1. Recognizing Opportunity Back to Table of Contents

2. Recognizing Opportunity 2 Chapter 3 Recognizing Opportunity Understanding Entrepreneurial Trends Starting Versus Buying a Business 3.1 3.2

3. Recognizing Opportunity 3 Identify the importance of personal values and goals in choosing an entrepreneurial pursuit. Describe the challenges and rewards of entering a family business. List the benefits and drawbacks of buying a business. Describe how you can evaluate a business opportunity. Compare the advantages and disadvantages of starting your own business. Section 3.1 Understanding Entrepreneurial Trends 3.1

4. Recognizing Opportunity 4 The ability to recognize new opportunities and to think creatively is essential for success in today’s market. Section 3.1 Understanding Entrepreneurial Trends 3.1

5. Recognizing Opportunity 5 online business services outsourcing strategic alliance corporate venture innovation Section 3.1 Understanding Entrepreneurial Trends 3.1 niche brainstorm demographics trade magazine specialty magazine trade show

6. Recognizing Opportunity 6 Current Entrepreneurial Trends One way to identify business opportunities is to study current trends that provide opportunities for entrepreneurs. Section 3.1 Understanding Entrepreneurial Trends

7. Current Entrepreneurial Trends Section 3.1 Understanding Entrepreneurial Trends 7 Internet businesses service businesses home-based businesses socially-responsible non-profit businesses corporate ventures strategic alliances technology outsourcing

8. Recognizing Opportunity 8 Internet Businesses The Internet has transformed the way business is conducted. An online business can reach customers around the world. online business a company that conducts business by means of the Internet Section 3.1 Understanding Entrepreneurial Trends

9. Recognizing Opportunity 9 Service Businesses Service businesses dominate the American economy. Business services account for the largest part of U.S. economic growth. services intangible things that businesses do for consumers that enhance their lives Section 3.1 Understanding Entrepreneurial Trends

10. Recognizing Opportunity 10 Outsourcing Outsourcing is hiring people and other companies to handle tasks that a business can not do or chooses not to do itself. outsourcing contracting with other companies for services Section 3.1 Understanding Entrepreneurial Trends

11. Outsourcing Section 3.1 Understanding Entrepreneurial Trends 11 Benefits of Outsourcing more efficient saves time saves money lowers regulatory burden speeds up projects attracts investors

12. Recognizing Opportunity 12 Strategic Alliances A strategic alliance is a partnership among companies. strategic alliance a partnership formed with another company for the purpose of supplying a product or service Section 3.1 Understanding Entrepreneurial Trends

13. Recognizing Opportunity 13 Corporate Ventures A corporate venture is formed within a company. corporate venture a new venture started inside a larger company Section 3.1 Understanding Entrepreneurial Trends

14. Recognizing Opportunity 14 Learning to Recognize Opportunity Entrepreneurial thinking is about generating ideas and recognizing opportunities. Section 3.1 Understanding Entrepreneurial Trends

15. Recognizing Opportunity 15 Creativity and Innovation Creativity is the activity that results in innovation. innovation a new way of doing things Section 3.1 Understanding Entrepreneurial Trends

16. Recognizing Opportunity 16 Idea Versus Opportunity You generate ideas by thinking creatively. Opportunities are ideas that have commercial potential. Section 3.1 Understanding Entrepreneurial Trends

17. Recognizing Opportunity 17 Idea Versus Opportunity You can find a good business opportunity by recognizing an unfilled market niche. niche a small specialized market Section 3.1 Understanding Entrepreneurial Trends

18. Recognizing Opportunity 18 Finding Opportunities by Understanding Industries If you understand an industry, you can identify opportunities within that industry. Section 3.1 Understanding Entrepreneurial Trends

19. Thinking Creatively About Opportunity Section 3.1 Understanding Entrepreneurial Trends 19 Practice brainstorming. Find creative solutions to common problems. Look at ordinary items in new ways. Connect unrelated items.

20. Recognizing Opportunity 20 Thinking Creatively About Opportunity During brainstorming, ideas are not judged as good or bad. brainstorming to think freely in order to generate ideas Section 3.1 Understanding Entrepreneurial Trends

21. Recognizing Opportunity 21 Challenges to Creativity Entrepreneurs can stimulate and encourage creativity in many ways. The most difficult challenges to creativity are the challenges you bring upon yourself. Section 3.1 Understanding Entrepreneurial Trends

22. Recognizing Opportunity 22 Creative Sources of Ideas To identify creative ideas: Section 3.1 Understanding Entrepreneurial Trends Observe the world around you. Watch for demographic changes. Be an avid reader. Consider your interests, hobbies, and work experiences. Consult outside sources of information.

