Sources of New Venture Ideas. Business Idea

Introduction

All businesses start with a notion or an idea in the mind of an individual or rather an entrepreneur. However, the idea is to a great extent determined by the ability of the individual (entrepreneur) to recognize the opportunities that are presented by the general environment or by the variables of the social setup (Robert, Gerald & Lumpkin, 1999: 2). For instance an entrepreneur can, through a critical analysis of his neighborhood, identify a need for the people that are either well serviced by the current ventures or business or whose potential is not fully taken advantage of by the current businesses. It is this recognition of the gap that forms the basis of an idea of a new venture and which the latter can convert into a new business. However, a business can either start by an entrepreneur recognizing an opportunity then proceed to develop a business idea, or use the idea that he or she has to identify the opportunity that matches the notion. Whichever precede the other, both the opportunity recognition and coming up with a business idea are crucial to successful entrepreneurship (Hills, 1995: 212). A new business idea can originate from multivariate sources ranging from individual creative thinking to conducting market research. This paper therefore looks at the possible source of new business ventures ideas while being keen to explain the relationship between new business ventures and business opportunities.

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Business Idea versus Business Opportunity

According to Gartner (1990: 112), entrepreneurship purely means coming up with new business ideas, recognizing the opportunities, and turning the ideas and opportunities into a real business venture. Robert, Gerald & Lumpkin (1999: 12) concurs that opportunity recognition is one of the most important steps as far as successful entrepreneurship is concerned. Opportunity recognition here is explained as the process of recognizing a gap in the business environment, conceptualizing it as an opportunity that can be turned into a profitable business venture. According to Timmons (1990:34), research has proven that business ventures do not always arise from opportunities recognition and ideas conceptualization. However, it is obvious that entrepreneurship has a solid foundation on the idea conceptualization and opportunities recognition. Johannisson (1990: 237) however strongly differs with this fact. He argues that a business must begin with an idea which is then converted to an opportunity to amount in to a new business.

In order for an idea to amount into an opportunity there must be a host of other factors to support the idea. In that case, an idea only becomes an opportunity in circumstances where the person who comes up with the idea is able to turn it into a profitable venture (Hills, 1995: 37). According to the latter for instance, an individual can come up with a notion of innovating new farming machines, but it is not obvious that people will like and buy them. Although it is a business idea to innovate and manufacture new farming machines in this case, the latter can only be a business opportunity if and only if the new products will receive acceptance in the marketplace, hence making the manufacture benefit from its profitability. To achieve this, scores of other factors must be present to support the idea (Hills, 1994: 13).

Sources new venture ideas

A business idea forms the basis of any particular business. A business that is up and running today, whether big or small, simple or complex, must have been preceded by an idea in the mind of the entrepreneur or rather the founder. However, where the entrepreneur first got the idea to start the business varies from one business to the other. An idea is defined as a conceptualization of a thought of a business venture that an individual can venture into most of which is driven by existing gaps or unmet needs in the market (Hills, 1994:31, Robert, Gerald & Lumpkin, 1999: 12). Although a need to start a business has its roots in the economic needs of the entrepreneur, it must be based on an objective to either solve certain problems in the marketplace, or meet in the best way possible a need that is currently not met by the existing business ventures. However, the driving urge for any entrepreneur is profit thus the objective of the latter must be to profit via offering a solution to a certain unmet market need.

The idea here underlies the opportunities or rather the idea leads to opportunities recognition. Entrepreneurship is therefore a process that requires time right from the time of idea conception to setting up a new venture and beyond. The sources of new venture ideas are rather diverse. They range from an individual’s personal experiences, to creative thinking and ideas that one gets from social interactions with the people around him or her. According to Timmons (1990: 12), the source of a new business idea varies from one entrepreneur to the next. While some ideas are pure as a result of entrepreneur’s creativity and innovation, others obtain them from interactions with their friends, relatives, working teams and interactions forums such as business seminars and symposiums. According to Robert, Gerald and Lumpkin, (1999: 2), extensive special networks or rather normal interaction in the social setup contributes to a greater extent to sources of new business ideas. An individual can get a notion about starting a certain business from discussions with business associates, friends, relatives, family members or colleagues at the working place.

According to Hill (1994: 3), individuals often get business ideas from existing businesses or rather through close analyses of the existing business. For instance, a person may conceptualize an idea of setting up a grocery in a certain market after seeing a similar business do well in either the same or different places altogether. In addition some individuals develop ideas to set up business in the area that interests them most or rather in an activity that an individual likes doing most. For instance, if an individual is a lover of wildlife and keeps on touring different places to visit wildlife parks, he or she is likely to start up a tourism destination and rear such animals for business. Similarly, an individual who likes drawing and painting is likely to develop interest in art business. According to Robert, Gerald & Lumpkin, (1999: 12), the media provides a very vivid source of business ideas. Mediums such as television, newspapers, and magazines and in this era of globalization the internet has provided entrepreneurs with a humble source of business ideas. For example, investments that are aired on televisions, business news and discussions forums aimed at enlightening viewers on business matters can be a source of business ideas on the part of such viewers. Similarly, business articles in the newspaper and business magazines which at times reports entrepreneurs’ success stories can give readers a notion of a business he or she can venture into.

