Opportunity Recognition and Assessment

STAGE THREE Exploring New Business Ideas and Opportunities Search for a product or service idea Evaluate the possible alternatives Determine your preferences From your previous employment From hobbies From casual observation From a deliberate search Magazines and other publications Trade shows and conventions Product licensing information services Government agencies and departments Use creative thinking

Ideas vs. Opportunities Ideas Become Opportunities Only If They Have a Chance to Succeed

Long-Term Expectations for Your Business Lifestyle Ventures Small, Profitable Ventures High-Growth Ventures

Why Lower Failure Rates with HPV’s? able to retain key personnel possess higher gross margins superior product/service quality faster responses to opportunity innovation niche favored purchasing agreements greater marketing expenditures extensive experience with suppliers are in fast growing industry High potential ventures (HPV) must be distinguished from the “mom and pop” variety HPV’s are defined as having sales of at least $500,000 to $1 million and grow at a rate of at least 10% per year. They are:

Where Do Entrepreneurs Get Their Ideas? Discovered through systematic research for opportunities Swept into the PC revolution Discovered serendipitously: Built temporary or casual job into a business (7%) Wanted as an individual consumer (6%) Happened to read about the industry (4%) Developed family member’s idea (2%) Thought up during honeymoon in Italy (1%) Replicated or modified an idea encountered through previous employment Source: 100 founders of the 1989 Inc. *500* fastest growing private companies.

Sources of Ideas for a New Business Your Job Your Hobbies Personal Observation Casual Observation Deliberate Search Publications Inventor’s Shows, Trade Shows and Conventions Patent Brokers and Product Licensing Information Services Friends, Acquaintances, and Other Social Contacts Federal and Provincial Government Agencies and Departments Using Creative Thinking Copyright © 2000, McGraw-Hill Ryerson Limited

Expand Your Creativity

Creative Methods Brainstorming Attribute Listing

Brainstorming A process of detaching the analysis of ideas from the actual development of ideas Usually done in a group No criticism during idea generation Don’t try to sell or explain an idea Free-flowing, seeking a large quantity of ideas “weird” and “silly” ideas are encouraged and may lead to new and better ideas After a list has been generated, analysis of each idea can take place

Attribute Listing Changing the way you look at something in order to find new uses for it. Does its shape, weight, colour, textures, or properties suggest other uses? What could you do if you reversed it, combined it with something else, multiplied it, shrunk it, enlarged it, rearranged it?

Recognizing Trends Anticipate needs and develop a clear vision of the future which may help you anticipate successful products, services or directions to take and get a jump on the competition

Faith Popcorn’s Predictions for the Future CClanning AtmosFEAR Egonomics Be Alive Anchoring EVEolution Copyright © 2000, McGraw-Hill Ryerson Limited

Shirley Robert’s Best Businesses for Beyond the Year Self-diagnostic medical tools 2. Affordable organic foods 3. Educational books, videos, and CD-ROMs 4. Technology-training centres 5. Customized information services 6. Anti-aging cosmetics 7. Pet-related products and services 8. Financial services tailored to women 9. Activewear for aging adults 10. Home-safety devices Copyright © 2000, McGraw-Hill Ryerson Limited

How to Select the Right Opportunity for You Step 1: Identify Your Business and Personal Goals Step 2: Research Your Favourite Industries Step 3: Identify Promising Industry Segments Step 4: Identify Problem Areas and Brainstorm Solutions Step 5: Compare Possible Solutions with Your Objectives and Opportunities in the Marketplace Step 6: Focus on the Most Promising Opportunities Copyright © 2000, McGraw-Hill Ryerson Limited

Characteristics of the “IDEAL” Business Requires no investment Has a recognized, measurable market A perceived need for the product or service A dependable source of supply for the required inputs No government regulation Requires no labour force Provides 100% gross margin Buyers purchase frequently Continued Copyright © 2000, McGraw-Hill Ryerson Limited

Receives favourable tax treatment Has a receptive, established distribution system Has great publicity value Customers pay in advance No risk of product liability No technical obsolescence No physical perishability Impervious to weather conditions Possesses some proprietary rights Characteristics of the “IDEAL” Business (Continued) Copyright © 2000, McGraw-Hill Ryerson Limited