COM402B51: ENTREPRENEURSHIP AND STARTUP MANAGEMENT
Unit-1: ENTREPRENEUR AND VENTURE CREATION
10 Hours
Concept of Entrepreneur, and Entrepreneurship, Characteristics of Entrepreneurs, Types of Entrepreneurs, The Role of Entrepreneurship in Economic Development, Manager Vs Entrepreneurs, Vs Intrapreneur, Factors influencing entrepreneurship. Meaning of Idea, Sources of New Idea- Methods of Generating Ideas-Opportunities recognizing-Product Planning and Development Process. Latest policies of government towards entrepreneurship.
Concept of Entrepreneur:[1]
An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The process of setting up a business is known as entrepreneurship. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.
Entrepreneurs play a key role in any economy, using the skills and initiative necessary to anticipate needs and bring good new ideas to market. Entrepreneurship that proves to be successful in taking on the risks of creating a startup is rewarded with profits, fame, and continued growth opportunities. Entrepreneurship that fails results in losses and less prevalence in the markets for those involved.
Meaning of Entrepreneur[2]
The entrepreneur is defined as someone who has the ability and desire to establish, administer and succeed in a startup venture along with risk entitled to it, to make profits. The best example of entrepreneurship is the starting of a new business venture. The entrepreneurs are often known as a source of new ideas or innovators, and bring new ideas in the market by replacing old with a new invention.
It can be classified into small or home business to multinational companies. In economics, the profits that an entrepreneur makes is with a combination of land, natural resources, labour and capital.
In a nutshell, anyone who has the will and determination to start a new company and deals with all the risks that go with it can become an entrepreneur.
How Entrepreneurship Works
Entrepreneurship is one of the resources economists categorize as integral to production, the other three being land/natural resources, labor, and capital. An entrepreneur combines the first three of these to manufacture goods or provide services. They typically create a business plan, hire labor, acquire resources and financing, and provide leadership and management for the business.
Entrepreneurs commonly face many obstacles when building their companies. The three that many of them cite as the most challenging are as follows:
- Overcoming bureaucracy
- Hiring talent
- Obtaining financing
Characteristics of Entrepreneurs[3]
Being an entrepreneur requires specific skills. While some abilities might be naturally present, others can be learned or developed through careful practice. Understanding the qualities needed by entrepreneurs can help you grow to become a better business leader.
1. Passion
More often than not, entrepreneurs are extremely passionate about their work. It is this passion that maintains momentum during times of uncertainty. To become a more passionate business leader, you should focus more on the meaning of your work. Have a system to consistently remind yourself and your team that you are trying to solve a problem rather than just making more money.
Knowing that your commitment makes an impact may give you the drive you need to continue when doubt settles in or when the business gets difficult. Passion is what keeps you focused on your objective.
2. Motivation
Entrepreneurs need motivation to constantly push their skills to stay relevant in a dynamic market. To build motivation, you can start by looking at things at the micro-level. Set and achieve small goals to build a ladder towards larger ones. Maintain morale and confidence throughout your journey. Celebrate your small wins and keep a positive mindset.
Optimism facilitates creativity. When coupled with motivation, it enables you to develop new concepts and ideas. Use every opportunity or failure to analyse your shortcomings and take conscious measures to avoid them in the future. Entrepreneurs are dreamers with a plan of action. Keep your end goals in mind to stay motivated.
3. Product or service knowledge
Entrepreneurs should know what products or services they want to offer and who their target audience is. Clearly identify the category of your products or services and be very clear about how they are beneficial to your customers. Study customer needs thoroughly before building solutions.
You should constantly study your market to understand what customers need and promote the exact features that set you apart from your competitors. Talk to your clients and use their feedback to make changes and adjust your position as and when required.
4. Risk management
Entrepreneurs inevitably have to take risks. When faced with a difficult situation, you should make informed decisions after planning for all eventualities. As an entrepreneur, risk-taking is a must if you wish to emerge above your competition. With time, you improve at managing risks and recovering from failures. This further increases your level of comfort with challenges and helps you take your business to greater heights.
Always treat your journey as a learning process, and give equal importance to both your successes and your failures along the way. Keep your goal in mind and commit to consistent engagement.