23. Recognizing Opportunity 23 Watch for Demographic Changes It is important for entrepreneurs to understand demographics and demographic trends. demographics personal characteristics that describe a population by age, gender, income, ethnic background, education, and occupation, among others Section 3.1 Understanding Entrepreneurial Trends

24. Sources of Information 24 Sources of Information trade magazines specialty magazines trade shows exhibitions newspapers the Internet government agencies Section 3.1 Understanding Entrepreneurial Trends

25. Recognizing Opportunity 25 Consult Outside Sources A trade magazine offers current, industry-specific news. trade magazine a periodical published for a specific type of business or industry Section 3.1 Understanding Entrepreneurial Trends

26. Recognizing Opportunity 26 Consult Outside Sources A specialty magazine offers information about specific topics. specialty magazine a periodical published for people with special interests, such as sports, camping, or fashion Section 3.1 Understanding Entrepreneurial Trends You can use specialty magazines to identify the interests and needs of potential consumers.

27. Recognizing Opportunity 27 Consult Outside Sources At a trade show, you can learn about new goods and services in a field. trade show a gathering or exhibition where vendors and manufacturers introduce new items and promote established products and services Section 3.1 Understanding Entrepreneurial Trends

28. Recognizing Opportunity 28 1. Discuss current trends that provide opportunity for entrepreneurs. Section 3.1 Understanding Entrepreneurial Trends 3.1 Current trends that provide opportunity for entrepreneurs include Internet businesses, service businesses, home- based businesses, socially responsible nonprofit businesses, corporate ventures, strategic alliances, and an increased emphasis on technology and outsourcing.

29. Recognizing Opportunity 29 2. Explain ways to recognize opportunity. Section 3.1 Understanding Entrepreneurial Trends 3.1 Most good business opportunities result from the entrepreneur’s ability to recognize unmet consumer needs and unique and unfilled market niches. One way to identify opportunities is to understand industries and examine and analyze industry trends.

30. Recognizing Opportunity 30 3. Explain how to think creatively about opportunity. Section 3.1 Understanding Entrepreneurial Trends 3.1 There are several ways to think creatively about opportunity, including practicing brainstorming, looking at ordinary items in new ways, finding creative solutions to common problems, and connecting unrelated items.

31. Recognizing Opportunity 31 4. Discuss ways to overcome challenges to creativity. Section 3.1 Understanding Entrepreneurial Trends 3.1 To overcome challenges to creativity, believe in yourself, use nonlogical thinking, don’t think of everything in practical terms, view problems as challenges that offer the opportunity to innovate, entertain all ideas, relax, have a playful attitude, look at failure as a learning experience that will lead to success, model creative behavior, and develop listening skills.

32. Recognizing Opportunity 32 5. Explain ways to find creative business ideas. Section 3.1 Understanding Entrepreneurial Trends 3.1 You can generate creative business ideas by watching people; watching for demographic changes; reading; considering his or her own experiences; and consulting outside sources such as trade magazines, trade shows, newspapers, the Internet, and government agencies.

33. Recognizing Opportunity 33 Identify the importance of personal values and goals in choosing an entrepreneurial pursuit. Describe the challenges and rewards of entering a family business. List the benefits and drawbacks of buying a business. Describe how you can evaluate a business opportunity. Compare the advantages and disadvantages of starting your own business. Section 3.2 Starting Versus Buying a Business 3.2

34. Recognizing Opportunity 34 Whether you start a business from scratch or buy an existing business and make it better, owning a business that is compatible with your personal values and goals is critical. Section 3.2 Starting Versus Buying a Business 3.2

35. Recognizing Opportunity 35 values goodwill franchise Section 3.2 Starting Versus Buying a Business 3.2 franchisee franchisor business broker

36. Recognizing Opportunity 36 Personal Values and Goals Personal values and goals should be used as a guide when choosing entrepreneurial pursuits. values the beliefs and principles by which you choose to live that define who you are, shape your attitudes and choices, and help you identify your priorities Section 3.2 Starting Versus Buying a Business

