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DEVELOPING NEW BUSINESS IDEAS182

research by entering the American market direct. The only strategy
open to Knight and Bowerman was to manufacture the products
themselves in order to protect their brand. Had they started off with
own-manufacture, however, their risk and financial investment would
clearly have been of a quite different magnitude.

Anita and Gordon Roddick sought to protect the Body Shop idea by
perfecting the brand concept and achieving rapid national distribution at
low cost through the establishment of a franchise network. In the next
chapter, we will see how the Philippines-based Jollibee Foods Corporation
also used franchising as a key strategy to restrict McDonald’s to second
place in the fiercely competitive market for fast food in the Philippines.

can you sustain your business idea? Linked to the idea of
protection is the idea of sustainability. No product or service lasts for
ever. How will you re-energise the offering, extend the range of
products or services, enlarge the customer base, in order to maintain
your business idea?

One of the huge strengths of the Cobra brand is its ability to expand,
whether into new product areas or new geographical markets, ironically
including India. By the same token, Jeff Bezos was clear from an early
stage that ‘we would focus on expansion into things where we could
leverage . . . One is the brand name; two is the set of competencies; and
three is our customer base.’134

business-focused criterion 4: financial viability

You need to consider whether your business idea offers an opportunity
for an independent and financially viable business. To what extent will
the likely costs of the business and the likely selling price allow the
business to generate a viable profit in the long term? What is the length
of time before you achieve break-even? Is the forecast cash-flow viable?
How long is it before the cash-flow becomes positive?

Consistent with the bigger picture argument advanced earlier, a back-of-
envelope calculation which immediately highlights that the business
idea in its current form cannot generate a sustainable cash-flow is more
valuable to you than a slavishly developed month-by-month
spreadsheet analysis which covers the next decade.

business-focused criterion 5: level of risk We saw in

Chapter 1 that 33 per cent of business start-ups in the UK cease trading
within three years. That statistic is a stark reminder that it is impossible