UNIT 3: BUSINESS IDEAS AND OPPORTUNITIES
Key Unit Competence: To be able to generate viable business ideas and opportunities.
Introductory activity:Analyze the photo below and answer the following questions
Questions
1.From the picture above analyze different sources of business ideas.
2.Generate different business ideas from the above environment.
3.Not all business ideas are business opportunities. Is this statement true or false? Give reasons to justify your response.3.1 Business, business idea and a business opportunity
The government of Rwanda is encouraging youth to be job creators but not job seekers.”
a) What viable business opportunities can you think of in order to foster development of your community and country at large?
b) Explain why customers will be compelled to buy your products.
Meaning of a business idea
Business refers to any economic activity that involves the production, selling of goods and services, covering risks with the aim of getting profits.
An idea is called an opportunity if there is evidence that the entrepreneur’s idea can be turned into reality.
A business idea simply refers to any thought that the entrepreneur may come up with as a result of scanning the environment with the possibility of developing it into a business opportunity. It requires
the entrepreneur to exercise creativity and innovativeness in order to come up with the necessary business ideas for the environment. Examples of business ideas in Rwanda include Real estate, clothing and textiles, food processing, E-Commerce, internet and computer services, food delivery services, photography and videography, horticulture business.
Meaning of a business opportunity.
A business opportunity can be defined as an identified situation or chance that can be turned into a real and profitable business.
An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business. Such opportunities are determined by customer requirements and lead to the provision of a product or service which creates or adds value for its buyers or end-users.
A business opportunity is said to be viable, when it has the ability to grow and expand.
Examples of business opportunity and their business idea
-Lack of sufficient safe water in your community is a business opportunity. Provision of JIBU can be a business idea.
-High demand for charcoal as source of energy in your community is business opportunity. For that opportunity, many business ideas can be generated like Provision cooking Gas, making charcoal in wastes, planting trees, buying big vehicle to transport charcoal from far forest…
-A business idea may not necessarily be a business opportunity; one needs to filter and sift through these ideas to realize whether they are real opportunities.
Case study: A reality T.V. Show
Rwiyemeza is a nurse by profession and a prominent entrepreneur too dealing in growing and processing of Mushrooms in Kicukiro district. One day she was invited to give an interview on Rwanda Broadcasting Agency (RBA) about her business to the whole nation by Mr. Makuru.
Read through the excerpts from the interview
Makuru: why did you decide to get into mushroom growing and processing? How did you start?
Rwiyemeza: It was during my school time when I joined a school business club. I got the idea when our club mentor told us that we can start a back home business, we used to call it a ‘BHB’. I introduced the idea to my parents and I was lucky that they supported me. It was not a very easy task with everyone telling me different things about growing mushrooms. Many people that I talked to focused on the challenges but about three people told me that I can overcome the challenges if I plan in advance. I therefore decided to take on the business of Mushroom growing and processing.
Makuru: What was the biggest challenge and how did you overcome it while starting your Mushroom business?
Rwiyemeza: There were so many challenges such as unsure market, competition, pests, weather vagaries but deciding on turning my business idea into a profitable business was most challenging. I had to make a lot of research from existing entrepreneurs, Sector officers, and financial institutions. I also had to do personal evaluation. I found that I could market my product very widely to beat the market problem and ensure much cleanliness and timely watering to avoid pests.
Makuru: What are the benefits of your business to the community?
Rwiyemeza: Apart from earning me and my family a living, my business employs three ladies and 2 gentlemen who earn a monthly salary. Important to note also, is that I have inspired a lot of other young entrepreneurs especially women to start their own businesses.
Makuru: What advice would you give to the young people who may want to start businesses?
Rwiyemeza: My advice would be that all around us are opportunities of business ideas but one has to be careful because NOT all business ideas can be turned into profitable businesses. Before I finally decided to start mushroom growing and processing, I had tried a number of businesses which failed because they were not viable. So, I again advise the young people to take time and research about the business ideas before investing money because “Not all business ideas are business opportunities”.
