EVALUATING ENTREPRENEURIAL OPPORTUNITIES NOTES
2.1 Procedures of Starting a Business
- Identification of a business idea
- Development of a business plan
- Location of a business demand evaluation
- Registration of the business
Choice of the business organization
Business name - Trading licences / permit
- Start-up and management of the business.
- All entrepreneurs are business people – though not all business
people are entrepreneurs. - Entrepreneurs tend to be more innovative than ordinary business
people and end up developing a business plans.
2.1.1 Means of Generating a Business Idea
- identifying a need
- brainstorming
- building on ones skill, hobbies or interests
- spotting a market niche
- listening to what people say
- attribute listening
- gaining from waste
- look to see and listen to hear
- research
- importing an idea
- day dreaming
- Spin off from employment.
2.1.2 Identifying a Need
A need can be an opportunity and indeed a consumer buys to satisfy need. Abraham Maslow in his humanistic hierarchy of needs, physical needs to very high personalized needs. Therefore identifying an unidentified or unserved need is a sure way of generating business ideas.
- Basic or physiological needs
The first and the most basic need such as thirst hunger and sleep – in
the process of satisfying these needs, entrepreneurs can generate a lot
of business ideas- such as cloth stores, food stores, building materials
etc.
- Safety and security needs
Human beings require these and entrepreneurs can generate ideas in the
process of satisfying them e.g security, watchmen e.t.c. - Social needs
Generally speaking to need should be accepted in the society e.g
membership clubs, beauty clinics et..c - Self esteem or ego
the need only needs recognition e.g need for luxury cars cellular phones
e.t.c
5.self – actualization
The need to prove the ability in one’s self i.e self fulfillment –
research institutions opportunity to do something in one’s ability.
2.1.3 Brain Storming
This is a process of detaching analysis of an idea from the actual
ideas. The idea may or may not be related to a given product. In
brainstorming even silly and stupid ideas may be generated.
2.1.4 Building on One’s Skill, Hobbies or Interests
business ideas can be generated through
- personal interests and hobbies
- Copying or improving somebody’s ideas. ( skills)
2.1.5 Sporting a Market Niche
Entrepreneurs usually look for gaps in the growing markets, identifying
market sections which are not being utilized.
2.1.6 Listening to what People say.
These are people who simply say or speak their needs e.g if these good
bus services
2.1.7 Attribute listening
This method of generating business ideas is based on changing the way
one looks at something in order to fins a new use for it. It attempts to
answer the question – what do we do with this product.
2.1.8 Gaining from Waste
What would appear waste can be used- say recycles to create a new
opportunity.
2.1.9 Others
By soliciting ideas by interview, reading, observations listening
2.2. The Process of Screening a Business Idea.
After generating business ideas- it is important that some evaluation
through a screening process be made. The screening process is a
systematic evaluation ideas in order to select the best idea which would
suit one. The screening process must be done carefully, objectively,
soberly and without any emotions. The business idea screening is
required even when there is only one idea to consider. This is because
this is a stage of starting a business that may be not be profitable or
may be difficult to run.
The screening process must therefore evaluate the following
- Personal Evaluation
- the objective for going to business
- personal interests
- The degree of commitment to the business or others e.g family.
- Personal Skills
- The self SWOT analysis – this aims at analyzing ones
- Strengths
- Weaknesses
- Opportunities
- Treats
This will help achieve the desired goals- the
S- Relates to the internal capacity of self or organization
W- Are subjective
O- Relates to the external environment to self or organization
T- Are objective.
2.2.1 The Importance of this Screening Stage include;
- In order to develop a strategic profile.
- To provide a framework to assess the current and future plans
- To act as a control technique when conducted periodically
- To get realization ( reality) on the activities
The SWOT components
Strengths – these are positive internal conditions such as - Distinctive competence
- Adequate finances.
2.2.2 Components of the SWOT Analysis (importance of self evaluation)
The screening process or evaluation helps identify;
- Strength
- Distinctive competence
- Adequate finances
- Access to economies of scale
- Good innovation ability
- Proven management
- Weakness
- Lack of key skill
- Internal operations problems
- Low morale
- Poor track records
- Weak internal image
- Opportunities
- Potential customers
- Potential goodwill
- Health
- A favourable social
- Threats
- strong competitions
- Adverse government policies
- Political instability
- A designed economy mismanaged economy
- Unfavorable legislation
Market evaluations
The aim is to create assurance of adequate market
The main components include
- Consumer demand analysis
- Product price and placements
- No. of competitors in markets.
An analysis of availability of raw materials in terms of
- Adequacy
- Reliability
- Price
Analysis of providing technology in terms of
- Appropriateness
- Affordability
An analysis of skills available
Analysis of the government policies.
2.2.3 Characteristics of a Good Business idea.
- Easy to manage and involve minimal risk.
- Does not require excessive capital investments
- Offers a good returns on capital
- The idea has scope for growth, expansion and diversification
- Comparative with owner’s goal and interest
- Not against expectation of the society
- Has a short gestation period
- Has a readily available market
- Easy to exit when necessary.
2.3 The Generation and Sources of Business ideas
Generalization of business ideas
- Entrepreneurs have the ability to see opportunities in whatever
environment they happen to be - They are sensitive to people’s needs
- They use people’s problems as opportunities of a business
- The entrepreneurs can use several methods to help generate and test
new ideas.
