Reference no: EM132602266

You Make the Call

Situation 1

Jonathan Lugar, 17, had just finished helping his mom with a garage sale when it occurred to him that he might create a business to do the same for others and make a little money for college. The idea was to offer a service that would take the headache out of running a garage sale. Lugar would handle all advertising and sale setup, and his experience with other garage sales in the area would allow him to coach sellers on pricing so that items would actually be purchased. He figured he could charge $200 per job for sales that bring in $400 or less, but he and the seller would split sales above $400 on a 50-50 basis. Lugar believes the greatest value added from his services would be from his pricing insights, since most people rarely have a garage sale and thus have little idea about how much to ask for items. Careful pricing would make his customers happy, since they could maximize their sales and minimize the risk that they would be left with the very items they were trying to get rid of. In fact, Lugar planned to keep track of how much things sold for to fine-tune his pricing advice. He estimates that his startup costs would be minimal and would come mostly from the use of his truck and some fuel.

Question 1. How would you classify Lugar's startup idea? Is it a new market idea, a new technology idea, or a new benefit idea?

Question 2. What was the source of Lugar's startup idea?

Question 3. Would you recommend that he give this startup concept a try? Explain your reasoning.