Transcript Chapter 3

Recognizing
Opportunity
Back to Table of Contents
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.
services intangible
things that businesses
do for consumers that
enhance their lives
Business services account
for the largest part of U.S.
economic growth.
Section 3.1 Understanding Entrepreneurial Trends
9
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.
Section 3.1 Understanding Entrepreneurial Trends
outsourcing
contracting with other
companies for services
10
Outsourcing
lowers regulatory
burden
more efficient
saves time
Benefits of Outsourcing
saves money
Section 3.1 Understanding Entrepreneurial Trends
speeds up projects
attracts investors
11
Recognizing Opportunity
Strategic Alliances
A strategic alliance is a
partnership among
companies.
Section 3.1 Understanding Entrepreneurial Trends
strategic alliance a
partnership formed with
another company for the
purpose of supplying a
product or service
12
Recognizing Opportunity
Corporate Ventures
A corporate venture is
formed within a company.
Section 3.1 Understanding Entrepreneurial Trends
corporate venture a
new venture started inside
a larger company
13
Recognizing Opportunity
Learning to Recognize
Opportunity
Entrepreneurial thinking is about generating ideas
and recognizing opportunities.
Section 3.1 Understanding Entrepreneurial Trends
14
Recognizing Opportunity
Creativity and Innovation
Creativity is the activity that
results in innovation.
Section 3.1 Understanding Entrepreneurial Trends
innovation a new way of
doing things
15
Recognizing Opportunity
Idea Versus Opportunity
You generate ideas by thinking creatively.
Opportunities are ideas that have commercial
potential.
Section 3.1 Understanding Entrepreneurial Trends
16
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
17
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
18
Thinking Creatively About Opportunity
Practice brainstorming.
Look at ordinary items in
new ways.
Find creative solutions to
common problems.
Connect unrelated items.
Section 3.1 Understanding Entrepreneurial Trends
19
Recognizing Opportunity
Thinking Creatively About
Opportunity
During brainstorming,
ideas are not judged as
good or bad.
Section 3.1 Understanding Entrepreneurial Trends
brainstorming to think
freely in order to generate
ideas
20
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.
Section 3.1 Understanding Entrepreneurial Trends
21
Recognizing Opportunity
Creative Sources of Ideas
To identify creative ideas:
Observe the world around you.
Watch for demographic changes.
Be an avid reader.
Consider your interests, hobbies, and work
experiences.
Consult outside sources of information.
Section 3.1 Understanding Entrepreneurial Trends
22
Recognizing Opportunity
Watch for Demographic
Changes
It is important for
entrepreneurs to understand
demographics and
demographic trends.
Section 3.1 Understanding Entrepreneurial Trends
demographics
personal characteristics
that describe a
population by age,
gender, income, ethnic
background, education,
and occupation, among
others
23
Sources of Information
trade
magazines
government
agencies
specialty
magazines
Sources
of
Information
the Internet
trade shows
exhibitions
newspapers
Section 3.1 Understanding Entrepreneurial Trends
24
Recognizing Opportunity
Consult Outside Sources
A trade magazine offers
current, industry-specific
news.
Section 3.1 Understanding Entrepreneurial Trends
trade magazine a
periodical published for a
specific type of business
or industry
25
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
26
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
27
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
28
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
29
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
30
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
31
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
32
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
33
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
34
Recognizing Opportunity
3.2
values
goodwill
franchise
Section 3.2 Starting Versus Buying a Business
franchisee
franchisor
business broker
35
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
36
Recognizing Opportunity
Entering the Family
Business
The greatest advantage of a family business is the
trust and togetherness that family members often
share.
Families that work well together have great
potential for success in a family business.
Section 3.2 Starting Versus Buying a Business
37
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
38
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
39
Recognizing Opportunity
Buying a Franchise
When you buy a franchise,
you buy the right to set up a
new business patterned on
an existing model.
Section 3.2 Starting Versus Buying a Business
franchise a legal
agreement to begin a new
business in the name of a
recognized company
40
Recognizing Opportunity
Buying a Franchise
The franchisee is the
buyer of a franchise.
The franchisor is the seller
of a franchise.
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
franchisor the seller of
a franchise who is giving
the buyer planning and
management expertise
41
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
42
Where to Find a Business
business
publications
newspapers
Finding
Business
Opportunities
business
brokers
Section 3.2 Starting Versus Buying a Business
networking
43
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
44
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
45
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
46
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
47
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
48
Recognizing Opportunity
3.2
4. Describe how you can evaluate a business
opportunity.
To evaluate a business opportunity, investigate
the company and the industry very carefully;
verify the value of the businesses inventory,
accounts receivable, and assets; and hire an
accountant and an attorney to advise you.
Section 3.2 Starting Versus Buying a Business
49
Recognizing Opportunity
3.2
5. Compare the advantages and disadvantages
of starting your own business.
The advantages include being able to do things
your own way and being able to build the
company with fresh ideas and enthusiasm. The
disadvantages include extensive planning and
resource gathering.
Section 3.2 Starting Versus Buying a Business
50
Recognizing Opportunity
E-Commerce
Business Models
As the Internet has developed, new models of
businesses have emerged.
There are three principal business models that
e-commerce entrepreneurs employ.
business-to-business (B2B),
business-to-consumer (B2C)
clicks and mortar.
Section 3.2 Starting Versus Buying a Business
51
Recognizing Opportunity
Tech Terms
B2B E-commerce
ventures that sell products and services to other businesses
B2B exchanges
electronic forums where businesses trade goods and services
B2C e-commerce
ventures where businesses sell directly to the consumer
Section 3.2 Starting Versus Buying a Business
52
Recognizing Opportunity
Tech Terms
clicks and mortar
a business that operates both a traditional physical storefront and an
online store
e-tailing
selling on the Internet; the word is derived from the word retailing
Section 3.2 Starting Versus Buying a Business
53
End of
Recognizing
Opportunity
Back to Table of Contents