2.3.1 Methods of Generating ideas or Business Opportunities
Focus groups – i.e where a moderator leads a group of peoples though
an open , in –depth discussion through which new ideas are shared. Apart
from generating new ideas, the focus group is an excellent method of
screening ideas.
Brainstorming
The brainstorming method allows people to be stimulating to greater
creativity by meeting with others and participating in organized group
experience. When using brain storming the following rules must be obeyed.
- No criticism nor negative comments
- The wilder the idea the better ( freewheeling)
- Quality of ideas is desired
- Combinations and improvements of ideas are encouraged.
Problem inventory analysis
This method used individuals in a manner that it forcus groups to
generate new ideas e.g consumers given a list of problems in a general
product category and discuss the various problems in each product
category normally used to test new products.
Creative problem solving – is a method of obtaining new ideas by
focusing on the parameters such as
- Brainstorming – group method of obtaining spontaneous ideas
- Reserve brainstorming – a group method of obtaining new ideas but by
focusing on the negative i.e by finding fault. - Brain writing – is a form of brainstorming which gives participants
more time to think than brainstorming which dwells on spontaneous
ideas the participants write their ideas on a special form. - The Gordon method- is the method of developing new ideas when the
individual are unaware of the problem. - It ensures that the solution is not clouded by pre-conceived ideas
or behavioral pattern - Checklist method.- is a method of developing new ideas through a
list of related issues - Free association method
A new idea is developed through a chain of world association. Forced
relationship it is a technique that asks questions about an object or
idea in an effort to develop a new idea it follows the following five steps
- Isolate the element of the problem
- Find the relationships between these elements
- Record the relationship in an orderly way
- Analyze the resulting relationships to find ideas pattern
- Develop new ideas from the pattern.
Collective notebook method
Develops new ideas by a group members regularly recording ideas
Attribute listing
Developing a new idea by looking at the positives and negatives.
Big-dream approach
Developing a new idea by looking without constraints i.e think of the
problem and its solutions I, thinking big. Every possibility should be
recorded and investigated without regard to all the negatives.
Parameter- analysis
Developing a new idea by focusing on parameter identification and
creative synthesis. Parameter identification involves analysis variables
in the situation to determine their importance.
2.3.2 Opportunity Recognition
- Some entrepreneurs have the ability to recognize a business
opportunity which is fundamental to the entrepreneurial process as
well as growing business. - A business opportunity represents a possibility for the entrepreneur
to meet a large enough unsatisfied need that is worthwhile. - The key to recognition of an opportunity lies in the knowledge (
education) and experience gained either personal or through work by both - The prior knowledge is as a result of the combination of education
and experience. - The entrepreneurship needs to be aware of this knowledge and
experience and have the desire to understand and make use of it. - The other important factors in this process include
Entrepreneurship alertness
Entrepreneurial networks - Those entrepreneurs who have the ability to recognize meaningful
business opportunities are in strategic position to successfully
complete the planning and development process and successfully
launch a new venture.
2.3.3 Add Opportunity Identification
The sources of new ideas
Some of the more frequently used sources of business ideas for
entrepreneurs include.
- Consumers
Potential entrepreneurs not only pay attention to potential
customers but also monitor their potential needs through allowing
the customers to express their opinions. - Existing products and services
Through monitoring and evaluating competitive products and services. - Distribution channels
Contact with members of the distribution channels since they are
familiar with the needs of the market and give suggestions of new
products and consumer needs. - Federal government
Can be a source of a business idea through - The patent office which contains numerous product possibilities.
- Official government magazines
- Government regulatory bodies e.g KBS
- Government shows and exhibitions
- Research and development
Is the largest source of new ideas to the entrepreneur. - Education – i.e picking a given line of study e.g construction
- Vocational training programmes and experience.
- Personal hobbies especially for craft entrepreneurs.
- Personal contacts and observations through. Interactions and
Newspapers and magazines. - Conducting surveys and interviews of the people around.
- Other ways of generating business ideas
2.3.4 Definition of a Business Opportunity
- A business opportunity may be defined as an attractive project idea
with an entrepreneur accepts for investment on the basis of what is
known about the possible success for the project - A real business opportunity can by distinguish from a mere
possibility through the following two ingredients.
A good market scope
An attractive return on investment ( profit)
2.3.5 Qualities (Characteristics) of a Good Business Opportunity
The following are qualities of a good business opportunity.
- Demand – there should exist a good market scope
- Returns on investment – i.e the business should be sufficiently
profitable. - availability of raw materials
- Enough skilled people.
2.3.6 Evaluation of Business Opportunities (objectives of a pre-feasibility study)
Once a business opportunity has been identified one needs to confirm
that it is viable through a pre-feasibility study.
The main objective of a feasibility study is to determine whether.
- the investment opportunity is promising enough
- The project is viable from the marketing manufacturing and other
points of view. - Any aspect of the project that may be crucial to call for indepth
analysis.
2.3.7 The Purpose of Pre-feasibility Study (Market Research)
- To verify that the investment opportunity is promising enough to make
a firm decision. - To confirm that the project is viable from the
- Marketing
- Manufacturing and
- Other points of view
- To identify any aspects of the project that is critical or crucial
enough to call for in depth analysis - To acquire comprehensive technical, economic and commercial data for
the final investment decision. - To enable an in-depth study of aspects such as
- Market potential
- Technical requirements
- Managerial ability
- Financial projections and analysis
- Risks evaluation
- Business environmental analysis.