Questions
Referring to the case study (A reality T.V. Show) above, answer the following questions.
a) What do you understand by a business and what is Rwiyemeza’s business?
b) Mention any sources of business ideas for Rwiyemeza’s business activity.
c) Rwiyemeza says it was not easy for her to start up the business activity. Explain what you understand by a business opportunity and identify some challenges Rwiyemeza faced.
d) Why do you think it is very important to do a research and personal evaluation before deciding to start a business activity?
e) Think of two viable business ideas in line with your career as an associate nurse that you can invest in. give reasons to justify your opinion.
3.2. Reasons for generating business ideas
1) Why do you think that it is important to generate smart business ideas?
2) In your own words, explain why the following Enterprises: Urwibutso, Inyange, Mara phone, Volkswagen were started?
The simplest purpose of business is to solve a customer's problem or meet the customers’ needs. By providing the goods and services that meet the customer’s needs, the business owner may realize profits (and at times may incur losses). Businesses exist to impact on people's lives. This happens by businesses providing people with goods and services they desire to meet their needs. While the people buying the business’ products (goods and services) are meeting their needs, the business owners expect to realize profits. Businesses serve as conductors of economic activity and development.
Business may be done by private individuals, government, companies, co-operatives, or non-governmental organizations (popularly known as NGOs).
There are many reasons why entrepreneurs would need to generate business ideas.
-You need an idea: a good idea is essential for a successful business venture – both when starting a business and to stay competitive afterwards
-To respond to market needs: markets are made up essentially of customers who have needs and wants waiting to be satisfied.
-Changing fashions and requirements: provide opportunities for entrepreneurs to respond to demand with new ideas, products, and services
-To stay ahead of the competition: Remember, if you do not come up with new ideas, products and services, a competitor will. So, the challenge is to be different or better than others
-To exploit technology – do things better: Technology has become a major competitive tool in today’s markets and for one to be better with changing technology, generation of business ideas is crucial.
-Because of product life cycle: All products have a finite life. The firm’s prosperity and growth depends on its ability to introduce new products and to manage their growth
-To spread risk and allow for failure: It is necessary for firms to try to spread their risk and allow for failures that may occur from time to time by constantly generating new ideas.
a) Identify two main problems in your community and suggest the business opportunities you would come up with to solve them.
b) Case study.
Read the case study and answer the questions that follow.
We hear you. Hear us too.
Kigali Global Shapers (KGS) hub, a group that works with young Rwandan entrepreneurs, presents ‘Twumve-Twumve’ entrepreneurship evenings. Loosely translated, the event means ‘We hear you. Hear us too.’ The events aim is to find solutions for problems faced by Rwandan businesspeople, such as the high failure rate of start-up businesses.
What are the likely causes of failure of start-up businesses?
3.3 Sources of Business Ideas.
Referring to your community and beyond, explain at least 5 business ideas that you can generate from the different sources in the figure above.
“When the going gets tough, the tough get going, so goes an old saying.”
Most people think of doing business as the last option and yet it is a major source of income and reduces the dependence syndrome.
The following are some of the sources of business ideas:
-Looking within you and examining skills, talent, and passion: The very first place to start looking for business ideas and opportunities is to look within yourself. Self-examination is an important thing that can help in reaching to different decisions. It is important to examine your own skills, talent or passion that can fit into the business. Therefore, such businesses, which corresponds according to your skills is the most appropriate and are expected to be successful in future.
-Inventing a new product or service: Another great source of business opportunity is inventing a new product or service. Different people are creative with a mindset of thinking out of the box and solving problems with the best appropriate solution. One needs to think like great entrepreneurs such as Such as SINA Gerald of urwibutso enterprise, Zulphat Mukarubega proprietor of Rwanda Tourism University College, etc. However, for winning ideas you need to be specific on your target market and analyze the problem.
-Adding value to an existing product: Rather than inventing a product, one can also add a value to existing product. These kinds of innovations can be proved as a great source of business opportunities. Since most of the inventions have already taken place, so it is prevailing as innovation.
-Franchising: By looking on the demographics and the need for a particular service or product, one can also start a franchising business. It can be really profitable since much of business modeling is not required because a person uses the rights of another retailer
-Mass Media: Mass media has become comprehensive from past few years. Magazines, TV, Newspapers etc. are a great source of ideas and opportunities. Different businesses are on sale and different commercial advertisements are available to choose.
