BSM Module UNISA

Lesson 3 Part 1 – 3
The Identification and Development of Business Ideas

Content and Learning Objectives Covered in Part 1

 Three stages in creating an enterprise

o LO: List and explain the three stages in creating an enterprise

 Cultivating a creative attitude

o LO: Define “creativity”
o LO: Distinguish between divergent thinking and convergent thinking, and explain why
both these abilities are essential for creative output
o LO: List and explain the five methods that can be used to cultivate a creative attitude

List and explain the three stages in creating an enterprise

THREE STAGES IN CREATING AN ENTERPRISE

1. IDEA STAGE

Information  Ideas  Test Feasibility  Not Feasible Idea

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Feasible Small Business Plan

 Definition: Identifying and generating feasible business ideas.

 Key Points:
o Entrepreneur cultivates creativity.
o Opportunities ae identified and explored.
o Various business ideas are generated and refined.
o A suitable idea is chosen for further evaluation.
o Feasibility of the chosen idea is tested.

2. Planning Stage

 Definition: Investigating the profitable exploitation of the idea and drawing up a business plan.
 Key Points:
 o Viability of the idea is thoroughly tested.
o Market research is conducted to understand profit potential.
o Product offerings are defined, and the target market is identified.
o Costs, selling price and profit potential are calculated.
o A comprehensive business plan is developed if the idea is viable.

3. Implementation

 Definition: Put the idea into practice by starting the enterprise.

 Key Points:
o Necessary legal processes for starting a business are completed.
o Legal requirements are met to ensure compliance.
o The eight functions of the enterprise are put into action.
o Actual implementation of the business idea takes place.

Definition of Creativity

 Creativity involves seeing things differently and generating new ideas.

 Consider a topic from various angles for fresh perspectives.
 It’s about thinking differently about familiar things.
 Creativity is the ability to:
o Generate new possibilities.
o Identify alternatives.
o Come up with something new.

Distinguish between divergent thinking and convergent thinking and explain why both these
abilities are essential for creative output.

Balancing divergent and convergent thinking

 Divergent thinking sparks innovation and unique concepts.

 Convergent thinking refines ideas for practical implementation.
 Successful entrepreneurs master both divergent and convergent thinking.
 Creativity benefits from a balanced approach.
 Balanced approach maximizes creative output’s impact and relevance.
 Combine imaginative idea generation with rational evaluation.

List and explain the five methods that can be used to cultivate a creative attitude:

 Actively Seek Ideas

o Judge what you read or observe for potential ideas.
o Train your mind to spot idea-generating opportunities.

 Write Down Your Ideas

o Record every idea, even if it seems insignificant.
o Capturing ideas fosters creative thinking and prevents loss.

 View From Another Perspective

o Step into someone else's shoes for fresh insights.
o Gain new viewpoints and expand your thinking.

 Break Your Routine

o Try novel experiences to stimulate your thoughts.
o Challenge your comfort zone for renewed creativity.

 Explore Grey Areas

o Move beyond black-and-white thinking.
o Search for solutions and possibilities in-between.

 Adjust your Mindset

o Prepare your mind for creative thinking.
o Openness to new ideas enhances your creativity.

Lesson 3 Part 2

CONTENT AND LEARNING OBJECTIVES COVERED

 Generating business ideas

o LO: List and discuss the five approaches that can be followed to generate business
ideas.
 The development and evaluation of business ideas
o LO: Explain the purpose of using a bow-tie diagram
 List and discuss the five approaches that can be followed to generate business ideas:

 Approach 1 – Entrepreneur’s Skills, Expertise and Aptitudes

o Skills
 Refers to learnable manual abilities.
 Example: Carpenter using woodworking skills to start a furniture
business.
o Expertise:
 Based on acquired knowledge.
 Gained through formal education and/or experience.
 Example: A marketing expert launching a consulting firm.
o Aptitudes
 Inborn talents or natural abilities.

 Approach 2 – Common Needs

o Identify shared needs among a group of people.
o Develop a product/service to meet the identified need.
o Example: Creating a meal delivery service for busy
o professionals.

 Approach 3 – Existing Problems

o List personal or observed problems.
o Innovate solutions to address these problems.
o Example: Developing a smartphone app to organize daily tasks.

 Approach 4 – Everyday Activities

o Observe routines and activities in daily life.
o Identify areas for improvement or innovation.
o Example: Creating a mobile app for language learning during commute.

 Approach 5 – Other Sources

o Utilize external sources for inspiration.
o Yellow Pages, business publications, inventors’ associations, etc.
o Example: Transforming expired patents into new products.

 Why These Approaches Matter

o Diversity of approaches widens idea pool.
o Each approach taps into different aspects of entrepreneurship.
o Offers opportunities for innovation across various industries.

 Applying the Approaches

o Embrace these approaches as a creative exercise.
o Mix and match approaches for comprehensive idea generation.
o Transform ideas into viable business ventures.
 Explain the purpose of using a bow-tie diagram:

Development of business ideas:

 Not all creative ideas are feasible for business.

 A single idea or a combination may become an enterprise.
 Clarity on key aspects is crucial for evaluation.
 Before evaluation of the business idea
o Key question: What are the main business activities?
 Options include:
 Manufacturing a product
 Providing a service
 Selling other people’s product/services
 Key question: Who are the consumers?
 Two Categories:
o Individuals
o Organizations

Bow-tie diagram:

 Illustrates potential business activities and consumers.

 Aids in developing ideas effectively.
 Provides six options for business development:
o Manufacturing products for individuals
o Providing services to individuals
o Selling products/services to individuals
o Manufacturing products for organizations
o Providing services to organizations
o Selling products/services to organizations

 Using the Bow-Tie Diagram

o Develop your business idea using the diagram.
o Define the essence of your idea.
o Explore possible idea combinations.
o Consider taking new directions with your idea.
  Understanding Evaluation
o Prior to evaluation, understand the core idea of each concept.
o Clarity on two crucial aspects:
 Chief activities of the business.
 Manufacturing a product
 Providing a service
 Selling other people’s products/services.

Lesson 3 Part 3

CONTENT AND LEARNING OBJECTIVES COVERED

 The feasibility of business ideas

o LO: Explain what a feasibility study is
o LO: List the four questions to answer, when conducting a feasibility study
o LO: Explain the difference between a feasibility study and a viability study

Explain what a feasibility study is:

 Definition of a Feasibility Study

o An examination of idea potential for enterprise conversion.
o Determines practical possibility of transforming the idea.

 Focus of a Feasibility Study

o Evaluates the entrepreneur’s ability to convert the idea.
o Matches skills, expertise, and aptitudes with the idea.

 Purpose of Feasibility Study

o Determine potential of idea for enterprise conversion.
o Assess the entrepreneur’s capability to execute the idea.
 List the four questions to answer, when conducting a feasibility study:

 Four Key Questions:

1. Do I want to pursue this idea?
2. Is there a market for my idea?
3. Can I meet consumer needs?
4. Can I effectively communicate the idea to consumers?

Explain the difference between a feasibility study and a viability study:

Internal vs External environments: