Business Plan
Entrepreneurial Opportunity
Recognition
ELIB 203
Week3
Entrepreneurial Opportunity
Recognition
Entrepreneurship process starts
with opportunity recognition and
idea generation
Entrepreneurial Opportunity
Recognition
What is an Opportunity?
An opportunity is a favorable set of
circumstances that creates the need for a
new product, service, or business idea
Entrepreneurial Opportunity
Recognition
Most entrepreneurial firms are started in one
of two ways:
 An entrepreneur decides to start a firm, searches
for and recognizes an opportunity, then starts a
business.
 An entrepreneur recognizes a problem or an
opportunity gap and creates a business to fill it.
What is an Opportunity?
Opportunity is NOT the same as an idea.
Attractive
Timely
Opportunity
(rather than
just an idea)
Durable
Anchored in a product,
service or business that
creates or adds value for
its buyer or end user
Recognizing Opportunities
Three Ways
Observing
Trends
Solving
Problem
Finding Gaps
in the
Marketplace
1. Observing Trends
Trends Suggesting Business or Product Opportunity Gaps
Economic Forces:
State of economy
Level of disposable income
Consumer spending patterns
Social Forces:
Social and cultural changes
Demographic changes
What people think “in”
Technological Advances:
New technologies
Emerging technologies
New uses of old technologies
Political and Regulatory
changes:
New changes in political arena
New laws and regulations
Business or
Product
Opportunity
Gaps: Difference
between what’s
available and what’s
possible
New Business,
Product or
Service Idea
2. Solving a Problem
Sometimes identifying
opportunities simply
involves noticing a problem
and finding a way to
solve it.
These problems can be
pinpointed through observing
trends and through more simple
means, such as intuition,
serendipity, or chance.
Some business ideas are
clearly initiated to
solve a problem.
For example, Symantec Corp.
created Norton antivirus
software to guard computers
against viruses.
3. Finding Gaps in the
Marketplace
A gap in the marketplace is often created when a
product or service is needed by a specific group of
people but doesn’t represent a large enough
market to be of interest to mainstream retailers or
manufacturers.
 This is the reason that small clothing boutiques
and specialty shops exist.
 The small boutiques, which often sell designer
clothes or clothing for hard-to-fit people, are willing
to carry merchandise that doesn’t sell in large
enough quantities for Wal-Mart, GAP, or JC Penney
to carry.
Personal Characteristics
Characteristics that tend to make some
people better at recognizing opportunities
than others
Prior Experience
Social Networks
Cognitive Factors
Creativity
Recognizing Opportunities
Connection between an awareness of emerging trends
and the personal characteristics of the entrepreneur
Environmental
Trends
Economic factors
Social factors
Technological advances
Political and regulatory
advances
Business or Product
Opportunity Gaps:
Difference between what’s
Personal
Characteristics of an
Entrepreneur
Prior experience
Cognitive factors
Social networks
Creativity
available and
what’s possible
New Business,
Product and
Service Ideas
Techniques For Generating Ideas
Brainstorming
Focus Groups
Surveys
Brainstorming
Brainstorming
 Is a technique used to generate a large number of
ideas and solutions to problems quickly.
 A brainstorming “session” typically involves a group
of people, and should be targeted to a specific topic.
 Rules for a brainstorming session:
• No criticism.
• Freewheeling is encouraged.
• The session should move quickly.
• Leap-frogging is encouraged.
Focus Groups
Focus Group
 A focus group is a gathering of five to ten people,
who have been selected based on their common
characteristics relative to the issues being discussed.
 These groups are led by a trained moderator, who
uses the internal dynamics of the group
environment to gain insight into why people feel
they way they do about a particular issue.
 Although focus groups are used for a variety of
purposes, they can be used to help generate
new business ideas.
Surveys
 A survey is a method of gathering information from a
sample of individuals. The sample is usually just a
fraction of the population being surveyed.
• The most effective surveys sample a “random” portion of the
population, meaning that the sample is not selected
haphazardly or only from people who volunteer to participate.
• The quality of survey data is determined largely by the
purpose of the survey and how it is conducted.
 Surveys generate new product, service, and business
ideas because they ask specific questions and get
specific answers.
Protecting Ideas From Being
Lost or Stolen
Step 1
The idea should be put in a tangible form such as
entered into a physical idea logbook or saved on a
computer disk, and the date the idea was first thought
of should be entered.
Step 2
The idea should be secured. This may seem like an
obvious step, but is one that is often overlooked.
Step 3
Avoid making an inadvertent or voluntary disclosure of
an idea, in a manner that forfeits the right to claim
exclusive rights to it.
Case Study
Sofia’s passion was candy. She wanted to
make and sell her own candy, but her family
told her to choose something more stable. She
took an office job, but her position was
downsized. She considered her love of candy,
and a little research showed that there was a
market for her interests. There was one
problem; however, she never made candy
outside of her home and was not sure how to
sell it in mass. Her family told her that she
lacked the necessary skills to create her own
business, and she found another office job.
Case Study
Sofia’s passion was candy
Her family told her to choose something more
stable
She took an office job, but her position was
downsized
She never made candy outside of her home