U1 AOS 1: The Business Idea

Business Management 1&2 2023

Motivations for starting a business - Personal independence

- desire to have full control
- be in charge of decisions made for business
- freedom to organise own life
- flexibility in hours & working conditions

Motivations for starting a business - Financial independence

- fund desired lifestyle without relying on income from another individual (no longer relying on employees)
- directly related to success of actions when running their business

Motivations for starting a business - To make a profit

- business generating more revenue than expenses
- sales from product: expenses incurred in running the business such as wages

Motivations for starting a business - To fufil a market need

- a product that satisfies unmet needs referred to as filling "a gap in the market"

Motivations for starting a business - To fulfil a social need

- production of goods & services for purpose of making world better place
- business that addresses social need called social enterprise

Business Objectives - To make a profit

- money left over after business expenses have been deducted from money earned from sales
- important as allows business to survive & grow
- business success \= size of profit

Business Objectives - To increase a market share

- business's proportion of total sales in market or industry in compassion to competitors expressed as %
- usually objective in large businesses & small market shares gains can often translate into large profits for these businesses

Business Objectives - to fulfil a social need

- involves production or selling purpose of making world better place & improving lives of others

Business Objectives - to fulfil a market need

- "filling a gap in the market" can be done by offering service/good where there is customer demand

Business Objectives - to meet a shareholder expectations

- shareholders owners of business & expected to make return on investment
- dividends: share of company's profits
- capital gains: increase in value of shares

Business strategies

description of exactly how business plans to achieve business objectives

Sources of Business Opportunity - Innovation & entrepreneurship

- creating new product service or process

Sources of Business Opportunity - Recognising market opportunities

- need or want by consumers that is not currently being met by any rival businesses
- society's needs & wants change

Sources of Business Opportunity - Recognising market opportunities (factors that create market opportunities)

- changing demographics
- changing societal attitudes & norms
- changing laws & regulations
- advancements in technology

Sources of Business Opportunity - Changing customer needs

- customer's needs are impacted by popular trends

Sources of Business Opportunity - Research & development (R & D)

- directing resources towards discovering

Sources of Business Opportunity - Technological advancements

- inventions & innovation tools that solve problems & enhance processes
- improve how business create

Sources of Business Opportunity - Global markets

- globalisation: overseas countries
- allows business to reach more customers

Skills of Successful Entrepreneurs - Communication

- ability to transfer information to employees and other relevant people in way that is understood
- can be verbal

Skills of Successful Entrepreneurs - Delegating

- authority & responsibility to carry out specific activities transferred from manager to employee
- manager remains accountable for outcome (allows employees to make own decisions)

Skills of Successful Entrepreneurs - Planning

- can identify business objectives & determine methods or strategies to achieve those objectives
- can be strategic

Skills of Successful Entrepreneurs - Leading

- influence/motivate people to work towards achievement of business objectives

Skills of Successful Entrepreneurs - Decision making

identifying available options & choosing one course of action from alternatives
- involves being able to make decisions within a particular time frame

Skills of Successful Entrepreneurs - Interpersonal

- deal or liaise with people to build positive relationships with staff

Characteristics of Successful Entrepreneurs - Willing to take risks

* if not willing to risk in business - go backwards instead of progress
* start-up business requires owner to risk own personal assets
* must able to live with possibility of failure

Characteristics of Successful Entrepreneurs - Innovative thinkers

* come up with new ideas, then develop and improve them - creative

Characteristics of Successful Entrepreneurs - Resilience

* must be prepared to persist and preserve over long-term
* success can take years of hard work - constantly have curveballs
* ability to have sense of hope and confidence that future will be good and keep going even when things get tough

Characteristics of Successful Entrepreneurs - Confidence

* radiates power
* makes people believe in what you are saying - trust

Characteristics of Successful Entrepreneurs - Flexible

* ability to adapt and change direction when required
* result in changing tastes, consumer demands, or altering market conditions

Characteristics of Successful Entrepreneurs - Ability to work independently

* intrinsically/internally motivated to achieve personal goals, enjoy challenges and naturally competitive.

Business Concept Development - Business Opportunities

* can be found through experience or research up with new or innovated product that is not currently available

Business Concept Development - Business Concept

* idea for business that includes basic information
* service or product
* target demographic
* unique selling point (USP

Business Concept Development - Business Concept Development

* process of successfully refining and improving initial idea of product to allow it to become saleable and bring competitive advantage

Business Concept Development - Importance

* better chance of success in market place and will show whether business opportunity is feasible
* creates strong business plan that could help encourage financial lenders to invest in business

Business Concept Development - Process

1. Initial idea/concept
2. Conduct market research
3. Refine business idea
4. Conduct feasibility study
5. Write business plan

Business Concept Development - Intellectual property

* original creates of mind that can be legally owned
* include brand, logo invention, design or artistic work
* business implement range of legal barriers
* \

Legal barriers - Trademark

* legal protection for business over rights of name, symbols, colours, packaging or additional tools used to sell products

Legal barriers - Patent

* licence that provides business with exclusive rights to use of innovative devices, methods and processes

Legal barriers - Copyright

* free and automatic protection used on original ideas such as writing, art, sound, films and photographs

