Types of businesses

• Sources of business ideas for entrepreneurs

  • growing trend in the market
  • something working well in another country
  • ideas from family and friends
• Franchises: when one firm(franchisor) sells the right to use its products and brands name another business (franchisee) eg) McDonald’s
• Advantages of franchises

  • brand name well established
  • idea Already exists: reduces risk for franchisee
  • marketing costs are spread between franchisees
• Disadvantages of franchises

  • negative response to a franchisee may affect all
  • disputes over the balance of power
• Forms of business ownership

  • soletrader: owned and managed by 1 person
  • partnership: 2-20 people set up a business
  • private limited company: set up by between 1–149 people called shareholders, LTD or limited in its name because the liability of the owners is limited to what they originally invested in the business
• Product development

  1. idea generation
  2. product screening
  3. concept development
  4. feasibility study: study carried out to sell if the idea is commercially viable
  5. prototype development
  6. Test marketing
  7. product launch
• Sources of new product ideas

  • internal: brainstorming, ideas from employees, research and development department
  • external: competitors, customer complaints, market research
• Niche market: small specialised market for a particular product service