Business idea

A business idea is a concept that can be used for financial gain that is usually centered on a
product or service that can be offered for money. An idea is the first milestone in the process of
building a successful business. Business ideas are those ideas which have the capability of
becoming a productor a service in the market as such.
Characteristics
 Innovative
 Unique
 Problem solving
 Profitable
 Understandable
Innovation
For businesses, this could mean: creating new ideas, new product development through research
and development, or improving existing services. Innovation can be the central focus of a
business and this can help them to grow and become a market leader if they execute their ideas
properly. Businesses that are focused on innovation are usually more efficient, cost-effective,
and productive. Successful innovation should be built into the business strategy, where you can
create a culture of innovation and drive forward creative problem-solving.
Unique selling Proposition
A unique selling point (USP) is the factor that makes a company or a product stand out from its
competitors, whether it is through; pricing, quality, customer service or innovation. Each
successful company has a unique selling proposition (USP). A USP can be created through the
element of being first to a market, for example Uber was the first company to allow
for taxicab hailing via mobile app. Because Uber had reached this market first, it had a USP and
therefore it received loyal customers. However; with fierce competition copying Uber's business
model, Uber has had to develop its service through innovation
Problem solving
Business ideas that solve problems are fundamental to developing the world and companies such
as Cure mark are one of many who do this. Cure mark is a biotech company founded by Joan
Fallon, who noticed that a lot of the children she treated were low on an enzyme for processing
protein and since then she has quit her job and has built Cure mark to solve this problem. Cure
mark has now raised $50 million and is on its way to solving a problem that truly exists.
Profitability
Profitability is a business's ability to generate earnings compared to its costs over a certain period
of time. This is possibly the most important aspect of any business idea in the long term, as this
is what makes a business survive in order to keep having the impact that it has. Profitable ideas
need a strong revenue stream against its costs and this tends to create the success of the business,
however, some companies defy this and make losses to begin with, yet are still exceptional
business ideas that are worth billions
Ways to generate the ideas
Scanning the environment
 Screening large amount of information
 Scan humungous information to see emerging trend.
Creativity and creative problem solving
 Combine ideas in a unique way or to make unusual associations between the ideas.
 Role of creativity and creative problem solving as a structured technique for generating
ideas is that a number of specific creative.
 Attribute listing develops a new idea and look at the positive or negative attributes of a
product or a service.
 Free Association like a chain of word associations.
Brainstorming
 Unstructured discussion in which one idea leads to another.
 A group of people sitting in a room and discussing a problem.
Focus Group
 Moderator focuses the group discussion or whatever issues are being examined
 A focus group can provide an excellent way to generate new ideas and to screen proposed
ideas and concepts.
Market research
 Gathering information about products or services that already exist in the market.
 Systematic and in-depth study is undertaken.
Types of business ideas
 A gap in the market.
 New product, service or invention.
 Innovative solution to an every-day problem.
 An interest or hobby that can be monetized.
 Utilized skills you’ve learned in your career.
Misconceptions and realities
 Great ideas just appear from nowhere. They come in structured and a systematic way.
 There are no illogical ideas
 The customer will tell you what to do if you will only listen. More involvement required.
 All ideas can be generated in one meeting
 Great ideas are not the problem, implementing them is.
Evaluate an idea
 To decide what’s important.
 Identify strength and weakness of the idea.
 Making best use of limited resources.
 Minimizing risk and maximizing returns.

Business plan
A business plan is a document that defines in detail a company's objectives and how it plans to
achieve its goals. A business plan lays out a written road map for the firm from marketing,
financial, and operational standpoints. Both startups and established companies use business
plans. A business plan is an important document aimed at a company's external and internal
audiences. For instance, a business plan is used to attract investment before a company has
established a proven track record. It can also help to secure lending from financial institutions.
Furthermore, a business plan can serve to keep a company's executive team on the same page
about strategic action items and on target for meeting established goals. Although they're
especially useful for new businesses, every company should have a business plan. Ideally, the
plan is reviewed and updated periodically to reflect goals that have been met or have changed.
Sometimes, a new business plan is created for an established business that has decided to move
in a new direction. A written description of the business idea and how it will be carried out,
including all major business activities.
