CHAPTER 2.

IDEA GENERATION OVERVIEW

Introduction

The training content of the module is aimed at forming knowledge about the essence
and specifics of the eentrepreneurial idea. After learning about the topic, learners could:

• Identify the eentrepreneurial idea in details;

• Discuss the possibilities of their business with experts;

• Analyze the target market;

• Choose the context in which the company must be developed;

• Measure business risk in a preventive way

Topic structure:

1. The Entrepreneurial idea

2. Examination of the social and economic conditions in which the company will
develop

3. The mqin facrors to consider when develop a business plan

4. Marketing knowledge

5. The overall economic and social situation ( macro-environment and micro-

environment )

Methods of education and teaching

Training Methods: Case Studies; teamwork; training in a flexible, informal environment;

team training; online education. Teaching methods: lectures; practical tasks; discussion.

The Entrepreneurial idea

Every business was born of an idea: an intuition that comes suddenly and if cultivated it can
intercept and provide an answer to a need born of market observation.

The discovery of a new technology, the expansion of the demand for a product / service, the
modification of the tastes and buying propensities of consumers, the success of other
companies, the identification of a need and a market failure. From this intuition, an
organized process of verification of the idea has to start.

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This analysis process leads to the drafting of a viability plan, or business plan, to verify if the
business idea has a market and if the product/service can be purchased by the consumer
and at what price.

Many times, the initial intuition turns, coming to be enlarged and applied differently than
the initial intentions; other times the idea does not arrive and we must look for it, wait for it
and prepare the ground.

From the process of analyzing the idea, a real business project will be developed, in which
will have to be faced up to the following issues:

- The capital needed to start, and then to run the business;

- The members/collaborators to be involved;

- The most appropriate legal form;

- The bureaucratic requirements to be fulfilled;

- The technical characteristics of the product / service;

- The necessary technologies / equipment;

- The type of market one intends to address;

- The image you want to give to the company;

- The commercial and promotional policies that are intended to be activated;

- Price policies.

Some points to examine to give shape to the idea

- The "construction" of the entrepreneur you have inside

Successful and valuable entrepreneurs (not necessarily the same thing) are those who have
had the courage to get involved and fight for the realization of their ideas.

Steve Jobs said in a speech, "stay foolish, stay hungry". However, he did not intend to be
"foolish", in the sense of "reckless", but "visionaries" to imagine solutions and then test the
feasibility and concreteness of those solutions.

The entrepreneur must be hungry (with knowledge and experience) and brave (he must dare
for his own ideas).

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This does not mean risking everything but developing the knowledge to make the most for
your business.

He must not burn the stages, but prepare well, invest first in himself and then in the idea.

- Examination of the social and economic conditions of the world in which one operates

Having a general vision of the socio-economic reality in which the entrepreneurial idea is
born and thriving, will help achieve it in the right way and understand in what context it will
develop.

Specialized information, but also general information, are useful sources for having an
overall view of reality, particularly if you want to develop a business linked to the territory.

Observing the trend of the different sectors, the opportunities offered by the market, the
possibilities of expansion and its limits are indispensable indications.

- Define the idea

Thomas Edison said, "The value of an idea lies in putting it into practice"; an effort must be
made to try to turn the idea into a workable project.

To do this, try to define in detail the product you want to offer in which sector it fits, which
are market competitors, how it differs from the competition, which is the target or the
reference customer to whom you want to address the product.

Try to answer all these questions and outline the limits and critical issues to be addressed:
now your project starts to take shape.

- Compare with others

Comparison can give you advantages: talking about the idea and the project with experts
and consultants can give different and new points of view to consider.

The opinion of those who are not directly involved, can offer an objective view of the
project. The weaknesses and strengths of the idea or the inconsistencies between the
project and the real competences on the subject can be highlighted.

- The business plans

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After evaluating the previous elements, it is necessary to translate data, estimations and
projections into a business plan.

A business plan is a document describing all the features of the project and the resources
needed to carry it out. It is used, usually, to submit the project to the evaluation of an
external investor or to get a loan.