To enable sourcing reliable information such as - Authorized publications
- Consultants openings.
- To establish the final outcome of whether or not to proceed with the
business.
2.4. Business Incubation
Business incubation is the process of nurturing small and start – up
initiatives or business to relative maturity to become self-sustaining
business, healthy and wealth-generating entities. The failure rate of
any start-up business stands at 90% globally. The main causes of business
- Insufficient capital for start-up.
- Insufficient knowledge of business and industry.
- Lack of Entrepreneurial and business skills.
- Lack of Managerial skills.
- Inadequate Training.
- Lack of credit facilities.
- Lack of markets.
- Insufficient knowledge of markets.
- Inadequate infrastructure.
- Non-Empowering political environment.
For these reasons, many businesses which are ill-equipped do not
survive. A business incubator is important for precisely those reasons
above to provide these support services. Statistics show that the
success rate for incubated businesses initiatives is very
high (over 80%) are bound to succeed.
2.4.1 The Incubation Process
- Help with business basics.
- Networking activities.
- Marketing assistance.
- Help with accounting and other financial management.
- Access to bank loans and other funds.
- Link to resource centers such as training institutions.
- Link to strategic partners.
- Help in the identification of a management team.
- Commercializing assistance.
The business incubation programmes are designed to accelerate successful
development of entrepreneurial companies through an avvary of support
resources and services. Incubators vary in the way they deliver their
services in their organizational structure and in the types of clients
they serve. Business incubators differ from research and technology in
their dedication to start-up and early stage businesses. Research and
Technology institutes tend to be large scale projects that house
everything from corporate government or university labs to very small
companies. The research institutions do not offer business assistance
services which are the main objective of business incubation. Unlike
many business assistance programmes business incubators do not serve any
and all companies. Entrepreneurs who may wish to enter a business
incubation program must apply for admission. Acceptance criteria vary
from program to program but in general only those with feasible business
ideas and workable business plan are admitted. The time a company spends
in an incubation programme vary widely depending on a number of factors,
including the type of business and the
Entrepreneur’s level of business Expertise.
2.4.2 The Benefits of Incubation.
- Creating jobs and wealth
- Fosters a community’s Entrepreneurial climate
- Technology commercialization.
- Diversification of Local Resource.
- Acceleration of local development.
- Facilitation of Business creation and growth.
- Encouraging entrepreneurship especially women.
- Revitalization of the community as a whole.
- Growth of Private Sector Investment.
- Increased Tax Revenue.
- Equitable Development.
2.4.3 Government Roles in Promoting Incubation
- Creation of an enabling environment through;
i. Purchasing consumer products.
ii. Support programmes financially of the incubation process. - Government policy to buy from incubators.
- Give small scale businesses loans and grants.
- Launch campaign to sensitize the private sector to work with
business incubation initiative. - Take a lead role in the incubation process.
- Assist in the coordination, encouraging and streamling the efforts
of incubation at National level. - Lobby and Rally with Kenyans in Diaspora together with developing
partners to support business Incubation. - To encourage coordination of independent efforts country-wide for
better synergy and a more effective Natural impact - To rally universities and other research institutions behind the
concept to facilitate research and development in order to enrich
business incubation - To provide support to business incubation initiative by providing
morale support through Media Initiatives.
2.4.4 Protections of Business ideas & maintaining Secrecy
Most entrepreneurs will not be inventors, at least not in the classic
sense but all entrepreneurs are concerned with protecting their business
ideas, especially when those ideas are related to; Un usual production
and Unique designs et.c And for this to be done understand the “ patent
law” becomes but simply paramount. When entrepreneurs want to protect
unusual brand name, products business ideas or simply establishing
ownership, then understanding trade marks and copyrights if vital as a
way of protecting a business idea. The government law pertaining to;
- Patents
- Trademarks
- Copyrights – are not complicated
Many entrepreneurs file their own patent claims or prepare documentation
for trademark or copyright protection without professional help from the
Attorney or patent agents. However it is always wise to have
professional assistance though the laws are simple.
2.4.5 Ways of Protecting Business ideas
A patent
A patent is a grant of property right by the government to an inventor.
It is issued thought the commissioner of patent rights, and the most
common type of patent is called a utility patent. All patent however,
have the distinction of being assets with a commercial value because
they provide exclusive rights of ownership the patent holders. Patents
are exclusive property rights that can be sold, transferred, or used as
collateral much alike other valueable assets. The patent law stipulates
broad categories of what can and cannot be patented and in the words of
the statute any person who “ invents or discovers any new and useful
process, machine manufacture, or composition of matter, or ay new and
useful improvements thereof may obtain a patent” Anything that is
patentable must be new and useful ( must have some demonstrated function)
2.4.6 The Nature of Patentable Inventions
The terms used give classification of patentable
- Process – The word process as used in patents refers to new methods
of manufacturing or new technological procedures that can be validated
as unique. - Machine – In patent law means that the patent application if for a
specific physical item. - Manufacture- refers to physical items that have fabricated through
new combinations of materials or technical applications.
