Idea Generation

I recently attended a Workshop in which I came across theories on idea generation. I’m not a huge fan of theories, as I believe a lot of them are just common sense. However some, when used correctly in real life situations, can be very useful.

The two theories which I found particularly interesting revolve around idea generation and relate to how you decide which business idea to undertake. The theory states that there are two ways of generating and implementing new business venture ideas: through effectual and causal reasoning.

  • Effectual reasoning revolves around your set of means and how this can be applied to business: what resources do you have, what are your interests, who you know? Essentially, what can you achieve with the resources you have. The goal is not present, and is allowed to emerge over time, based on opportunities and threats which arise.
  • Causal reasoning is based on trying to achieve a certain goal, using the best possible means to get there. These may be the most effective, cheapest or fastest, but doesn’t necessarily take into account the means which you already have access to.

A good comparative example would be by applying it to travel. Someone acting under causal reasoning would be a general, setting out to conquer land, whereas someone operating under effectual reasoning would be an explorer looking to discover unknown waters.

Obviously this theory applies principally to entrepreneurship. An entrepreneur developing an idea may think about what field they have knowledge and interest in, which area their friends and family work in, and then implement an idea based on this, learning and adapting their business along the way. This would be an example of effectual reasoning.

A business example of causal reasoning could be an entrepreneur developing an idea based on a desire or goal. For example to create a business which will be sold for £1m within 5 years, and not dramatically altering their business model, despite the existing contacts they may have and the people they come into contact with, or opportunities and threats which arise.

There is no right or wrong way to undertake entrepreneurship and idea generation. Statistics seem to suggest that entrepreneurs who create businesses under the effectual reasoning concept are more successful, however, what works for some, doesn’t always work for all.

I very quickly learnt that creating contacts and networking is possibly the most important part of running your own start-up, so whichever approach you take, being open to new approaches and support from people outside your company, and adapting to them, is crucial.

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Corporation Tax

Since running my own businesses, I have definitely worked harder than I ever have done before, and learnt more than I ever have in the past. Learning theories in A Level and at Undergraduate level is great, as was having work experience in large multinational companies. But I found that my passion for small enterprise, which subsequently led to entrepreneurship, has provided me with the most learning opportunities. Indeed, I very rarely go a week without learning something new in the field of business.

My most recent discovery was how to file Corporation Tax. I received a letter to the registered address of Access Regional. I followed the instructions and logged onto the website. I then had to wait a week whilst paperwork containing my newly created online filing account came through, which included my activation code (so ensure that you leave yourself time before the deadline, so you don’t risk being fined!).

Corporation Tax is the company equivalent to Income Tax. Considering that although Access Regional had been registered since December 2011, it had remained largely dormant for a year whilst we sorted out our strategy and had shareholder and directional issues. However, at the time, we had not foreseen this big delay, so had not registered the company as dormant, meaning that we were now at a point where our first year’s Corporation Tax was due. Your company needs to pay Corporation Tax on taxable profits for each Corporation Tax accounting period. Your accounting period is normally 12 months and tends to match your company’s financial year.

The amount of Corporation Tax you pay depends upon the profits your business makes, and the rate depends on how much profit your company generates. If you’re a newly formed company, the rate which most likely will apply is the small profits rate of 20%. This applies to companies with profits of £300,000 or less. If your profits are over £1.5m, this is the main rate, and stands at 24% – although this is set to change to 23% in 2013. If your profits fall between these, you’ll have to pay the main rate, however you can apply for marginal relief, which means that your bill is reduced by an amount depends on your profit figure.

You can forgo this whole ‘exciting’ filing process if you have an accountant; however, chances are if you’re small, you won’t be able to afford one. And besides, I always feel that it’s best to do these things at least once so that you know the process in case it is useful in the future. The HMRC offer a number of useful tools for helping with this. They have an online demonstration of what will be required but the most useful resource which I have since discovered is a free online webinar for small businesses.

You’ll be asked to provide financial statements such as profit and loss, and a balance sheet covering the accounting period, so worth brushing up on those and taking your time (I was very grateful for my Management Accounting modules at this point!). But the good thing is that you can submit these to Companies House at the same time, so that you’re essentially killing two birds with one stone, as your financial statements need to be submitted to Companies House at the end of your company’s accounting period too.

It took me a morning to do, but once it’s done, it’s done. And it was a very useful thing to learn. There are a lot of resources around to help you, so you need not feel overwhelmed.