A business plan is also a way to focus on all aspects and potential business criticalities or to
know the validity of one's business: write down the ideas and the data forces you to examine
all aspects, even the most peculiar ones.

There is no defined path leading to a new idea, but surely, we can prepare a favorable
ground for its identification, adopting a spirit of observation and constructive criticism and
developing one's own curiosity.

You should remember that the idea must not be genial or original at all costs: the
fundamental thing is that it is a clear idea and that it can be achieved in an optimal way.

It is indispensable, in order not to lose contact with reality, fixing oneself on an intuition or a
little more, that no matter how beautiful it may seem, it may not be concretely useful or
profitable, keeping an eye on the world in which one operates daily. You may do this taking a
look at,

• The local, national and international economic reality: by reading economic newspapers
and specialist publications, you may obtain information on the performance of the various
sectors of activity and on their possibilities of expansion or contraction;

• Daily life that is the lifestyle of others: the opportunity to start a business could arise from
the absence or lack of competition in a certain sector. Besides, the activities cultivated
outside the working context (such as hobbies and interests) are explanatory of skills and
competences that we often underestimate and that, instead, could be a starting point for
the creation of a new activity;

• The work environment: whether you are in a large company or a small company, it may
allow you to identify the specific field of activity where you can compete, the competitors,
the customers with their specific needs and the evolution of the sector;

In order to understand if you can start a real project, you have to focus on some
fundamental steps:

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• Define the idea: you have to detail as much as possible the product or service that you
want to offer, define what is your target market, what kind of difference you want to give
your product compared to existing products or services;

• Search for other information by consulting books, texts, online information and research
concerning the sector in which you wish to work;

• Gather expert and non-expert opinions: you have to submit your idea to someone who is
not as involved as you, but who could be a potential customer, and also to someone who
have specific technical skills, have an entrepreneurial experience or who knows your
competitors;

• Making the obstacles emerge: the comparison with the outside world will be very helpful.
People you will be talking to will help you bring out or highlight any obstacles that you
should have to overcome, and any inconsistency between tour idea and tour skills, between
your idea and the target market, or between tour idea and the resources you can invest.

Not being afraid to subject the project to a sort of "stress test", it will surely give useful
results, which will allow you to evaluate the possible weaknesses of the project in an
objective and detached way.

The business projects

Once it is established that the idea has realistic foundations and that the obstacles to its
realization are not insurmountable, and that there are real possibilities of development, the
project must be analyzed points by points.

The entrepreneur and his project

As we have already said, a good idea is not enough to determine the success of a company.
You need a set of skills that the future entrepreneur will need to acquire:

- Know how to produce

- Know how to sell

- Know how to manage.

The main factors to consider starting the business plan

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To better define the business idea, we need to examine the following aspects:

- What size the company must have

- To whom you will sell i.e. what is the chosen reference market;

- What to sell what are the products or services you want to offer (define in detail);

- How to produce with what tools, technical knowledge, investments;

1. Initial company size

One of the first steps is to establish the optimal size of your company, based on the possible
investment plan: this involves defining the entity of the productive factors to be used in the
company (personnel, plants, equipment, etc.).

The problem of the right dimension is not only typical of the development phase, but it is
constantly repeated throughout the life of the business.

You will have constantly to monitor the business size, because the biggest problems of the
company should depend on this decision.

Anyway, the inspiring criterion must be the highest flexibility, above all thinking about the
economic and productive instability of each sector: you also need to create a structure able
to adapt to the continuous changing of external conditions without trauma.

Caution is necessary for the first moments of a company's life.

It is better to limit the size at the beginning, taking account of expansion only when the
company is already solid, and it can bear the costs of new investments.

You need rationality from the beginning, setting the conditions for any subsequent
adaptations: the optimal size will come consequently.

Indeed:

• The expansion of the initial dimensions, if properly prepared, is physiological;

• A forced downsizing is an extremely negative fact and is the result of incorrect planning
from the beginning.