The application must explain how the product is made including materials
processes e.t.c. - Composition of Matter- this category is patent law relates to the
chemical compounds such as synthetic materials, medicine, cosmetics etc
2.4.7 Types of Patents
Patent law provides for three categories of patents namely
- Utility patent
- Design patent
- Plant patent.
- The utility patent
utility patent is granted for new products processes, machines, methods
of manufacturing and composition of matter. This category excludes, most
botanical creations related to plant and agricultural use. - The design patents
Are granted for any new or original ornamental design for an article of
manufacture. A design patent protects the appearance of an article and
not the article itself. - The plant patents
In botanical terms any, new variety of plant that have been sexually
reproduced can be granted a plant patent. The new plant must not exist
in nature or in an un cultivated state. Therefore new plants hybrids and
seedlings may be patented. - Disclosures
- The patent office provides an important service of limited
protection through the invention disclosure programme - As a first step in seeking protection form the disclosure statement
– the aim is to register an idea with the government. - The investor explains what the items is, that it is new and useful
and how it is to be used copy is given or photograph. - This gives the investors protection as evidence of any legal tassel,
or conflicting claims giving the investor priority.
2.4.8 The Patent Procedures
- The disclosure
When an idea is first reduced to sketches on paper or when it is
mocked up, a disclosure should be filed. This is a measure of
insurance that precedes the actual patent and provides legal
recognition for all aspiring inventors. If someone took the sketches
or steals the idea, evidence is on record. - The patent sketch
A patent sketch is required to determine whether an inventor’s
creation already exists and remains actively protected under the law. - The preliminary section
The preliminary search scans the patent summaries for prior claims
or invention. Records are accessed to make judgments and diligent
decisions are made. - Collecting search documents
The application can the collect the approved documents for further
processing. - Making the patent application
A formal application is now made at the search and is sent to the
commissioner of patents and trade market
The application contains three parts
- A description of the item
- A set of drawings
- A formal oath or declaration
- Payment of patent filing ideas
2.4.9 Trademarks
Trademarks include any word, name, symbol or distinguishing device or
any combination thereof adopted and used by a manufacturer or merchant
to identify his goods and distinguish them from those manufactured or
sold by others. Trade-marks can be names used in commerce such as KCA it
can be a symbol or any distinguishing device artistic in nature. An
important qualification for a trademark is that mark, name etc. must be
used commercially.
2.4.10 Service mark Is similar to at trademark and can be registered in the same way
with the sale protection A service market can be a name, wording used in
advertising symbols or artistic figures that create a distinctive
service concept.
2.4.11 Copyrights
- Are similar to patents in establishing ownership and protection for
creative ideas but they pertain to the intellectual property. - The copyright is distinct from patents and trademarks in that
intellectual property is protected for the life of the originator
plus a further 50 years. - This protection affords an extraordinary property right and
substantial estates. It extends protection to author, composers and
artists.
2.4.12 Trade Secrets
Are proprietary information used in the course of business to gain an
advantage in manufacturing or commercialization of products or services.
Trade secrets
- formulas
- patterns
- list of customers
- data bases
- chemical compounds
- combinations of ingredients for commercial products
- process of manufacturing
- Complied information.
- Every organization must keep their secrets because
Modern communications systems contain so much information which if
not guarded, the business may collapse.
Employees leaving may disseminate information to competitors.
In any business to maintain a market Niche, then desire to protect
their product.
2.4.13 Trade Secrets
In certain instances the entrepreneur may prefer to maintain an idea or
process as confidential, and eventually sell or license it as a trade
secret. The trade secret will have a life as long as the idea or process
remains secret. A trade secret in not covered by any law but is
recognized under a governing body. Employees involved in working with an
idea or process may be asked to first sign a confidential information
agreement that will protect against their giving out the trade secret
either while as employees or when leaving the organization – this is
called trade secret non -disclosure agreement. Most entrepreneurs have
limited resources so they choose not to find means of protecting their
ideas or products or services.
2.4.14 Steps to be taken in order to maintain Secrecy in an Organization.
- Train employees to refer sensitive questions to designated personnel
- Provide proper security measures such as escorts to all visitors
- Avoid discussing business ideas in public places
- Keep important travel plans secret.
- Control information that might be presented by employees at
conferences or published journals - Use simple security measures such as locked file cabinets, passwords
or computers, shedders e.t.c. - Have employees and consultants sign non-disclosure agreements.
- Debrief departing employees on any confidential information.
- Avoid faxing any sensitive information
- Mark documents confidential when needed.
Unfortunately protection against the leaking to trade secrets is
difficult to enforce.
2.4.15 Licensing
- Licensing may be defined as an agreement between two parties, where
one party has proprietary rights over some information, process or
technology protected by a patent, trademark or copyright. - This arrangement specified in a contract requires the licence to pay
royalty or some other specified sum to the holder of the proprietary
rights in return for permission to copy the patent trade mark or
copyright. - Licensing has significance as a marketing strategy to holders of
patents, trademarks or copyrights to grow their business in a new
market when they lack resources or experiences in such markets. - It is also an important marketing strategy for entrepreneurs who
wish to start a new venture but need permission to a copy or
incorporate the patent trademark or copyright with the ideas.
2.5. Product Safety and Liability
EVALUATING ENTREPRENEURIAL OPPORTUNITIES NOTES
2.1 Procedures of Starting a Business
- Identification of a business idea
- Development of a business plan
- Location of a business demand evaluation
- Registration of the business
Choice of the business organization
Business name - Trading licences / permit
- Start-up and management of the business.
