Five business ideas: Hairdresser, nail tech esthetician, makeup artist, fashion designer
Assignment A:
Question #1 Describe 3 trends that you’ve noticed (either demographic, invention/technology, lifestyle, or style/entertainment) and explain how each might generate a small business opportunity.
Use the notes below to guide you. In your answer use three bullet points, identify which blue category (see below) your trend came from, what the trend is, and how it lends itself to a small business opportunity.
Identifying Changes and Trends
Demographic
Demographics are the characteristics of a population, such as gender, age, race, ethnicity, religion, education, income, home ownership, disabilities, and location (city, suburban, or countryside). The characteristics of a population can change over time. EXAMPLE People born in the U.S. from the mid- 1940s through the mid-1960s are called the Baby Boomer generation because many babies were born then. When Baby Boomers were young, they increased demand for diapers, toys, and other youth products. As they reach retirement age, they are increasing demand for products for retired people. Local schools and other resources can affect the demographics of a population in a specific area. EXAMPLE An area with a popular university likely attracts young, educated people to the area. The types of jobs available may also change and affect the demographics of an area. EXAMPLE An area with many manufacturing jobs is likely to attract a population of skilled laborers. Many communities in the U.S. have immigrants who have come from other countries, and this can affect the area’s gender, age, race, ethnicity, religion, and so on.
Inventions and Technology
Inventions and technology often spread into global changes that affect people all over the world. However, these sorts of changes may start in a small area and expand from there. Advances in technology sometimes start in cities and then expand out to farther-away areas. It’s often easier to provide technology services to people who are closer together. EXAMPLE Electricity was first provided in cities, because it was easier to send electricity to buildings that were closer together. It took more time before the structures were built to carry electricity out to homes and businesses in the countryside. EXAMPLE Today, many cities and suburbs provide water and sewer services to homes and businesses. In the countryside, water and sewer services are often not available. Instead, private wells and septic systems are used to get water and dispose of waste.
Lifestyle
Lifestyle changes and trends are a great place to look for business opportunities. These may be local, national, or global lifestyle trends. They may also be related to demographic changes or new inventions. EXAMPLE The invention of many household appliances created lifestyle trends toward convenience, such as dishwashers, blenders, microwaves, irons, washing machines, and so on. Lifestyle trends also may affect housing types. EXAMPLE In cities with large populations, land is often limited, so not every family can have a large house and yard. Smaller homes and yards, or apartments and condos without yards, may be more popular lifestyle choices in a city. An area with a lot of outdoor recreation, such as hiking, skiing, boating, and so on, may attract people who care about exercise and who are interested in protecting the environment. Health trends are another common lifestyle trend. EXAMPLE People may look for organic foods, avoid certain foods, buy special water or vitamins, and so on. In an area where people are concerned with living a healthy lifestyle, products and services that encourage that may do well. EXAMPLE Gyms, yoga classes, and health food stores might take advantage of this lifestyle trend. The income and types of jobs in an area may also affect lifestyle trends of the people in that area. EXAMPLE People with higher incomes are more likely to hire nannies, housekeepers, landscapers, and other service providers to help with their families, homes, and yards. People with lower incomes might handle a lot of those tasks themselves. In areas where people have very little free time to cook, they might rely more on fast food or restaurants.
Style and Entertainment
Changes and trends are also common in style and entertainment. Fashion and other possessions that show a person’s style are a constantly changing set of popular products. EXAMPLE A certain type of backpack or jeans might be widely popular one year but not the next. Music, television, movies, video games, and sports are other common areas with trends. EXAMPLE A popular song one year might be considered old and boring by the next year. Or a new TV show or movie might inspire fashion and style trends in its viewers. EXAMPLE A local sports team that has a successful season might get people in the community more interested in playing that sport and wearing fan gear for the team.
Question #2 Make a list of at least 5 business ideas that you would be interested in starting as an entrepreneur. Then explain which one you think is the best opportunity for you. Give at least 3 reasons why this opportunity is better than others.
In your answer use five bullet points to list your five business ideas from the trends you identified in question #1. Next, identify the idea that you will be using for your final project, create a list of three bullet points where you will state the reasons it is a good business opportunity, and state which blue category (see notes below) that each reason came from.
Ideas and Opportunities
A business idea is an idea for a company, product, or service. Not all business ideas have a good chance of succeeding. Some ideas are more likely than others to succeed. A business opportunity is a consumer problem, need, or desire that a business could provide a solution for. This could be a problem, need, or desire of individual consumers or companies. An entrepreneur recognizes a business opportunity and creates a business idea to take advantage of the opportunity. There may be more than one business idea that is designed to take advantage of the same opportunity, because there might be more than one way to solve that problem or satisfy that need or desire. EXAMPLE Parents with new babies have a need for diapers. There are many different businesses that can take advantage of this opportunity. A company might make disposable diapers, another might make cloth diapers, and another might provide cloth diaper delivery and cleaning service. It’s important to consider the needs and desires of your customers. A business idea may sound great to you, but if consumers aren’t interested in your product or service, it isn’t a good opportunity.
