entrepreneurship ch 3 recognizing opportunity. understanding entrepreneurial trends current trends...

Entrepreneurship Ch 3

Recognizing Opportunity

Understanding Entrepreneurial Trends

• Current Trends– Internet Business• Transformed the way business is conducted• Online Business – Business that conducts

business by means of the internet• Potential to attract a huge number of customers

– Service Businesses• Most small business are service businesses• Services – intangible things that a business does

for us that enhances our lives


• Current Trends– Home-Based Businesses• Represents roughly 53% of all small businesses• Many people who have lost their job due to

cutbacks choose to work from home in the field where they were once employed• Many companies choose Homesourcing

(transfer of service industry employment from offices to home-based employment) to fill human resource needs


• Current Trends– Green Businesses• Design their business practices so that they

promote sustainability (Venture seeks to achieve economic, environmental, and social goals without compromising the ability of future generations to meet their own needs)– Includes: Food quality, energy resources,

pollution, and human rights


• Current Trends– Social Entrepreneurship• Start business to improve society• Identify social needs, such as finding employment for

wounded veterans, combating pollution, or providing shoes for children who cannot afford them• Focus on the arts• Measure success by their positive impact they make on

society


• Current Trends– Focus on Technology• An increased reliance on technology is the main

trend that affect businesses today.• Creates a strong competitive advantage


• Current Trends– Outsourcing• Contracting with other companies for services• Allows small businesses to focus on what it

does best while tapping into outside resources


• Current Trends– Outsourcing• Benefits

1. Allows greater efficiency, saving time, and money

2. Decreases overhead investment or debt3. Lowers regulatory compliance burdens4. Allow companies to start new projects

quickly5. Makes companies more attractive to

investors


• Current Trends– Strategic Alliances• Forming a partnership with another company• Supply a product or service that is part of the other

company

– Corporate Venture• New venture started inside a large corporation• Parent company supplies resources to the corporate

venture to help the new venture get started• New ventures usually become independent companies

Learning to Recognize Opportunity

• Creative and Innovation– Creativity – Activity that results in innovation

(finding new ways of doing something)– All creativity leading to the invention of something

new involves connection, discovery, invention, and application• Connection – bring things together that are not usually

connected• Connection leads to a discovery that is turned into an

invention


• Creative and Innovation• Application – Is going beyond the original invention to

other uses in new areas.

– Idea or Opportunity• Ideas are generated by thinking creatively• Opportunities are ideas that have commercial potential• Innovative opportunity can be turned into a business• Most business opportunities result from the

entrepreneurs alertness to consumer needs and unfilled market niche (small specialized market)


• Creative and Innovation– Understanding Industries• One way to identify opportunities • Industries – Group of businesses with a common

purpose

Strategies for Thinking Critically

• New Enterprise Ideas– Practice Brainstorming• Brainstorm – Think freely to generate new ideas

– Ideas are not judged as good or bad

– Look at ordinary items in new ways• Figure out new ways or uses you can find for it,

– Find creative solution's to common problems– Connect unrelated items• Try to come with new products

– Challenges to Creativity


• Challenges Sources of Ideas• Ideas can come to you from anywhere

– Observe the World Around You• Watch People• You can learn a lot about peoples wants and needs

– Watch for Demographics Changes• Demographics – Personal characteristics that describe

a population– Includes age, gender, income, ethnic background, education,

and occupation


• Challenges Sources of Ideas– Be an Avid Reader– Consider Your Own Experiences• Interests

– Practice thinking about the problems you encounter each day as you pursue your interest

• Hobby– Turn into successful ventures

• Work– Experience in the world of work can be an excellent source of

business ideas


• Consult outside sources• Look at people, places, and things in the business

community for business ideas

– Trade Magazines• Periodical published for specific types of businesses or

industries• Contains articles, new products, services

– Specialty Magazines• Periodicals that target people with special interests


• Consult outside sources– Trade Shows and Exhibits• Vendors and manufactures introduce new items and

promote established products and services

– Newspapers• Provides ongoing source of ideas (Trends and

Innovations)


• Consult outside sources– The Internet– Government Agencies• US Patent Office – contains detailed description of new

products• OSHA – Occupational Safety and Health Act

Starting versus Buying a Business

• Personal Value and Goals– Values – Beliefs and principles you choose to live

by• Define who you are, shape you attitudes, and

your choices, and help you identify your priorities• Once you identify your core values, you can use

them to lay out your goals for your future• Goals are the objectives you are trying to

achieve


• Entering the Family Business– One way to experience entrepreneurship– Important part of the US economy– The rewards and challenges of family businesses• Only about 1/3 of them survive to the second

generation• Greatest advantage is the trust and togetherness that

family members share• One of the greatest disadvantages is that its owners can

never get away from the business


– The rewards and challenges of family businesses– Important to establish clear lines of

responsibility, be objective about family members qualifications, keeping decisions unaffected by personal emotions, and respect individual family members needs


– Questions to ask yourself1. Do you have the ability to work for a member of my

family?2. Do I get along with the family members who I’ll be

involved with?3. Do we share the same goals for the business?4. Do we share the same general goals for our personal

lives?5. Can we be clear and specific about our expectations

for each other?


– Questions to ask yourself6. Can I leave business problems at work when I go

home?7. Can we maintain a positive family relationship?

• If you answered no to any of the questions, then we have a potential problem

Buying an Existing Business

– Acquire – Buy an existing business– Less risky then starting a new one• Because:–Employees already hired and trained–Equipment is already in place–Company already has customers

– Goodwill – Customer loyalty• Extremely valuable business asset


– Buying a Franchise• Franchise – A legal agreement to begin a new

business in the name of a recognized company• Gives the franchisee (buyer) the right to a

product, process, or service; training and assistance in setting up the business; and ongoing marketing and quality support while the business is in operation• Most important advantage is that the

entrepreneur does not incur all of the risk associated with starting a business


– Buying a Franchise• Franchisee usually buys into a business with

accepted name, product, or service.• Franchisee is buying a way of operating a

business and a product with name recognition• Franchisee pays a fee and an annual royalty on

sales, usually 3-8%• Franchisor – Seller• Franchisor is selling its planning and

management experience


– Buying a Franchise• Before buying franchise, understand all of the

costs and limitations involved

– Evaluating a Business Opportunity• Evaluate whether the business is a good prospect• Why is it for sale?• Hire an accountant to verify the value of the

business’s inventory, accounts receivable, and assets


–Where to Find a Business• Look in newspaper•Most effective way - Network with people

in the community• You can hire a business broker –

Someone whose job is to bring buyers and sellers together


–Questions to Ask?• Is the business interesting to me and to other?• Why is the owner selling?–Check the businesses financial statements

• What is the business’s potential for growth?–Business’s go through a cycle of growth –

Growth, Maturity, and Decline

Starting Your Own Business

–Questions to ask:• Do I have the motivation to start a new business from

nothing?• Does the business align with my personality, abilities,

values, and goals?• Do I have sufficient knowledge of basic operation to

undertake the business?• Do I have the necessary managerial skills?• Do I have the right partners to help me with the

business?• Do I have enough financial resources to start from

scratch?• Am I willing to accept the risk?

entrepreneurship ch 3 recognizing opportunity. understanding entrepreneurial trends current trends...

Documents

way business

business practices

employedmany companies

independent companies

new areas

new ways

sustainability venture

homebased employment