Chapter 3 Business Ideas and Opportunities

Introduction

In this chapter, you will be able to select a business opportunity from the environment and conduct a market survey. This will enable you to generate a business idea from the environment and create your own business to solve day-to-day problems.

After getting several ideas, the entrepreneur selects the best to form a business opportunity based on the available resources and carries out a market survey to assess the potential success of the business. Think about any three businesses that you can start in your school. Then choose the best. That business you have chosen is your business idea.

3.1:Business Ideas

Keywords

business idea

decision tree

By the end of this sub-topic, you should be able to;

(a) demonstrate and understand how to generate business ideas from the environment.

(b) generate a business idea

(c) select a good business idea.

Meaning of Business Ideas

An idea is a thought, plan, or suggestion about what to do to solve an ident problem. It can be something that you imagine or picture in your mind. A business idea is a concept that can be used for financial gain, that is us centred on a product or service that can be offered for money. An idea is important when it comes to starting up a business.

Assuming you have a sports competition at your school playground with schools for the whole day. Think of various examples of business action that can be done on that day.

The characteristics of a promising business idea are:

(a) Market driven

Solve a problem

Customer focused not product-driven

Find a market need

(b) Feasible

Attractive -there is a demand

Achievable -it can be done

Safe

Affordable

Durable -it lasts

(c) Unique Faster/Better/Cheaper

(d) Fundable

■Manageable risk

Scalable or Replicable

Growth potential

Differentiated (commodity)

Product pipeline

Sustainable -Market exists with the frequency of purchase

Activity 3.1.1

Identifying problem-solving business ideas

1. As a student of entrepreneurship, come up with ideas that may result into business activities to solve identified situations in your community below.

(a) Lack of sufficient safe water in your community.

(b) High demand for charcoal as source of energy in your community.

(c) Increased pollution due to increased disposal of wastes in your community.

2. Share your work with the rest of the class.

Sources of Business Ideas

Coming up with new business ideas is an important first step to becoming a great entrepreneur. The real-life scenarios have grown to become the greatest sources of business ideas and opportunities for both young and established entrepreneurs and can work for anyone with the desire to join the entrepreneurship world. For example, interest and hobbies.

A hobby is an activity that you enjoy doing during your leisure time. Most people have found great successful businesses while pursuing their interests or hobbies. For instance, if you enjoy traveling, playing with computers, music, sports, performing or cooking, you can develop it into a business.

Activity 3.1.2 Identifying sources of business ideas.

In groups, read the case study and answer the questions that follow;

Case study

Musinguzi is a resident of Fort Portal city. He loves travelling very much. During holidays, he goes on trips to see new places, animals, and learn about the history and culture of different people.

After walking, Musinguzi took a photograoh at a dry crater lake in Fort Portal.

Fig 3.1.1: Musinguzi at the crater lakes

Task:

1. Identify business ideas Musinguzi can generate from travelling as his hobby.

2. Use the internet or library research to find out more sources of business ideas 3

3. List down three problems that you repeatedly encounter around your home or school.

4. Generate three business ideas that can solve the identified problems in 3 above

All businesses originate when someone comes up with a good idea which turned into a reality.

Factors to consider when selecting a business idea: Skills, passions, and goals

Passion: As important as it is to find a profitable business, it is equally important choose a business that you have some passion for. So, when deciding on a busine idea to start, ask yourself this question- ‘Do I have any passion for this business ide

Skills: When you have determined that you have some passion for the business, next step is to evaluate your skills and capabilities. Do you have any special skills make you more capable (than an average person) of running the business you hav mind? Do you have distinguishing expertise and abilities?

Passion is essential in choosing a business idea, but having the right skills and exper will put you in a better position for success. Consider this: Someone who is passion about cooking and has fantastic cooking skills will be better positioned for success choosing a business that concerns food and cooking. If such an individual decide start a building or business consulting company, the odds of success are lower.

Goals: When deciding between business ideas, an important factor to consider is the business idea matches your personal goals, both long and short term. For example, if your goal is to serve the best food locally, or be the highest-ra restaurant, then you shouldn’t be starting a beauty salon but start a business focuses on your long-term goals. Setting up a business with clear goals in minc only motivates you but also positions you, better for success in business.

The Target Market and Opportunities

The target market is very important in deciding what business idea you want to start. To be successful in any business, you need to know who your potential customers are. What people will be interested in your product or service, and what they are looking out for. You also need to know what trends are changing and how you can satisfy your customers better.

