • Existing businesses need new ideas to replace or improve existing products. • Business ideas can be generated from inside the business (internally) or ideas may be generated from outside the business (externally).
Internal Sources of Ideas • Brainstorming sessions • Ideas from employees within the business (intrapreneurship) • Sales personnel • Research and development (R&D) department
External Sources of Ideas • Competitors • Import substitution • Customer complaints or feedback • Market research
The Product Development Process • Helps entrepreneurs and businesses develop ideas that have genuine market potential. • Ensures that the finished product has the best possible chance of success. • Product development is expensive and risky. • If major problems arise it may be more cost effective to halt the development process than to launch a product which will generate losses.
Recap and Review • Can you do the following?: • Outline how entrepreneurs get ideas for business • Identify and explain internal and external sources of new product or service ideas • Explain the stages in the new product or service development process