In some cases, however, it may be useful to oversize, not excessively, from the beginning
certain production factors: for example, for certain plants or machinery it may be difficult to
make the necessary extensions. You also need to avoid immediate reduced market
absorption capacities.

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However, the production capacity reserves created by a little oversize could have "functional
character"; they could be sustainable from an economic and financial point of view and be
established based on a good probability of future use.

2. Localization

Identifying the correct logistic location is fundamental, especially if it concerns

manufacturing plants. There are considerable indirect costs deriving from a poor territorial
positioning: higher transport costs, longer times, poor production flows, etc.

You need to evaluate, among others, the following main factors:

• Proximity to the "supply" markets (where you obtain raw materials) or "outlet" (where
your product is sold);

• The existence of infrastructures (motorways, railways, aqueducts, power lines, telephone

lines, etc.);

• Availability of qualified personnel in the area;

• Access to the facilities provided for some territorial areas;

• The availability of premises in a specific area.

Often the location is chosen because there are already premises where the business activity
could be carried out: this could paradoxically represent a limit, even if it seems to be the
cheapest solution, because it is not said that it responds to the optimal location;

• The existence of environmental or other constraints that could make unseemly or

impossible company location

These factors have different importance depending on the type of activity carried out: each
production and commercial activity have their specificities.

A store that sells high-level items must be located in a city center, while a production of
automotive components must be located in strategic areas for the exchange (receiving and
sending) of goods; a courier must be located at the large motorway junctions.

Another assessment concerns the method of acquisition of the premises. Purchase or lease?

The two solutions have mutual advantages and disadvantages.

Purchase:

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Advantages: it is a good investment in general; the ownership of a property can also be a
guarantee for third parties

Disadvantages: it prevents a simple change of location, it immobilizes a lot of capital

depriving of its other investments, and it is a big economic link if you need to sale your
company.

Lease:

Advantages: it is simpler to move the site, the cost is deductible, and you do not lock a big
amount of capital.

Disadvantages: in the case of long stays, the fees are "to lose" funds, as well as any
improvements or renovations made on the premises.

3. The reference market

First, you need to identify clearly your target market. This is one of the first steps for a new
entrepreneurial initiative.

A bad evaluation could lead you to unsatisfactory or even unsuccessful results.

For this reason, you have to start from a fundamental consideration: the market is not only a
point of arrival, but also and above all a starting point.

Before selling anything, you need to understand what the customer is looking for.

Understand what your needs are.

Successful companies in general are not "product oriented", but "market oriented".

This means that they produce and sell what the market demands and not what they think is
the best or most congenial product for them.

If they think about a new product, they also try to identify a need that has to be satisfied.

A clear example is those of recent technological products, such as tablets, smart phones and
technology present on cars, which satisfy the needs (created ad hoc) of a large part of the
market.

Market knowledge

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However, to identify the market, we need to study it. An essential prerequisite to start new
business is a good knowledge of the demand (real and potential).

However, very few companies start with a satisfactory level of knowledge of their reference
market.

To this purpose, you need to:

• Analyze the potential market: trends, vastness, territoriality and reachability;

• Identify the potential "target": it is the type of client to turn to. It means analyzing
demographic characteristics (age, sex, income bracket, level of education, etc.) and
psychographic ones (attitudes, values, motivations, etc.).

To answer all these questions, you need a market research.

Marketing as a planning tool.

Marketing is a science that studies mass-market attitudes.

It does not serve to sell anything that is produced, but to produce what the consumer needs
and seeks.

It can be defined as an activity aimed at offering:

• The correct product,

• At the correct price,

• Through the correct distribution channel,

• With correct communication,

• To the correct customer.

• The elements above are the cornerstones of a correct "go to market" and must be
properly mixed:

• Product and price: you cannot sell notoriously expensive products at low prices, or
high-priced consumer products;

• Product and distribution: you cannot sell valuable products in a stall, or perishable
products by post;

• Product and communication: it is not useful to advertise a neighborhood store on a

national television network, or to promote diet products to overweight people;

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 • Communication and distribution: a product cannot be advertised long before it is
distributed in stores;

• Communication and price: a luxury product cannot be advertised by highlighting its

high price (it is generally kept silent);

• Product and customer: children cannot sell products "for grown-up" (i.e. alcoholic
beverages).