-Attending Exhibitions: Trade shows and Expos help to develop a strong business network.
-Industrial Survey: Another important source for a business can be industrial surveys. Since, the main point of a business is to fulfill the needs of a customer. Therefore, surveying and analyzing the underlying need of a customer can help in reaching a rational decision that addresses the customer’s problem and result in a profitable business.
-Listening to customer complaints: Complaints are a part of customers’ relationship that led into the development of new or improved products and services. Whenever customers report badly it means, that the customer satisfaction is not being achieved and there is some issues with the product. This can help in generating new business ideas for addressing problems of customers.
Describe the sources and qualities of a viable business idea that can be turned into a Back-Home Business.
3.4. Steps of generating business ideas
a) What would you do to take on the best business opportunity?
b) Would you advise a friend on how to assess business ideas and opportunities? If yes, how? If no, what would you do?
1. Start thinking/get your brain at work
The first thing to do when you get a business idea is determine whether it’s a good idea. Not every idea that seems good at first is practical. And some business ideas have no market. You will need to do some research to evaluate your business idea. Here is a checklist of questions to use as a guide:
-Is there a need for this product or service? Some of the most popular products and services meet a need that people currently have. The product or service may improve upon or complement an existing product or service, or your idea may be a completely approach to meeting a need.
-Is there a desire for this product or service? Admittedly, some of the most popular products are desire-based rather than need-based. That means that someone is purchasing the product because they want to. A few needs-based reasons for a purchase include to increase status or to follow a trend.
-Who is currently meeting the need for this product or service? Answering this question gives you a start on evaluating your competition. You need to know not only who your competitors are, but also how many are they? Don’t forget to consider indirect competition.
-Who will buy this product or service? Find out who your typical customer is likely to be. This may involve conducting surveys, testing the waters, finding a focus group, and more. The better your understanding your potential customer, the more likely you are to create a successful business.
-How big is that market? You may have a great business idea. It may even be brilliant. But, if the market for your idea is very small, your business might not be viable–that is unless people are willing to pay a premium for your product or service. This brings us to the next question.
-How much are people willing to pay for your product or service? Your intake from your product or service needs to cover your costs and should include a healthy profit. Remember, that even a small niche market can be profitable if potential customers are willing to pay you enough money.
How hard will it be to implement the idea? Let’s face it, some ideas are easier to implement than others. When answering this question, take into consideration the amount of time it will take you to launch your business as well as whether or not you will need to hire someone to help.
-After doing your research, you should be able to tell whether you want to continue and develop your business idea.
2. Buy a notebook
Now that you know how to stimulate your brain and get started with the creative thinking process, you need to keep count on your ideas and make sure that you can document them to study and examine them further. Every business you can think of started with a small idea somewhere, from a small observation, a frustrating situation, or while taking a shower. You never know when the inspiration comes, so always keep a notebook close to you to write these ideas down whenever they come.
3. Follow your passion
Once you start your business, you will spend most of your day for several years doing that business. So, make sure you choose a business that you feel passionate and excited about. If you don’t like the business, you are, chances are, you might not succeed in that business, probably not because you don’t have what it takes, but mostly because you might lose interest too easily in the face of the challenges that will come your way.
4. Keep your eyes open
New business opportunities get born from new situations every day. Keep an eye on what is happening around you, make it a habit to read the newspaper and identify new opportunities. You may read that people are complaining from poor health services in your area, or the lack of schools in your neighborhood. Talk to your neighbors and the people you know, what is frustrating them? What would they want to change in your neighborhood? Is your neighbor complaining that he/she needs to drive long distances to get to the nearest dry cleaner? Or is your other neighbor complaining about the lack of groceries in close proximities to where you live? Are you coworkers frustrated that there are no restaurants close to your work building?
5. Capitalize on your strengths
Most people are good at something. Look at your experiences and career, what is it that you can do well? Have you been working in project management for 15 years and know the ins and outs of the business, this is often the best place to start. Instead of focusing on the things you cannot do well, focus on the things you are good at. What can you do better than others? How are the others doing it? And how can you do it differently?
