Generating and protecting business ideas

research suggests that there are 4 major sources of ideas for Entrepreneurs

• spotting trends and analyzing their impact on peoples lives
• noticing something that is missing from the market
• copying ideas from other countries
• taking a scientific approach
• Brainstorming and personal business experience

Once a business has used these methods, it needs to identify both a product and a market niche in which to target. After using one of these methods above, a business must then plan carefully…

• spotting trends: A business must decide on what style of product meets the markets needs
• Noticing something that is missing from the market: What product best fits in this gap?
• Copying ideas from other countries: Will the customers here like the product?
• Taking a scientific approach: the product is decided but who will buy it?
• brainstorming: an overview or idea of the potential market is needed
• personal business experience: Does the experience need to be adapted to the market?

Franchise

A franchise is when the business gives the right to supply its product or service to another business

Benefits to the franchisee of operating a franchise

• they offer lower risks compared to other startup business, therefore there is a higher success rate
• franchise business usually have an established brand name
• banks would be more willing to lend as there is less risk involved
• benefits from national advertising or promotion
• franchisee is more likely to have a monopoly in that area
• relationships with the supplier are strong as they are more likely to have been established by the franchisor
• franchise offers support and training

 

Disadvantages for the franchisee from operating a franchise

• the franchisor may not have set up a sustainable or viable business idea
• costs may be higher than expected
• reduced risk of operating a franchise business may mean less rewards
• other franchisees may give the franchise a bad reputation and may have an adverse impact on all franchises as a result
• the owners independance is reduced par the franchise agreement
• It may be difficult to sell the franchise as the franchisor must approve of the new franchisee

benefits of the franchisor from operating a franchise

• They receive regular reward for their ideas, as the franchisee provides the capital and the risk
• rapid expansion is easier as they do not need to provide the capital
• this means that that the business can capture a larger share of the market
• franchisor retains control of the products and the distribution

Disadvantages of the franchisor from operating a franchise

• the franchisees may do a terrible job and lower the brand image of the franchise
• the more franchises means it is harder to keep control
• franchisees are sharing the franchisors ideas

Protecting business ideas

Business can protect their ideas with patents,trademarks and copyrights

Copyright is a legal protection against copying for authors, artists and musicians

• films
• books
• music
• computer programs
• sound recordings
• The owner of the copyright can charge a royalty for letting other people use it

A patent is an official document granting the holder the right to be the only user or producer of a newly invented product or process for a specific period

Benefits of patents….

• The owner has a monopoly and has the right to sell the product for up to 20 years without close competition
• It can bring in revenue as the patent can be sold,rented, or licensed
• A small business with a patent can seem more appealing to banks and larger businesses

Although….

• it does cost a lot of money in order to apply for and protect the patent
• there are high legal costs involved as other firms cannot use it

Trademarks are signs, logos or symbols displayed on a companies product or its advertisements  It distinguishes it brand from its competitors

it helps the business by

• providing an image that is instantly recognized by consumers
• create a USP by differentiating itself from its competitors
• make it easier to launch new products as it is using the recognized trademark

analysis

• comparing different sources of business ideas in a specific firm
• recognizing the impact of limited resources on business ideas
• linking the choice of product to the market niche chosen by the business
• drawbacks of the franchisor/ee of using or having a franchise
• explaining the benefits and drawbacks of protecting business ideas

 

evaluation

• Merits of a franchise as opposed to an independent start up
• overall impact of protecting a business idea to the business
• weighing up of two different franchises
• key factors to consider when protecting business ideas