5. Self-confidence
Entrepreneurs invest their time and resources in a particular initiative because they are confident about creating something better than what the market has to offer. The road to their goals may have poorly defined grey areas, but ultimately, those who persevere are the ones who succeed.
6. Money management
Entrepreneurs need to keep track of the financial situation of their business, its past record and future targets. Even if you hire an accountant, you are the final decision maker. You should be well aware of the financial situation of your business to be able to make sound decisions.
Practice basic money management skills by preparing a budget and committing to it. Invest available funds into the development of your business, but take only calculated financial risks during investments. Consult experts to understand the impact of your financial decisions in detail. The internet is also a treasure trove for free financial advice and guidelines. You should select your sources carefully and spend time learning the basics of financial management.
7. Vision
Entrepreneurship involves knowing what you want to achieve, setting a goal and working towards it through tangible milestones. Vision is what defines the identity of an organization. Not only does it keep you driven, but it also fuels general motivation across the workplace and encourages everyone involved to work towards the success of a venture.
You may start by identifying what your professional goals are and how they align with your vision. Following this, you may set milestones and plan an achievable timeline to guide your actions. This allows you to witness your progression and helps keep you committed to your goals. Prioritizing your tasks keeps you from feeling overwhelmed and lets you stay true to your vision in the long run.
8. Decision-making ability
Entrepreneurs often need to make quick decisions and take actions. To improve decision-making skills, always avoid reacting spontaneously to situations and circumstances. Understand all facets of a problem, inform yourself of its nuances and then proceed to action. Assess the impact of a decision you intend to take and avoid rushing into it at all costs. You can also narrow your options through a simple pros and cons list.
9. Adaptability
In the infant stages of a business, entrepreneurs often have to manage multiple aspects of the business-like finance, marketing and sales simultaneously. Flexibility in your schedule, as well as in your thinking, is crucial to continue growing in challenging situations. To increase your adaptability, approach all activities, be it personal or professional, with an open mind and be open to changing your ways if required. Experiment with new methods and embrace new trends to enhance your ability to adapt.
10. Ability to network
The ability to make connections and seize opportunities as and when they appear is crucial to successful entrepreneurship. Interacting with new people facilitates access to resources or knowledge that may otherwise be out of your reach. It allows you to learn from the success and failure of others, promote what you bring to the table and expand your business.
Although business relationships often have many superficial aspects to them, strive to build genuine relationships with clients and other professionals in your field. Try to make friends and acquaintances as part of running your business. If you come across someone who may benefit another person in your network, connect them. They will probably remember you and return the favor somewhere down the line.
Types of Entrepreneurs[4]
Entrepreneurs turn bold ideas into reality. They create jobs and contribute to the economy but there are different types of entrepreneurs and each type tends to choose their own path based on their personality, abilities and surroundings.
The types of entrepreneurs vary depending on background, country and even sector but the most common types are:
1. Innovators
Innovators are the types of entrepreneurs who come up with completely new ideas and turn them into viable businesses.
In most cases, these entrepreneurs change the way people think about and do things. Such entrepreneurs tend to be extremely passionate and obsessive, deriving their motivation from the unique nature of their business idea.
Innovative entrepreneurs also find new ways to market their products by choosing product differentiation strategies that make their company stand out from the crowd. And sometimes it is not just standing out from the crowd but actually creating a new crowd.
To say that innovators like Steve Jobs, Larry Page of Google and Microsoft founder Bill Gates were obsessed with their business would be an understatement.
Advantages of Being an Innovate Entrepreneur:
- Get all the glory for the success of the business (and take all the arrows)
- Create the rules
- Face minimal competition during the initial days
Disadvantages of Being an Innovate Entrepreneur:
- You will need a lot of capital to bring a new idea to life
- Often face resistance from shareholders
- The timeframe for success is longer
The ability of an innovative entrepreneur to envision a new way of thinking makes them stand out from the crowd and wildly successful in many cases however it takes significant capital, patience and commitment to bring true innovation to life.