The product / service

Once you have analyzed the target market and selected the target customer, you need to
think about the "right" product or service to meet its needs.

In recent years, the evolution of the product concept has been very strong: the components
that corollary to a physical product sold are innumerable. Successful companies are those
that manage to give the customer something more than a physical object: they no longer sell
only a product, material or immaterial. We sell quality, prestige, variety of choice, assistance
before and after the purchase, courtesy, efficiency, personalized products or services, and
more.

The product life cycle

In the marketing manuals, you can often find the definition of the product life cycle.

Indeed, each product experiences four phases, which correspond to different opportunities
and characteristics:

• Introduction;

• Development;

• Maturity;

• Decline.

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For each product, you need to estimate what could be the product development, and you
need to monitor constantly its progress. Nowadays we talk about programmed
obsolescence, which is to decide in advance the timing of the product phases, making it
reach the peak and then make it become "old" in order to replace it with a similar but
innovative product, which brings up the sales.

Consider, for example, the increasingly tight launch times by Apple and Samsung of their
respective smartphone models, with new updated versions in a very close time.

The concept of “new” becomes therefore relative, and sometimes the product life cycle may
undergo different fluctuations from those represented above.

Indeed, success does not always require the introduction of a "new" product. On the
contrary, there are several cases of successful companies that have revitalized existing
products by proposing different (or even better) uses, or even proposing them to different
customer targets, with what is called "price skimming".

In such cases the products, even if they are at an advanced stage of maturity, may
experience a second youth.

Production technology and influence on the company.

The tools and technical knowledge in the production define the “technology”, which is that
system composed of

• Technical knowledge ("know-how")

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 • Equipment

• Process

These components form the "technology”, which allows the company to produce goods and
services as efficiently as possible, compatibly with the available resources.

In common language, "technology" refers to everything that has to do with sophisticated

tools

(In the electronic, IT, robotic sector, etc.), but in truth it is not only this.

The technologies used in the company can affect many areas such as:

- Production flexibility, i.e. the ability to adapt to changes in demand: certain

technological choices make you able to easily switch from one type of production to
another, while others are more rigid;

- Investments: because adopting a type of equipment or production process in place of

another generally involves different costs;

- The loans that the company needs: they depend on the necessary investment;

- On profits, because generally the more efficient technologies are, the more they are
expensive, and they allow improving profitability.

Analysis of the context in which you must develop your business project

The analysis of the environment in which you choose to build the project is one of the basic
steps to avoid taking serious risks.

The company is not an island and you must integrate it within the environment-system that
will condition it and that will be influenced by it.

First, we need to understand two aspects:

- The overall economic and social situation (macro-environment);

- The situation of the nearest market (micro-environment).

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The macro-environment, that is the general situation, concerns everything that the company
cannot directly control:

• The public administration;

• The political, social, economic, cultural climate, etc.

The microenvironment, that is the sector of activity, regards everything that can at least be
addressed by company actions, more or less, directly:

• Customers;

• The competitors;

• Providers;

• Commercial intermediaries (carriers, wholesale and retailers, agents and representatives;

brokers; advertising agencies, etc.).

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The company operates within this complex system, bas below represented:

The macro-environment

It is represented by the set of factors and environmental and social context characterized by
economic crises, political and legislative changes, cultural fashions, falling births, strikes,
social conflicts: these are events that, more or less directly, influence the life of all
businesses.

These events are part of a general situation, which, as we have said, escapes from
company’s control.

However, it is important to identify, among the many changes in the macro-environment,

those that can represent an opportunity for our business (i.e. a particularly favorable law) or
a threat (i.e. a period of economic recession or a penalizing tax system).

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You can hope to succeed only by fully understanding the opportunities and threats.

However, sometimes even a threat may become an opportunity: think of the forecast of a
change in consumer tastes, which would generate production reconversion and so would
make you able to floor your competitors.