Evaluating Opportunities
Customer Demand
The most important thing to consider is whether there will be enough customer demand for your product or service. Is it something many people will be willing to pay for, and will those people be willing to pay you the amount you’ll need to become profitable? Figure out who the potential customers for your business are, and then talk to them. Find out if they would be interested in buying your product and service, and what price they would expect to pay. Your potential customers might have suggestions that will help you develop your idea into something that people really want. EXAMPLE You might want to start an overnight boarding service for dogs, but when you talk to potential customers in your area, you find that they are more interested in a dog day care service.
Competition
Competitors are other companies that are trying to take advantage of the same opportunity.
EXAMPLE If you run a cloth diaper service, disposable diaper companies are your competitors, and so are other cloth diaper services. To determine how good the business opportunity is, learn more about your competitors. Find out what their strengths and weaknesses are. Make sure your company will have a competitive advantage over those competitors, so customers will be likely to choose your company instead. If the business idea and opportunity are unique, and you have no competitors yet, consider how you will protect yourself against future competitors. You might be able to get your company known as the leader in this field, or get your company’s name better known than the competitors that don’t exist yet. You can also focus on forming a customer base and making those customers happy, so they won’t be tempted to leave for a new competitor in the future.
Timing
Many good opportunities are limited to a specific time. If you don’t take advantage of the opportunity before too long, someone else will, or the opportunity will go away. Consider how this opportunity may change over time. What makes the opportunity such a good idea right now, compared to a few months or years from now? The opportunity might be good because there are not many competitors in the area yet, so you have a chance to establish your business before competitors catch up to you. EXAMPLE When the Internet was first developing, there were many opportunities for Web businesses, because there were not a lot of competitors at first. Eventually, the competition grew to the point where the market could not support so many Web companies, and many went out of business. Or the opportunity might be good now because there is a lot of short-term demand for the product, but that demand is likely to fade over time. Short-term fads and trends often disappear quickly. They can be a chance for a company to make a lot of money in a short time, but the opportunity may go away quickly. It’s important to recognize the products that are likely to be popular for only a short time, so you aren’t shocked when the customer demand for that product disappears. EXAMPLE Fashion products are an area with frequent short-term fads and trends. This is why clothing companies change their products so frequently. They need to keep up with the trends. Other longer term trends might be the demographics of your potential customers. Demographics are characteristics of a group of people, such as age, race, income, education, employment, and other factors. EXAMPLE If your community has many children, a babysitting or tutoring business is likely to be more successful than in a community with mostly adults.
Money
The cost of starting the company and the financial predictions for its success are other important considerations in a business opportunity. If the company will be expensive to start, and you don’t have a way to get that much money, it is not a good opportunity for you.
Or if the company is not likely to become profitable before the startup money runs out, it may not be a good opportunity. You’ll need realistic predictions about how much money your company will make, and whether it can make enough to become profitable before the startup money runs out. If the finances don’t look promising, the idea is probably not a good opportunity.
Personality and Skills
Even if all the other considerations make the opportunity seem like a good one, it might not be a good fit for you personally. It’s important to choose a business that is a good fit for your personal interests and skills. EXAMPLE There might be a demand in your community for cleaning the gutters on people’s roofs. But if you are afraid of heights or wouldn’t enjoy cleaning gutters, it is probably not a good fit for you. It might be a great fit for someone who likes to work outside, enjoys cleaning, and doesn’t mind heights. Some people are able to successfully start businesses that are not a good fit for them by hiring other people to do the hands-on work. EXAMPLE You could hire gutter cleaners to work for you, and you could try to run the business without actually cleaning gutters yourself. But you would probably have a more successful business if you chose something you really were interested in and cared about. You will also be happier if you are working in a field you enjoy.
Assignment B
The following chart has each topic that you need to include in your final business plan. You need to write one paragraph for each topic (minimum 5-7 sentences per paragraph). In the last column next to each topic I stated where in the class you can find the materials that covered that content. If the title has a B in it, that means that it’s from the second part of the class. Please go back into the course materials and reread any sections that you don’t feel comfortable writing about. You have to submit the 9 paragraphs in the order that they are listed in the chart, but if you don’t feel like you can write a certain paragraph then go onto a different one and then go back to ones that were harder. I tried to put the topics in an order that makes sense, but you might find that writing about one topic makes you think about things that will help you with another topic.
