Chapter 3: Recognizing Opportunity

1. Chapter 3: Recognizing Opportunity Business Management Mrs. Deady

2. Ch. 3.1: Understanding Entrepreneurial Trends Objectives • Discuss current trends that provide opportunity for entrepreneurs • Explain ways to recognize opportunity • Explain how to think creatively about opportunity • Discuss ways to overcome challenges to creativity • Explain ways to find creative business ideas

3. Definitions • Online business – conducted on the internet • Services – intangible things which enhance our lives • Outsourcing – contracting with other companies for services • Strategic alliance – partnership with another company to supply product or services • Corporate venture – new venture within a corporation • Innovation – finding new ways of doing things

4. More Definitions • Niche – small specialized market • Brainstorm – think freely to generate ideas • Demographics – personal characteristics that describe a population; age, gender, income • Trade magazine – periodical for specific types of businesses or industries • Specialty magazine – targets special interests like sports, fashion • Trade show – convention for vendors and manufacturers to introduce new items and promote established products

5. Internet Service Home-based – 41 million in late 90s Socially responsible nonprofit Corporate ventures Strategic alliances Technology Outsourcing Current Business Trends

6. Why Outsource? • Allows greater efficiency, saving time and money • Decreases overhead investment or debt • Lowers regulatory compliance burdens • Allows companies to start new projects quickly • More attractive to investors because allows capital to be directed into money-making activities

7. Idea vs. Opportunity An idea is not the same as an opportunity. • You generate ideas by thinking creatively • Opportunities are ideas that have commercial potential; addressing unmet consumer needs or wants.

8. How to Think Creatively • Practice brainstorming • Look at ordinary items in a new way • Find creative solutions to common problems • Connect unrelated items • Write down figure 3.1 on page 51!!!

9. Where do YOU get ideas? • Interests • Hobbies • Work experiences • Outside sources • Trade magazines • Specialty magazines • Trade shows and exhibitions • Newspapers • Internet • Government agencies

10. 3.2 Starting vs. Buying a Business Objectives • 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

11. Definitions • Values are characteristics that define YOU, shape your attitudes and choices, identify your priorities • Goodwill is the loyalty of customers • Business Broker brings together the buyer and seller

12. Franchise related definitions • Franchise is a legal agreement to begin a new business in the name of a recognized company • Franchisee is the buyer who has the right to the product, process or service, training and assistance in setting up the business, ongoing marketing and quality support • Franchisor is the seller who sells planning and management expertise along with the use of the name

13. Enter a Family Business?? • Do I have the ability to work for a member of my family? • Do I get along well with the family members who will be involved in the business? • Do we share the same goals for the business? • Do we share the same general goals for our personal lives? • Can we be clear and specific about our expectations of each other? • Can I leave business problems at work when I go home each night? • Can we maintain a positive family relationship?

14. Evaluate a Business Opportunity • Investigate the company and the industry carefully. . . Talk to customers, employees and suppliers. • Hire an accountant to verify the value of the inventory, assets and accounts receivable or payable. • Hire an attorney to advise you and to investigate any legal liabilities that exist.

15. Before You Buy a Business • Is the business interesting to you and others? • Why is the owner selling? • What is the potential for growth? Where is the business in the life cycle of growth, maturity and decline?

16. Then, Ask Yourself: • Do I have the motivation to start from nothing? • Does this fit my personality, abilities, values and goals? • Do I have sufficient knowledge of basic operations to undertake this? • Do I have the necessary managerial ability? • Do I have the right partners to help me? • Do I have enough financial resources to start from scratch? • Am I willing to accept the risk?

17. What You Must Do • Determine feasibility – are there enough customers? • Decide what type of business, traditional, online, or a combination • Prepare a Business Plan to seek capital, partners and employees • Secure Accountant, Lawyer, Insurance • Purchase needed equipment • Hire Employees • Initiate relationships with suppliers • Set up distribution channels • Create awareness of the business