OCETIMTIONP _ _ _ _ _ _ _ _ _ _ _
Necessity is the mother of invention. When entrepreneurs see a need, their minds automatically go to work to find a solution.
Identifying needs can be as simple as seeing new neighbors move in with little kids and realizing they may need babysitting.
Needs can also be location specific. If there’s a new neighborhood twenty minutes out of town, there will be a need for restaurants, gas stations, dry cleaners, grocery stores, baseball fields, and tutors.
Often times, businesses are started by people who already have a career but see a need that is not being met by their company.
One of the best places to start is with your own needs.
Passions are the activities that give you enjoyment in life.
Clayton Jacobson II loved riding motorcycles, however, he wished there was a similar riding experience without the danger of falling and getting hurt. His passion for riding ultimately led to the creation of the personal watercraft known as the Jet Ski®.
Passion drives business ideas every day. People who are passionate about things can often make businesses out of them. People who love surfing create surfboard companies or become surfing instructors. People who love to teach start tutoring companies. People who love fashion, learn how to sew and start clothing lines. People who love to travel start travel agencies or travel tour companies. When you are passionate about something, there’s a good chance many other people love doing the same thing too.
Tragedy is one of the greatest inspirations for business ideas. Virtually all safety products are the result of a tragedy (e.g. life jacket).
The Jaws of Life® are rescue tools used to get people out of cars as a result of a high speed accident.
In 1953, Vitale Bramani invented rubber-soled hiking boots after six climbers died while they were climbing. At the time, climbing boots were only made of leather with nail heads on the bottom. Vitale knew rubber tires kept cars on the road, even when covered in snow. He went to Pirelli®, a tire manufacturer, and designed climbing boots with rubber tread. The soles were called Vibram®. The new design saved climbers’ lives and allowed them to even climb to new heights. Shortly after their creation, Vitale’s boots were used to climb the 2nd highest mountain in the world, K2. Every year, over 40 million pairs of Vibram® boots and shoes are sold.
Virtually anything you do or come into contact with during your life can be the inspiration for business ideas. Often times, you’ll find in life that you’re really good at doing some things that others find difficult. This is often the seed of a business idea. Some people may be great at math, science, sports and singing, or listening to friends. These experiences, natural talents, and interests are great sources for business ideas.
Jake Burton was a carpenter, riding and building Snurfers before snowboards came along. Snurfers were a wide single ski with a rope on the front that riders held onto as they rode down small hills. After Jake’s experience of riding the Snurfers and seeing their popularity explode, he began working on improving them. One of the problems with snurfing was the awkwardness of staying on the board. Jake created a binding for the riders’ boots to lock onto the board and also metal edges to make turning easier. After working days and nights to keep up with the demand for his new creation, Burton Snowboards® was launched.
What are some needs you see for yourself or others?
What are your passions?
What products or services have been created as a result of tragedies?
What are life experiences you have had that could become business ideas?
Price / Quality Graph
When you think of a business idea, whether it comes from a passion, tragedy, or other source, there will probably already be competitors in the industry. Last class, we learned that you can differentiate your business by providing different value.
Another great strategy you can use is a Price/Quality graph.
The Price/Quality graph will show you a part of an industry that may be underserved. This part of the market is called a niche.
Even if you aren’t the first to think of a business idea, that doesn’t mean you can’t find a new way to turn your idea into a profitable business.
To use the Price/Quality graph, first plot an X and Y axis on a piece of paper. Label the X axis: Quality and label the Y axis: Price. On the top of the graph, write down an industry. Now, add all of the companies you know in that industry to the graph based on their price and quality.
For example, let’s say that you choose to graph the automotive industry. Start with the company Ferrari. First, look at the X axis labeled Quality. The farther right you go down the X axis, the higher the quality of the car company. Since Ferrari is one of the highest quality car companies, we will go all the way down the X axis. Now look at the Y axis labeled Price. The higher up you go on the Y axis, the higher the price of the car company.
Since Ferrari is a very expensive car company, we will go all the way up the Y axis. After analyzing the X and Y axis, we can decide to plot the name Ferrari on the top right of the Price/Quality Graph.
Most companies fall into predictable positions on the graph, but you may need to do more research. Once you have plotted all the companies in the automotive industry, circle the empty areas on the graph. These are niches in the industry.
Example: (All these airlines are successful companies and this graph is not meant to disparage their reputation.)
Can a business be successful on the top left of the graph?
Yes! These types of businesses usually sell their products or services by providing the value of exclusivity or have celebrity promotions (e.g. clothing industry).
What is a Price/Quality graph?
Draw a Price/Quality graph of the automotive industry on a piece of paper. Please use at least 5 companies.
What are different sources of inspiration for business ideas? (One or more correct answers)
Identifying needs can be as simple as seeing new neighbors move in with little kids and realizing they may need babysitting. (True or False)
The Jaws of Life® are shark teeth used to cut cars as a result of a high speed accident. (True or False)
A part of an industry that is not being served is called a niche. (True or False)
Day 3 Homework
(Complete your homework assignment on paper)
Download and complete the homework.
Create a Price/Quality graph for the restaurant industry in your local community. Circle the niches on the graph.