2.2. Business Idea & Value Proposition

2.2.1. The Business Idea

The business plan must concisely describe the subject of the business concept: this is the business idea. The business idea describes the idea to make a business successful. A business idea wants to sell a performance - that is a product or service. The service is an offer that is directed at the concrete needs of a target group or at the customer. The customer benefit is the top priority. Only if the service resulting from a business idea is accepted by the customer does it have a chance of success in the market. Only then can it become a profitable business.

The business idea includes the terms "idea" and "business".

• The idea is oriented towards needs. Thus, the idea of wealth, of happiness, of beauty and health is directed towards a human condition that can be satisfied by different means, in a particular social situation and at a particular time. Ideas have cultural differences. If the idea also contains an economic trend, the challenge for the entrepreneur is to develop a "sellable" service from it. This makes a fundamental distinction that is insufficiently considered in some business plans.
• With the term business, the question must be answered as to how a service can be generated from an idea that is in demand. The business is directed towards the need, the economic unit of needs. The need is always concrete, even if it is often difficult to forecast its value. In the competitive society, the customer decides on the need or demand. The need, in the form of supply and demand of goods, is mediated in the market. A business becomes profitable when it makes a profit.

Now the market is not a one-way street. A distinction can be made between buyers' and sellers' markets. In the first case, it is mainly the buyers who decide whether to accept an offer. In the second case, it is mainly the sellers who decide whether to make an offer.

2.2.2. Search for Business Ideas

There is no patent recipe for how an entrepreneur finds a business idea. Success is determined to a large extent

• The personal commitment which the founder tackles and drives forward a business plan. This commitment develops out of the individual motivation to become self-employed.
• by the quality of the business idea with which the founder wants to earn money and succeed Even if every founder does his best with the business idea, the quality and success are defined by the customers. They decide for which customer benefit they are willing to pay money - or not to pay. Not every interesting business idea finds enough customers in the market.

Looking for a business idea seems easy in the age of the Internet. Anyone who enters appropriate search terms there is inundated with business ideas. The promises of the providers of business ideas are breath taking. No founder should fall for such advertising slogans, they are not infrequently dubious.

For the elaboration of a business idea and the development of the service description, it can be helpful to create personal network. The quality of a business plan stands and falls with insider knowledge of the market in which the company will operate. Attending regular entrepreneurs' tables and other events for founders is helpful. In addition, offers are made by the chambers of commerce, municipal economic development agencies, consumer, and trade fairs and business incubators and technology centres. These are generally good addresses for making contacts.

2.2.3. The Value Proposition as a Product and Service

A business idea makes an offer to a customer. A service is offered. Two basic types of services can be distinguished: the product and the service.

The product can be characterised as a product or material object. For example: watch, mobile phone, pen, clothes, technical accessories, machines, books, cars, computers, bio-diesel, plastic shells, measuring device, software, mobile phone network, smart card, spectrometer, clothes, food. Products must be developed and designed.

task of product development produce an object or a product in such a way that it can be sold on the market Product development includes both new development and further development. Technical progress requires the constant adaptation of products to the new needs in the market. Most customers in our culture have a high affinity for innovative products. generation of mobile phones, jewellery collection, the latest fragrance, the latest car, and the latest edition are preferred. 

There are hardly any limits to product development. Everything that has been and will be produced in our world is thought up and developed by people. In the process, ever more rational manufacturing processes are being devised and used. The product life cycles are becoming shorter and shorter for many objects. Most of all products sold today have only been developed and produced in recent years. New products are being created all the time. In the globalised world, many new products are brought onto the internationally networked markets every day.

The task of product design is to decide on usability, quality, size, shape, colour and design It is about finding and developing the best possible benefit for the customer. In the process, for example, the usability of services is constantly adapted.

Product development and design are driven by different motives. One strong motive is the novelty of the product. Equally important are cost considerations. The compulsion to adjust costs to the market price in competition leads to productivity increases in companies. Market adjustment is the basis of a company's competitiveness. In the globalised world, production moves to those regions where the best conditions for capital utilisation exist.

The difference between product and service lies essentially in its material character. The service is defined by the fact that the performance is generated directly at or with the customer It hardly ever happens that it is produced without the customer Typical services are those of a hairdresser, a craftsman, an agency, an agent for travel, for real estate, for insurance, for trade, for education and teaching, for counselling. Service can be many things that do not directly concern production. Service means service for the marketing of products. In a café coffee and drinks are sold as products, the service can be understood as a service. In a tanning salon, "tan" is sold, which can be an expression of the desire for "healthy and beautiful appearance". Services must be directly tailored to people's needs, only then do they become marketable. Only if the service is right will the customer come back.

