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

Describe the challenges and rewards of entering a family business. 3.1 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 The ability to recognize new opportunities and to think creatively is essential for success in today’s market. Section 3.1 Understanding Entrepreneurial Trends

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Creative Sources of Ideas To identify creative ideas: 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. Section 3.1 Understanding Entrepreneurial Trends

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

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

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

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 You can use specialty magazines to identify the interests and needs of potential consumers. Section 3.1 Understanding Entrepreneurial Trends

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

Discuss current trends that provide opportunity for entrepreneurs. 3.1 Discuss current trends that provide opportunity for entrepreneurs. 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. Section 3.1 Understanding Entrepreneurial Trends

Explain ways to recognize opportunity. 3.1 Explain ways to recognize opportunity. 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 . Section 3.1 Understanding Entrepreneurial Trends

Explain how to think creatively about opportunity. 3.1 Explain how to think creatively about opportunity. 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. Section 3.1 Understanding Entrepreneurial Trends

Discuss ways to overcome challenges to creativity. 3.1 Discuss ways to overcome challenges to creativity. 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. Section 3.1 Understanding Entrepreneurial Trends

Explain ways to find creative business ideas. 3.1 Explain ways to find creative business ideas. 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. Section 3.1 Understanding Entrepreneurial Trends

Describe the challenges and rewards of entering a family business. 3.2 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 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

values goodwill franchise franchisee franchisor business broker 3.2 Section 3.2 Starting Versus Buying a Business

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

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

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

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

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

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 franchisor the seller of a franchise who is giving the buyer planning and management expertise Section 3.2 Starting Versus Buying a Business

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

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

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

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

3.2 Identify the importance of personal values and goals in choosing an entrepreneurial pursuit. 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. Section 3.2 Starting Versus Buying a Business

Describe the challenges and rewards of entering a family business. 3.2 Describe the challenges and rewards of entering a family business. 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. Section 3.2 Starting Versus Buying a Business

List the benefits and drawbacks of buying a business. 3.2 List the benefits and drawbacks of buying a business. 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. Section 3.2 Starting Versus Buying a Business

Describe how you can evaluate a business opportunity. 3.2 Describe how you can evaluate a business opportunity. 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. Section 3.2 Starting Versus Buying a Business

3.2 Compare the advantages and disadvantages of starting your own business. 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. Section 3.2 Starting Versus Buying a Business

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

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 Section 3.2 Starting Versus Buying a Business 52

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 Section 3.2 Starting Versus Buying a Business 53

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