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How to make profit = Business idea

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How to make profit = Business idea

Having a vision is the key to your entrepreneurial new venture. Without it there is no driving force or sense of direction. However, your vision needs to be backed up otherwise is pure fantasy.

The business idea is the basis for the company’s business and describes what the company’s existence is based on. It briefly describes how the company creates profit. The business idea describes which products or services the company offers, who they are and how the product or service is produced, delivered and sold. A business idea does not have to be revolutionary and unique, but it’s the ability to be able to distinguish itself from the amount that determines the company’s success. 


1 Exploring Entrepreneurship, (pp.33-37 )

Problem discussion

Today, there is not much knowledge about the establishment process and how entrepreneurs make decisions when new companies are started. Sarasvathy a well known entrepreneur has created a framework based on the fact that entrepreneurs’ decision-making processes are either rational and follow predetermined guidelines / goals or are trying and constantly try to improve the business idea and discover new business opportunities. Sarasvathy calls these two processes for causation and effectuation, respectively, assuming that start-up companies essentially use either one or the other process.

According to Sarasvathy’s causation, you have a clear goal and you know in advance what you want to achieve. The central part of this process is therefore the best way to go about achieving the predetermined goal. However, in the decision-making process effectuation, there is no clear predetermined goal. Instead, you try to find optimal solutions that lead to a good end result. Sarasvathy emphasizes that neither causation nor effectuation can be seen as a superior decision-making process at the start of new businesses. Instead, both decision making processes are considered as good. On the other hand, Sarasvathy emphasizes that experienced entrepreneurs to a large extent use effectuation during business establishment.


1 What makes entrepreneurs entrepreneurial?, (pp.2-9)

2 Saras Sarasvathy Explains the Entrepreneurial Method (Youtube video)

3 Sarasvathy. What makes entrepreneurs entrepreneurial? (pp. 1-9.)

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