2. The Hustler Entrepreneur
Unlike innovators whose vision is the gas in their engine, hustlers just work harder and are willing to get their hands dirty. Hustlers often start small and think about effort – as opposed to raising capital to grow their businesses. These types of entrepreneurs focus on starting small with the goal of becoming bigger in the future.
Hustlers are motivated by their dreams and will work extremely hard to achieve them. They tend to be very focused and will get rid of all forms of distractions, favoring risks over short-term comfort.
A perfect example of a hustler is Mark Cuban. He started in business very young selling trash bags, newspapers and even postage stamps and this hustle later created a goldmine which was acquired by internet giant Yahoo!
Mark Cuban sold Broadcast.com to Yahoo for $5.7 billion in 1999. He is now a serial entrepreneur, owner of the Dallas Mavericks, long-time “Shark Tank” Shark, executive producer and bestselling author.
Advantages of Being a Hustler
- They will outwork most
- Tend to have thick skin – they don’t give up easily
- See disappointment and rejection as just a step in the process
Disadvantages of Being a Hustler
- Usually prone to burn out
- Wear out their team members who don’t have the same work ethic
- Often don’t see the value of raising capital as opposed to just working harder
Even though many hustlers never give up, a lot of them are willing to try anything to succeed which unfortunately means that they have a lot of hits and misses. Achieving their dreams takes a lot longer than most other types of entrepreneurs.
3. Imitators
Imitators are the types of entrepreneurs who copy certain business ideas and improve upon them. They are always looking for ways to make a particular product better so as to gain an upper hand in the market.
Imitators are part innovators and part hustlers who don’t stick to the terms set by other people and have a lot of self-confidence.
Advantages of Imitators
- Refining a business idea is easier and less stressful
- You can easily benchmark your performance with the original idea
- Can learn and avoid mistakes that were made by the originator
Disadvantages of Imitators
- Their ideas are always compared to the original idea
- Always have to play catch-up
- Taking an existing idea and refining and improving it can be a great way to develop a business.
4. Researcher
Even after having an idea, researchers will take their time to gather all the relevant information about it. To them, failure is not an option because they have analyzed the idea from all angles.
Researcher entrepreneurs usually believe in starting a business that has high chances of succeeding because they have put in detailed work to understand all aspects.
As a result, these types of entrepreneurs usually take a lot of time to launch products to make decisions because they need the foundation of deep understanding. These entrepreneurs rely much more on data and facts than instincts and intuition.
For a researcher, there should be no room for making mistakes.
Advantages of Being a Researcher Entrepreneur
- Plan for as many contingencies as possible
- Write detailed, well-thought-out business and financial plans
- Focus on data and information rather than gut feeling
- Won’t start unless they feel like they know the market
- Will minimize the chances of failing in the business
Disadvantages of Being a Researcher Entrepreneur
- Typically moves slow
- Doesn’t like risk and that can hamper progress in a new venture
- Even though these types of entrepreneurs spend a lot of time researching and digging into the data to ensure the success of their business, they can fall into the habit of obsessing over the numbers and focusing less on the running of the business.
- Jeff Bezos has spoken against this in a recent letter to shareholders where he asserted that “Most decisions should probably be made with somewhere around 70% of the information you wish you had”.
5. Buyers
One thing that defines buyers is their wealth. These types of entrepreneurs have the money and specialize in buying promising businesses.
Buyer entrepreneurs will identify a business and assess its viability, proceed to acquire it and find the most suitable person to run and grow it.
Advantages of being a Buyer
- Buying an already established venture is less risky
- Doesn’t have to worry so much about innovation
- Can focus on building on something that has already gone through building a foundation
- Already has a market for your products
Disadvantages of being a Buyer
- Usually pays a high price for good businesses
- Will face the risk of buying businesses that have problems that you think you can turn around
The Role of Entrepreneurship in Economic Development[5]
Economic development essentially means a process of upward change whereby the real per capita income of a country increases over a period of time. Entrepreneur plays a vital role in economic development. Entrepreneurs serve as the catalysts in the process of industrialization and economic growth. Technical progress alone cannot lead to economic development, unless technological breakthroughs are put to economic use by entrepreneurs.