Service quality is increasingly at the forefront in today's It is characteristic of services that they are not exchangeable or reversible. Rectification is only possible to a limited extent. An unkind word cannot be taken back, even if an apology is possible. A service cannot be stored or produced in stock. It takes place in the creation process itself, in which the customer is passively or also actively involved. The outcome quality of a service refers to having to achieve previously defined goals. If the objectives are not met, the service is provided inadequately. If the quality is missed, the customer will look for better quality. The service stands and falls with the skills of the person who performs it.

Customer orientation plays a direct role service Customer orientation can be understood as the orientation of all activities and business processes of a company to engage with wishes, requirements, and expectations of the target customers. In this context, quality is understood as the optimal fulfilment of customer requirements. customer-oriented concept of quality must be reflected in the type and quality of a product as well as in the provision of a service.

2.2.4. Patents and Property Rights

In competition, products and services can only be protected against foreign access to a limited extent. Intellectual property is protected by industrial property rights: patents, utility models, trademarks, names or designs In the case of property rights, a certificate is issued for the right to exploit an invention on its own. An IP right gives its owner an exclusive position for a certain period of time. The exclusive right excludes competitors from commercial exploitation. It gives the owner of the rights the opportunity to conquer and secure market share.

In Germany, for example, protective rights are registered with the German Patent and Trademark Office. Depending on the area for which the protection is to apply, an application to the European Patent Office, the European Trademark Office or other foreign offices may also be considered.

• "Patents can only be applied for on truly "patentable" inventions This applies to innovations that must have a "technical character" and be "industrially applicable". They must also actually be new. Finally, it must be an invention and not, for example, an "obvious craft solution" to a problem that is virtually obvious. What thus ultimately "patentable" can often only be clarified with the help of a patent attorney or during examination by the patent office."
• A utility model can be registered for all technical inventions (not processes) that could also be patented Difference: The term of protection is shorter. And in contrast to the patent, such a pronounced inventive step is not required here."
• patents or utility models, which are granted for technical products or processes, design patents protect Here, the design of products is protected, but also, for example, the design of fabrics and wallpapers.
• The trademark is, so to speak, the business card with which goods and services appear on the market Not only words can be protected as trademarks, but also sequences of letters, numbers, logos, colour combinations, sound marks (sequences of sounds) etc. Registration in the trademark register prohibits third parties from using the protected trademark or a similar trademark for identical or similar goods or services. Goods and services are divided into 42 classes (e.g., clothing, toys)."
• "Company names are not property rights, but they can also be protected First of all, automatically through registration in the commercial register. This name (or one confusingly similar to it) may not thereafter be used again in the same district court district and here in the same industry. If this happens nevertheless, the older trademark rights take effect. Company names can also be registered as trademarks. Caution: Trademark rights can often prevail over name rights."
• An Internet domain is not a property right either, but it is nevertheless protected. They are registered, varying in different countries. Before choosing a domain name, companies should clarify whether they are possibly infringing existing domain name rights (and trademark rights). Here too - as with company names - it usually depends on who first registered the domain in question. Domain names can also be registered as trademarks. Caution: Trademark rights can often prevail over name rights.

2.2.5. Unique selling Points for Business Ideas

Every new business must be distinguished the market by at least one unique selling. The unique selling proposition can refer to all features of a product or service. The unique selling proposition can relate to different dimensions at the same time. In any case, the business idea must offer the customer a previously unavailable benefit. What the special benefit for the customer is must be defined for the respective business idea. It can be: the offer is cheaper, the business is new at the location, the service better that of the competitors The unique selling proposition must be geared to the specific market situation of the enterprise. The unique selling proposition does not have to be something extraordinary or innovative, it is sufficient to justify the unique selling proposition from the respective subjective situation of the enterprise. If, for example, there is no baker in a district, the first one is the sole provider.

Unique selling proposition: Price

Perhaps the most significant unique selling proposition is price. Price is used to pursue differentiated business strategies. They must be defined in the business plan when determining the price. They can be distinguished and interpreted:

"Low price" (particularly favourable),

"High Award" (especially valuable)

"Normal price" (lies in the average),

"Maximum price" (most expensive),

"Lowest price" (cheapest, a bargain).

Price is a decisive differentiating criterion because in the consumer society there is almost nothing left that does not already exist. Services are becoming more and more similar in quality, so they have to show a price difference to be bought.

At the same time, determining the price implies a strategic orientation of the company. A company that positions itself in the low-price segment will only be able to offer certain qualities (simple) and appeal to certain target customers. A company that positions itself in high-price segments will only be able to attract target customers of this level.    

Unique selling point: speed

According to the motto, time is money, speed is a unique selling point. The way to deliver on the value proposition is an increasingly important argument for customers. Speed promises immediate satisfaction of needs. As customer orientation grows, so does the desire for fast service and immediate, individual attention. Those who promise this and can deliver it gain a competitive advantage. Speed is a criterion that can apply to low-priced offers as well as to exclusive luxury goods.