Purposes of a Business Plan
Chances are, someone drafting a business plan will be doing so for one or more of the following
reasons:
1. Securing financing from investors.
Since its contents revolve around how businesses succeed, break-even, and turn a profit, a
business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of
showing potential investors or lenders how their capital will be put to work and how it will help
the business thrive. All banks, investors, and venture capital firms will want to see a business
plan before handing over their money, and investors typically expect a 10% ROI or more from
the capital they invest in a business.
Therefore, these investors need to know if – and when – they'll be making their money back (and
then some). Additionally, they'll want to read about the process and strategy for how the business
will reach those financial goals, which is where the context provided by sales, marketing, and
operations plans come into play.
2. Documenting a company's strategy and goals.
A business plan should leave no stone unturned. Business plans can span dozens or even
hundreds of pages, affording their drafters the opportunity to explain what a business' goals are
and how the business will achieve them.
To show potential investors that they've addressed every question and thought through every
possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations
strategies – from acquiring a physical location for the business to explaining a tactical approach
for marketing penetration.
To show potential investors that they've addressed every question and thought through every
possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations
strategies – from acquiring a physical location for the business to explaining a tactical approach
for marketing penetration.
These explanations should ultimately lead to a business' break-even point supported by a sales
forecast and financial projections, with the business plan writer being able to speak to the why
behind anything outlined in the plan.
3. Legitimizing a business idea.
Everyone's got a great idea for a company – until they put pen to paper and realize that it's not
exactly feasible. A business plan is an aspiring entrepreneur's way to prove that a business idea is
actually worth pursuing. As entrepreneurs document their go-to-market process, capital needs,
and expected return on investment, entrepreneurs likely come across a few hiccups that will
make them second guess their strategies and metrics – and that's exactly what the business plan is
for.
It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world
and reassures the readers that whoever wrote the plan is serious about the idea, having put hours
into thinking of the business idea, fleshing out growth tactics, and calculating financial
projections.
Components of a business plan
Executed summary
overview This section outlines the company and includes the mission statement along with any
information about the company's leadership, employees, operations, and location.
Products and Services
Here, the company can outline the products and services it will offer, and may also include
pricing, product lifespan, and benefits to the consumer. Other factors that may go into this
section include production and manufacturing processes, any patents the company may have, as
well as proprietary technology. Information about research and development (R&D) can also be
included here.
Written Description
This brief part of your business plan will detail your business name, years in operation, key
offerings, and positioning statement. You might even add core values or a short history of the
company. The company description’s role in a business plan is to introduce your business to the
reader in a compelling and concise way.
Investor companies
Financial planning
This section should include a company's financial planning and projections. Financial statements,
balance sheets, and other financial information may be included for established businesses. New
businesses will include targets and estimates for the first few years plus a description of potential
investors.
Marketing strategies
 This section describes how the company will attract and keep its customer base and how it
intends to reach the consumer. A clear distribution channel must be outlined. The section also
spells out advertising and marketing campaign plans and the types of media those campaigns will
use.
Competitive advantage
Just about every industry has more than one player in the market. Even if your business owns the
majority of the market share in your industry or your business concept is the first of its kind, you
still have competition. In the competitive analysis section, you’ll take an objective look at the
industry landscape to determine where your business fits. A SWOT analysis is an organized way
to format this section.
Budget
Every company needs to have a budget in place. This section should include costs related to
staffing, development, manufacturing, marketing, and any other expenses related to the business
Industry analysis
A firm needs a good handle on its industry as well as its target market. This section of the plan
will detail a company's competition and how the company fits in the industry, along with its
relative strengths and weaknesses. It will also describe the expected consumer demand for a
company's products or services and how easy or difficult it may be to grab market share from
incumbents.
Management team
So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready
for what you have to offer. Who’s responsible for turning all this high-level talk into results? The
“team” section of your business plan answers that question by providing an overview of the roles
responsible for each goal. Don’t worry if you don’t have every team member on board yet,
knowing what roles to hire for is helpful as you seek funding from investors.
SWOT analysis
Strengths weaknesses, vision mission threats market share position of industry sales pricing,
management team, area, achieving break even i.e. no profit no loss, cash flow, credits etc.
Types of business plan
They can normally fall into two different categories
Traditional
According to the Small Business Administration (SBA), the traditional business plan is the most
common. It contains a lot of detail in each section. These tend to be longer than the lean startup
plan and require more work.
