1. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-1 The Entrepreneurial Perspective

2. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-2 Chapter Learning Objectives 1.To explain the aspects of the entrepreneurial process 2.To explain how to distinguish between ideas and opportunities 3.To understand that the type and/or size of the idea will impact the opportunity assessment methods used. 4.To understand how to screen for both big and small opportunities using opportunity / feasibility assessments. 5.To understand the importance of qualitative evaluations.

3. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-3 Chapter Opening Profile Chris Griffiths –Garrison Guitars –Developed better sounding guitar by design Under pressure from initial investors to secure orders at his first trade show Used guerilla marketing techniques to arrange for 112 sales meetings at the show No manufacturing facility but orders for 56,000 guitars! Challenge to manage 40 employees producing 50 guitars per day in only 1,850 sq m’s of space Five departments encouraged to operate as entrepreneurs Success due to culture of innovation and empowered employees

4. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-4 The Entrepreneurial Process The process through which a new venture is created by an entrepreneur Four distinct phases: –Identification and evaluation of the opportunity –Development of the business plan –Determination of the required resources –Management of the resulting enterprise Each stage depends upon the other

5. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-5 Screening Method Necessary to help in choosing from a number of different ideas For SMEs an entrepreneur should ask these basic questions describe the actual idea determine if there is a need for the idea calculate a quick income statement determine if you have the skills & resources

6. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-6 Qualitative Opportunity Assessment Methods Goals Work Schedule Type of Work Abilities Past Experience

7. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-7 Large Scale Opportunity / Feasibility Assessment Description of the business. Customers – who are they The influencing Environments economic environment political / legal environment social-cultural environment geographic environment technological environment competitive environment For a SME an entrepreneur will want to deal with the following questions

8. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-8 Large Scale Opportunity / Feasibility Assessment Marketing Plan Suppliers Financials For a SME an entrepreneur will want to deal with the following questions - continued

9. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-9 Market Analysis Approach Typically used to assess ideas that will generate more than $ 1 million in revenue Market structure Market size & growth Market capacity Market share attainable Time to break even ROI Startup costs

10. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-10 Income Statement Approach Building and income statement to determine the potential net income for a venture Determining Market potential Determining Retail Market share Determining Income & Expenses Determining Startup costs and ROI Determining Market Share in the Manufacturing & Service Industries

11. Chapter 3 Concept & Development of Entrepreneurship Entrepreneurial Decision Process Types of Start-up Ventures Entrepreneurship & Economic Development Ethics and Social Responsibility Entrepreneurship 2nd Canadian Edition © 2009 McGraw-Hill Ryerson Ltd. 3-11 Product Driven Opportunity Assessment Can be a useful tool in distinguishing between an idea and an opportunity Product Planning & Development Process Establishing Evaluation Criteria Idea Stage Concept Stage Product Development Stage Test Marketing Stage