The sector of belonging

The general context is important, but even more important is the scenario and the context
closest to the business: the microenvironment, i.e. the specific sector of activity.

This represents the real field of action in which the company will be challenge

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For this reason, first, you need to understand which the five forces are operating in the
sector. These forces (which overall form the so-called competitive system) are represented
by:

• Current competitors in the business sector;

• Customers;

• Providers;

• Potential competitors;

• Substitutes for existing products (think of photographs printed on paper compared to

digital cameras).

These five factors are of fundamental importance: their interactions determine the profit
and the potential development of the activity you are going to perform.

The characteristics of the other forces operating in the competitive system of the chosen
business sector mainly are:

• The competitors

• Providers

• Customers

• Commercial intermediaries and wholesalers

• Replacement products

• The positioning

The competitors

It is important knowing how your competitors act.

Ask yourself a few questions:

• Who are your competitors?

• What do they do well?

• What are they not good at?

• What is the quality / price ratio of their products?

• What can you learn from them?

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These questions sometimes can be answered only partially and sometimes more completely.

To find the answers there are various possibilities:

• Consult the budgets of the competitors, if they can be found, in order to find out
what are the sales levels and the results of companies that perform similar activities.
For these activities there are databases that provide mapping services for the main
companies in each sector;

• Consult official statistics and specific sector studies on the number of companies
present in the various sectors and on the trend in demand;

• Talk to people who work in similar activities or who even manage them;

Providers

To produce goods or services, each company must turn to other companies for the supply of
raw materials, semi-finished products, energy, transport services, etc. Therefore, more the
production process depends on the supply chain, more the choice of good suppliers is
important, as in the case of the manufacturing transformation sector.

In particular:

• Always have a list of alternative suppliers available if the main ones, for whatever
reason, fail, so you avoid being held by these subjects;

• Give priority to those suppliers who apply the most favorable payment terms.

Commercial intermediaries and wholesalers

Equally important is to select carefully commercial intermediaries and wholesalers in the

sector: these subjects can often "make" the market. The former hold customers, which can
then be transferred to competitors in the event of a relationship interruption (loyalty is
important to the company of its sales force). The wholesalers can strongly affect prices,
affecting demand quantities at any time

Replacement products

Many products or services will disappear from the market, eventually, because more
modern, easier to use, with more function’s ones replace them.

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It is always necessary to monitor incoming threats, in order to take timely countermeasures
and comply in advance with market trends.

The positioning

The analysis of the forces of the competitive system enables us to understand how to
"position" the company in the sector, or how to understand the primordial importance of
elements to be successful on the reference market.

These vary according to the sector of activity. For example:

• In the commercial sector, important factors of success are the quality / price ratio
and after-sales assistance;

• In the customer service and in the craft sector the quality of service is usually more
important than the price;

• In the manufacturing sectors, instead, the availability of raw materials at satisfactory

prices and quantities and the sales network are very important: after-sales
assistance, on the contrary, has almost no importance

Innovate in the offer of your company

A company of a new technological or other type of expertise (marketing, business

management, etc) can define innovation as the first commercial use.

Firstly, it should be clarified that it should not be confused:

• With the invention, or any object of discovery that remains at the prototype level:
innovation takes place only when the new invention is offered for the first time on
the market;

• With change: innovation occurs only when the newness introduced brings a
significant improvement or benefit.

Innovation can be:

• Of the process: it involves everything concerning the growth of efficiency in the

supply of a product or service: the technological organization of the company, the
human resources’ management, the various phases of the production process, etc.;

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 • Of the product essentially concerns improvement:

• Of the objective performance of a product or service,

• Of the satisfaction of the subjective needs of customers.

Innovation is often perceived as a threat and not as an opportunity.

The problem becomes even more pronounced when you have product innovation, which
compared to process innovation (oriented mainly within the company) obliges to continuous
interaction with the external context and to understand its evolution.