Lean startup.
Lean startup business plans, on the other hand, use an abbreviated structure that highlights key
elements. These business plans aren't as common in the business world because they're short as
short as one page and lack detail. If a company uses this kind of plan, it should be prepared to
provide more detail if an investor or lender requests it. The lean startup business plan is an option
when a company prefers a quick explanation of its business. The company may feel that it
doesn't have a lot of information to provide since it's just getting started.
Sections can include: a value proposition, a company's major activities and advantages, resources
such as staff, intellectual property, and capital, a list of partnerships, customer segments, and
revenue sources.
Startup Business Plan
As one of the most common types of business plans, a startup business plan is used for brand
new business ideas. This plan is used to lay the foundation for the eventual success of a business.
Business Acquisition Plan
A business plan for an existing company will explain how an acquisition will change its
operating model, what will stay the same under new ownership, and why things will change or
stay the same. Additionally, the business plan should speak to what the current state of the
business is and why it's up for sale.
Business Repositioning Plan
When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or
owners will develop a business repositioning plan. Companies planning for a business reposition
do so – proactively or retroactively – due to a shift in market trends and customer needs. This
plan will:
 Acknowledge the current state of the company.
 State a vision for the future of the company.
 Explain why the business should (or must) be repositioned.
 Outline a process for how the company will adjust.
Expansion Business Plan
Expanding a successful business venture into another location typically requires a business plan,
as the project may focus on a new target market and demand more capital. Fortunately, an
expansion business plan isn’t like a startup business plan in that it starts from scratch. Instead,
this type of plan references sales, revenue, and successes from existing locations. However, as
great as a reference as these points can be, it's important to not be too reliant on them since it's
still a new business that could succeed or fail for a myriad of reasons.
 Business Model
It is a company plan for making profit. It identifies the products or services the business will sell,
identifies sources of revenue. The term business model refers to a company's plan for making
a profit. It identifies the products or services the business plans to sell, its identified target
market, and any anticipated expenses. Business models are important for both new and
established businesses. They help new, developing companies attract investment, recruit talent,
and motivate management and staff.
Established businesses should regularly update their business model or they'll fail to anticipate
trends and challenges ahead. Business models also help investors evaluate companies that
interest them and employees understand the future of a company they may aspire to join.
Types of business model
Retailer
One of the more common business models most people interact with regularly is
the retailer model. A retailer is the last entity along a supply chain. They often buy finished
goods from manufacturers or distributors and interface directly with customers. i.e. Wholesale.
Manufacturer
A manufacturer is responsible for sourcing raw materials and producing finished products by
leveraging internal labor, machinery, and equipment. A manufacturer may make custom goods
or highly replicated, mass produced products. A manufacturer can also sell goods to distributors,
retailers, or directly to customers. i.e. Ford Motor Company
Fee-for-Service
Instead of selling products, fee-for-service business models are centered around labor and
providing services. A fee-for-service business model may charge by an hourly rate or a fixed cost
for a specific agreement. Fee-for-service companies are often specialized, offering insight that
may not be common knowledge or may require specific training. i.e. DLA Piper LLP
Subscription
Subscription-based business models strive to attract clients in the hopes of luring them into long-
time, loyal patrons. This is done by offering a product that requires ongoing payment, usually in
return for a fixed duration of benefit. Though largely offered by digital companies for access to
software, subscription business models are also popular for physical goods such as monthly
reoccurring agriculture produce subscription box deliveries. i.e. Spotify
Freemium
Freemium business models attract customers by introducing them to basic, limited-scope
products. Then, with the client using their service, the company attempts to convert them to a
more premium, advance product that requires payment. Although a customer may theoretically
stay on freemium forever, a company tries to show the benefit of what becoming an upgraded
member can hold. i.e. LinkedIn or LinkedIn Premium
 Bundling
If a company is concerned about the cost of attracting a single customer, it may attempt to bundle
products to sell multiple goods to a single client. Bundling capitalizes on existing customers by
attempting to sell them different products. This can be incentivized by offering pricing discounts
for buying multiple products. i.e. AT&T
Marketplace
Marketplaces are somewhat straight-forward: in exchange for hosting a platform for business to
be conducted, the marketplace receives compensation. Although transactions could occur
without a marketplace, this business models attempts to make transacting easier, safer, and
faster. i.e. eBay
Affiliate
Affiliate business models are based on marketing and the broad reach of a specific entity or
person's platform. Companies pay an entity to promote a good, and that entity often receives
compensation in exchange for their promotion. That compensation may be a fixed payment, a
percentage of sales derived from their promotion, or both. i.e. social media influencers such as
Lele Pons, Zach King, or Chiara Ferragni.
