Recognizing
Opportunity
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Recognizing Opportunity
Chapter 3
Recognizing
Opportunity
3.1
Understanding
Entrepreneurial Trends
3.2
Starting Versus Buying a Business
2
Recognizing Opportunity
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
3
Recognizing Opportunity
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
4
Recognizing Opportunity
3.1
online business
services
outsourcing
strategic alliance
corporate venture
innovation
Section 3.1 Understanding Entrepreneurial Trends
niche
brainstorm
demographics
trade magazine
specialty magazine
trade show
5
Recognizing Opportunity
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
6
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
Recognizing Opportunity
Internet Businesses
The Internet has
transformed the way
business is conducted.
online business a
company that
conducts business
by means of the
Internet
An online business can
reach customers around
the world.
Section 3.1 Understanding Entrepreneurial Trends
8
Recognizing Opportunity
Service Businesses
Service businesses
dominate the American
economy.
Business services account
for the largest part of U.S.
economic growth. Types
include tourism, banking,
accounting, and many
more.
Section 3.1 Understanding Entrepreneurial Trends
services intangible
things that
businesses do for
consumers that
enhance their lives
9
Recognizing Opportunity
Home-Based Businesses
The number of businesses that start in the home
has been growing tremendously over the past 20
years. In the late 1990’s, about 41 million
businesses were being conducted from home. A
result from the high technology available to selfemployed people.
Examples include- consultants, sales reps,
writers, graphic artists, and Web Page designers.
10
Recognizing Opportunity
Socially Responsible
Nonprofit Businesses
Some people start businesses to better society.
They have a mission that is focused on doing
good.
The business is usually nonprofit, which means
the owner must keep the profits in the business.
Examples- feed the hungry, community theatre
organization, or an educational focused business.
11
Recognizing Opportunity
Focus on Technology
An increased amount of focus is on technology in
the business world today. Entrepreneurs who
know how to use technology will continue to
improve their business and stay ahead of their
competition.
12
Recognizing Opportunity
Outsourcing
Outsourcing is hiring
people and other
companies to handle tasks
that a business can not do
or chooses not to do itself.
Example- North Penn
School District.
What types of work might
be outsourced?
Section 3.1 Understanding Entrepreneurial Trends
outsourcing
contracting with
other companies for
services
13
Outsourcing
more
efficient
saves time
lowers
regulatory
burden
Benefits of Outsourcing
saves
money
Section 3.1 Understanding Entrepreneurial Trends
speeds up
projects
attracts
investors
14
Recognizing Opportunity
Strategic Alliances
A strategic alliance is a
partnership among
companies. If one
company has a product or
service that will help out
another company, an
alliance is formed.
Section 3.1 Understanding Entrepreneurial Trends
strategic alliance a
partnership formed
with another
company for the
purpose of
supplying a product
or service
15
Recognizing Opportunity
Corporate Ventures
A corporate venture is
formed within a company.
The parent company
supplies resources to help
the new venture out.
Section 3.1 Understanding Entrepreneurial Trends
corporate venture a
new venture started
inside a larger
company
16
Recognizing Opportunity
Learning to Recognize
Opportunity
Entrepreneurial thinking is about
generating ideas and
recognizing opportunities.
Section 3.1 Understanding Entrepreneurial Trends
17
Recognizing Opportunity
Creativity and Innovation
Creativity is the activity
that results in
innovation.
Innovation- a
new way of doing
things
Section 3.1 Understanding Entrepreneurial Trends
18
Recognizing Opportunity
Idea Versus Opportunity
You generate ideas by thinking
creatively.
Opportunities are ideas that have
commercial potential.
Section 3.1 Understanding Entrepreneurial Trends
19
Recognizing Opportunity
Idea Versus Opportunity
You can find a good
business opportunity
by recognizing an
unfilled market niche.
Section 3.1 Understanding Entrepreneurial Trends
niche a small
specialized market
20
Recognizing Opportunity
Finding Opportunities
by Understanding
Industries
If you understand an
industry, you can identify
opportunities within that
industry.
Section 3.1 Understanding Entrepreneurial Trends
21
Thinking Creatively About Opportunity
Practice brainstorming.
(Think Freely)
Find creative solutions to
common problems.
(Use a screwdriver as a
pry bar.)
Section 3.1 Understanding Entrepreneurial Trends
Look at ordinary items in
new ways.
( Find a new use for an
item)
Connect unrelated items.
(Come up with a new
product from unrelated
ones.)
22
Recognizing Opportunity
Thinking Creatively About
Opportunity
1. During brainstorming,
ideas are not judged as
good or bad.
2. Look at ordinary items.
3. Find creative solutions.
4. Connect unrelated
items.
See your notes.