It is the entrepreneur who organizes and puts to use capital, labour and technology. Accordingly, “development does not occur spontaneously as a natural consequence when economic conditions in some senses are right. A catalyst is needed and this requires entrepreneurial activity to a considerable extent, the diversity of activities that characterizes rich countries can be attributed to the supply of entrepreneurs.”
The entrepreneur is the key to the creation of new enterprises that energize the economy and rejuvenate the established enterprises that make up the economic structure.
Entrepreneurs initiate and sustain the process of economic development in the following ways:
1. Capital Formation:
Entrepreneurs mobilize the idle savings of the public through the issues of industrial securities. Investment of public savings in industry results in productive utilization of national resources. Rate of capital formation increases which is essential for rapid economic growth. Thus, an entrepreneur is the creator of wealth.
2. Improvement in Per Capita Income:
Entrepreneurs locate and exploit opportunities. They convert the latent and idle resources like land, labour and capital into national income and wealth in the form of goods and services. They help to increase net national product and per capita income in the country, which are important yardsticks for measuring economic growth.
3. Generation of Employment:
Entrepreneurs generate employment both directly and indirectly. Directly, self-employment as an entrepreneur offers the best way for independent and honorable life. Indirectly, by setting up large- and small-scale business units they offer jobs to millions. Thus, entrepreneurship helps to reduce the unemployment problem in the country.
4. Balanced Regional Development:
Entrepreneurs in the public and private sectors help to remove regional disparities in economic development. They set up industries in backward areas to avail various concessions and subsidies offered by the central and state governments.
Public sector steel plants and private sector industries by Tatas, Birlas and others have put their industries on the international map.
5. Improvement in Living Standards:
Entrepreneurs set up industries which remove scarcity of essential commodities and introduce new products. Production of goods on mass scale and manufacture of handicrafts, etc., in the small-scale sector help to improve the standards of life of a common man. These offer goods at lower costs and increase variety in consumption.
6. Economic Independence:
Entrepreneurship is essential for national self-reliance. Industrialists help to manufacture indigenous substitutes of hitherto imported products thereby reducing dependence on foreign countries. Businessmen also export goods and services on a large scale and thereby earn the scarce foreign exchange for the country.
Such import substitution and export promotion help to ensure the economic independence of the country without which political independence has little meaning.
7. Backward and Forward Linkages:
An entrepreneur initiates change which has a chain reaction. Setting up of an enterprise has several backward and forward linkages. For example- the establishment of a steel plant generates several ancillary units and expands the demand for iron ore, coal, etc.
These are backward linkages. By increasing the supply of steel, the plant facilitates the growth of machine building, tube making, utensil manufacturing and such other units.
Entrepreneurs create an atmosphere of enthusiasm and convey a sense of purpose. They give an organization its momentum. Entrepreneurial behavior is critical to the long-term vitality of every economy. The practice of entrepreneurship is as important to established firms as it is to new ones.
Manager Vs Entrepreneurs, Vs Intrapreneur
Manager:
A manager is a professional who takes a leadership role in an organization and manages a team of employees. Often, managers are responsible for managing a specific department in their company. There are many types of managers, but they usually have duties like conducting performance reviews and making decisions. Managers are often the line of communication between a company’s employees and its high-level executives.
- Administrating controlling, operating a business
- Utilize available resources, implement strategies, ensures proper functioning of organization
- Works for salary
- Does not take risk
- Vision & Mind-set Self-development & growth
- Executor, planner
Entrepreneur:
An entrepreneur is an individual who sets up business or businesses, identifies and solves problems, is creative, innovative, opportunist, risk-taker, self-starter, and open-minded with the hope of making a profit from the enterprise.
- Executing ideas & Setting up a business
- Accumulates land, labor, tools, machinery, technology for organization
- Works for profit
- Take financial risk
- Make profits and serve society
- Inventor, innovator
Intrapreneur:
An intrapreneur is an inside entrepreneur, or an entrepreneur within a large firm, who uses entrepreneurial skills without incurring the risks associated with those activities.
Intrapreneurs are usually employees within a company who are assigned to work on a special idea or project, and they are instructed to develop the project like an entrepreneur would. Intrapreneurs usually have the resources and capabilities of the firm at their disposal.