- All entrepreneurs are business people – though not all business
people are entrepreneurs. - Entrepreneurs tend to be more innovative than ordinary business
people and end up developing a business plans.
2.1.1 Means of Generating a Business Idea
- identifying a need
- brainstorming
- building on ones skill, hobbies or interests
- spotting a market niche
- listening to what people say
- attribute listening
- gaining from waste
- look to see and listen to hear
- research
- importing an idea
- day dreaming
- Spin off from employment.
2.1.2 Identifying a Need
A need can be an opportunity and indeed a consumer buys to satisfy need. Abraham Maslow in his humanistic hierarchy of needs, physical needs to very high personalized needs. Therefore identifying an unidentified or unserved need is a sure way of generating business ideas.
- Basic or physiological needs
The first and the most basic need such as thirst hunger and sleep – in
the process of satisfying these needs, entrepreneurs can generate a lot
of business ideas- such as cloth stores, food stores, building materials
etc.
- Safety and security needs
Human beings require these and entrepreneurs can generate ideas in the
process of satisfying them e.g security, watchmen e.t.c. - Social needs
Generally speaking to need should be accepted in the society e.g
membership clubs, beauty clinics et..c - Self esteem or ego
the need only needs recognition e.g need for luxury cars cellular phones
e.t.c
5.self – actualization
The need to prove the ability in one’s self i.e self fulfillment –
research institutions opportunity to do something in one’s ability.
2.1.3 Brain Storming
This is a process of detaching analysis of an idea from the actual
ideas. The idea may or may not be related to a given product. In
brainstorming even silly and stupid ideas may be generated.
2.1.4 Building on One’s Skill, Hobbies or Interests
business ideas can be generated through
- personal interests and hobbies
- Copying or improving somebody’s ideas. ( skills)
2.1.5 Sporting a Market Niche
Entrepreneurs usually look for gaps in the growing markets, identifying
market sections which are not being utilized.
2.1.6 Listening to what People say.
These are people who simply say or speak their needs e.g if these good
bus services
2.1.7 Attribute listening
This method of generating business ideas is based on changing the way
one looks at something in order to fins a new use for it. It attempts to
answer the question – what do we do with this product.
2.1.8 Gaining from Waste
What would appear waste can be used- say recycles to create a new
opportunity.
2.1.9 Others
By soliciting ideas by interview, reading, observations listening
2.2. The Process of Screening a Business Idea.
After generating business ideas- it is important that some evaluation
through a screening process be made. The screening process is a
systematic evaluation ideas in order to select the best idea which would
suit one. The screening process must be done carefully, objectively,
soberly and without any emotions. The business idea screening is
required even when there is only one idea to consider. This is because
this is a stage of starting a business that may be not be profitable or
may be difficult to run.
The screening process must therefore evaluate the following
- Personal Evaluation
- the objective for going to business
- personal interests
- The degree of commitment to the business or others e.g family.
- Personal Skills
- The self SWOT analysis – this aims at analyzing ones
- Strengths
- Weaknesses
- Opportunities
- Treats
This will help achieve the desired goals- the
S- Relates to the internal capacity of self or organization
W- Are subjective
O- Relates to the external environment to self or organization
T- Are objective.
2.2.1 The Importance of this Screening Stage include;
- In order to develop a strategic profile.
- To provide a framework to assess the current and future plans
- To act as a control technique when conducted periodically
- To get realization ( reality) on the activities
The SWOT components
Strengths – these are positive internal conditions such as - Distinctive competence
- Adequate finances.
2.2.2 Components of the SWOT Analysis (importance of self evaluation)
The screening process or evaluation helps identify;
- Strength
- Distinctive competence
- Adequate finances
- Access to economies of scale
- Good innovation ability
- Proven management
- Weakness
- Lack of key skill
- Internal operations problems
- Low morale
- Poor track records
- Weak internal image
- Opportunities
- Potential customers
- Potential goodwill
- Health
- A favourable social
- Threats
- strong competitions
- Adverse government policies
- Political instability
- A designed economy mismanaged economy
- Unfavorable legislation
Market evaluations
The aim is to create assurance of adequate market
The main components include
- Consumer demand analysis
- Product price and placements
- No. of competitors in markets.
An analysis of availability of raw materials in terms of
- Adequacy
- Reliability
- Price
Analysis of providing technology in terms of
- Appropriateness
- Affordability
An analysis of skills available
Analysis of the government policies.
2.2.3 Characteristics of a Good Business idea.
- Easy to manage and involve minimal risk.
- Does not require excessive capital investments
- Offers a good returns on capital
- The idea has scope for growth, expansion and diversification
- Comparative with owner’s goal and interest
- Not against expectation of the society
- Has a short gestation period
- Has a readily available market
- Easy to exit when necessary.
2.3 The Generation and Sources of Business ideas
Generalization of business ideas
- Entrepreneurs have the ability to see opportunities in whatever
environment they happen to be - They are sensitive to people’s needs
- They use people’s problems as opportunities of a business
- The entrepreneurs can use several methods to help generate and test
new ideas.
2.3.1 Methods of Generating ideas or Business Opportunities
Focus groups – i.e where a moderator leads a group of peoples though
an open , in –depth discussion through which new ideas are shared. Apart
from generating new ideas, the focus group is an excellent method of
screening ideas.