6. Explore new things
As mentioned earlier, change is one of the biggest stimulators to the brain. Even if you don’t want to open your own coffee shop, next time you are in one, look at how things are done and think of new ways to improve it. Often this thinking might lead you to new ways to improve on your business ideas in your chosen field.
7. Check your bank account
Starting and running your business requires money. Depending on your situation, you need to think of businesses that suit your budget. Everyone’s finances are limited, so make sure whatever business idea you come up with is doable. If you have a small amount of money, then look into business ideas that are not cash hungry, maybe start small and then grow with the business.
8. Know what you want in life
Aside from your business goals, think about the reasons you want to start the business in the first place. What is it that you are looking for? What are your goals in life? Are you starting a business to be able to spend more time with your family? To make more money? To be respected among your peers?
Whatever your goals are, make sure that your business idea complements these goals and helps you achieve them. If your goal is to find more time to spend with your family and do other things, then starting a business that requires you to work 16 hours a day or travel constantly might not be the best idea.
9. Choose a business that suits your personality
Are you a morning person or a night creature? Each person has his/her own peak hours of the day. You will find very few successful bakers or newspaper owners that don’t like to wake up in the morning. If you are not a morning person, avoid businesses that will need you to work in the early hours of the morning. If you are a night person, then maybe running a night club or a restaurant that stays open till late hours is more suitable for you. Conversely, if you sleep early, running a business that requires you to stay late might not be suitable for you.
Are you an indoor or outdoor person? Do you like working in an office for long hours or can’t stand the office and feel that you need on the move all the time? If you like the office quiet environment, then pick a business that can be done from an office. If you like to be on the move, pick a business that requires you to go to different places and meet new people.
Are you brainy or handy person? People do things differently, some people like to do things that involve thinking and working their brains, other people like to do things that involve craftsmanship and handy work.
Are you shy or outgoing person? If you are a shy person, then becoming a public speaker might not be the best idea for you. If you are an outgoing person and like to meet new people all the time, having an internet-based business might deprive you from that joy.
I think you get the idea, think of your personal traits and attributes, and pick a business idea that suits your personality.
10. Read about other people that started their own business
A large part of becoming successful involves looking at other successful people and learning how they achieved their success. Reading autobiographies about prominent and successful business figures and learning how they started their journey will give you great insight on how they did things and what exactly they did to become successful.
Most successful entrepreneurs started from scratch. Many of them failed in several businesses and had to listen to people that told them they will never be successful. But they stood up and tried again
and again until they succeeded. It is not whether you fail that makes you the man you are, it is how you stand up after the fall.
Study their characters, what do successful entrepreneurs have in common? How did they achieve their vision? What challenges did they have to overcome? Look for similarities between their stories and your situation right now. You will find that it is a great source of inspiration and motivation. If others just like you, did it, then you can do it too.
3.5 Factors to consider when generating and evaluating viable business ideas and opportunities
Discuss factors to consider when generating and evaluating viable business ideas and opportunities both in your community and elsewhere.
It is very important to examine and evaluate your business opportunity and determine your potential for success before you spend time and money developing a business plan.
Entrepreneurs need to determine whether the business opportunity they have identified is viable or not. When evaluating the viability of the business opportunity, the following factors need to be taken into consideration:
1. Market Business evaluation process goes through analyzing the market. If there isn’t a big enough market for your product or service, you should rethink whether this business opportunity makes sense.
· Who will be your target consumer?
· Is there a need for your business idea?
· Can you fill a market need?
For instance, you might think of a great business idea to produce a carbonated beverage flavored with roots, berries, and other natural flavors.
However, in your evaluation you might find that this type of product is already saturated in the market. The idea is good and a market exists, but if the market is flooded with competitors, it would not likely be profitable.
2. Business plan
The bottom line of any business is to make money. Without positive cash flow, you won’t succeed. Business owners with the best of intentions often fail because the financial potential isn’t big enough.
· Will there be sufficient financial reward?
· Do you see a potentially growing market for the product?
· Do you have others who believe in your business ideas?
· Are there other businesses that are similar (which is a validation that this potential business opportunity could be worth pursuing)?