Section 3.1 Understanding Entrepreneurial Trends
brainstorming to
think freely in order
to generate ideas
23
Recognizing Opportunity
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. Time pressures, the
influences of uncooperative people,
lack of confidence, and rigid thinking.
Section 3.1 Understanding Entrepreneurial Trends
24
Recognizing Opportunity
Creative Sources of Ideas
To identify creative ideas:
1.
2.
3.
4.
Observe the world around you.
Watch for demographic changes.
Be an avid reader.
Consider your interests, hobbies, and
work experiences.
5. Consult outside sources of
information.
Section 3.1 Understanding Entrepreneurial Trends
25
Recognizing Opportunity
Watch for Demographic
Changes
It is important for
entrepreneurs to
understand demographics
and demographic trends.
Section 3.1 Understanding Entrepreneurial Trends
DemographicsPersonal
characteristics that
describe a
population by age,
gender, income,
ethnic background,
education, and
occupation, among
others
26
Sources of Information
trade
magazines
government
agencies
specialty
magazines
Sources
of
Information
the Internet
trade shows
exhibitions
newspapers
Section 3.1 Understanding Entrepreneurial Trends
27
Recognizing Opportunity
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
28
Recognizing Opportunity
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
29
Recognizing Opportunity
Consult Outside Sources
At a trade show, you can
learn about new goods and
services in a field.
Section 3.1 Understanding Entrepreneurial Trends
trade show a
gathering or exhibition
where vendors and
manufacturers
introduce new items
and promote
established products
and services
30
Recognizing Opportunity
3.1
1. Discuss current trends that provide
opportunity for entrepreneurs.
Current trends that provide opportunity for entrepreneurs
include Internet businesses, service businesses, homebased businesses, socially responsible nonprofit
businesses, corporate ventures, strategic alliances, and an
increased emphasis on technology and outsourcing.
Section 3.1 Understanding Entrepreneurial Trends
31
Recognizing Opportunity
3.1
2. 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
32
Recognizing Opportunity
3.1
3. 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
33
Recognizing Opportunity
3.1
4. 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
34
Recognizing Opportunity
3.1
5. 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
35
Recognizing Opportunity
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
36
Recognizing Opportunity
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
37
Recognizing Opportunity
3.2
values
goodwill
franchise
Section 3.2 Starting Versus Buying a Business
franchisee
franchisor
business broker
38
Recognizing Opportunity
Personal Values and Goals
Personal values and goals
should be used as a guide
when choosing
entrepreneurial pursuits.
Section 3.2 Starting Versus Buying a Business
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
39
Recognizing Opportunity
Advantages and Disadvantages
of working for a Family Business
Trust and togetherness are shared.
Team environment, get more accomplished.
Disadvantages
Owners can never get away from the business.
Can’t view the business objectively.
Sometimes parents cant let their kids make
business decisions.
40
Recognizing Opportunity
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
41
Recognizing Opportunity
Advantages of buying an
existing Business
Employees are already working and trained.
The equipment is already in place.
Customers are established.
Procedures are in place.
Inventory procedures are set up.
42
Recognizing Opportunity
Drawbacks of buying a
business
Unforeseen debt.
Employees may not be the best in the workforce.
Is the industry in decline?
Is there potential for growth?
43
Recognizing Opportunity
Buying an Existing
Business
When you buy an existing
business, you often gain
the goodwill of loyal
customers.
Section 3.2 Starting Versus Buying a Business
goodwill The favor
and loyalty a
business
acquires by
its good
reputation
44
Recognizing Opportunity
Buying a Franchise
franchise a legal
agreement to
begin a new
business in the
name of a
recognized
company
Section 3.2 Starting Versus Buying a Business
When you buy a
franchise, you
buy the right to
set up a new
business
patterned on an
existing model.
45
Recognizing Opportunity
Buying a Franchise
The franchisee is the
buyer of a franchise.
The franchisor is the seller
of a franchise.
franchisor the
seller of a franchise
who is giving the
buyer planning and
management
expertise
Section 3.2 Starting Versus Buying a Business
franchisee the
buyer of a
franchise who is
given the right to
the franchisor’s
product, process,
or service
46
Recognizing Opportunity
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
47
Where to Find a Business
newspapers
business
publications
Finding
Business
Opportunities
business
brokers
Section 3.2 Starting Versus Buying a Business
networking
48
Recognizing Opportunity
Where to Find a Business
You can find a business
broker in the telephone
book or online.
Section 3.2 Starting Versus Buying a Business
business broker
someone whose job
it is to bring buyers
and sellers of
businesses together
for a fee
49
Recognizing Opportunity
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
50
Recognizing Opportunity
3.2
1. 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
51
Recognizing Opportunity
3.2
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
52
Recognizing Opportunity
3.2
3. 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
53