For this reason, the main difficulties in promoting innovation usually concern the product,
even more than the production process. This is particularly true in Italy, where companies
have often focused innovative efforts on processes (with significant investments in
automation, to replace robots with the workforce), neglecting the sphere of the product.

Product innovation

In relation to the depth of the improvement introduced, a first distinction can be made
between:

• Incremental innovation: it is a marginal improvement in performance through the

refinement of the existing solution: for example, a new smartphone in which,
compared to the previous version, the battery lasts longer because of the processor.
With it the company must "always do better what it already knows how to do";

• Radical innovation: it is a leap to a new system, structurally different from the

previous one: for example, the smallest transistor ever made, based on a single
phosphorus atom, which will one day make the quantum computer possible. With it
the company will have to learn to "do things that it has never done".

The process that leads to the need to innovate the product can be summarized as follows:

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Related to the dimensional plans of the improvement we can instead distinguish between:

• Utility innovation: it is the purely technical dimension of the product, which

produces a tangible advantage for the customer;

• Meaningful innovation: it is a predominantly aesthetic dimension of the product. An

incremental innovation continuously adapts design and packaging to the evolution of
languages, values and tastes of customers.

The product is the main element of interaction of the company with the market. It is
therefore evident that its innovation is one of the first sources of economic value creation
for a company.

Innovating means improving the product compared to competing or replacement products.

This means optimizing:

• The production cost

• Product quality

This has several advantages:

• Higher sales volumes and / or higher profits.

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 • A significant improvement in the brand image

• The creation of a temporary monopoly

• The achievement of a permanent advantage

The types of innovations

Innovation can be classified according to defined models: a scheme of four areas of

reference: for each of these the different types of innovation are defined and identified.

1) Viewpoints and innovative practices can be identified as:

• Process innovations that can make existing processes more efficient and effective in
some markets;

• Technological innovations;

• Improvement of assembly lines.

2) Management innovations allow:

• To change the way the management operates, changing organizational forms and
objectives and, consequently, improving performance;

• To change business processes, or change the methods of organization, coordination,

planning, motivation and allocation of resources;

3) Product and service innovations allow:

• To bring to a higher level of offer what is already offered on established markets;

• To make changes that improve the customer experience curve on the range of
products offered.

4) Strategic innovations allow:

• To adopt new business models or new markets, as well as to increase the value for
the customer and for the company.

Knowledge, creativity and innovation: three fundamental ingredients.

Creativity and innovation are the basis of solving business problems, and not all this can be
separated from strategic innovation.

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Generally, creativity is that process of recognizing the relationship between things (the
concepts) producing something new, giving solution to an indirect or immediate, glaring or
hidden problem. Creativity is a characteristic of human intelligence and has to do with
processes such as the association of ideas, memory, perception, analogical thinking, research
into the space of a structured problem and critical thinking. Affective and motivational
spheres are essential to creativity, but so are the cultural context and personal factors.

Creativity can be applied to concepts and ideas; it can have a combinatorial or investigative
character; it allows generating new ideas starting from the exploration of structured
concepts or from changing sizes

Creativity is a very important aspect of innovation. You can define "structured" creative
thinking (that is innovation) as complementary activity: like the result of creativity in an
appropriate organizational culture. In the modern enterprise, the structured exercise of
creativity is often converted into a standardized process.

Company management, in dealing with the business environment, needs to develop

strategies for problem solving creative thinking allows you to seek valid alternative and
substitutive solutions. In our ever-changing world, we need to think ahead.

How to set up and organize the "tools" of the company

After acquiring the knowledge of the environment in which you are going to work, you have
to design the structure of your company and understand the set of tools necessary to carry
out the business activity.

Each company is composed of four basic ingredients:

• Material resources (premises, furniture, machinery, equipment, raw materials ...);

• Human resources (staff);

• Financial resources;

• Technological resources and expertise.

Your choices regarding your company are numerous and delicate. In particular, you must
establish:

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 • Whether to set up the structure from scratch or acquire an existing one;

• What size to give it;

• Where to locate it;

• How to organize production factors;

• What legal form to assume?