- Intrapreneur refers to an employee of the organization who is in charge of undertaking innovations in product, service, process etc.
- Use resources provided by the company
- Capital is financed by the company
- Risk is taken by the company
- Change and renew the existing organizational system and culture
Factors influencing entrepreneurship[6]
Entrepreneurship is essential for the development of any economy. Countries which have flourished attribute their rise to the growth of entrepreneurship. Therefore, governments and people all over the world want to encourage this concept.
Political Factors
Political factors play a huge role in the development of entrepreneurship in a given geographical area. This is because politicians decide the type of market that is in place. The market could be capitalistic, communist or some countries have adopted a mixed economy. Each of these three markets has very different implications for the way in which entrepreneurs are required to function. Capitalism requires breakthrough innovation whereas communism requires entrepreneurs to be well connected with the political class. Therefore, it has been observed that the more capitalistic any country is, the more entrepreneurship flourishes in the region.
Legal Factors
Entrepreneurs are dependent upon law for a wide variety of factors. The strength and fairness of the legal system of a nation affect the quality of entrepreneurship to a large extent. This is because entrepreneurs require a wide variety of legal services to function. For instance, entrepreneurs would require the courts to enforce the contracts that were entered to between parties. In many countries such contracts are not enforceable and therefore the resultant risk prohibits the development of entrepreneurship. Then again, the entrepreneurs are dependent on the courts for the protection of their property rights. Also, many advanced countries have noticed that the provision of declaring bankruptcy has been positively associated with the development of entrepreneurship. Entrepreneurs do fail a few times before they find the right innovation that leads to their success. The United States is amongst the countries with the highest rate of entrepreneurial development and it is also known to have one of the most advanced bankruptcy laws! Even business legends like Henry Ford had declared bankruptcy in their early days.
Taxation
The government can also influence a high degree of control on the market through provisions of taxation. Some amount of taxation is necessary for the government to maintain the legal and administrative systems in place for the entire economy. However, a lot of times governments resort to excessive taxation. They usually adopt the policy of beggaring the rich and giving it off to the poor. This goes against the basic tenets of entrepreneurship which believes in survival of the fittest. Therefore, countries where tax regimes are restrictive find an outflow of entrepreneurs. In short, entrepreneurs want to set up shop in places where there is minimal interference from the government.
Availability of Capital
The degree to which the capital markets of a nation are developed also play a huge role in the development of entrepreneurship in a given region. Entrepreneurs require capital to start risky ventures and also require instant capital to scale up the business quickly if the idea is found to be successful. Therefore, countries which have a well developed system of providing capital at every stage i.e. seed capital, venture capital, private equity and well developed stock and bond markets experience a higher degree of economic growth led by entrepreneurship.
Labor Markets
Labor is an important factor of production for almost any kind of product or service. The fortunes of the entrepreneurs are therefore dependent on the availability of skilled labor at reasonable prices. However, in many countries labor has become unionized. They demand higher wages from the entrepreneurs and prohibit other workers from working at a lower price. This creates an upward surge in the costs required to produce and as such has a negative effect on entrepreneurship.
With the advent of globalization, entrepreneurs have witnessed the freedom to move their operations to countries where labor markets are more favorable to them. This is the reason why countries like China, India and Bangladesh have witnessed a huge rise in entrepreneurial activity in their countries.
Raw Materials
Just like labor, raw material consisting of natural resources is also an essential product required for any industry. In some countries this raw material is available through the market by paying a fair price. However, in some countries seller cartels gain complete control over these natural resources. They sell the raw materials at inflated prices and therefore usurp most of the profit that the entrepreneur can obtain. Therefore, countries where the supply of raw material faces such issues witness depletion in the number of entrepreneurial ventures over time.
Infrastructure
Lastly, there are some services which are required by almost every industry to flourish. These services would include transport, electricity etc. Since these services are so basic, they can be referred to as the infrastructure which is required to develop any business. Therefore, if any country focuses on increasing the efficiency of these services, they are likely to impact the businesses of almost all entrepreneurs in the region. Therefore, countries which have a well developed infrastructure system witness high growth of entrepreneurship and the opposite is also true.
