INTRODUCTION
The possibility of
One of the strong qualities that an entrepreneur
must possess is that of being a good opportunity seeker.
It will be his/her first task to look for and to choose
business opportunities that are attractive and feasible.
What is an opportunity? Opportunity refers to an
attractive idea which an entrepreneur can opt
(option/means to choose) for investment with a good
basis for assuming the feasibility of the project. An
opportunity must be the one that has a good market
scope and offers an attractive return on investment or
profit.
To ensure a greater chance for success, business
opportunities have to be analyzed and evaluated for
different aspects:
1. technical production
2. commercial and managerial viabilities
3. availability of raw material
4. manpower needs
5. power requirements
6. location requirements
The above considerations make business
identification all the more challenging and interesting for
the entrepreneur.
IDENTIFYING BUSINESS OPPORTUNITIES
Several ways in which the would-be
entrepreneur can identify business opportunities are
enumerated in the book How to Start and Manage a
Small Enterprise by the Philippine Jaycee Senate and
U.P Institute for Small Scale Industries. These are the
following:
1. Understand the business environment. Take
note of factors that affect the success of business
on increasing population, income, educational and
leisure levels, changing age structure.
2. Study Imports. Because of higher handling and
transportation costs and tariffs placed over imported
products, locally produced goods can be used as
substitutes. However, the consumers preference
over imported goods remains a problem of many
manufacturer.
3. Study Exports. Many of our locally produced goods
have good export potentials, especially raw
materials intensive and/or labor-intensive
products. A listing of export trade opportunities
complete with names and addresses of interested
buyers and products derived can be obtained from
the Department of Trade and Industry.
4. Study Available Skills. Availability of skilled
manpower in an area, more often than not, leads to
the establishment of similar industries which
produce the same products.
manufacturing products requiring the same skill may
also be examined (e.g., from shoe craft to
handicraft)
5. Investigate Local Materials. Availability, quantity
of price of certain raw materials may provide
opportunities for trading or productive activities.
6. Apply Technology. The development of more
advanced technology will also create new
opportunities. This could be done by reexamining
locally produced raw materials and existing
products in relation to scientific and technological
advances. Development of new products and
processes provides more chances to small scale
and rural-based enterprises.
7. Examine Inter-Industry Relationship. The growth
of a certain industry may create opportunities to
establish other related industries. Close monitoring
and analysis of how the various inputs and outputs
of industries fit together could be done to be able to
identify business possibilities.
8. Analyze Industry Studies. Studies on specific
industries are often published by private and
governmental institutions. Such studies include
information on whether there is room for expansion,
as well as possible problems basetting the industry.
9. Evaluate Development Plans. Government
development plans, such as road constructions,
supplying of power, and putting up
industrial/commercial sites in certain areas create
business opportunities that were not previously
feasible.
10. Observe Experiences Elsewhere. Projects that
have become successful in areas with similar
condition could be used as basis for establishing
similar projects. Observing closely the experiences
of entrepreneurs who have become successful
somewhere can serve as a guide in making related
business decisions. Purely products imitation
without adding innovative ideas will often lead to
short-lived consumer acceptance.
11. Review Old Projects. Old projects that have been
developed but were never implemented could be
reviewed and used as basis for possible
opportunities especially when economic
circumstances have improved.
INTRODUCTION - Poor design
Entrepreneurs, in the conduct of their business, always - Inappropriate size
take moderate risk. They must be prepared to face every - Poor packaging
single problem that may come along as they manage the - Poor marketing strategies
daily affairs of the business. Some of the possible risks - Expensive
that they should be prepared for are: zero return profit, - Low production at a time of peak of popularity of
short term existence, bankruptcy, etc. the product
- Inability to understand consumer needs,
These risks may be avoided if at an early stage the consumer demand, consumer acceptance, etc.
entrepreneurs ensure the feasibility of the business
through an intensive analysis of the strengths, For any business to succeed, these weak points
weaknesses, threats and opportunities that they will be should be addressed immediately.
confronted with. Diaz (1990) suggested the use if what
is known as SWOT Analysis. 3. Opportunities (O). These are good chances for
future advancement which the business should take
WHAT IS SWOT ANALYSIS? advantage of. Examples of opportunities are:
- Products not yet available in the market
The SWOT Analysis is a tool used for: - Increasing consumer demand for the
1. Questioning and decision-making for small business product/service offered
regarding marketing, finance, production and - Presence of favorable government support for
general management; such products/services
2. Asking important questions about the strengths, - Continued product development
weaknesses, opportunities and constraints of the - Scarcity of the product in the locality
business or the products under study;
3. Identifying, evaluating possible potential products
for the entrepreneur; 4. Threats (T). Threats are obstacles that may prevent
4. Providing clues for product/service development by the business from achieving its financial objectives
way of evaluating strengths, weaknesses, which may totally damage the venture and cause its
opportunities and threats related to particular downfall. Examples of threats are:
product/service. - Rising costs
- Shortage of raw materials
- Too many competitors
WHAT ARE THE COMPONENT OF SWOT - New taxation scheme
ANALYSIS? - Unfavorable government legislation
The SWOT Analysis is composed of: Since threats are normally beyond the control of the
1. Strengths (S). These are referred to as strong entrepreneur, like rising costs, necessary measures
points or good attributes of the project or the should be adapted so that said threats will not prevent
business. Analyzing and evaluating these strong the business from operating.
points will be very beneficial, most especially in Diaz suggested that the following aspects should be
determining the feasibility of the business. covered while making a SWOT Analysis for the
Examples of strengths are: business/product.
- Cheap raw materials
- Available working capital
- Available technical expertise (workers/owners) 1. Financial Resources
- Strong consumer demand for the - Capital
products/services - Cash flow
- Easy to manage - Access to additional financing
- Small operating expenses 2. Physical Facilities
- Small working capital - Location
- Infrastructure
- Utilities
2. Weaknesses (W). These are probable problems - Transport facilities
that a business or entrepreneur faces. 3. Management, supervisory and Operator
- Poor management Capabilities
- Lack of technical know-how of the - Management abilities
owner/manager - Technical knowledge
- Poor management of capital - Age and experience
4. Market
- Price vs. competitors
- Market share
- Product quality
- Expanding/contracting
- New market for new products of the business
- Salesmanship of the owner
- Location of business
5. Production Process
- Organizational structure
6. Management Information
- Availability of information
- Availability of time for decisions and corrective
actions
7. Source of Supply
- Adequate and continued supply
- High quality
- Reasonable prices
- Availability of new materials which will be useful
to the economy.
8. Social Environment
- Market standard and consumer acceptance of
the product/business
- Particular prejudices, likes or dislikes for the
business in the community.