Improvisation is often not a good idea

Very often a new company risks becoming extinct due to lack of planning and haste and
superficiality in preparing a good plan.

Instead, the business idea, as we said at the beginning of the chapter, must always be
carefully evaluated. Sitting at a table, trying to gather all the information needed to evaluate
the business idea you have in your mind is never a waste of time. It does not guarantee
success in itself, but it can reasonably reduce the risk of failure.

Measure business risk in a preventative way.

In the initial phase, you have to carry out a first verification of the feasibility of our business
idea, proceeding, if necessary, to a first revision of the idea itself before venturing into the
market. Later on, what you will have learned in this phase will be very useful for dealing with
the last part of the journey, the most difficult: the drawing up of the business plan.

We said that the business idea is feasible when it proposes products or services required by
the market. But there is another way to check if your idea is feasible: analyze it in detail and
measure its risk.

There is no venture without risk: the danger of something going wrong is connected to the
very idea of setting up on one's own. However, if the risk cannot be eliminated, it can be
calculated.

In this phase, it is more appropriate to carry out an initial "internal analysis", which allows
to:

• Evaluate the "strong points" and the "weak points" of the business idea (risk factors);

• Estimate the overall degree of risk.

In the initial phase, that of assessing attitudes to starting up on your own, you were faced
with subjective factors, that is, with your personal characteristics.

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Now you must instead consider all those factors that objectively affect the success of your
company: for example, the presence in your sector of competing companies, the location of
the initiative, the market trend, the financial coverage of the investment, etc.

If you do not consider these fundamental risk factors, at the first market storm the sinking of
your initiative is likely probable.

By carrying out a first feasibility analysis, on the other hand, it will be possible for you to
proceed - before actually leaving - to all the "shooting corrections" that will be necessary.

To this end, it is necessary to analyze various risk areas, which may vary according to the
different sectors of activity.

Recommended additional literature:

1. Blackwell, Edward. How to Prepare a Business Plan. London: Kogan Page,

2002.

2. Business Plans Handbook: A Compilation of Actual Business Plans Developed

By Small Businesses throughout North America. Detroit, M.I.: Gale Research,
2002.

3. Coke, Al. Seven Steps to a Successful Business Plan. New York: American
Management Association, 2002.

4. DeThomas, Art. Writing a Convincing Business Plan. Hauppauge, N.Y.: Barron's

Educational Series, 2001.

5. Stutely, Richard. The Definitive Business Plan: The Fast-Track to Intelligent

Business Planning for Executives and Entrepreneurs. London: Financial Times
Prentice Hall, 2002.

6. Matthews, Jana B., Lessons from the Edge: survival skills for starting and
growing a company. New York: Oxford University Press, 2003.

7. Townsley, Maria. Small Business: Essentials for the Successful Professional.

Ohio: Thomson, 2003.

8. Csordos, Mark D. Business Lesson For Young Entrepreneurs: 35 Things I

Learned Before The Age Of Thirty. Ohio: Thomson, 2003.

Key words:

Economic reality

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Purchase

Lease

Product life cycle

Intermediaries

Demographic factors

Macro environment

Micro environment

Questions for discussions and self-test:

1. What kind of issues would you take into consideration when analysing an
entrepreneurial idea?

2. How would you discuss Thomas Edison’s statement: “The value of the idea
lies in putting it into practice.”

3. What kind of skills does an entrepreneuer need?

4. What are the main factors to examine when defining the business idea?

5. What are the advantages and disadvantages of purchasing the premises?

6. What are the advantages and disadvantages of leasing the premises?

7. How would you define your reference market?

8. What are the main phases of the product life cycle?

9. How would you describe the macro environment?

10. How would you describe the micro environment?

11. How is innovarton usually perceived?

12. What are the three fundamental ingrediants for solving business problems?

Summary:

The entrepreneurial idea is cricial for a sucessful company. It must be an innovating idea of
offering something different. Furthermore, the entrepreneurial idea will give your business a
good chance in the labor market. Turning the entrepreneurial idea into a startup business,

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