Brainstorming
The brainstorming method allows people to be stimulating to greater
creativity by meeting with others and participating in organized group
experience. When using brain storming the following rules must be obeyed.
- No criticism nor negative comments
- The wilder the idea the better ( freewheeling)
- Quality of ideas is desired
- Combinations and improvements of ideas are encouraged.
Problem inventory analysis
This method used individuals in a manner that it forcus groups to
generate new ideas e.g consumers given a list of problems in a general
product category and discuss the various problems in each product
category normally used to test new products.
Creative problem solving – is a method of obtaining new ideas by
focusing on the parameters such as
- Brainstorming – group method of obtaining spontaneous ideas
- Reserve brainstorming – a group method of obtaining new ideas but by
focusing on the negative i.e by finding fault. - Brain writing – is a form of brainstorming which gives participants
more time to think than brainstorming which dwells on spontaneous
ideas the participants write their ideas on a special form. - The Gordon method- is the method of developing new ideas when the
individual are unaware of the problem. - It ensures that the solution is not clouded by pre-conceived ideas
or behavioral pattern - Checklist method.- is a method of developing new ideas through a
list of related issues - Free association method
A new idea is developed through a chain of world association. Forced
relationship it is a technique that asks questions about an object or
idea in an effort to develop a new idea it follows the following five steps
- Isolate the element of the problem
- Find the relationships between these elements
- Record the relationship in an orderly way
- Analyze the resulting relationships to find ideas pattern
- Develop new ideas from the pattern.
Collective notebook method
Develops new ideas by a group members regularly recording ideas
Attribute listing
Developing a new idea by looking at the positives and negatives.
Big-dream approach
Developing a new idea by looking without constraints i.e think of the
problem and its solutions I, thinking big. Every possibility should be
recorded and investigated without regard to all the negatives.
Parameter- analysis
Developing a new idea by focusing on parameter identification and
creative synthesis. Parameter identification involves analysis variables
in the situation to determine their importance.
2.3.2 Opportunity Recognition
- Some entrepreneurs have the ability to recognize a business
opportunity which is fundamental to the entrepreneurial process as
well as growing business. - A business opportunity represents a possibility for the entrepreneur
to meet a large enough unsatisfied need that is worthwhile. - The key to recognition of an opportunity lies in the knowledge (
education) and experience gained either personal or through work by both - The prior knowledge is as a result of the combination of education
and experience. - The entrepreneurship needs to be aware of this knowledge and
experience and have the desire to understand and make use of it. - The other important factors in this process include
Entrepreneurship alertness
Entrepreneurial networks - Those entrepreneurs who have the ability to recognize meaningful
business opportunities are in strategic position to successfully
complete the planning and development process and successfully
launch a new venture.
2.3.3 Add Opportunity Identification
The sources of new ideas
Some of the more frequently used sources of business ideas for
entrepreneurs include.
- Consumers
Potential entrepreneurs not only pay attention to potential
customers but also monitor their potential needs through allowing
the customers to express their opinions. - Existing products and services
Through monitoring and evaluating competitive products and services. - Distribution channels
Contact with members of the distribution channels since they are
familiar with the needs of the market and give suggestions of new
products and consumer needs. - Federal government
Can be a source of a business idea through - The patent office which contains numerous product possibilities.
- Official government magazines
- Government regulatory bodies e.g KBS
- Government shows and exhibitions
- Research and development
Is the largest source of new ideas to the entrepreneur. - Education – i.e picking a given line of study e.g construction
- Vocational training programmes and experience.
- Personal hobbies especially for craft entrepreneurs.
- Personal contacts and observations through. Interactions and
Newspapers and magazines. - Conducting surveys and interviews of the people around.
- Other ways of generating business ideas
2.3.4 Definition of a Business Opportunity
- A business opportunity may be defined as an attractive project idea
with an entrepreneur accepts for investment on the basis of what is
known about the possible success for the project - A real business opportunity can by distinguish from a mere
possibility through the following two ingredients.
A good market scope
An attractive return on investment ( profit)
2.3.5 Qualities (Characteristics) of a Good Business Opportunity
The following are qualities of a good business opportunity.
- Demand – there should exist a good market scope
- Returns on investment – i.e the business should be sufficiently
profitable. - availability of raw materials
- Enough skilled people.
2.3.6 Evaluation of Business Opportunities (objectives of a pre-feasibility study)
Once a business opportunity has been identified one needs to confirm
that it is viable through a pre-feasibility study.
The main objective of a feasibility study is to determine whether.
- the investment opportunity is promising enough
- The project is viable from the marketing manufacturing and other
points of view. - Any aspect of the project that may be crucial to call for indepth
analysis.
2.3.7 The Purpose of Pre-feasibility Study (Market Research)
- To verify that the investment opportunity is promising enough to make
a firm decision. - To confirm that the project is viable from the
- Marketing
- Manufacturing and
- Other points of view
- To identify any aspects of the project that is critical or crucial
enough to call for in depth analysis - To acquire comprehensive technical, economic and commercial data for
the final investment decision. - To enable an in-depth study of aspects such as
- Market potential
- Technical requirements
- Managerial ability
- Financial projections and analysis
- Risks evaluation
- Business environmental analysis.
