Transcript Opportunity Identification.ppt

Lecture 4
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Section 4
OPPORTUNITY IDENTIFICATION:
The Assessment Process
Assessment and Evaluation of New Venture Ideas
New Venture Idea Checklist
Business Location and Layout
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OHT 2
Opportunity Identification:
The Assessment Process
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1. Assessment and Evaluation of New
Venture Ideas
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What is a business opportunity?
How can you generate ideas for business opportunities?
Sources for new venture ideas
How can you decide which ideas are worth pursuing?
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OHT 3
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1. What is a business opportunity?
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A business opportunity is defined as a needed
product or service selling in enough volume and
produced cheaply enough to make a profit.
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Note the important words in the definition:
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needed
enough volume
cheaply enough
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OHT 4
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2. How can you generate ideas for business
opportunities?
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The best ideas come from you
Your own ideas are the best to work with, not only
because you have a sense of ownership but because
they are more likely to be about things you feel some
sense of commitment to.
To help bring out your ideas, do an inventory of yourself
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OHT 5
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To begin with, ask yourself what special knowledge,
skills, or experience you have in the following areas:
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Products - what products do you know about?
- what can you make or mend?
- do you have an hobby which you can develop into a
business?
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Consumer buying patterns - what do you know about how
and what people buy?
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Contacts with industries - do you have an “inside edge”, a
contact who can help you to get ahead of the game?
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- do you have a contact who can help you introduce a
product or service into Vietnam?
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Hobbies - many businesses started as hobbies
- what do you do in your spare time?
- how could your hobbies become business opportunities?
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OHT 7
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Groups of people - What groups of people do you associate
with?
- what do you know about these groups?
- do they have a need that you could supply?
Kinds of businesses - What kind of businesses have you
been involved in?
- what problems did they have?
- what opportunities do you see to do it better yourself?
OHT 8
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Job Skills - what special job skills do you have?
- what can you do that might be needed by other
people?
Trends - have you seen any current trends you could turn
into business opportunities?
- can you spot a trend and go with it?
- are people starting to eat less junk food and more
nutritious snacks?
- are people getting more involved with sports and
fitness classes?
OHT 9
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Lifestyles - what do you know about lifestyles in your town
or city?
- what do people do on weekends?
- what kind of lifestyles do families have?
- is there an opportunity to serve these lifestyle needs?
OHT 10
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3. Sources for New Venture Ideas
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Many opportunities exist for identifying and providing newer
and better goods and services.
The entrepreneur will read or hear about something that in
turn sparks the idea.
Quite often they are are a result of developments in the
external environment.
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OHT 11
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Some of the sources for these ideas are:
Newspapers, trade journals, and professional
publications
Specialty magazines - in food, sports, fashion, hobbies,
and so
Trade shows, fairs, and exhibitions
Consumer groups - that generate new product or service
ideas
Employees in a firm - the work environment can
generate innovative, commercially feasible ideas
OHT 12
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4. How can you decide which ideas are worth pursuing?
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ASK YOURSELF 3 QUESTIONS
Is the product or service I am thinking of for my
business something people really need or want?
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Do enough people need or want this product or service
to make it a good business prospect?
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Can I provide this product or service cheaply enough to
make a profit?
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These questions will make you ask many other
questions, such as:
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Why you believe people want or need what you intend to
offer?
What kind of people and how many will buy it?
What it will cost you to produce or provide the goods or
services you have in mind?
What people will be prepared to pay?
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Note: May be able to compete successfully on
the basis of:
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better product design
greater durability
better service
lower price
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Warning: Ideas are cheap, but profits take
planning
OHT 15
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2. New Venture Idea Checklist
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 There are many critical factors that are important in newventure assessment.
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 One way of identifying and evaluating them is through the
use of a checklist.
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 The assessment must be tailor-made for the specific
venture.
OHT 16
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 There are three specific phases that a new venture goes
through:
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pre-start-up
start-up
post-start-up
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Pre-start-up: This phase begins with an idea for the venture
and ends when the doors are opened for business.
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Start-up: This phase commences with the initiation
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of sales activity and delivery of products and/or services and
ends when the business is firmly established and beyond
short-term threats to survival.
