A1 Business Ideas and Objectives
Businesses go through a range of stages in their development from start-up to more established businesses. As businesses grow their focus changes as a result of a range of internal and external factors.
Business Ideas and Objectives for Start Ups
Start Up businesses are new businesses established by an entrepreneur who believes that there will be demand for a product or range of product ideas. Start up’s have a high level of risk as there is no established customer base and as a result of high start up costs and low revenue, sources of finance come from investment and loans.
At this stage, ideas and objectives are heavily influenced by the interests and skills of the entrepreneur, product innovation, finding gaps in the market, current trends and likely demand.
Ideas and Objectives for Developing Business
A Developing Business is one that has survived the first two years. They may be beginning to establish a customer base and have a stronger idea of customer wants and needs and where their brand fits in the market.
At this stage, ideas and objectives are influenced by changes in external factors such as social trends and the economy. Entrepreneurship may be replaced by intrapreneurship and decisions on changes to the product portfolio and new markets to enter will be made.
Businesses in maturity may have an established customer base and strong brand. They will likely broad product range but there may be a lot of competition.
At this stage, ideas and objectives will be influenced by the need to develop new products. Changes may be made to processes such as production, inventory management, procurement and sales may be developed. Organisational structures will need to be revised as a business expands.
Classification of Business Ideas and Objectives
Development of New Products
This involves creating and launching new goods or services to meet the wants and needs of customers. This requires investment in market research to establish customer needs and investment in innovation to develop ideas.
Changes to Processes
This involves adapting the methods used to complete tasks in the production of goods and services and the way in which customers interact with the business to improve efficiency. This may include including more capital in production or allowing customers to make purchases online.
Changes to Systems
Systems are the combination of processes, people and technology that work together to achieve business goals. This includes customer relationship management (CRM), sales, procurement, inventory management and human resource management.
Changes to Structure
Organisational structures are the frameworks of roles and responsibilities in an organisation. To make effective use of human resources as the environment changes, roles, responsibilities and departments need to be reviewed and adapted to meet changing market needs.
Criteria to Evaluate an Idea or Objective
When considering an idea or objective, it is important for businesses to conduct a process of evaluation to reduce the risks associated with it. This is due to a range of factors such as changing customer preferences, actions of competitors and their own strengths and competencies.
When evaluating an idea or objective, a business should consider;
Costs (financial and non-financial)
Returns (financial and non-financial)
How the idea/objectives contributes to the businesses long-term strategy