1. Recognizing Opportunity
Entrepreneurship Ch 3
Recognizing Opportunity

2. Understanding Entrepreneurial Trends
Current Trends
Internet Business
Transformed the way business is conducted
Online Business – Business that conducts business by means of the internet
Potential to attract a huge number of customers
Service Businesses
Most small business are service businesses
Services – intangible things that a business does for us that enhances our lives

3. Understanding Entrepreneurial Trends
Current Trends
Home-Based Businesses
Represents roughly 53% of all small businesses
Many people who have lost their job due to cutbacks choose to work from home in the field where they were once employed
Many companies choose Homesourcing (transfer of service industry employment from offices to home-based employment) to fill human resource needs

4. Understanding Entrepreneurial Trends
Current Trends
Green Businesses
Design their business practices so that they promote sustainability (Venture seeks to achieve economic, environmental, and social goals without compromising the ability of future generations to meet their own needs)
Includes: Food quality, energy resources, pollution, and human rights

5. Understanding Entrepreneurial Trends
Current Trends
Social Entrepreneurship
Start business to improve society
Identify social needs, such as finding employment for wounded veterans, combating pollution, or providing shoes for children who cannot afford them
Focus on the arts
Measure success by their positive impact they make on society

6. Understanding Entrepreneurial Trends
Current Trends
Focus on Technology
An increased reliance on technology is the main trend that affect businesses today.
Creates a strong competitive advantage

7. Understanding Entrepreneurial Trends
Current Trends
Outsourcing
Contracting with other companies for services
Allows small businesses to focus on what it does best while tapping into outside resources

8. Understanding Entrepreneurial Trends
Current Trends
Outsourcing
Benefits
Allows greater efficiency, saving time, and money
Decreases overhead investment or debt
Lowers regulatory compliance burdens
Allow companies to start new projects quickly
Makes companies more attractive to investors

9. Understanding Entrepreneurial Trends
Current Trends
Strategic Alliances
Forming a partnership with another company
Supply a product or service that is part of the other company
Corporate Venture
New venture started inside a large corporation
Parent company supplies resources to the corporate venture to help the new venture get started
New ventures usually become independent companies

10. Learning to Recognize Opportunity
Creative and Innovation
Creativity – Activity that results in innovation (finding new ways of doing something)
All creativity leading to the invention of something new involves connection, discovery, invention, and application
Connection – bring things together that are not usually connected
Connection leads to a discovery that is turned into an invention

11. Learning to Recognize Opportunity
Creative and Innovation
Application – Is going beyond the original invention to other uses in new areas.
Idea or Opportunity
Ideas are generated by thinking creatively
Opportunities are ideas that have commercial potential
Innovative opportunity can be turned into a business
Most business opportunities result from the entrepreneurs alertness to consumer needs and unfilled market niche (small specialized market)

12. Learning to Recognize Opportunity
Creative and Innovation
Understanding Industries
One way to identify opportunities
Industries – Group of businesses with a common purpose

13. Strategies for Thinking Critically
New Enterprise Ideas
Practice Brainstorming
Brainstorm – Think freely to generate new ideas
Ideas are not judged as good or bad
Look at ordinary items in new ways
Figure out new ways or uses you can find for it,
Find creative solution's to common problems
Connect unrelated items
Try to come with new products
Challenges to Creativity

14. Strategies for Thinking Critically
Challenges Sources of Ideas
Ideas can come to you from anywhere
Observe the World Around You
Watch People
You can learn a lot about peoples wants and needs
Watch for Demographics Changes
Demographics – Personal characteristics that describe a population
Includes age, gender, income, ethnic background, education, and occupation

15. Strategies for Thinking Critically
Challenges Sources of Ideas
Be an Avid Reader
Consider Your Own Experiences
Interests
Practice thinking about the problems you encounter each day as you pursue your interest
Hobby
Turn into successful ventures
Work
Experience in the world of work can be an excellent source of business ideas