Possible dimensions of fast:

fast + customer orientation

fast + delivery and service

fast + production

fast + organisation and personnel

fast + payment

If a service company focuses on the characteristic of speed, it must also be fast. It must communicate to its customers what is meant by this. A fast service means that the phone is picked up at the latest after the third ring. If a transport company wants to be "fast and safe", there must be no delays and accidents.

Example: example of a successful company whose unique selling point is "speed" is the online mail order company Amazon. Amazon is an international household name among customers who like to order their goods over the internet. In addition to a wide range of products, the promise of fast and uncomplicated delivery of goods is crucial to the company's success. This promise becomes even more attractive with the offer of a so-called "Prime membership", which advertises with the argument of goods delivery within 24 hours.

Unique selling proposition: Market niche

The market gap is the area of the market that is still "free". The market is not yet occupied by another product or service.

Every company must constantly search for new markets or "market gaps". There are always market areas and niches that are still unoccupied. To track them down, a view with "other eyes" is necessary. this context, the term definitely different levels

Market niche means, for example, having detailed industry knowledge and technical know-how when developing a new product, so that the service can be fitted into the existing product ranges - including those of competitors.

Market niche means, for example, when choosing a location, finding the optimal place that is not yet occupied. It's like a jigsaw puzzle, the piece only fits into the picture at a very specific place.

The market gap practically means that a certain offer new to the customer It does not matter whether the business idea or the service is new. The market gap is found when the offer is new to the customer.

Unique selling proposition: Copying successful ideas

It can be helpful and cost-effective to copy ideas. Other countries are doing this to an unimaginable extent, such as China. There are business ideas all over the world that have already proven their success. Often these can be transferred - with modifications if necessary - to old markets or existing locations. Copying ideas and adapting them to the market opens up new markets and establishes a business with limited risk. The franchise idea is based on this concept. Copyrights or other industrial property rights must be respected.

Unique selling proposition: Trendy offers

Now, trend is not a unique selling proposition, it is rather an opportunity to make current market offers with "trendy" products and services There are constantly new products and services that can be defined as market trends. Those who are in the trend are at the top in the market. The one who recognises the trend early and creates services for it is usually ahead. The trend symbolises a basic mood in which products and services are particularly current.

The trend also knows different levels. For example, wellness, health, best agers or 50-plus, organic and energy are just as trendy as "youth". Typical products and services in fashion, sport, health and music are made from these basic social orientations. The question is, what is "trendy", what is "in". What can be sold quickly and in the latest fashion. What catches on with the customer is what catches on.

Unique selling proposition: innovation and novelty

Innovations are novelties and both technical and social inventions generated by the application of new processes and techniques. Innovations are economic novelties.

Germany can be considered the "Land of Ideas". The list of new products and services is outstanding, for example, in car technology, biotechnology, chemistry, energy, medicine, logistics, process engineering, psychological methods, living environments, etc.

Innovations are also directed towards new methods and a particular type of service. For example, the development of the call centre, which was based on telecommunications technology, can be seen as an innovation in the service sector. If technical innovations are marketed with economic expertise, there are good chances of success.

Innovations are generated in renewal processes. This applies, for example, to spin-offsin which scientists develop and sell products from their scientific research at the university. For this purpose, new companies (start-ups) are usually founded out of the university.

Innovative products or services represent "real" novelties. The service offered is really new. Bisically, this offer did not exist. This can be a product or service that not existed in the form offered of its quality, its benefits, its presentation, its distribution area, its manufacturer, its degree of innovation, its profitability or its service Novelties are becoming more and more frequent. Examples: "RTL is looking for the superstar", "videophone", "fashion creations", "computers MPx players, social networks.

Unique selling proposition: Specialisation

Specialisation is also typical for business start-ups. It refers to the fact that products or services are presented and sold in a specific way. They are separated, so to speak: One-product companies.

Specialisation can be well illustrated by the total assortment of a department store, where originally all goods were presented under one roof in a single large room. The concept of the "shop-in-shop system", in which individual products are marketed exclusively in separate business premises under the roof of a department store, can be seen as specialisation. Specialisation in the technical field also means that a single product is developed further in such a way that it could be used to set up its own company.

Specialisation means getting involved in what is special and taking it to market maturity.

2.2.6. Performance Specification

The service description clearly defines the offers that are to be sold. For the service description it is not sufficient to name headings for products or services.

