Business concept

The business concept is a description of the intended conduct of an entrepreneur through the creation or development of an enterprise or a separate enterprise. Each such the concept is related to market activities and should include decisions and projects marketing . A business concept is understood here as a description of the intended conduct of an entrepreneur, which includes: determination of objectives for a given period, formulation of assumptions and directions of development of business activity, a systematized set of activities to be carried out . The concept is prepared by the business owner or manager working for him, sometimes with the support of advisory teams from inside and outside, on the basis of analysis and assessment of the internal situation and external conditions .

The role of the business concept in the operation of the enterprise

Preparation of an appropriate business concept is treated as a foundation in the construction of an enterprise and its development, as well as in the preparation for the implementation of a business venture . Without a concept it is impossible to imagine a lasting business success. A business concept is a tool for creating business, more precisely - as one of several sets of tools, next to financial, technological, human resources and others .

Creating a business concept

There are two approaches to developing a business concept :

• The first refers to the situation where a concept for the creation, operation, transformation and/or development of a business is created, distinguishing between a business concept that is yet to be created and an existing organisation that, for example, we wish to change or develop or simply plan to function within a certain period of time.
• The second approach, on the other hand, refers to the project concept in the sense of the project, which has a defined scope and time frame, for example - an investment project, restructuring, organization of a significant business event.

In both approaches, a structured concept must be developed, which is the real foundation of the business to be initiated or planned. The development of a business concept should be based on an analytical approach, i.e. it should take into account previously performed research and analysis, and not only vision and intuition (R. Casadesus-Masanell F. Zhu, 2013, p.3-4). They can, for example, use methods such as :

• SWOT analysis,
• marketing research,
• tests of products and production lines,
• resource analysis,
• benchmarking,
• economic and market forecasts,
• matrix positioning,
• pre-investment studies.

Stages of creating a business concept

The business concept of the project must be based on the previously implemented analyses, which in total form a three-phase sequence: first a purposefulness analysis, then, if purposefulness is confirmed, a feasibility analysis and cost-effectiveness, and finally - development of an implementation plan - in-kind and financial . As can be seen, the first two phases are of the nature of the analyses, which take the form of the form of pre-implementation studies, sometimes referred to as feasibility studies (e.g. in EU-funded projects) European). These studies are :

• an opportunity study to answer the questions of whether the project makes sense or is feasible in the existing reality;
• a feasibility study to clarify whether the project will be feasible at a given point in time and cost-effective under defined variants, and what are the success and risk factors.

Elements of the business concept

Only after receiving and analyzing the results of necessary studies does the following occur the business concept of the project in the form of a business plan which includes the following main elements : Genesis of the project:

• project participants,
• history of the project,
• types of studies carried out and their costs.

Market analysis and marketing strategy:

• Market - products,
• supply and demand actors,
• prices,
• tendencies,
• market forecasts,
• segmentation;
• target buyers and their acquisition,
• marketing mix,
• sales production programme.

Material inputs:

• structure and expected size of demand,
• current and potential availability,
• estimation of prices and annual costs of material inputs.

Technical characteristics of the project:

• identification of the size of the project,
• technology and equipment,
• buildings and construction/assembly works,
• estimates of investment expenditure.

Organisation and employment:

• general organisational plan,
• anticipated staffing requirements,
• staff structure,
• the estimated staff and management expenditure.

Timetable for implementation:

• period and timetable for implementation;
• expected costs of individual stages.

Financial analysis:

• total investment outlays,
• project financing,
• production costs,
• revenues,
• cash flows,
• profit and loss account,
• balance sheet forecast,
• evaluation of the profitability of the project.

Business concept form

The most general and far-reaching provision of the concept is the company's strategy, which includes at least elements such as:

• vision,
• mission,
• deliverables,
• action, often in a formalised form, i.e. accepted by the relevant management or ownership body.

At the other extreme, there is a concept in the form of a set of recorded assumptions of the enterprise and its future or assumptions of the intended enterprise - such sets of assumptions are usually only a record of reflections and/or discussions, they are not always based on analyses, do not always have the necessary depth or detail of shots . Between these business plans of a new entity, an existing entity, an enterprise (project) are extreme forms of concept .

Types of business concepts

A distinction should be made between business concepts relating to enterprises (emerging and existing) and projects (projects). The most important differences between these types of concepts are listed below . A business concept is a description of an economic entity and its intended or planned activities, including in particular :

• characteristics of the entity at the moment of preparing the concept, including its legal and economic status and organisation,
• the object of the action,
• strategic assumptions,
• target markets and assessment of market opportunities,
• the environment of the enterprise and the conditions of its operation,
• analysis and forecast of costs, sales, market effects and result financial.