16. Strategies for Thinking Critically
Consult outside sources
Look at people, places, and things in the business community for business ideas
Trade Magazines
Periodical published for specific types of businesses or industries
Contains articles, new products, services
Specialty Magazines
Periodicals that target people with special interests

17. Strategies for Thinking Critically
Consult outside sources
Trade Shows and Exhibits
Vendors and manufactures introduce new items and promote established products and services
Newspapers
Provides ongoing source of ideas (Trends and Innovations)

18. Strategies for Thinking Critically
Consult outside sources
The Internet
Government Agencies
US Patent Office – contains detailed description of new products
OSHA – Occupational Safety and Health Act

19. Starting versus Buying a Business
Personal Value and Goals
Values – Beliefs and principles you choose to live by
Define who you are, shape you attitudes, and your choices, and help you identify your priorities
Once you identify your core values, you can use them to lay out your goals for your future
Goals are the objectives you are trying to achieve

20. Starting versus Buying a Business
Entering the Family Business
One way to experience entrepreneurship
Important part of the US economy
The rewards and challenges of family businesses
Only about 1/3 of them survive to the second generation
Greatest advantage is the trust and togetherness that family members share
One of the greatest disadvantages is that its owners can never get away from the business

21. Starting versus Buying a Business
The rewards and challenges of family businesses
Important to establish clear lines of responsibility, be objective about family members qualifications, keeping decisions unaffected by personal emotions, and respect individual family members needs

22. Starting versus Buying a Business
Questions to ask yourself
Do you have the ability to work for a member of my family?
Do I get along with the family members who I’ll be involved with?
Do we share the same goals for the business?
Do we share the same general goals for our personal lives?
Can we be clear and specific about our expectations for each other?

23. Starting versus Buying a Business
Questions to ask yourself
Can I leave business problems at work when I go home?
Can we maintain a positive family relationship?
If you answered no to any of the questions, then we have a potential problem

24. Buying an Existing Business
Acquire – Buy an existing business
Less risky then starting a new one
Because:
Employees already hired and trained
Equipment is already in place
Company already has customers
Goodwill – Customer loyalty
Extremely valuable business asset

25. Buying an Existing Business
Buying a Franchise
Franchise – A legal agreement to begin a new business in the name of a recognized company
Gives the franchisee (buyer) the right to a product, process, or service; training and assistance in setting up the business; and ongoing marketing and quality support while the business is in operation
Most important advantage is that the entrepreneur does not incur all of the risk associated with starting a business

26. Buying an Existing Business
Buying a Franchise
Franchisee usually buys into a business with accepted name, product, or service.
Franchisee is buying a way of operating a business and a product with name recognition
Franchisee pays a fee and an annual royalty on sales, usually 3-8%
Franchisor – Seller
Franchisor is selling its planning and management experience

27. Buying an Existing Business
Buying a Franchise
Before buying franchise, understand all of the costs and limitations involved
Evaluating a Business Opportunity
Evaluate whether the business is a good prospect
Why is it for sale?
Hire an accountant to verify the value of the business’s inventory, accounts receivable, and assets

28. Buying an Existing Business
Where to Find a Business
Look in newspaper
Most effective way - Network with people in the community
You can hire a business broker – Someone whose job is to bring buyers and sellers together

29. Buying an Existing Business
Questions to Ask?
Is the business interesting to me and to other?
Why is the owner selling?
Check the businesses financial statements
What is the business’s potential for growth?
Business’s go through a cycle of growth – Growth, Maturity, and Decline

30. Starting Your Own Business
Questions to ask:
Do I have the motivation to start a new business from nothing?
Does the business align with my personality, abilities, values, and goals?
Do I have sufficient knowledge of basic operation to undertake the business?
Do I have the necessary managerial skills?
Do I have the right partners to help me with the business?
Do I have enough financial resources to start from scratch?
Am I willing to accept the risk?