Razor Blade
Aptly named after the product that invented the model, this business model aims to sell a durable
product below cost to then generate high-margin sales of a disposable component of that product.
Also referred to as the "razor and blade model", razor blade companies may give away expensive
blade handles with the premise that consumers need to continually buy razor blades in the long
run. i.e. HP (printers and ink)
Reverse Razor Blade
Instead of relying on high-margin companion products, a reverse razor blade business model
tries to sell a high-margin product upfront. Then, to use the product, low or free companion
products are provided. This model aims to promote that upfront sale, as further use of the product
is not highly profitable. i.e. Apple (iPhones + applications)
Franchise
The franchise business model leverages existing business plans to expand and reproduce a
company at a different location. Often food, hardware, or fitness companies, franchisers work
with incoming franchisees to finance the business, promote the new location, and oversee
operations. In return, the franchisor receives a percentage of earnings from the franchisee. i.e.
Domino's Pizza.
Pay-As-You-Go
Instead of charging a fixed fee, some companies may implement a pay-as-you-go business model
where the amount charged depends on how much of the product or service was used. The
company may charge a fixed fee for offering the service in addition to an amount that changes
each month based on what was consumed. i.e. Utility companies
Brokerage
A brokerage business model connects buyers and sellers without directly selling a good
themselves. Brokerage companies often receive a percentage of the amount paid when a deal is
finalized. Most common in real estate, brokers are also prominent in construction/development
or freight. i.e. Re-Max
How to Create a Business Model
There is no "one size fits all" when making a business model. Different professionals may
suggest taking different steps when creating a business and planning your business model. Here
are some broad steps one can take to create their plan:
Identify your audience
Most business model plans will start with either defining the problem or identifying your
audience and target market. A strong business model will understand who you are trying to target
so you can craft your product, messaging, and approach to connecting with that audience.
Define the problem
In addition to understanding your audience, you must know what problem you are trying to
solve. A hardware company sells products for home repairs. A restaurant feeds the community.
Without a problem or a need, your business may struggle to find its footing if there isn't a
demand for your services or products.
Understand your offerings
With your audience and problem in mind, consider what you are able to offer. What products are
you interested in selling, and how does your expertise match that product? In this stage of the
business model, the product is tweaked to adapt to what the market needs and what you're able to
provide.
Document your needs
With your product selected, consider the hurdles your company will face. This includes product-
specific challenges as well as operational difficulties. Make sure to document each of these needs
to assess whether you are ready to launch in the future.
Find key partners
Most businesses will leverage other partners in driving company success. For example, a
wedding planner may forge relationships with venues, caterers, florists, and tailors to enhance
their offering. For manufacturers, consider who will provide your materials and how critical your
relationship with that provider will be.
Set monetization solutions
Until now, we haven't talked about how your company will make money. A business model isn't
complete until it identifies how it will make money. This includes selecting the strategy or
strategies above in determining your business model type. This might have been a type you had
in mind but after reviewing your client’s needs, a different type might now make more sense.
Test your model
When your full plan is in place, perform test surveys or soft launches. Ask how people would
feel paying your prices for your services. Offer discounts to new customers in exchange for
reviews and feedback. You can always adjust your business model, but you should always
consider leveraging direct feedback from the market when doing so.
Examples of a business model
Consider the vast portfolio of Microsoft. Over the past several decades, the company has
expanded its product line across digital services, software, gaming, and more. Various business
models, all within Microsoft, include but are not limited to:
Productivity and Business Processes
Microsoft offers subscriptions to Office products and LinkedIn. These subscriptions may be
based off product usage (i.e. the amount of data being uploaded to SharePoint).
Intelligent Cloud
Microsoft offers server products and cloud services for a subscription. This also provide services
and consulting.
More Personal Computing
Microsoft sells physically manufactured products such as Surface, PC components, and Xbox
hardware. Residual Xbox sales include content, services, subscriptions, royalties, and advertising
revenue.