According to a research that was carried by the University of Texas on 120 entrepreneurs chosen randomly along several streets and which aimed at establishing where first the entrepreneur get the entrepreneur business idea (Timmons, 1990: 37), it was found that ideas were mainly obtained from families and friends, seeing similar businesses, social interaction, personal experience in the business et cetera. Also, individuals were found to break away from employment to start their own businesses. Other sources of business ideas included personal interests, career or professional training, organized business research as well as innovative thinking. According to the results of the survey, well over half of those interviewed (76 respondents) or rather 63% said that they had got the initial business ideas from friends, family members and colleagues at the working places. Furthermore, close to 20% of the respondents who indicated that they got the idea from friends or family members had requested ideas from the latter while 42% indicated that they came to conceptualize the idea from the proceedings of discussions in the social circles. 1.7 percent of the respondent said that they had been challenged by family members to start a certain business by the family members to ensure continuity of the family business empire. 31 respondents or rather 25.8 percent said that they got their initial business ideas from previous business experiences. A further 18.3 % of the respondents said that they obtained the business ideas from the business associates and workmates, either explicitly or following discussions of the latter.

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From the survey, 3% of the respondents said that they got the business idea from their professional training especially in legal and medical business. A further 0.4% said that the business idea originated out of their personal interests. However, 9 % indicated that the initial idea for their business resulted from the media. 83% of these ideas were reportedly obtained from the business-related magazine, 13.5% from the newspaper and the rest (5.5%) were gotten out of viewing business-related television programs. In addition, 5 % of the respondents admitted that they got their business idea from internet sources.

According to Hill (1995), a business idea can either originate from a single source or from multiple sources. For instance, an individual gets an idea about a certain business from their peers and at the same time uses his experiences on the same business venture to consolidate prior ideas. If an individual gets a business idea from diverse sources instead of a single source, the confidence level and the urge to venture will probably go up. Similarly, creatively thinking of an idea in the field that one has personal interest in is likely to place him or her at a better place to start up the venture. This is just like a case where one gets an idea from the internet that lies within his professional qualification or career.

According to the findings of a survey carried out by students of the University of Illinois Institute for entrepreneurial studies in 1999 (Robert, Gerald & Lumpkin, 1999: 7), it was found out that individuals prior experiences with the business, interactions with business associates, an individual has seen a similar business, getting ideas either explicitly or indirectly from friends and relative, conducting business research, individuals innovativeness or personal thinking, information from magazines or newspapers, listening to radio and television’s business-related programs and visiting business-related sites on the internet were the main sources of business ideas if the information obtained from the questionnaires administered to 251 entrepreneurs are anything to go by. Majority of the respondents (73%) however, indicated that their initial new business idea resulted from the entrepreneur’s prior experience.

It is important to note that the entrepreneurs chosen for this study were that individuals with close to ten years of experience in the industry before they venture into the current business, a factor that concurs to a great extent with this particular finding. Similarly, significant number of respondents admitted that their initial business idea for the new business came from social networks interactions and contacts, which consisted of a robust 51.9% percent of the respondents. Out of the latter, 32.8 percent said that they obtained their initial venture idea from their interactions and contacts with business associates while the rest 19.1% said that the business idea came from interactions with friends and relatives or ideas presented explicitly from the latter. In addition, a significant percentage of the respondents (25.8%) said that they obtained the idea for theirs business from seeing a similar business. Out of these respondents, 66.7 % indicated that they had prior hands-on experience before venturing thus interaction with the business was the source of their current business idea (Robert, Gerald & Lumpkin, 1999: 7).

The indication of this is that very many entrepreneurs are modeled by their working environment thus getting business ideas from the business or the organizations they were working with before. For instance, an individual who has worked in a telecommunication company for a number of years will realize that he can offer the services to the customers in their own businesses as well hence goes ahead to venture into the industry. From a closer analysis of the social network sources, it was ascertained that close to 42% of the respondents got their initial business ideas from close business associates, workmates, friends, and relatives a fact that is consistent with prior empirical surveys that were conducted to ascertain the extents to which social networks and connections acted as a source of new business ideas (Hills, Lumpkin, & Singh, 1997).

