Entrepreneurial Opportunity Recognition Business Plan Entrepreneurial Opportunity Recognition ELIB 203 Week3

Entrepreneurial Opportunity Recognition Entrepreneurship process starts with opportunity recognition and idea generation

Entrepreneurial Opportunity Recognition What is an Opportunity? An opportunity is a favorable set of circumstances that creates the need for a new product, service, or business idea

Entrepreneurial Opportunity Recognition Most entrepreneurial firms are started in one of two ways: An entrepreneur decides to start a firm, searches for and recognizes an opportunity, then starts a business. An entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it.

(rather than just an idea) What is an Opportunity? Opportunity is NOT the same as an idea. Attractive Timely Opportunity (rather than just an idea) Durable Anchored in a product, service or business that creates or adds value for its buyer or end user

Recognizing Opportunities Three Ways Observing Trends Solving Problem Finding Gaps in the Marketplace

1. Observing Trends Trends Suggesting Business or Product Opportunity Gaps Economic Forces: State of economy Level of disposable income Consumer spending patterns Business or Product Opportunity Gaps: Difference between what’s available and what’s possible Social Forces: Social and cultural changes Demographic changes What people think “in” New Business, Product or Service Idea Technological Advances: New technologies Emerging technologies New uses of old technologies Political and Regulatory changes: New changes in political arena New laws and regulations

2. Solving a Problem Sometimes identifying opportunities simply involves noticing a problem and finding a way to solve it. These problems can be pinpointed through observing trends and through more simple means, such as intuition, serendipity, or chance. Some business ideas are clearly initiated to solve a problem. For example, Symantec Corp. created Norton antivirus software to guard computers against viruses.

3. Finding Gaps in the Marketplace A gap in the marketplace is often created when a product or service is needed by a specific group of people but doesn’t represent a large enough market to be of interest to mainstream retailers or manufacturers. This is the reason that small clothing boutiques and specialty shops exist. The small boutiques, which often sell designer clothes or clothing for hard-to-fit people, are willing to carry merchandise that doesn’t sell in large enough quantities for Wal-Mart, GAP, or JC Penney to carry.

Personal Characteristics Characteristics that tend to make some people better at recognizing opportunities than others Prior Experience Social Networks Cognitive Factors Creativity

Recognizing Opportunities Connection between an awareness of emerging trends and the personal characteristics of the entrepreneur Environmental Trends Economic factors Social factors Technological advances Political and regulatory advances New Business, Product and Service Ideas Business or Product Opportunity Gaps: Difference between what’s available and what’s possible Personal Characteristics of an Entrepreneur Prior experience Cognitive factors Social networks Creativity

Techniques For Generating Ideas Brainstorming Focus Groups Surveys

Brainstorming Brainstorming Is a technique used to generate a large number of ideas and solutions to problems quickly. A brainstorming “session” typically involves a group of people, and should be targeted to a specific topic. Rules for a brainstorming session: No criticism. Freewheeling is encouraged. The session should move quickly. Leap-frogging is encouraged.

Focus Groups Focus Group A focus group is a gathering of five to ten people, who have been selected based on their common characteristics relative to the issues being discussed. These groups are led by a trained moderator, who uses the internal dynamics of the group environment to gain insight into why people feel they way they do about a particular issue. Although focus groups are used for a variety of purposes, they can be used to help generate new business ideas.

Surveys A survey is a method of gathering information from a sample of individuals. The sample is usually just a fraction of the population being surveyed. The most effective surveys sample a “random” portion of the population, meaning that the sample is not selected haphazardly or only from people who volunteer to participate. The quality of survey data is determined largely by the purpose of the survey and how it is conducted. Surveys generate new product, service, and business ideas because they ask specific questions and get specific answers.

Protecting Ideas From Being Lost or Stolen Step 1 The idea should be put in a tangible form such as entered into a physical idea logbook or saved on a computer disk, and the date the idea was first thought of should be entered. Step 2 The idea should be secured. This may seem like an obvious step, but is one that is often overlooked. Step 3 Avoid making an inadvertent or voluntary disclosure of an idea, in a manner that forfeits the right to claim exclusive rights to it.

Case Study Sofia’s passion was candy. She wanted to make and sell her own candy, but her family told her to choose something more stable. She took an office job, but her position was downsized. She considered her love of candy, and a little research showed that there was a market for her interests. There was one problem; however, she never made candy outside of her home and was not sure how to sell it in mass. Her family told her that she lacked the necessary skills to create her own business, and she found another office job.

Sofia’s passion was candy Case Study Sofia’s passion was candy Her family told her to choose something more stable She took an office job, but her position was downsized She never made candy outside of her home