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Intellectual Property

Since developing Access Regional into a magazine and finding a unique way of distributing, I have been furiously trying to find out about intellectual property. After all, if you have an idea which people have told you is good, you want to try and protect it as much as possible. Despite having found experts willing to spend time speaking to me about it, I still find the topic very complex. But I shall try to give you the basic concept behind the different forms of intellectual property:

  • Patent: this gives an inventor the exclusive rights to their invention for a specific period of time. This means that only they can make, use and sell this product. An invention can be defined as a product or process which solves a technological problem, i.e. a solution, not simply an idea. A good example is ‘Dyson’, who own around 430 patents which define how they make their vacuum cleaners (you cannot simply patent a full product).
  • Copyright: this gives the creator of an original piece of work, the right to use it. Copyrights are used for a range of ‘works’, so something creative, such as a book. Again, a copyright does not cover an idea, but instead the manner in which it is expressed. So it basically gives you the right to copy your work, whilst stopping others from doing so.
  • Trademarks: this recognises a design or sign which identifies the company’s product or service. For example, ‘Nike’ have their name and logo registered as trademarks so that no one could imitate them.

These are the main 3 types of protection which you are likely to come into contact with, however ‘trade dress’ (protecting the appearance of a product or packaging) and ‘trade secrets’ (laws protecting a process or company information) are also other forms of intellectual property.

Particularly when starting out, it is well worth looking into intellectual property, and how much an application would cost, and indeed ensuring that you’re not treading on anyone else’s IP toes. Sometimes it’s not possible to protect your product, so when entering a market place, simply being the first in and then building a strong brand is essential. ‘Innocent’ are a very good example of this, given that they couldn’t protect the idea of offering smoothies, yet they were first to market and have since built a strong brand. This has meant that despite people imitating the concept, they maintain their market share and customer loyalty.

This is also the path I’ve gone down. A great place to start is checking the UK Intellectual Property website to see if something exists. Ensure it is different enough from what you have in mind, so simply adding a ‘-‘ or ‘,’ to an existing trademark, could mean you are taken to court, which even if you win, will cost you money! The process itself can take a few months, and cost £170 if you do it online, but any sort of protection you can get for your product or service is well worth investigating.

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Design and conquer

A lot of my time recently has been spent getting to grips with various image editing programmes and attempting to build a webpage. This has all been for my first venture (which started at the turn of the 2012 year), called Access Regional. This initially began life as a social enterprise which would be similar to the Big Issue in that it would be a magazine, and proceeds would be going to a good cause. However, my idea was around helping out students with disabilities. The main issue I encountered would have been the cost of publishing, particularly as establishing and circulating a new magazine would be tricky.

The idea then developed into an online advertising portal, advertising both student venues and employment opportunities. We spent a long time going over the concept and creating a portal, however, I had a doubt in my mind over how unique this would be and where the revenue would be developed; this was only reaffirmed when speaking to like-minded people. There had been huge delays in launching this, and eventually it was decided that the best way to proceed was for the other Company Director and I to part company.

So the company is now on its third evolution, and it’s been keeping me very busy! The idea now is a combination of the two original thoughts: advertising and reviewing local entertainment venues, but doing so in a magazine. This would also mean that I could get a team of writers together covering the Birmingham area, which would help with distribution. The idea of a physical copy of the magazine being published was abandoned a long time ago, and now the focus is on an e-magazine. The business model adapted by the ‘Shortlist’ magazine is one which I admire, and it must be working, given the number of awards they have received. So this is the model which I am adapting, but with a twist in the method of delivery and circulation, and therein lies the USP. I can’t reveal what that will be just yet, as I’m looking into the intellectual property behind this, and whether or not I can protect it. Needless to say, this will be the world’s first magazine distributed in this way.

As the other Company Director used to handle the web development and graphics side of the business, this has given me a steep learning curve, but one I am enjoying and learning a lot from. I’ve found www.moonfruit.com a great place to start, and would recommend that to anyone. There are several courses you can go on in order to learn how to use Adobe PhotoShop, but so far, I’ve found finding free fonts, and then altering the images using basic features of PhotoShop produce good results.

The landing page for Access Regional is now up (www.accessregional.com), so do have a look and subscribe to pre-launch page, to ensure that you are one of the first to hear about the launch and receive a copy.

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