THE SEARCH FOR A SOUND
What is a sound business idea?
is defined as the economic opportunity
which is within the reach of the
entrepreneur and which will provide him a
NOTE: An entrepreneur who is well grounded in
the concept of sound business idea will be
able to save time, effort, and money in
pursuing his goals.
The Importance of Sound Business
NOTE: Business ideas
differ in form.
Procedure in Determining the
Best Business Idea
the List of
Methods of Searching for
Means – The entrepreneur
finds business ideas w/o serious effort
a. The Person’s Work
b. The Person’s Hobbies
c. The Person’s Acquaintances
d. A chance event encountered by the
Methods of Searching for
a. Using Search Questions
b. Idea Prompting
b.1. someone else’s idea
b.2. customer request
b.3. some other event
Screening Generated Ideas
and Sufficient Demand
A business idea will not last if there is
insufficient demand for whatever product or
service that is contemplated. Demand that
remains constant or shows signs of growth
throughout long periods indicates the
probability of market feasibility. Demand
must also be large enough to justify the
investments that will be needed by the
The business idea must be such that the
venture can effectively compete with current or
The competitive strength of the competitors
must be determined in terms of product offerings,
price, distribution methods, promotion methods, and
NOTE: The proposed business idea must be strong
enough to withstand competition.
The Way to Sound Business
Search for Business
Adoption of the
Selected Business Idea
Preparation of Formal
Sources of Market Information
It is the information required to determine the market fit of the business idea may be derived from the following:
studies of the market/related markets by other companies,
government agencies, and entrepreneurs.
polls of population samples representing typical customers.
The means used include the following:
Advertisements incorporating feedback mechanisms such as
with prospective customers to solicit orders and
determine whether or not they will actually buy.
ideas of ten times appear easy
to execute, but it is not really so
when converting them into real products
or services with the required quality
of he factors necessary in determining
whether a business idea should be considered
or not is financing.
Sources of Financing
1. The Proposed Owner’s Savings
2. Relatives and Friends
3. Financing Institutions like banks
The purpose of entrepreneurship is to provide a source
of income to the entrepreneur.
Profit – is a result of the financial feasibility of
the business idea.
2 Steps in determining Financial Feasibility through
1. The preparation of projected financial statements
1.a. income statement
1.b. balance sheet statement
Cash flow statement
2. The determination and analysis of financial ratios
derived from the projected statements.
forecast of something w/c will
happen in the future.
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