Generating and Protecting Business Ideas

Question 0

Sources of business ideas

Answer 0

1. Thought showers
2. Personal interest
3. Expertise
4. Business or Personal experience
5. Observation
6. Innovations

Question 1

Define Business

Answer 1

An activity that requires the organisation of resources, taking a risk in return for reward

Question 2

What are Thought showers

Answer 2

• 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.

Question 3

What are Personal Interests

Answer 3

• 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.

Question 4

Expertise

Answer 4

If you have particular expertise in a certain area then you should be able to translate these skills into a successful business.

Question 5

Business Experience

Answer 5

• 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.

Question 6

Observations

Answer 6

• 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)

Question 7

Innovation

Answer 7

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)

Question 8

•Niche Marketing

Answer 8

involves aiming a specialist product at a relatively small target market.

Question 9

market niche

Answer 9

a small segment of a much larger market.

Question 10

•Niche products

Answer 10

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.

Question 11

Benefits of knowing the product or service

Answer 11

. Good knowledge of product features
. Motivated by interest in product
. Contacts in established market

Question 12

Disadvantages of knowing the product or service

Answer 12

. Interest may not be shared by others
. Interest may overestimate the market size
. The wider skills than interest/passion

Question 13

Benefits of spotting a gap in the market

Answer 13

. First move advantage
. idea based on customer needs
. little or no competition

Question 14

Disadvantages of spotting a gap in the market

Answer 14

. Is it real gap? Do people want product?
. No expertise in market
. competition may enter market quickly

Question 16

Patents

Answer 16

An exclusive right to use a process or produce a product for a fixed period of time.

Question 18

Copyright

Answer 18

The protection given to books, plays, films and music.

Question 20

Trademark

Answer 20

A word, image, sound or smell that enables a business to differentiate itself from competitors

Question 21

Disadvantage of using a trademark

Answer 21

A registered trademark must be renewed every ten years to keep it in force.

Question 22

How to gain a patent

Answer 22

–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

Question 23

Advantages of using a copyright

Answer 23

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

Question 24

Franchise

Answer 24

•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.
Eg macdonalds
(The business)

Question 25

Franchiser

Answer 25

the company, which allows the person to use their product and name

Question 26

Franchisee

Answer 26

the person who pays the franchiser to use their products and name

Question 27

Key features of a franchise

Answer 27

• 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

Question 28

Benefits of using a patent

Answer 28

• 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.

Question 30

Benefits of using a trademark

Answer 30

• 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!

Question 35

Advantages for the franchisee

Answer 35

• 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.

Question 36

Disadvantages for the franchisee

Answer 36

• 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.

Question 37

Advantages for the franchisor

Answer 37

• Rapid growth for the business.
• Risk is taken by others.
• Regular income from royalty fees.
• Retains ultimate control, can end the agreement.

Question 38

Disadvantages the franchisor

Answer 38

• 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.

Question 39

Advantages for the franchisee

Answer 39

• 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.