The concept of a project is an ordered description of an intended economic or managerial undertaking containing in particular:

• objectives,
• assumptions, including how to manage the project,
• the necessary means of action,
• expected costs and effects,
• the necessary actions and their timetable,
• the necessary financial outlays together with an estimate of their effectiveness.

Author: Natalia Chowaniak

Examples of Business concept

• Online Business: An online business is a business that is conducted through the internet, without the need for a physical storefront. This type of business could include online stores, virtual marketplaces, and digital services.
• Mobile App Business: A mobile app business involves the development and deployment of mobile applications. This type of business is typically done in partnership with app stores, such as the Apple App Store or Google Play.
• Franchising: Franchising is a business model in which a business owner (franchisor) grants a license to another person or entity (franchisee) to use the franchisor’s business name and/or intellectual property in order to sell the franchisor’s products or services.
• Consulting Business: A consulting business is a service-based business in which the consultant provides advice, guidance, and/or services to clients in a specific area of expertise.
• Retail Business: A retail business involves the sale of products and/or services to customers for their personal or household use. This type of business typically involves the purchase and reselling of products to customers in a physical store or online.
• Social Media Business: A social media business involves the use of social media platforms to market, promote, and advertise products and services. This type of business typically involves creating and managing social media accounts and campaigns for businesses.
• Dropshipping Business: A dropshipping business involves the sale of products without the need to store or ship the product themselves. Instead, the dropshipper will purchase the product from a third-party supplier and have it shipped directly to the customer.
• E-commerce Business: An e-commerce business involves the sale of products and services over the internet. This type of business typically involves the setup of an online store using a platform such as Shopify or BigCommerce.

Advantages of Business concept

A business concept is a powerful tool for entrepreneurs to use to create successful businesses. It enables them to develop an understanding of the market, identify gaps and opportunities, and create a plan to capitalize on them. The following are some of the key advantages of having a business concept:

• Clarity: A business concept helps to clarify the purpose, vision and objectives of the business, helping to ensure that everyone involved is working towards the same goal.
• Focus: A business concept helps to define the focus of the business, ensuring that resources are allocated efficiently and effectively and that activities are aligned with the overarching goal.
• Flexibility: A business concept allows for flexibility, allowing the entrepreneur to adapt quickly to changes in the market and to adjust the strategy to take advantage of new opportunities.
• Risk Management: A business concept helps to identify potential risks, setting out a plan for how to avoid them or mitigate them if they arise.
• Market Knowledge: A business concept helps the entrepreneur to gain a deeper understanding of the market and the competition, allowing them to develop strategies to differentiate their product or service.

Limitations of Business concept

A business concept should include decisions and projects related to market activities, however, it should not be limited to just that. There are several other limitations to consider when creating a business concept:

• The concept should not rely on assumptions that may be difficult to verify or prove.
• The concept should be realistic and feasible in the current market conditions.
• The concept should not rely on the availability of any unavailable resources.
• The concept should not require any changes in legislation or regulations.
• The concept should not be overly optimistic or ambitious.
• The concept should not be overly complex or difficult to operate.
• The concept should not be overly expensive or difficult to implement.
• The concept should not require an unreasonable time commitment.
• The concept should be flexible and adaptable to changes in the market.

Other approaches related to Business concept

The Business concept includes more than just market activities and decisions. Other approaches related to the Business concept are:

• Strategic planning - Strategic planning is the process of planning for the future of the business, including setting goals, determining actions to achieve those goals, and evaluating the progress of the business in meeting those goals.
• Financial planning - Financial planning is the process of estimating the capital required and determining its competition. It also involves formulating strategies to raise the capital, and evaluating the potential risks of the business.
• Operational planning - Operational planning is the process of determining the best way to use the resources of the business to achieve the desired objectives. This includes identifying the resources needed and developing plans for their efficient use.
• Business process re-engineering - Business process re-engineering is the process of analyzing and redesigning business processes to improve the efficiency and effectiveness of the business.
• Risk management - Risk management is the process of identifying, analyzing, and responding to potential risks that may affect the business. This includes assessing the likelihood and impact of the risks, developing strategies to mitigate them, and monitoring the progress of the risk management activities.

In summary, the Business concept involves more than just market activities and decisions; it also includes strategic, financial, operational, and process re-engineering planning, as well as risk management. By considering all of these approaches, the business can be better equipped to achieve its goals and objectives.

Footnotes

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Business concept — recommended articles

Business plan — Strategic planning — Resource plan — Promotional plan — Project feasibility study — Structure of enterprise planning system — Capital planning — Strategic analysis methods — Investment project

References

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