LC BUISNESS- Identifying Business Ideas

External Sources of new business ideas 1/4

1 family and friends. Ideas for new products can come from family members, friends and colleagues

External Sources of new business ideas 2/4

2 media. ideas can come from the media i.e social media e.g popsocket enables users to take selfies easier with a steadier hand

External Sources of new business ideas 3/4

3 networking. meeting new people to build relationships and share business ideas and information e.g going to corporate functions like conferences

External Sources of New Business Ideas 4/4

4 market trends. a business keeps an eye on market trends to identify new goods and services to satisfy consumer needs

Internal Sources of New Business Ideas 1/4

1 brainstorming. people from different areas of the business come up with as many ideas as possible e.g friends created the irish fairy door company while brainstorming at a kitchen table

Internal Sources of new business ideas 2/4

2 interests and hobbies. the entrepreneur looks at what they enjoy doing and try turn their hobbies and or interests into a business e.g gaming youtubers initially always have a passion for playing videogames

Internal Sources of new business ideas 3/4

3 frustration. entrepreneurs may be frustrated about the lack of products on the market e.g James Dyson was upset that his vacuum did not have enough suction power and after 5000 prototypes he created the dyson vacuum

Internal Sources of new business ideas 4/4

4 Intrapreneurship. means that ideas come from employees, through suggestion schemes or boxes e.g by adding new features

The seven steps of development process of a new products

1 idea generation

2 product screening

3 concept development

4 feasibility study

5 prototype development

6 test marketing

7 product launch

Step 1 of Development Process of a New Products

1 idea generation. ideas found through internal and external sources like brainstorming and family and friends

Step 2 of Development Process of a New Products

2. product screening. ideas are vetted, impractical/unworkable ideas are dropped, and the best ones are chosen, the ideas most likely to be successful are chosen for further development, this saves the business time and money developing a product that consumers will buy

Step 3 of Development Process of a New Products

3 concept development. the idea is turned into an actual product. USP of product is identified which makes it different from other products on the market.

USP (abbreviation meaning)

unique selling point

Unique selling point (definition)

A feature of the product or services which sets it apart from similar products or services and from its competitors. What you have that the competitors don't. The USP is valued by a customer and attracts them to the product

Step 4 of Development Process of a New Products

4 feasibility Study. identifies whether the product is technically and commercially viable, its 3 aims are:

1 production: can the product physically be made? Will it meet government regulations, e.g. safety standards?

2 financial: what will it cost to make the product?

3 marketability: Is there a demand for the product?

Step 5 of Development Process of a New Products

5 prototype development. Sample product is produced to see if:

1 can it be made?

2 what materials are required to make it?

3 does it appeal to customers?

used to test product to see if it meets standards.

determine whether adjustments or improvements can be made.

Step 6 of Development Process of a New Products

6. test marketing. small launch to get consumers initial feedback. business evaluates how consumers react and if any further changes need to be made

Step 7 of Development Process of a New Products

7 product launch. product launched to the entire market and full scale production begins. strong market campaign is needed to raise consumer awareness, pricing and channels of distribution are established

Limitations of Break Even Analysis 1/5

1 sales. assumes that all products manufactured will be sold. In times of low demand, a firm may have difficulty selling its products.

Limitations of Break Even Analysis 2/4

2 selling price. it assumes that selling price per unit remains the same for all items sold. It does not take into account times the business may sell the items at a lower price. E.g discounts for bulk buying

Limitations of Break Even Analysis 3/4

3 faulty products. it assumes that there is always 100% quality 100% of the time

Limitations of Break Even Analysis 4/4

4 classification of costs. it assumes that the business knows all its costs and can categorise them into fixed and variable costs.

Total Revenue (TR)

forecast output x selling price per unit

Break even units

fixed costs/ contribution

contribution

selling price per unit- variable cost per unit

profit

total revenue-total costs

Break even in euro

break even in units x selling price

variable cost

forecast output x variable cost

margin of safety

forecast output in units- break even point in units

niche market

segment of a broader market with consumers that have unique/specific needs e.g the hermes birkin bag item of high social class and luxury and has a limited but highly sought out clientele

margin of safety definition

the margin of safety is the amount of sales (in units) that a business can afford to lose before it reaches Break-even Point. It identifies the point at which businesses will start to make a loss and acts as a buffer for business to ensure that this point is not reached