Meaning of Idea
- A plan, purpose, or goal.
- Something one thinks, knows, or imagines; a thought; mental conception or image; notion.
- A plan; scheme; project; intention; aim.
- Something, such as a thought or conception, that is the product of mental activity.
- A sense that something can happen; a notion or expectation.
Sources of New Idea
Sources of new ideas for Entrepreneurs[7]
Entrepreneurs frequently use the following sources of ideas:
1. Consumers– the potential consumer should be the final focal point of ideas for the entrepreneurs. The attention to inputs from potential consumers can take the form of informally monitoring potential ideas or needs or formally arranging for consumers to have an opportunity to express their concerns. Care needs to be taken to ensure that the new idea or the needs represents a large enough market to support a new venture.
2. Existing Companies– with the help of an established formal methods potential entrepreneurs and intrapreneurs can evaluate competitive products & services on the market which may result in new and more market appealing products and services.
3. Distribution channels– members of the distribution channels are familiar with the needs of the market and hence can prove to be excellent sources of new ideas. Not only do the channel members help in finding out unmet or partially met demands leading to new products and services, they also help in marketing the offerings so developed.
4. Government– it can be a source of new product ideas in two ways firstly, the patent office files contain numerous product possibilities that can assist entrepreneurs in obtaining specific product information, and secondly, response to government regulations can come in the form of new product ideas.
5. Research & development– Entrepreneur’s own R&D is the largest source of new idea. A formal and well-equipped research and development department enables the entrepreneur to conceive and develop successful new product ideas.
Methods of Generating Ideas
Creative Idea Generation Methods[8]
No matter what you do for a living, the success of your business probably depends on how good and creative you are. The ability to come up with fresh and exciting ideas is what separates top-performers from their less successful peers, so you definitely need to think of how to improve this skill.
Idea generation is defined as the process of creating, developing and communicating abstract, concrete, or visual concepts. To put it simply, it’s the process that requires finding new solutions for practical problems in all fields of life and work.
#1 The 5W+H Method
1. Who?, 2. What?, 3. Where?, 4. When?, 5. Why?, 6. How?
Although it may seem like a random set of numbers at first glance, the 5W+H method is a really meaningful way to cope with the creative drought. The technique represents basic questions you need to ask when thinking about a specific topic: Who, what, where, when, why, and how?
Jason Richardson, a content creator at essay papers, shared his thoughts with us: “If you answer each of the 5W+H questions precisely – regardless of the topic – you can get one step closer to solving your problem. These answers should stimulate your brain to rethink the whole subject and find a new angle of looking at things.”
#2 Social Listening
Idea generation doesn’t mean you have to come up with a great suggestion single-handedly. On the contrary, sometimes it’s enough to do a little bit of social listening and see what the target audience has to say about a certain topic. You can use social networks like Facebook or Twitter to find precious ideas coming from end-users.
Besides that, you can always organize an opinion poll to directly ask people what they want. For example, a platform such as Survey Monkey allows you to launch a simple survey within minutes, so why not use it as the idea generation tool?
#3 Brainstorming
Brainstorming is a well-known method that people all over the world use for decades already. What makes this tactic so popular? Well, it’s the fact that no one gets laughed at for proposing a stupid idea. There is no right or wrong here – you just need to say the first thing that comes to your mind and that’s it. After a quick brainstorming session, you just need to filter through all suggestions and find the ones that have the biggest potential to succeed.
#4 Role Playing
Walking in someone else’s shoes is everything but easy, but sometimes it’s the only way to break the barrier and think of a brilliant idea. The process is simple: you just need to switch places with your colleagues and try to embrace their point of view. It doesn’t guarantee immediate results, but it often leads to interesting conclusions and brand-new ideas.
#5 Use Online Tools
The Internet is filled with interesting tools that can assist you in identifying alternative ideas. You can choose between many different options, but the final decision usually depends on the nature and peculiarities of your business. However, we can definitely recommend a couple of valuable platforms here:
Evernote: Nothing hurts like coming up with amazing solutions and forgetting it along the way. Evernote prevents this because it allows you to write down every thought instantly.