Globalization and the Internet as Sources of New Venture Ideas

Information communication technology continues to advance every other day. The recent developments in information communication technology especially the development of the internet present an unmatched boost to the business especially in terms of efficiency and effectiveness in the overall access of business-related information and new business ideas. With the internet, for instance, the world which used to be a complex and extensive globe has been virtually reduced to what professional refers to as ‘a small village’. As a result, interactions and contacts among people from various parts of the globe have been made easier and more efficient. According to Keith (1997: 42), the internet and globalization have extended social networks and connections beyond the national borders, thus diversifying the source of business ideas. For instance, an individual can, through the internet, get information concerning the business environment from across the world; get business ideas through creation of social contacts and interaction with people from various parts of the world. Similarly, an existing gap in the European market can offer an individual a humble source of business ideas. Although such a person may not move to the European market to set up the venture, the notion presented by such discovery can assist him or her to set up a similar business locally. In the same way, visiting world business sites on the internet, online business conferences as well as establishing social networks and connections with the overseas business persons can be a reliable source of the best business ideas ever.

Although critics around the world have come up with all sorts of arguments against globalization or what scholars refer to as internationalization, all evidence indicates that the effects of globalization on international trade have been vehemently positive. In fact, globalization has virtually reduced the world or rather turned the previously very extensive globe into one small village. In the same way, the movement of people, goods and services as well as information has become incredibly easier. Also, international contacts and sharing among people across the globe have been made more efficient than ever thus the latter which presents individuals with an effective platform to interact with the businesspersons from across the world the latter of which present potentials entrepreneurs with the best source of business ideas (Gartner, 1990). For instance, a manufacturer in the United States is able to obtain information concerning the state of demand of his products and services in a country in the United Arabs emirate, create business contacts obtain orders and consequently transacts in less than 48 hours especially with the massive developments in ICT and globalization. As a result, individuals in the United Arabs emirates can get an idea of venturing into the manufacturing business from such business exchanges. In addition, people from different destinations around the world have become more and easily connected with each other. Besides, the flow of information as well as money has been made easier, faster and more efficient than ever before. As a result of globalization also, movement of goods, services, ideas as well as tourists has been made easier. Consequently, goods, services and ideas produced in a certain part of the world are increasingly becoming available virtually in all parts of the globe. In addition, international communication has been made easier and common thus making business ideas exchanges easier, more efficient and continuous than ever before (Keith, 1997: 42).

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According to a research carried out by David Gartner, a professor in the school of business department of entrepreneurial science in 2000 on 150 entrepreneurs, 57% of the respondents admitted that globalization and the internet had to a greater extent opened up the world business. In fact, majority of the entrepreneurs interviewed pointed out those interactions with business people from across the world could present an entrepreneur with viable business ideas as different people presented diversity in thinking creativity, innovations and business procedures. Listening to proposals from individuals in different parts of the world could also present the entrepreneur with a wide range of business ideas thus widening his or her choice and increase the chance of coming up with the best idea ever.

Conclusion

A business idea is a conception, visualization or rather a notion in the mind of a potential entrepreneur about a business that he or she can venture into and profit from. While individuals tend to mistake an idea for a new venture for a business opportunity, the two are distinct. However, both the business idea and business opportunity are closely related and are both crucial for success in entrepreneurship. An idea must therefore be converted into an opportunity for it to translate into a new business venture. An idea therefore forms the basis for business opportunities recognition. A business idea can be gotten from a number of sources which includes but is not limited to, individual personal experience with the business, an entrepreneur has come into contact or rather seen a similar business, social interaction and networks (ideas from business associates, workmates, friend and relatives) individual personal creativity and innovativeness, ideas presented by media such as the TV, radio and written media such as newspapers, business publications magazines. In addition, development on the internet coupled with robust internationalization of business has created extended social and business contacts & networks and efficiency inflow of business information; an extra source of the best business ideas ever.

Works Cited

Gartner, W. B. “What are we talking about when we talk about entrepreneurship?” Journal of Business Venturing, 5, 15-28. (1990)

Hansen, E. L. “Entrepreneurial Networks and New Organization Growth Inc.” Journal of Entrepreneurship Theory and Practice, 19(4), 7-19(1995).

Hills, G. E. “Marketing and entrepreneurship”: Research ideas and opportunities. Westport, CT: Quorum Books. (1994).

Hills, G. E. “Opportunity recognition by successful entrepreneurs: A Pilot Study”. Frontiers of Entrepreneurship Research. Wellesley, MA: Babson College, 105-117. (1995).

Hills, G. E., Lumpkin, G. T., & Singh, R. “Opportunity recognition: Perceptions and behaviors of entrepreneurs”. Frontiers of Entrepreneurship Research, 17: 168-182.. (1997)Johannisson, B. Economics of overview – guiding the external growth of small firms; International Small Business Journal (1990).

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Keith, Porter. “Globalization and International Business”. The Journal of Business venturing (1998) pp 33-47. 2009. Web.

Robert, P. Singh, Gerald E. Hills & G. T. Lumpkin, “New Venture Ideas and Entrepreneurial Opportunities: Understanding the Process of Opportunity Recognition”, University of Illinois at Chicago Institute for Entrepreneurial Studies pp1-15 (1999). 2009. Web.

Timmons, G. “Opportunity recognition: Perceptions and behaviors of entrepreneurs”. Research Report submitted to the E. M. Kauffman Foundation. (1990).

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