Flashcards in Generating and Protecting Business Ideas Deck (32):
An activity that requires the organisation of resources, taking a risk in return for reward
Sources of business ideas
4.Business or Personal experience
What are Thought showers
•random way of coming up with business ideas.
• any ideas are put down on a piece of paper and then the best ideas are chosen by the group.
•SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats) is often a good way of finalising a business idea.
What are Personal Interests
•If you have a particular interest in a certain subject, this can often become the basis of an effective business.
•However, just because you enjoy something, it does not automatically mean it will make a good business.
If you have particular expertise in a certain area then you should be able to translate these skills into a successful business.
•If you have worked in a particular industry for along period of time, you tend to pick up a feel for how things work.
•You can sometimes translate this experience into your own business.
•The business does not necessarily have to be the same, but the skills need to be transferable.
•This is where you see similar business ideas in other locations, or countries, and recognise the potential for use in your own area.
•Need to be aware of legal infringements (e.g. existing patents)
Innovation can come through science (e.g. new technology in the mobile market) or the clever reworking of an existing product (e.g. the Dyson Vacuum)
involves aiming a specialist product at a relatively small target market.
a small segment of a much larger market.
do not appeal to the mass markets. They focus on a restricted group of people.
•Although the total sales is unlikely to be huge, the retail price of such products is often high to help compensate.
Benefits of knowing the product or service
. Good knowledge of product features
. Motivated by interest in product
. Contacts in established market
Disadvantages of knowing the product or service
. Interest may not be shared by others
. Interest may overestimate the market size
. The wider skills than interest/passion
Benefits of spotting a gap in the market
. First move advantage
. idea based on customer needs
. little or no competition
Disadvantages of spotting a gap in the market
. Is it real gap? Do people want product?
. No expertise in market
. competition may enter market quickly
An exclusive right to use a process or produce a product for a fixed period of time.
The protection given to books, plays, films and music.
A word, image, sound or smell that enables a business to differentiate itself from competitors
Disadvantage of using a trademark
A registered trademark must be renewed every ten years to keep it in force.
How to gain a patent
–Be a new invention
–Have an inventive step that is not obvious to someone with knowledge and experience in the subject
–Be capable of being made or used in some kind of industry
Advantages of using a copyright
You automatically have a copyright when you create something
Eg –Literature e.g. novels, song lyrics, computer programs, website content and newspaper articles
–Music composition and recordings
–Art e.g. paintings, engravings, photographs
•A company that owns a well known product or service.
•Allows an individual to buy the right to sell their good or service.
•Trade under their name.
the company, which allows the person to use their product and name
the person who pays the franchiser to use their products and name
Key features of a franchise
•Owned by the franchisee
•Controlled by the franchiser
•Managed by the franchisee
•Finance – savings or borrowing from banks
•Profit goes to franchisee, but the franchiser takes a % called royalty payments
Benefits of using a patent
•A patent provides legal protection for up to 20 years.
•If they use the invention and do not pay for it, they can be sued for compensation. However, this is time consuming and expensive.
Benefits of using a trademark
•A trademark protects any sign or symbol that distinguishes you from your competitors.
•You can register a name, logo, slogan, domain name, shape, colour or sound!
Advantages for the franchisee
•Training and expert advice is available.
•Equipment and materials are provided.
•National advertising is covered by the Franchisor.
•Only one branch of the franchise is allowed to operate in a given area. This means that franchises are not in direct competition with each other.
•Lower risk by buying into a well known business.
Disadvantages for the franchisee
•A large sum of money is required to pay the initial franchise fee.
•Monthly royalty fees must be paid.
•Branded materials must be purchased from the franchisor, which might be expensive.
•Cannot sell the business without permission.
•The rights to the franchise can be removed.
Advantages for the franchisor
•Rapid growth for the business.
•Risk is taken by others.
•Regular income from royalty fees.
•Retains ultimate control, can end the agreement.
Disadvantages the franchisor
•Start-ups can fail if the wrong person is in charge or the local competition is strong.
•Reputation is at risk if quality is not managed.