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Post-start-up: This phase lasts until the venture is
terminated or the surviving organisational entity is no longer
controlled by an entrepreneur.
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CONTENTS OF A NEW VENTURE IDEA CHECKLIST
Basic Feasibility of the Venture
- Can the product or service work?
Competitive Advantages of the Venture
- What specific competitive advantages will the product
or service offer?
Buyer Decisions in the Venture
- Who are the customers likely to be?
- Where are these customers located and how will they
be served?
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Marketing of the Goods and Services
- What share of the market will the company capture?
By when?
- What are sales targets? By when should they be met?
Production of the Goods and Services
- Will the company make or buy what it sells?
Or will it be a combination of these two?
Staffing Decisions in the Venture
- Who will be hired? By when? How will they be found and
recruited?
OHT20
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Control of the venture
- What records will be needed? When?
Financing
- How much will be needed for development of the
product or service?
- How much will be needed for setting up operations?
- How much will be needed for working capital?
- Where will the money come from? What if more is
needed?
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A NEW VENTURE IDEA CHECKLIST
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Refer to T 1
OHT 22
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3. Business Location and Layout
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Often the location is chosen because a building or piece of
land is vacant or because the site is located close to the
home of the owner.
These are poor reasons for picking a business location.
Economics, population, and competition are important factors
to consider.
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Selecting a Business Location
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1. General factors to be considered when
selecting a business location:
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a) Economic factors - A major concern in locating an area
for a small business is the economic base of the area.
- A study should be made of the industries in the area.
-The study should answer the following questions:
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Do 80 percent of the people work in one industry or
business? Or does the community have a variety of jobs
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Is industry in the area healthy?
Are businesses moving in or locating elsewhere
What is the average income?
What are the income level (low, medium, or high) in the
area?
What are the employment/unemployment trends?
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b) Population
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Is the population growing or declining?
What is the area’s total population?
What are the age groups, ethnic groups, and ratio of
sexes in the area?
Ratio of family to two or three or four-person household.
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c) Competition
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How many are there?
Where are they located?
How well are they doing?
How many similar businesses have opened or closed in
the past two years?
What are their strengths (competitive advantage) and
weaknesses?
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2. Three areas to consider in making your
location decision:
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the trading area as a whole
the town or city
the actual site
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In choosing your location, consider the
following:
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Refer to T 2
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3. What about the future
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Most of the information on economics, population, and
competition deals with past or present conditions.
Search for information about future plans for the area
An important factor in locating a business is future
potential of the site
- maybe a highway is going bypass the area
- the area is going to be developed for more houses to
come up
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OHT 30
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4. To Buy or Lease Premises
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If you are considering leased premises, you should at least
know the answers to the following questions:
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How is rent determined? Are there extras?
What are the lease renewal provisions?
Who owns improvements that the tenant makes?
Does the tenant have the right to sublet?
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Are there any options for expansion?
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Are there any restrictions on use of the property?
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Will the tenant be reimbursed in case of fire?
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How much insurance does the landlord hold and does
he require the tenant to have a certain kind?
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5. Types of Business Locations
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Firms tend to cluster in one of the following locations:
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Central Business Districts (CBD)
- generally located in the center of city or town
- traffic - cars, motorcycles, and people is heavy
- problems with this kind of area usually include poor
parking and high rents
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Neighbourhood Shoppping Areas
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- areas of the city or town where many people live
- many different types of stores will locate together
- rent is moderate compared to the central business
district
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Shopping Centers
- the mix of stores in the shopping center is planned
- they are generally located near main streets and
highways
- have ample parking space
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- usually it is about 30 to 40 minutes drive away
- a supermarket often is the largest store in the center
Industrial Parks and Estates
- they are for manufacturers and wholesalers
- they are planned clusters
- easy access to transportation and utilities
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6. Selecting the Correct Site must be related
to:
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type of business to be established
customers to be served
types of goods and services to be sold
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Note:
your business location must be selected as a result of
careful study, not on a hunch.
this study does not need to be fancy, but it must be done
carefully.
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End of Lecture 4