Legal barriers - Domain name

* unique website address

Business Concept Development & Business Opportunities Relationship

* Initial business ideas and concepts often developed after identifying business opportunity in market
* after recognising business opportunity, business owners can decide on goods or services they want to sell to gain competitive advantage
* foods or service in individual plans sell may or be significant improvement on something that already exists or entirely new offering

Market research

* process of collecting and analysing data from consumers about attitude, opinions and behaviours towards existing products/services
* data helps business make decisions about consumers and marketplace
* identify and evaluate industry in which they will be operating

Market research - Forecasting

* planning tool that relies on fate from past and present which determine future events
* qualitative - gathered from opinions
* quantitative - use of numerical date

Feasibility studies

* initial research required to determine whether a business concept potientially viable or whether identified resons business concept should not proceed
* information gathered from market research included and part of evaluation to determine if estibated cost result in profit

Components of Feasibility studies

1. Description of the business idea – products to be sold or service to be offered
2. Description of the market – consumers, size of market, expected sales
3. Profile of key people involved – skills, qualifications & experience
4. Analysis of the competition - and how a competitive advantage may be gained
5. Assessment of financial feasibility – preparation of budgets –  estimated cash flow, profits, and start up costs
6. Strengths of business owner/s – skills and experience in the area/industry, commitment to the idea

Feasibility studies - viability

* whether business capable of developing and growing - can survive and be profitable

Feasibility studies - market feasibility

* understanding of market conditions will help determine of business concept has potential to be successful in long term

Feasibility studies - operational feasibility

* individual will have to research what kind of employees required
* what equipment needed
* if resources accessible
* technology required

Feasibility studies - commercial feasibility

* afford cost of setting up business
* costs include hiring, purchasing equipment
* industry in position to supporting opening of specific business area - research involve examining market conditions and assessing profitability of market

Feasibility studies - technical feasibility

* examines current skills of individual starting business and ability to help business achieve aim
* establish resources required to support owner

Feasibility studies - legal feasibility

* understand legal regulations associated with starting business and determine if possible to start business while complying with applicable laws and registrations

Contribution to Economic wellbeing

* reflected by level of income, consumption and wealth people have to support their standard of living

Contribution to Economic wellbeing - Employment

* employ human labour to produce goods and services - employment opportunities
* individuals can use income to purchase goods and services to meet needs and wants
* supports growth of nation’s business and creates further job opportunities

Contribution to Economic wellbeing - Taxation revenue

* compulsory payment to government
* provide essential services
* businesses sell goods or services to make revenue → portion of revenue used to pay income to employees → government taxes individuals percentages of their income

Contribution to Economic wellbeing - Infrastructure

* essential facilities and structures
* transport, communications, education, power and electricity sercice
* functions society smoothly
* plays critical role

Contribution to Economic wellbeing - economic growth

* or Gross Domestic Product (GDP) known as total market value of production in country over period of time, minus cost or production
* ensure improved standard of living
* when businesses sell more, they increase total value of goods and services productid and sold with economy - results in economic growth

Contribution to Economic wellbeing - international trade

* exchange of goods and services between different countries
* allows businesses and individuals to good they may not otherwise have been to purchase
* exporting - money being accessed and fuelled into local economy from businesses in different countries
* importing - given businesses access to cheaper materials, which can reduce costs and price of final products

Contribution to Economic wellbeing - Research and development

* development of existing products, development of new businesses process as well as innovation of entirely new products
* outcomes - allow business to meet demands of customers, cut costs and improve affordability of products
* lower prices improve standard of living - customers purchase more goods and services

Contribution to Social wellbeing

* quality of life based
* non-material living standards
* includes general happiness, crime rates, environmental quality, education and accessibility of healthcare

Contribution to Social wellbeing - Employment

* likely to be happier and more fulfilled
* less financial stress because of regular income

Contribution to Social wellbeing - less crime

* lower unemployment levels - lower homelessness and crime rates
* more individuals afford housing and less incentive to turn to crime as source of income

Contribution to Social wellbeing - employee wellbeing programs

* improve mental health of workers
* programs such as counselling, employee check in sessions

Contribution to Social wellbeing - environmentally friendly

* sustainable production methods
* improve, protect and preserve environment we live in

Building Culture of Innovation & Entrepreneurship - Government investment in R&D

* implemented number of initiatives to assist business in R&D to make more affordable
* innovation connections - provides support and funding assistance to operate in growing industries
* R&D tax incentive - if business have revenue less than $20 million, spend over $20,000 on R&D and pay tax in Australia able to apply to receive tax offset, making financially feasible
* Accelerating commercialisation - government program provides funding and advisory support to develop new and innovative products. participants in program more quickly make products available in market

Building culture of Innovation & Entrepreneurship - Council grants for new businesses

* include money and incentives provided to businesses and individuals to pursue business ideas and development
* start-ups, business growth grants and relocation and expansion grants

Building culture of Innovation & Entrepreneurship - Business mentorship

* person or program that offers knowledge, advice and experience to another person
* offer assistance to businesses

Building culture of Innovation & Entrepreneurship - School-based educational programs

* introduce students to business world and develop business knowledge and problem-solving skills
* aims to create culture of innovation and increase student confidence and willingness to develop innovative ideas in future as well as to highlight career pathways

Building culture of Innovation & Entrepreneurship - Creation of regional start-up hubs

* place where businesses and individuals to go seek support and have place and space to use without having to set up in own office
* particularly beneficial for regional businesses