To enable sourcing reliable information such as - Authorized publications
- Consultants openings.
- To establish the final outcome of whether or not to proceed with the
business.
2.4. Business Incubation
Business incubation is the process of nurturing small and start – up
initiatives or business to relative maturity to become self-sustaining
business, healthy and wealth-generating entities. The failure rate of
any start-up business stands at 90% globally. The main causes of business
- Insufficient capital for start-up.
- Insufficient knowledge of business and industry.
- Lack of Entrepreneurial and business skills.
- Lack of Managerial skills.
- Inadequate Training.
- Lack of credit facilities.
- Lack of markets.
- Insufficient knowledge of markets.
- Inadequate infrastructure.
- Non-Empowering political environment.
For these reasons, many businesses which are ill-equipped do not
survive. A business incubator is important for precisely those reasons
above to provide these support services. Statistics show that the
success rate for incubated businesses initiatives is very
high (over 80%) are bound to succeed.
2.4.1 The Incubation Process
- Help with business basics.
- Networking activities.
- Marketing assistance.
- Help with accounting and other financial management.
- Access to bank loans and other funds.
- Link to resource centers such as training institutions.
- Link to strategic partners.
- Help in the identification of a management team.
- Commercializing assistance.
The business incubation programmes are designed to accelerate successful
development of entrepreneurial companies through an avvary of support
resources and services. Incubators vary in the way they deliver their
services in their organizational structure and in the types of clients
they serve. Business incubators differ from research and technology in
their dedication to start-up and early stage businesses. Research and
Technology institutes tend to be large scale projects that house
everything from corporate government or university labs to very small
companies. The research institutions do not offer business assistance
services which are the main objective of business incubation. Unlike
many business assistance programmes business incubators do not serve any
and all companies. Entrepreneurs who may wish to enter a business
incubation program must apply for admission. Acceptance criteria vary
from program to program but in general only those with feasible business
ideas and workable business plan are admitted. The time a company spends
in an incubation programme vary widely depending on a number of factors,
including the type of business and the
Entrepreneur’s level of business Expertise.
2.4.2 The Benefits of Incubation.
- Creating jobs and wealth
- Fosters a community’s Entrepreneurial climate
- Technology commercialization.
- Diversification of Local Resource.
- Acceleration of local development.
- Facilitation of Business creation and growth.
- Encouraging entrepreneurship especially women.
- Revitalization of the community as a whole.
- Growth of Private Sector Investment.
- Increased Tax Revenue.
- Equitable Development.
2.4.3 Government Roles in Promoting Incubation
- Creation of an enabling environment through;
i. Purchasing consumer products.
ii. Support programmes financially of the incubation process. - Government policy to buy from incubators.
- Give small scale businesses loans and grants.
- Launch campaign to sensitize the private sector to work with
business incubation initiative. - Take a lead role in the incubation process.
- Assist in the coordination, encouraging and streamling the efforts
of incubation at National level. - Lobby and Rally with Kenyans in Diaspora together with developing
partners to support business Incubation. - To encourage coordination of independent efforts country-wide for
better synergy and a more effective Natural impact - To rally universities and other research institutions behind the
concept to facilitate research and development in order to enrich
business incubation - To provide support to business incubation initiative by providing
morale support through Media Initiatives.
2.4.4 Protections of Business ideas & maintaining Secrecy
Most entrepreneurs will not be inventors, at least not in the classic
sense but all entrepreneurs are concerned with protecting their business
ideas, especially when those ideas are related to; Un usual production
and Unique designs et.c And for this to be done understand the “ patent
law” becomes but simply paramount. When entrepreneurs want to protect
unusual brand name, products business ideas or simply establishing
ownership, then understanding trade marks and copyrights if vital as a
way of protecting a business idea. The government law pertaining to;
- Patents
- Trademarks
- Copyrights – are not complicated
Many entrepreneurs file their own patent claims or prepare documentation
for trademark or copyright protection without professional help from the
Attorney or patent agents. However it is always wise to have
professional assistance though the laws are simple.
2.4.5 Ways of Protecting Business ideas
A patent
A patent is a grant of property right by the government to an inventor.
It is issued thought the commissioner of patent rights, and the most
common type of patent is called a utility patent. All patent however,
have the distinction of being assets with a commercial value because
they provide exclusive rights of ownership the patent holders. Patents
are exclusive property rights that can be sold, transferred, or used as
collateral much alike other valueable assets. The patent law stipulates
broad categories of what can and cannot be patented and in the words of
the statute any person who “ invents or discovers any new and useful
process, machine manufacture, or composition of matter, or ay new and
useful improvements thereof may obtain a patent” Anything that is
patentable must be new and useful ( must have some demonstrated function)
2.4.6 The Nature of Patentable Inventions
The terms used give classification of patentable
- Process – The word process as used in patents refers to new methods
of manufacturing or new technological procedures that can be validated
as unique. - Machine – In patent law means that the patent application if for a
specific physical item. - Manufacture- refers to physical items that have fabricated through
new combinations of materials or technical applications.
The application must explain how the product is made including materials
processes e.t.c. - Composition of Matter- this category is patent law relates to the
chemical compounds such as synthetic materials, medicine, cosmetics etc
2.4.7 Types of Patents
Patent law provides for three categories of patents namely
- Utility patent
- Design patent
- Plant patent.
