Ch. 3: Recognizing Opportunity

Understanding Entrepreneurial Trends  Current Trends  Internet – Most Businesses have an Online Component  Service – Most Small Businesses  Service = Intangible things that businesses do for us that enhance our lives  Home Based – Approximately 53% of Small Businesses  Typically online

Understanding Entrepreneurial Trends  Current Trends  Green – Promote Sustainability  Sustainability = Achieve Goals without compromising the ability of future generations to meet their own needs  Social Entrepreneurship – Improve Society  Identify social needs and recognize them as opportunities  May be Non-Profit

Understanding Entrepreneurial Trends  Current Trends  Focus on Technology – Critical component of Business: As a Product or used to Increase Productivity  Outsourcing – Anything and Everything  Contracting with other companies for services  Allows Focus on what You do BEST  5 Main Benefits

Understanding Entrepreneurial Trends  Current Trends  Outsourcing – Anything and Everything  5 Main Benefits  Greater Efficiency, Saving Money & Time  Decreases Overhead Investment or Debt  Lowers Regulatory Compliance Burdens  Start New Projects Quickly  More Attractive to Investors – Money is Directed Towards Money-Making Activities

Understanding Entrepreneurial Trends  Current Trends  Strategic Alliances – Partnerships  Alliance with Another Company to Supply You with a Product or Service  Corporate Ventures – Spin-Off  Resources Provided to get the New Venture Started  Often Becomes Independent Company

Understanding Entrepreneurial Trends  Recognizing Opportunity  Creativity and Innovation  Connection, Discovery, Invention, Application  Idea vs Opportunity  Opportunities are Ideas that Have Commercial Profit Potential  Finding Unfulfilled Niches  Niche = Small Specialized Market

Understanding Entrepreneurial Trends  Strategies for Thinking Creatively  Practice Brainstorming – Thinking Freely  Look at Ordinary Items in New Ways  Find Creative Solutions to Common Problems  Connect Unrelated Items  Being Creative Can Be Challenging!  Time, Unsupportive People, Lack of Confidence, & Rigid Thinking

Understanding Entrepreneurial Trends  Creative Sources of Ideas  Observe the World Around You  Watch for Demographic Changes  Demographics = Personal Characteristics that Describe a Population  Be an Avid Reader  Consider Your Own Experiences  Interests, Hobbies, Work  Consult Outside Sources  Magazines, Trade Shows, Internet, & Government

Starting Vs. Buying a Business  Personal Values and Goals  Influenced by Family, Religion, Teachers, Friends, Society, and Personal Experiences  What are Your Core Values?  Family Business  Approximately 1/3 Survive to the 2 nd Generation – Why?  Advantages = Trust and Togetherness  Disadvantages = Can’t get Away and Parents Not Viewing their Children as Effective Business People

Starting Vs. Buying a Business  Family Business  Question to Ask:  Do I Have the Ability to Work for a Member of My Family  Do I Get a Long with the Family Members Involved  Do we Share the Same Goals – Business and Personal Life

Starting Vs. Buying a Business  Family Business  Question to Ask:  Can we be clear and Specific About Expectations of Each other  Can I Leave Business Problems at Work  Can We Maintain a Positive Family Relationship

Starting Vs. Buying a Business  Buying an Existing Business  Typically Less Risky  Employs Hired and Trained  Equipment in Place  Customers  Goodwill – Customer Loyalty  Established Procedures  Inventory

Starting Vs. Buying a Business  Buying an Existing Business  Franchise  Legal Agreement to Begin a New Business in the Name of a Recognized Company  McDonalds  Franchisee  Does Not have to Acquire All Risk  Pay Fees and Annual Royalties  Franchisor  Can restrict how You Run the Business

Starting Vs. Buying a Business  Starting Your Own Business  Questions to Ask  Do I have Motivation  Does the Business Align with My Personality, Ability, Values, and Goals  Do I have Sufficient Knowledge of Basic Operations to Undertake the Business

Starting Vs. Buying a Business  Starting Your Own Business  Questions to Ask  Do I have the Managerial Ability  Do I have the Right Partners to Help Me  Do I have Enough Financial Resources  Am I willing to Accept the Risk

Starting Vs. Buying a Business  Starting Your Own Business  What You Must Do  Test the Feasibility: Are there Enough Customers in the Market to Make the Effort Worthwhile  Traditional Business or Online, or Both  Business Plan: Seek Capital, Partners, Employees  Secure Professional Advisors: Accountants, Lawyers

Starting Vs. Buying a Business  Starting Your Own Business  What You Must Do  Hire Employees and Build Relationships with Suppliers  Purchase Equipment and Determine Distribution Channels  Create Awareness