You as an entrepreneur have a lot of thinking to do. Come up with great business ideas. Be creative and get enthusiastic about your ideas. However, always take the time to perform sound business opportunity evaluation.
3. Technology and other resource requirements
The business should be evaluated in terms of whether there is an appropriate technology that can be used in production. Factors to be looked into include.
-Appropriateness of the technology. The cost of the technology. The possibility of the business suffering in case the technology becomes outdated/obsolete. Availability of raw materials and other resources.
-The raw materials and resources required should be within the reach and affordable to the
entrepreneur.
- Infrastructure: Easy access to infrastructure such as roads, water, electricity, telephone, and postal services among others enables business enterprises easily make orders for goods and deliver them, hence reducing operating expenses. With low operating expenses, profits can be maximized.
-Government policy: An entrepreneur should consider the requirements of the government before starting a business e.g., the government may require certain businesses to be in certain areas only.
-Amount of capital required: The capital required to run and maintain the business should be considered i.e., the source of capital.
-Security: Availability of security should be considered.
4. Impact of the business operations on the environment.
Some businesses operations on the environments lead to environmental degradation and should be in appropriate environment. Are the political, economic, geographical, legal, and regulatory contexts favorable? Will the business do any damage to the physical environment? The above questions are typical of the type of issues that need to be addressed. Responses to these questions will determine the attractiveness of any business opportunity.
5. Competition and competitive advantage:
Competition is regarded as a threat to business of similar kinds operating in a similar location. Although competition is a threat, it is healthy in the sense that it goes along the way in controlling the price of goods offered. It is crucial for entrepreneurs to consider opportunities where competition is not high as this will enable them to get reasonable market.
6. Length of the window of opportunity:For example, one may inform you of an upcoming workshop for educators in your area, you realize that there is an opportunity for you to supply water, food and airtime among others, but for you to determine whether you should invest in this, you need to know how many people are coming, the length of the workshop, such that you know how much stock is needed, you also base on that to determine whether you will get back your money or not.
Analyze the photo below and answer the questions that follow.
Questions
1)What kind of activity is represented in the photo?
2)What are the effects of such business ideas to the community?
3)As an entrepreneur, suggest any two business ideas you may generate in response to the effects of the activity above.
4)Picking one idea, give the factors you will base on while choosing that idea.
5)What advice would you give to potential entrepreneurs while generating business ideas in relation to the photo above?
Skills Lab 3:
Choose 2 business ideas and conduct a viability test to find out which one is better in terms of; 1. Potential for growth, 2. Infrastructure, 3. Market for the goods/services (real demand), 4. Profitability, 5. competitive advantage, 6. Financial viability. Make posters indicating how each of the above factors favors or limits their business ideas with clear examples.
Recommend the most viable business ideas the Business club should start/continue running basing on the results of the viability tests and suggest action steps for the implementation.
End of unit 3. Assessment:
Read the following scenario,
Mr. and Mrs. Kaberu visited their friend Kambanda who lives in Kigali. They were surprised to see how Kambanda’s business of Coca-Cola wholesaling was booming. They didn’t even ask him how and why he chose to do that business. When they went back home in Nyagatare, they sold all their cows and opened up a wholesale depot of Coca-Cola products, just like their friend’s. Months went by and they had to pay rent, pay the attendant, pay utility bills, but there were no customers. Even the crates and bottles got covered in dust and cobwebs because they were kept for long. The landlord chased them out of the house because they couldn’t pay rent any more. Out of frustration, Mr. Kaberu had to sell all his stock at half price because he had nowhere else to keep them. On hearing this, his wife Mrs. Kaberu cried the whole day and night to the extent that she collapsed and was taken to the hospital at the mercy of the neighbours because her and her husband couldn’t afford the medical bills.
Questions
1a) Explain whether the business idea was good or bad.
b) Write a letter to Mr. and Mrs. Kaberu advising them on the importance of assessing a business idea or opportunity in case they have another one.2) There are many business opportunities that we can get from our communities, why should we always assess a business opportunity before investing our resources and time? To answer this, discuss in your groups and raise at least 5 business opportunities that you can think of. Assess each one of them and choose the best two viable ones which you will present to the class.