- The utility patent
utility patent is granted for new products processes, machines, methods
of manufacturing and composition of matter. This category excludes, most
botanical creations related to plant and agricultural use. - The design patents
Are granted for any new or original ornamental design for an article of
manufacture. A design patent protects the appearance of an article and
not the article itself. - The plant patents
In botanical terms any, new variety of plant that have been sexually
reproduced can be granted a plant patent. The new plant must not exist
in nature or in an un cultivated state. Therefore new plants hybrids and
seedlings may be patented. - Disclosures
- The patent office provides an important service of limited
protection through the invention disclosure programme - As a first step in seeking protection form the disclosure statement
– the aim is to register an idea with the government. - The investor explains what the items is, that it is new and useful
and how it is to be used copy is given or photograph. - This gives the investors protection as evidence of any legal tassel,
or conflicting claims giving the investor priority.
2.4.8 The Patent Procedures
- The disclosure
When an idea is first reduced to sketches on paper or when it is
mocked up, a disclosure should be filed. This is a measure of
insurance that precedes the actual patent and provides legal
recognition for all aspiring inventors. If someone took the sketches
or steals the idea, evidence is on record. - The patent sketch
A patent sketch is required to determine whether an inventor’s
creation already exists and remains actively protected under the law. - The preliminary section
The preliminary search scans the patent summaries for prior claims
or invention. Records are accessed to make judgments and diligent
decisions are made. - Collecting search documents
The application can the collect the approved documents for further
processing. - Making the patent application
A formal application is now made at the search and is sent to the
commissioner of patents and trade market
The application contains three parts
- A description of the item
- A set of drawings
- A formal oath or declaration
- Payment of patent filing ideas
2.4.9 Trademarks
Trademarks include any word, name, symbol or distinguishing device or
any combination thereof adopted and used by a manufacturer or merchant
to identify his goods and distinguish them from those manufactured or
sold by others. Trade-marks can be names used in commerce such as KCA it
can be a symbol or any distinguishing device artistic in nature. An
important qualification for a trademark is that mark, name etc. must be
used commercially.
2.4.10 Service mark Is similar to at trademark and can be registered in the same way
with the sale protection A service market can be a name, wording used in
advertising symbols or artistic figures that create a distinctive
service concept.
2.4.11 Copyrights
- Are similar to patents in establishing ownership and protection for
creative ideas but they pertain to the intellectual property. - The copyright is distinct from patents and trademarks in that
intellectual property is protected for the life of the originator
plus a further 50 years. - This protection affords an extraordinary property right and
substantial estates. It extends protection to author, composers and
artists.
2.4.12 Trade Secrets
Are proprietary information used in the course of business to gain an
advantage in manufacturing or commercialization of products or services.
Trade secrets
- formulas
- patterns
- list of customers
- data bases
- chemical compounds
- combinations of ingredients for commercial products
- process of manufacturing
- Complied information.
- Every organization must keep their secrets because
Modern communications systems contain so much information which if
not guarded, the business may collapse.
Employees leaving may disseminate information to competitors.
In any business to maintain a market Niche, then desire to protect
their product.
2.4.13 Trade Secrets
In certain instances the entrepreneur may prefer to maintain an idea or
process as confidential, and eventually sell or license it as a trade
secret. The trade secret will have a life as long as the idea or process
remains secret. A trade secret in not covered by any law but is
recognized under a governing body. Employees involved in working with an
idea or process may be asked to first sign a confidential information
agreement that will protect against their giving out the trade secret
either while as employees or when leaving the organization – this is
called trade secret non -disclosure agreement. Most entrepreneurs have
limited resources so they choose not to find means of protecting their
ideas or products or services.
2.4.14 Steps to be taken in order to maintain Secrecy in an Organization.
- Train employees to refer sensitive questions to designated personnel
- Provide proper security measures such as escorts to all visitors
- Avoid discussing business ideas in public places
- Keep important travel plans secret.
- Control information that might be presented by employees at
conferences or published journals - Use simple security measures such as locked file cabinets, passwords
or computers, shedders e.t.c. - Have employees and consultants sign non-disclosure agreements.
- Debrief departing employees on any confidential information.
- Avoid faxing any sensitive information
- Mark documents confidential when needed.
Unfortunately protection against the leaking to trade secrets is
difficult to enforce.
2.4.15 Licensing
- Licensing may be defined as an agreement between two parties, where
one party has proprietary rights over some information, process or
technology protected by a patent, trademark or copyright. - This arrangement specified in a contract requires the licence to pay
royalty or some other specified sum to the holder of the proprietary
rights in return for permission to copy the patent trade mark or
copyright. - Licensing has significance as a marketing strategy to holders of
patents, trademarks or copyrights to grow their business in a new
market when they lack resources or experiences in such markets. - It is also an important marketing strategy for entrepreneurs who
wish to start a new venture but need permission to a copy or
incorporate the patent trademark or copyright with the ideas.
2.5. Product Safety and Liability
- It is very important for the entrepreneur to assess whether any
product that is to be marketed in the new venture is subject to any
regulations under the consumer product. - In addition to setting standards for products the commission also
has a great deal of responsibility and power to identify what to
consider being a substantial hazard and barring any products that
may be considered unsafe. - Any products introduced by entrepreneurs must obtain clearance from
the Kenya bureau of standards under the consumers protection Act.