Ninja Essays: It’s a team of incredibly creative authors who can help you to brainstorm and craft high-quality topics for your websites, blogs, or research papers.
#6 Mind Mapping
Mind mapping is another method to get through the creative drought successfully. By definition, a mind map is a diagram for representing tasks, words, concepts, or items linked to and arranged around a central concept or subject using a non-linear graphical layout that allows the user to build an intuitive framework around a central concept.
Let’s say you are writing a screenplay. In this case, you can put the main character in the center of the map and then add links leading to all other elements of your movie – from plot and love relationships to supporting roles.
#7 Think in Reverse
The last solution on our list is very amusing. Instead of thinking about how to reach your goal, you can think about how not to achieve it. For example, you can plan on how to reduce the number of Instagram followers instead of increasing it. The so-called negative thinking often leads people to unbelievable conclusions, which in turn brings them a bunch of new ideas.
Conclusion
You can be the most creative person in the world, but it won’t save you from an occasional creative drought. Everybody knows that feeling when you feel miserable because you just can’t seem to think of a good idea, but there is a way to get out of the whole.
Opportunities recognizing-Product Planning and Development Process.
Product Planning[9]
Product planning is an essential process for companies that create, manufacture and sell goods. Having a product development plan allows businesses to assess their current customer demographics, identify markets for expansion and create product development goals that help them gain, retain and serve their customers. Learning about product planning can help you create a product development strategy that grows your business.
What is product planning?
Product planning is the process of developing successful products to offer your customers. It includes all aspects of the product development cycle, including market research, strategic planning, product design and development, manufacturing and pricing. A product development plan helps you construct realistic goals for each stage of the development process. It also allows you to measure your progress toward those goals, assess your successes and make adjustments as needed.
4 product planning examples:
1. Start with a target market
The first approach to developing a successful product plan is to know which customers you want to target with your new product. Conducting market research helps you identify the needs of your customers, clarify your focus on key demographics and design products with the specific desires of your customers in mind. As part of this stage of the product planning process, performing quantitative and qualitative research through surveys, focus groups, interviews and other methods can help you gain insight into what your customers want and how your products can fit their needs.
Example: Blue Hibiscus Beauty manufactures and sells makeup, skincare products and hair accessories through its online store. As part of its market research strategy, it distributes surveys to each customer who makes a purchase from its shop. The survey includes several demographic questions and an open-ended response portion that asks each participant to describe what products they’d most like Blue Hibiscus Beauty to carry. Based on the survey results, the company learns that its core demographic of female shoppers between the ages of 18 and 25 wants sustainable and easy-to-apply eyeliner, so it begins developing this product.
2. Focus on customer retention
Another approach to product planning is to consider opportunities to retain current customers. Businesses often look to implement new products that appeal to their current customers in order to retain them and encourage repeat purchases. To improve customer retention, businesses can conduct research into their current customers’ buying habits to identify their most popular products, to notice which products customers often purchase together and to determine whether they can offer additional products to supplement or support the functions of their existing products.
Example: Remote Work Fitness sells home workout equipment to its customers and wishes to expand its available products to improve its customer retention. Through its market research, the business identifies that most customers purchase only a few pieces of home gym equipment and rarely return to purchase additional equipment, despite leaving positive reviews. The company decides to expand its product selection to include dietary supplements to appeal to its customer base of home exercise enthusiasts. Since customers need to resupply their supplements periodically, introducing this product may improve Remote Work Fitness’ customer retention.
3. Focus on new customers
The next way to conduct product planning is to identify opportunities to gain new customers by expanding your selection of products. To conduct this method of product planning, consider your current target market and related markets that you haven’t yet accessed. Knowing which demographics are related to your current target market can help you identify opportunities for expansion.
Example: Garden Fleece Market is a small community grocery store that sells fresh produce from local farmers. Although it has a loyal customer base, the store hopes to increase its new customers by 25% over the next fiscal year. To attract new customers, the store decides to expand its product selection to include a butcher, a bakery and a selection of locally made care products like lip balm, lotion, bar soap and essential oils. Its plan to expand its product selection involves contacting local vendors to supply these items. By stocking more diverse products, the store hopes to gain new customers.