To define and adequately understand your target market, you need to carry out market research which will reveal a lot of valuable information such as:

The size of the market The age structure of the market

The geographical concentrations of the market

Significant changes in market trends and customer behaviours.

Activity 3.1.3

Discussing the factors to consider before choosing a business idea

In groups, use internet or library research to answer the following questions;

1. Discuss the following factors that an entrepreneur should consider in order to choose a business idea.

(a) competition (b) financing (c) growth and expansion possibilities

2. Present your work to the rest of the class.

Selecting a Good Business Idea

Selecting a good business idea is the first step towards transforming the entrepreneur’s desire and creativity into a business. Essentially, entrepreneurs need ideas to start and grow their entrepreneurial ventures. Selecting ideas is an innovative and creative process.

Activity 3.1.4

Selecting a good business idea In groups, study the photographs in figures A, B, C and D, and answer the questions that follow;

To select a business idea, you have to consider your passion, skills, availability market, cost of production, risks involved, and many others.

Making Decisions using a Decision Tree

No matter what type of business you want to set up, it starts with a specific decisi A decision tree is a specific chart used to show the decision-making process mapping out different courses of action, as well as their likely outcomes.

A decision tree consists of:

Squares: These are decision points.

Circles: These are chance or probability nodes.

Activity 3.1.5 Creating a decision tree

In groups, read the scenario below and answer the questions that follow; Imagine you have saved some money together with your friends at school. Some members want to consume it on the last day of the term yet others want to invest the money.

Task:

1. Create a decision tree for this scenario.

2. Exchange your decision tree with another group to work on and comment on.

3. Explain the benefits of using the decision tree you have made above.

A decision tree helps you to make the best decisions and best guesses on the basis of the information you have. This is because it uses the probability of something happening to calculate likely outcomes.

3.2: Business Opportunities

Fig 3.3.4: A business opportunity from drinking straws

Key words

business opportunity

By the end of this sub topic, you should be able to;

(a) understandthe differences between business ideas and business opportunities.

(b) appreciate the characteristics of a good business opportunity.

Meaning of Business Opportunity

An opportunity is a favourable set of circumstances that creates a need for a new product, service, or business. A business opportunity can be defined as an attractive business idea worth investing in or propositions that provide the possibility of money returns for the person implementing them or taking the risk of investing in them.

For example, if you always enjoyed making and building stuff as a kid, selling handmade products is a great business opportunity to monetise your creativity. Even if you have the will to create something new but lack experience, there’s a way to make it happen. In simple terms, a business opportunity is the evidence that the entrepreneur’s idea can be turned to reality.

Activity 3.2.1 Understanding the meaning of a business opportunity

In pairs, read the scenario below to help you answer the questions that follow;

There are many business opportunities available in our communities, and a lot of them don’t require a huge investment to get started. Assuming your school is hosting Music Dance and Drama competitions and different schools are coming to participate. The school has also invited parents and guardians to be part of the function.

Activity 3.2.2

Differentiating between business ideas and opportunities

In groups read the case study below and answer the questions that follow;

Sylvia is a Christian girl who is an usher guiding people who have come to pray in church. Since she was not qualified for any job, she thought of many business ideas but somehow, she failed to determine the best.

She thought of making a saloon, boutique, decorations or events management, ,but all these ideas required a lot of money to start off, at least above five hundred thousand shillings, which she did not have. The saloon and decorations business in addition required her to have special skills which she did not have.

Three years after, she thought of turning the services she used to do in church into a business. She got convinced to start ushering on events. First of all, ushering didn’t need huge monies to start. She only needed to buy uniforms. She mobilised a group of other seven girls and they collected Uganda shs.400000.

The money was used to buy uniforms and transport. She had a lot of experience because of ushering in church for a number of years. The market was beyond enough since many of her church members used to organise functions which needed ushering services

Fig 3.2.6: Ushering team in uniform

1. Identify the different business ideas Sylvia had.

2. What business opportunity did she identify?

3. What factors enabled Sylvia to select the business opportunity in (2) above?

4. How does a business idea differ from a business opportunity?

5. Share your work with other members.

Entrepreneurs have many business ideas in their minds before they start-up a business. Some of these ideas may be of no commercial value, but the entrepreneurs analyse them to select a business opportunity which has been proven to be profitable. into business.

