Business Fundamentals |
5/13/2020 1 Comment Creating Business IdeasSTEEPL a great source of business ideas You should use any business that you already know well as a tool to help you with this. As I mentioned in my earlier blog, I am going to use the example of a café business. I am using the STEEPL framework which I mentioned in the previous blog entry. I will also wander off a bit during this blog – to make other points so please bear with me. In terms of the café business; S (Social)– The number of single people is on the rise; often they cannot be bothered to cook for themselves, so I guess there is an opportunity to cater for them providing we can create an atmosphere in which they feel comfortable on their own. People are also more health-conscious – so that doesn’t mean we need to create a healthy menu – but we create a healthy alternative to fast food. (I worked on the launch of low-fat cakes with Mr. Kipling and it was a disaster – healthy food is associated with poor taste. It also explains why Mars has not had more success with Flyte). What people want first and foremost from a food outlet is taste. I get lots of business proposals which are all about healthy food – I don’t like them as I think they miss the fundamental point of eating out! There are lots of other social changes which I could mention but you get the point. T (Technological)– Wireless has really taken off as a technology and with an increasing number of people working as Nomads, they see cafes as a virtual office. Starbucks charges $5 per half hour for access to their wireless – but with more and more people using broadband connectors, and with wireless access costing so little, it makes sense to offer this as a freebie to customers and this would act as a huge point of difference with Starbucks. E (Economic)– People are nervous about the current economic environment. Discretionary spending is going to decrease and a café business will suffer unless we are seen as an alternative to more expensive dining so that people switch from expensive meals to light meals in cafes? So the offer needs to change to reflect the different circumstances that people may be experiencing. We will also have to work harder to attract consumer’s money. The other challenge the business will no doubt face is located near the City is that it needs to prepare for a reduction in the workforce in the area. There may be an opportunity to exploit in catering for a different clientele – by providing meals to places which were buying slightly higher priced food? Another change is the drop in the value of sterling compared to the Euro. This will mean that the supply of foreign (European) labour to the UK will drop sharply as it becomes less attractive to earn sterling. This means we will need to focus more on local staff (and hence opportunities for recruitment companies looking to train and supply local staff). The opportunity for the cafes (which are located in central London) is to cater to the increasing number of European tourists attracted by the strength of their currency. E (Environmental)– The reality of the green movement has been well documented. This creates huge opportunities for a café to differentiate itself from a huge national chain. By sourcing more local ingredients and therefore less packaging the business can demonstrate a competitive advantage. It will be easier for the business to get involved in local green initiatives and demonstrate that commitment to customers. P (People)– The company is based in London which now has a new Mayor. His policies may affect the way the business operates and as soon as detailed proposals come out that may create opportunities for the business. For example, if the congestion charge is relaxed, it may create additional opportunities for a delivery business. If on the other hand it is made more expensive, it may make it easier for the business to sell to local businesses that were having problems with maintaining their existing suppliers
L (Legal)- Sorry – nothing here at the moment! So the point of the above exercise was that you could see how changes at a macro level provide opportunities for a business to exploit. If you were a consultancy you could provide this analysis for companies and then add value by helping to implement them. With the internet providing a wealth of information within seconds, you can back up your predictions with hard empirical evidence. When trying to come up with a new idea, use this framework with an industry that you are already familiar with and you will see opportunities emerge for a new type of service you could provide, or changes you can make to an existing operator to gain competitive advantage, I hope this is helpful and I will soon talk about how to assess whether a business you are about to start has the potential to be profitable (Five forces model). I use this model all the time as a starting point to guide me in investing in a business. Best of luck
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11/8/2023 01:59:32 am
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