37. Recognizing Opportunity 37 Entering the Family Business The greatest advantage of a family business is the trust and togetherness that family members often share. Families that work well together have great potential for success in a family business. Section 3.2 Starting Versus Buying a Business

38. Recognizing Opportunity 38 Buying an Existing Business In many ways, buying an existing business is less risky than starting one from scratch. Section 3.2 Starting Versus Buying a Business

39. Recognizing Opportunity 39 Buying an Existing Business When you buy an existing business, you often gain the goodwill of loyal customers. goodwill the favor and loyalty a business acquires by its good reputation Section 3.2 Starting Versus Buying a Business

40. Recognizing Opportunity 40 Buying a Franchise When you buy a franchise, you buy the right to set up a new business patterned on an existing model. franchise a legal agreement to begin a new business in the name of a recognized company Section 3.2 Starting Versus Buying a Business

41. Recognizing Opportunity 41 Buying a Franchise The franchisee is the buyer of a franchise. The franchisor is the seller of a franchise. franchisee the buyer of a franchise who is given the right to the franchisor’s product, process, or service Section 3.2 Starting Versus Buying a Business franchisor the seller of a franchise who is giving the buyer planning and management expertise

42. Recognizing Opportunity 42 Evaluating a Business Opportunity To evaluate a business opportunity: Section 3.2 Starting Versus Buying a Business Investigate the company. Investigate the industry. Talk to customers, employees, and suppliers. Hire an accountant to advise you. Hire an attorney to advise you.

43. Where to Find a Business 43 Finding Business Opportunities newspapers business publications networking business brokers Section 3.2 Starting Versus Buying a Business

44. Recognizing Opportunity 44 Where to Find a Business You can find a business broker in the telephone book or online. business broker someone whose job it is to bring buyers and sellers of businesses together for a fee Section 3.2 Starting Versus Buying a Business

45. Recognizing Opportunity 45 Starting Your Own Business When you start your own business from scratch, you can do things your own way. You can build the company with fresh ideas and enthusiasm. Section 3.2 Starting Versus Buying a Business

46. Recognizing Opportunity 46 1. Identify the importance of personal values and goals in choosing an entrepreneurial pursuit. Section 3.2 Starting Versus Buying a Business 3.2 Personal values and goals should be used as a guide when choosing entrepreneurial pursuits because they define who you are, shape your attitudes and your choices, and help you identify your priorities.

47. Recognizing Opportunity 47 2. Describe the challenges and rewards of entering a family business. Section 3.2 Starting Versus Buying a Business 3.2 The greatest reward of a family business is the trust and togetherness that family members often share. One of the greatest challenges of a family business is that its owners can never get away from the business.

48. Recognizing Opportunity 48 3. List the benefits and drawbacks of buying a business. Section 3.2 Starting Versus Buying a Business 3.2 The benefits include established procedures, inventory, trade credit, employees, equipment, and customers. The drawbacks include the possibility that the business may be losing money or have a poor reputation, dated inventory, substandard equipment or facilities, and unskilled employees.

49. Recognizing Opportunity 49 4. Describe how you can evaluate a business opportunity. Section 3.2 Starting Versus Buying a Business 3.2 To evaluate a business opportunity, investigate the company and the industry very carefully; verify the value of the businesses inventory, accounts receivable, and assets; and hire an accountant and an attorney to advise you.

50. Recognizing Opportunity 50 5. Compare the advantages and disadvantages of starting your own business. Section 3.2 Starting Versus Buying a Business 3.2 The advantages include being able to do things your own way and being able to build the company with fresh ideas and enthusiasm. The disadvantages include extensive planning and resource gathering.

51. Recognizing Opportunity 51 Section 3.2 Starting Versus Buying a Business 51 As the Internet has developed, new models of businesses have emerged. There are three principal business models that e-commerce entrepreneurs employ. E-Commerce Business Models business-to-business (B2B), business-to-consumer (B2C) clicks and mortar.

52. Recognizing Opportunity 52 Section 3.2 Starting Versus Buying a Business 52 Tech Terms B2B E-commerce ventures that sell products and services to other businesses B2B exchanges electronic forums where businesses trade goods and services B2C e-commerce ventures where businesses sell directly to the consumer

53. Recognizing Opportunity 53 Section 3.2 Starting Versus Buying a Business 53 Tech Terms clicks and mortar a business that operates both a traditional physical storefront and an online store e-tailing selling on the Internet; the word is derived from the word retailing

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