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

3. 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

4. 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

5. 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

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
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

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

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

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

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. 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
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

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. 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. 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

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

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. 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

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. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

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

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. 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. 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. 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. 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. 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

42. 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

43. 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

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. 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. 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

47. 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

48. 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

49. 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

50. 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

51. 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

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
Section 3.2 Starting Versus Buying a Business 52

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
Section 3.2 Starting Versus Buying a Business 53

54. End of