4. Optimize for growth
One important consideration during the product planning process is optimizing your manufacturing operations and product availability for growth. This means accounting for the expenses of developing, manufacturing, transporting, storing and selling a new product while anticipating your earnings to ensure your new product is profitable. The process of developing new products can be expensive, so it’s important to conduct thorough research into your target market. This research helps you determine how likely your customers are to purchase your product and how much they’re willing to pay for it so you can budget effectively.
Example: Tilly’s Knitting Supply Store is a small business that sells craft supplies. The business is interested in expanding to include a custom picture frame service. The company plans to create the custom frames in-store by working directly with customers to design and craft each frame. As part of its product plan, Tilly’s Knitting Supply Store performs thorough research to gain an estimate of how many customers might use the service each quarter. It then creates a budget to determine how much to spend on materials and how much to charge for the services in order to make a profit.
Product Development Steps[10]
The steps are: 1. Generation of New Product Ideas 2. Screening of Ideas 3. Product Concept Development 4. Commercial Feasibility 5. Product Development 6. Test Marketing 7. Commercialisation.
Step # 1. Generation of New Product Ideas:
The first step in product planning and development is generation of ideas for the development of new/innovative products.
Ideas may come from internal sources like company’s own Research and Development (R&D) department, managers, sales-force personnel etc.; or from external sources like, customers, dealers, competitors, consultants, scientists etc.
At this stage, the intention of management is to generate more and more new and better product ideas; so that the most practical and profitable ideas may be screened subsequently.
Step # 2. Screening of Ideas:
Screening of ideas means a close and detailed examination of ideas, to determine which of the ideas have potential and are capable of making significant contribution to marketing objectives. In fact, generation of ideas is not that significant as the system for screening the generated ideas.
The ideas should be screened properly; as any idea passing this stage would cost the firm in terms of time, money and efforts, at subsequent stages in product planning and development.
Step # 3. Product Concept Development:
Those product ideas which clear the screening stage must be developed into a product concept – identifying physical features, benefits, price etc. of the product. At this stage product idea is transformed into a product concept i.e. a product which target market will accept.
Step # 4. Commercial Feasibility:
At this stage, the purpose is to determine whether the proposed product idea is commercially feasible, in terms of demand potential and the costs of production and marketing. Management must also ensure that product concept is compatible with the resources of the organization technological, human and financial.
Step # 5. Product Development:
Product development encompasses the technical activities of engineering and design. At this stage, the engineering department converts the product concept into a concert form of product in view of the required size, shape, design, weight, colour etc. of the product concept.
A model or prototype of the product is manufactured on a limited scale. Decisions are also made with regard to packaging, brand name, label etc. of the product.
Step # 6. Test Marketing:
A sample of the product is tested in a well-chosen and authentic sales environment; to find out consumers’ reaction. In view of consumers’ reactions, the product may be improved further.
Step # 7. Commercialisation:
After the management is satisfied with the results of test marketing, steps are taken to launch a full-fledged programme for the production, promotion and marketing of the product. It is the stage where the new product is born; and it enters it life cycle process.
Latest policies of government towards entrepreneurship.[11]
[1] https://www.investopedia.com/terms/e/entrepreneur.asp#
[2] https://byjus.com/commerce/what-is-entrepreneurship/
[3] https://in.indeed.com/career-advice/career-development/characteristics-of-an-entrepreneur
[4] https://lonelyentrepreneur.com/types-of-entrepreneurs/
[5] https://www.economicsdiscussion.net/entrepreneurs/role-of-entrepreneurs-in-economic-development/31496
[6] https://www.managementstudyguide.com/factors-which-affect-entrepreneurship.htm
[7] https://abhishekkatiyar.wordpress.com/2005/07/21/sources-of-new-ideas-for-entrepreneurs-2/
[8] https://magazine.startus.cc/7-creative-idea-generation-methods/
[9] https://www.indeed.com/career-advice/career-development/product-planning-examples
[10] https://www.yourarticlelibrary.com/production-management/product-planning/product-planning-and-development-top-7-steps/69574
[11] https://yourstory.com/2022/05/government-schemes-indian-startup-ecosystem-samridh-msmes/amp
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