High, customer-oriented quality demands must be placed on the performance description of the products and services in a business plan Selling a service requires the entrepreneur to be able to describe and produce it precisely. Of course, there are clear differences in the description of products and services. Some examples:

• A manufacturing company sells technically definable products. In addition, they fulfil a customer-specific purpose. A product catalogue with data and prices can represent the performance description.
• A trading company can define its services as a list of goods, or an assortment list A large assortment of goods should be divided into categories and groups typical for the company. The range of goods must define the quality, quantity, and sales prices.
• A restaurant clearly defines its services as a food and beverage menu.
• A hotel defines its services through the rooms it offers, through food and beverages, through wellness offers, through room rentals, through banquets, etc.
• A launderette clearly defines its services by the different washing programmes that the available machines allow.
• An advertising agency sells consulting, conception, planning, design, realisation. These abstract terms must be clearly transformed into saleable services, such as "flyer creation", "logo creation", "concept development" with a price.
• An intermediary office or agency sells services that belong to or are attributable to third parties. They receive a "commission" to be defined for the successful brokerage of the sale. The service description must describe exactly what money is paid for and in which case.    
• An Internet portal has a specific idea as its object What the business model consists of must be precisely defined. Mostly, the turnover is only achieved through the sale of advertising. In this sense, internet advertising is sold. For this purpose, there should be a "media sales offer", for example.
• A business or communication consultant must define his advisory service conceptually He must describe the advisory units in terms of content or instruments. He must develop service categories and determine a sales price for them.
• A freelancer must conceptualise his or her service in terms of content or instruments If a journalist sells articles, for example, he is paid a fee per line. If an author sells a book, he only receives a commission from the actual sale of the books in the trade, and that retrospectively. If a psychologist sells the creation of a competence profile with the help of a psychological test, this defined service is paid per item.
• A music or tutoring school sells lessons that are offered in terms of content, target group-specific or divided into units over time. The service "tuition" is sold to students at a defined hourly rate.

To increase the comprehensibility of a service description, a drawing, a photo, a sketch, a flyer, a technical description, an advertisement, a service catalogue, a menu or even a sample of the product can be attached.

In addition to the formal definition of the service, the description of the quality of the offer, the definition of the quantity of the offer and the determination of the sales price are part of the service description. The sales price is divided into gross - with value added tax or VAT and net - without value added tax or VAT.

2.2.7. Requirement for the Performance specification

It must be possible to determine state of development and the degree of professionalism the product and service description. The state of development could be documented by referring to previous models in the case of products or by describing the unique selling propositions of services in a plausible way.

Exemplary examples are given below.

• Anyone who wants to produce a service for a highly developed market must know the scientific and technological status This must result from the performance description of the product and be documented.
• Anyone who wants to produce and sell a service in the craft sector must have learned the respective craft, he must have dealt with the sector in order to know the technical standards. He must be able to describe what customers expect from the craft service He must fulfil the legal requirements of the craft.
• Anyone who wants to provide a service must understand something about the matter, he must be able to describe and convey it A hairdresser must know how hair is cut and which care products work how, he must be able to do it practically, he should know what is trendy and what the individual customer wants. He must know the dangers of chemicals.
• Anyone who wants to sell goods in trade, gastronomy or on the internet must know how they are traded and sold He has to deal with the specifics of the respective industries and business areas. He must produce the goods himself, buy them as a trader and then sell them again at a profit as a retailer or wholesaler. Anyone who wants to sell goods and commodities needs a range of goods that is classified, listed in a differentiated manner, and described.
• A commercial agent must be able to describe the object of the trade He must know the product features and quality criteria. He must be able to talk about the customer benefits. He must get to the heart of the unique selling proposition in order to convince the customer to close the sale. The "what" and the "how" must be the subject of the performance description.
• A counsel or must know and master the subject matter and content of counselling He must develop a concept for the guidance business. He must know what counselling means and he must have trained the communicative skills to be able to advise. Anyone who wants to advise a company, for example, must know how a company functions as a whole and in its sub-areas. They must know what makes a company successful. He must know and be able to use instruments to measure the object of counselling. He must then develop a concept in which the goals and results of the counselling are defined. The same applies to someone who wants to specialise in media consulting, for example. He must know the media industry and media companies. He must understand, be able to measure and advise on the impact of media. He must know how their use in the company contributes to more success and economic return. A consultant must be able to formulate a precise service description.
• A trainer must know the education market, the quality of educational services and educational products It is not sufficient for the service description to state that he wants to offer seminars for the 50+ generation, for example. A seminar programme with the planned seminar titles and contents for the first year of business is the minimum condition for a permanent self-employment as a trainer. Otherwise, one can speak of an experiment.

Anyone who wants to run a car wash, an internet shop, a school, a forwarding agency, a call centre, a retail shop, a bakery, a coffee shop, a tanning salon, a consultancy or an agency must be able to concretely define the type of service to be sold in their business.

Professional standards must be applied to the description of services. Entrepreneurial activity is, at its core, a professional exercise of the profession. Professional in its origin means to regard the activity as a profitable source of income.