Business Plan Business Plan Entrepreneurial Opportunity RecognitionEntrepreneurial Opportunity Recognition

Week3Week3

ELIB 203ELIB 203

Entrepreneurial Opportunity Recognition

Entrepreneurial Opportunity Recognition

Entrepreneurship process starts with opportunity recognition and

idea generation

Entrepreneurial Opportunity Recognition

Entrepreneurial Opportunity Recognition

What is an Opportunity?

An opportunity is a favorable set of circumstances that creates the need for a new product, service, or business idea

Entrepreneurial Opportunity Recognition

Entrepreneurial Opportunity Recognition

Most entrepreneurial firms are started in one of two ways:

An entrepreneur decides to start a firm, searches for and recognizes an opportunity, then starts a business.

An entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it.

What is an Opportunity?What is an Opportunity?

Opportunity is NOT the same as an idea.

Attractive Timely

Durable

Anchored in a product, service or business that creates or adds value

for its buyer or end user

Opportunity(rather than just an idea)

Recognizing OpportunitiesRecognizing Opportunities

Three Ways

Observing Trends

Solving Problem

Finding Gaps in the

Marketplace

1. Observing Trends1. Observing Trends

Trends Suggesting Business or Product Opportunity Gaps

Economic Forces: State of economy

Level of disposable incomeConsumer spending patterns

Social Forces: Social and cultural changes

Demographic changesWhat people think “in”

Technological Advances:New technologies

Emerging technologiesNew uses of old technologies

Political and Regulatory changes:

New changes in political arenaNew laws and regulations

Business or Product

Opportunity Gaps: Difference

between what’s available and

what’s possible

New Business, Product or

Service Idea

2. Solving a Problem2. Solving a Problem

Sometimes identifyingopportunities simply

involves noticing a problemand finding a way to

solve it.

These problems can bepinpointed through observing

trends and through more simplemeans, such as intuition,serendipity, or chance.

Some business ideas are clearly initiated to solve a problem.

For example, Symantec Corp. created Norton antivirus

software to guard computersagainst viruses.

3. Finding Gaps in the Marketplace

3. Finding Gaps in the Marketplace

A gap in the marketplace is often created when a product or service is needed by a specific group of people but doesn’t represent a large enough market to be of interest to mainstream retailers or manufacturers.This is the reason that small clothing boutiques

and specialty shops exist.

The small boutiques, which often sell designer clothes or clothing for hard-to-fit people, are willing to carry merchandise that doesn’t sell in large enough quantities for Wal-Mart, GAP, or JC Penney to carry.

Personal CharacteristicsPersonal Characteristics

Characteristics that tend to make some people better at recognizing opportunities

than others

Prior Experience Social Networks

Cognitive Factors Creativity

Recognizing OpportunitiesRecognizing Opportunities

Connection between an awareness of emerging trends and the personal characteristics of the entrepreneur

Environmental Trends

Economic factorsSocial factors

Technological advancesPolitical and regulatory

advances

Personal Characteristics of an

EntrepreneurPrior experienceCognitive factorsSocial networks

Creativity

Business or Product Opportunity Gaps:

Difference between what’s available and

what’s possible

New Business,Product and Service Ideas

Techniques For Generating IdeasTechniques For Generating Ideas

Brainstorming

Focus Groups

Surveys

BrainstormingBrainstorming

Brainstorming

Is a technique used to generate a large number of ideas and solutions to problems quickly.

A brainstorming “session” typically involves a group of people, and should be targeted to a specific topic.

Rules for a brainstorming session:

• No criticism.• Freewheeling is encouraged.• The session should move quickly.• Leap-frogging is encouraged.

Focus GroupsFocus Groups

Focus Group

A focus group is a gathering of five to ten people, who have been selected based on their common characteristics relative to the issues being discussed.

These groups are led by a trained moderator, who uses the internal dynamics of the group environment to gain insight into why people feel they way they do about a particular issue.

Although focus groups are used for a variety of purposes, they can be used to help generate new business ideas.

SurveysSurveys

A survey is a method of gathering information from a sample of individuals. The sample is usually just a fraction of the population being surveyed.

• The most effective surveys sample a “random” portion of the population, meaning that the sample is not selected haphazardly or only from people who volunteer to participate.

• The quality of survey data is determined largely by the purpose of the survey and how it is conducted.

Surveys generate new product, service, and business ideas because they ask specific questions and get specific answers.

Protecting Ideas From Being Lost or Stolen

Protecting Ideas From Being Lost or Stolen

Step 1The idea should be put in a tangible form such as entered into a physical idea logbook or saved on a computer disk, and the date the idea was first thought of should be entered.

Step 2The idea should be secured. This may seem like an obvious step, but is one that is often overlooked.

Step 3Avoid making an inadvertent or voluntary disclosure of an idea, in a manner that forfeits the right to claim exclusive rights to it.

Case StudyCase Study

Sofia’s passion was candy. She wanted to make and sell her own candy, but her family told her to choose something more stable. She took an office job, but her position was downsized. She considered her love of candy, and a little research showed that there was a market for her interests. There was one problem; however, she never made candy outside of her home and was not sure how to sell it in mass. Her family told her that she lacked the necessary skills to create her own business, and she found another office job.

Case Study Case Study

Sofia’s passion was candy

Her family told her to choose something more stable

She took an office job, but her position was downsized

She never made candy outside of her home