1. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Three Business Idea Generation and Initial Evaluation

2. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Outcomes 3.1 Describe a systematic means for examining skills in order to generate new business ideas 3.2 Explain how to use gap analysis to examine potential business ideas 3.3 Discuss the elements of opportunity analysis 3-2

3. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Generating Business Ideas Skills Analysis Hobbies Education Work Experience Family History 3-3

4. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Additional Skills 1.What are your top three skills? 2.What things do you like doing best? 3.Name one or two things you enjoy more than any others. 4.What do you read? 5.What are your three greatest accomplishments? 6.Do you enjoy working with people? 7.What industry would you prefer to work in? 3-4

5. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Your Unique Skills and Personality 1.Do you prefer to work with people or not? 2.Do you have an intense detail orientation? 3.Are you trained in the area you want to work in? 3-5

6. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Opportunity Identification Gap Analysis- Identifying a gap or opportunity that exists between the demand by customers and the supply provided by firms in the market. 3-6

7. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Potential Businesses 1.Examine Trends 2.Interview Successful Entrepreneurs 3.Discuss Ideas with Family Members 4.Brainstorming 5.Frustrations 6.Examine Patent Files 3-7

8. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Choosing a Business Initial Analysis- The potential business owner will likely have several ideas, but will need to identify one business on which to perform a due diligence analysis. 3-8

9. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Deficit Analysis Table 3.1 (p. 51) 3-9

10. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Categories Finances –Your Resources –Business Need Time –Your Resources –Business Need 3-10

11. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Categories Nonfinancial Resources –Your Resources –Business Need Risk –Personal Risk –Business Risk 3-11

12. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Business Risk 1.Threats to Profit Margin 2.Threats to Sales Generation Schemes 3.Threats to Operational Financing 4.Competitors 3-12

13. McGraw-Hill© 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Summary The potential entrepreneur must perform an initial evaluation of her business ideas. The next step is to evaluate the potential opportunities Deficit analysis methodology has been successfully used for some time. 3-13