This unit contains four parts: 8. The business idea
8.2 Resources and quality issues 8.3 Financial resources 8.4 Feasibility and evaluation
Unit 8: BUsiness development
business does not exist in a vacuum. Competitive businesses need to respond to a variety of pressures, both internal and external, as well as needing to
innovate. This unit looks at how a small business can be established in response to the needs for change, including the reasons for, and the likely outcomes of the decisions taken. While studying this unit you will need to focus on the assessment requirements. You will be creating a fully developed business plan for the establishment of a new small business operating as a sole trader or partnership. The plan will include your aims and objectives, a marketing plan, resource issues and a financial analysis. The plan will be presented as a viable business idea, suitable to support a request for finance for the venture.
What you will learn in this unit
✱ What gives rise to a business idea ✱ The role of small and medium-sized enterprises in the market ✱ What is involved in setting up a business ✱ How to carry out primary and secondary research into the needs of competitors and the power of competitors ✱ The appropriate scale for a small enterprise ✱ The resources required to set up a small enterprise and how they can be combined effectively ✱ The importance of start-up finance ✱ How to create an effective budget, profit and loss account and balance sheet ✱ The importance of planning ✱ How to evaluate business performance
GCe A2 level BUsiness
8. The business idea
Coming up with an original idea is only one part of coming up with a successful business idea.
What gives rise to a business idea?
The inventor Sir Clive Sinclair is perhaps best known for the development of a good idea that didn’t sell. He was aware of the problems caused by petrol-guzzling large motor vehicles, as well as the difficulties of parking them and driving them in urban environments. So, in the 1980s he invented and launched the C5 battery-powered vehicle. The idea was a celebrated failure. The product suffered from technical limitations and was hurt by marketing that appeared to position the product as a rival to cars rather than as a fun leisure ‘toy’.
Marketing. Providing the right product at the right price in the right place, profitably. In later years Sir Clive Sinclair went on to admit that: ‘What inventors need to recognise is that
what is great to them is not necessarily great to other people’. We can contrast the C5 with the development by James Dyson of his twin cyclone range of vacuum cleaners. In recent years these have revolutionised the way we clean our carpets and floors. Dyson developed his idea to replace oldfashioned vacuuming techniques by observing how industrial cyclone systems worked. Dyson then produced and trialled hundreds of different prototypes to come up with a product that would appeal to them. Dyson products are now sold worldwide. Another story of innovation is that of the birth of the iPod. The iPod originated with a business idea created by Tony Fadell, an independent contractor and hardware expert who had helped develop handheld devices. His idea was to take an MP3 player, build a Napster music sale service to complement it, and build a company around it. Fadell took the idea around several major companies. All of them rejected it except Apple, the celebrated computer manufacturer. In early 2001 Apple assigned Faddel a team of 30 industrial designers – including designers,
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