While choosing a business opportunity therefore, you must It is important to note that not all spotted business opportunities can be turned consider the following;

Demand of the product

Capital required

Availability of resources

Skills required

Ability to meet objectives

Competition in the business

Good business opportunities should be represented by customers’ requirements and lead to the provision of the goods or service that satisfies the customers (creates or adds value for the buyers or end user).

A good business opportunity must be carefully examined and should fulfill the following criteria: ■Real demand should exist for the products to be produced.

■Favourable return on the investment made.

■ Be able to favourably compete in the market (competitive).

■ Should meet the investors many objectives.

■ There should be availability of resources necessary for the investment.

3.3:Market Survey

Fig 3.3.1: A gentleman carrying out a market survey

Keywords

market

survey

strategies

By the end of this sub topic, you should be able to;

(a) carry out a market survey Meaning of a Market

(b) understand the importance of a market survey.

Meaning of a Market

Many businesses in our community sell different products. Think of how business owners determine the right products to sell and prices customers should offer. A these can be determined by demand and supply in the market.

A market is an arrangement of buyers and sellers, allowing or enabling exchang of commodities. A market survey is the investigation one carries out to understan the nature of the market for a particular product or service.

It can include an investigation into cusomers’ desires, tastes, income levels, ar the price they are willing to pay for the products/service. you want Market surveys are tools to directly collect feedback from the target audience, understand their characteristics, expectations, and requirements.

If start up any business, it’s important to get to know your customer. What they want out of a product, which price entices them the most, is there particular feature they look for or did something else “bring them in”?

These are all important questions to ask before launching a product. The process of Let’s say you start your own ice cream plant. How do you know what type of ice cream your audience is looking for? Do you want to sell to schools, grocery stores, or maybe start your own ice cream shop?

Even though beer brewing is a business gaining popularity, you will help your business to become a successful one by doing some market survey.

Importance of Conducting a Market survey

Why conduct a market survey? The environment that businesses operate in can be very changing. Changes in economic conditions, technology, demographic factors like age, sex, and new regulations can all affect the way you do business.

Reasons why an entrepreneur should conducting market survey .

Market research helps you understand your customers better. When you know what your customers are looking for, you’ll be able to tweak your product or service to fit the customer’s needs better. This is true whether you’ve already released, or you’re still in the planning stages. You can always change something that fell flat.

Your competitors are definitely using market research techniques. At this point, most companies are utilising market research. It just makes sense! If you choose not to, you’re putting yourself behind in the race for success. Understanding your competitors is an important facet of market research. If what they’re doing is working, you want to know why. If it isn’t, you’ll want to avoid making those same mistakes. On top of that, you can find dissatisfied customers who have had a bad experience with a different business and then learn from that mistake without making it on your own.

You can set better goals for your company with market research. It’s easy to come up with goals like, ‘I want to double our sales from this year, ‘or “I want to expand to two more locations, “but do you know if they’re actually feasible? Researching what the market looks like gives you the best picture of the field and what success will really look like.

• Market research helps you identify problems before they happen. As you grow into a bigger, different company, you may find yourself dealing with new problems. Whether that’s managing a more extensive website or supplying customer service to more people, you need to anticipate that change. With market research, you can solve your own challenges, sometimes before they happen at all.

Task:

1. State a general term to describe what Masannyu is doing.

2. Apart from using the tool above, how else would Masannyu get information

3. from customers? How useful is this activity to Masannyu as a businessman?

Market surveys are a way an entrepreneur gets to know their consumer audience by providing insights into their needs and desires to provide a relevant product with a fair price. You can even achieve this through telephone interviews to obtain information directly from a customer without waiting to meet them in person. The questions need to be short, clear, and easy to understand.

Activity 3.2.4

Carrying out a market survey

In groups, use either questionnaires or interview method; Your school administration has allowed you to sell any product of your choice through the entrepreneurship club.

Carry out a market survey and present a report covering the following. 23

1. Which product will you sell?

4. What price will you charge?

Who are the likely customers?

Do you have any competitors?

How are you going to manage them?

5. What would be the suitable location for your business? 5

6. How will you deliver your products to the customers?

How will you promote your products?’

Chapter summary

In this chapter, you have learnt how to generate business ideas from the environment, how to differentiate between a business idea and a business opportunity, the characteristics of a business opportunity and the importance of a market survey in business