Module 2 From idea to business

1. Introduction

Before starting a business it is essential to have analysed all the elements that are proposed below:

Evaluating entrepreneurial attitudes. What are the motivations behind the entrepreneurial idea? The success of an initiative is not only linked to the idea but also to the ability of people to manage it.

In fact, it is important to examine skills and experiences of the potential entrepreneur and her collaborators on the basis of the project that you want to start in order to understand, from the basis, if the conditions to manage the company successfully exist.

Define the idea. The idea is the starting point that will lead to the definition of a product or service to be explored in the operational project.

The first thing to do is to start describing it; to tell how it was born; what the central element is and how it can be developed; in what context; if it comes from passions, professional experience or simply from having identified that the demand for that product or service is not satisfied enough.

Rethinking it according to the market. The goal of this exercise is to redefine the idea more precisely in order to understand if it can be successful.

The questions for this purpose are the following:

• What product or service do I propose? (define category and characteristics)
• What need will I have to satisfy? Do I create new needs? If so, which ones?
• Who is my client? (the more defined and precise, the easier it will be to detail the offer and make it suitable for the market)
• Define the offer: how many products or services do I intend to market?
• Define selling price (evaluate market prices and the production process)
• Who are my competitors? What are they doing? What don’t they do?
• How and where do I sell my product or service? Did I foresee a different distribution method? (The choice of location is a very important element for some types of companies. The presence, nearby, of infrastructures, services, connections with the main arteries, the presence of ​​commercial areas, parking lots, can help the business development. However, it is necessary to check the regulatory provisions. For a digital service you have to control the internet connection and the broadband connection).
• How do I promote and communicate my product or service to get more customers?

Objectives and strategies. Another important step is to translate the idea into market objectives and strategies (marketing plan) and, above all, to analyse the factors that can help or hinder entrepreneurial project‘s development.

You will therefore have to ask you the following questions:

• What skills, features and resources do I have? So, what strengths and weaknesses related to my business project? (factors internal to the company)
• What decisions can affect my project in positive or negative terms? So, what threats and what opportunities for my business project? (factors external to the company)

The economic and financial plan. At this point, the task to be carried out is to translate the idea presented into numbers and to do so it is necessary to identify:

• Assets used for several years in the company (durable goods)
• Goods intended for resale
• Costs for the purchase of services (example: electricity, advertising, consultancy, other)
• Personnel costs (wages, salaries, contributions, other)
• Costs incurred for assets which, in order to be used by the company, involve a rental fee
• Financial charges (interest payable to suppliers, banks, or other charges related to financial management)
• Other extraordinary charges (charges caused by extraordinary and unforeseeable events)
• Tax charges (taxes and duties)
• Other charges (e.g. magazine subscriptions, gifts, others)

Once the Costs (fixed, variable and mixed) have been defined, it is also necessary to foresee the Revenues (sales price multiplied by the quantity sold) in order to understand the business balance (economic, financial and patrimonial) and therefore the sustainability of the entrepreneurial project.

Starting the business. Before starting the business it is important to check:

• If there are any regulatory provisions that provide for the possible possession of professional and /or moral requirements, registration, authorizations or special communications.
• The legal form, whose “convenience” assessment must be made from time to time in relation to the type of business project and the type of scenarios that are thought to be achievable in the course of the business. The wide choice alternative therefore requires careful consideration of the pros and cons of each solution.

All the informations above require a deep knowledge that we will try to give you in the following topics.