Entrepreneurship
LECTURES/PPT AND HANDOUTS
OPPORTUNITY SEEKING, SCREENING AND
SEIZING
Entrepreneurs are innovative opportunity seekers.
Opportunity seeking - They have an endless curiosity
to discover new things.
ENTREPRENEURIAL MIND FRAME, HEART
FLAME, AND GUT GAME
ENTREPRENEURIAL MIND FRAME
- optimistic amid a crisis
ENTREPRENEURIAL HEART FLAME
- Passion is that great desire to attain a vision or fulfill a
mission. It is about wanting something so much that a
person would be willing to devote oneself to the quest.
- also, about Emotional Intelligence, nurturing
relationships with customers employees, and suppliers
- Caring culture within the organization
ENTREPRENEURIAL GUT GAME
- Ability of the entrepreneur to sense without using the
five senses.
- Also known as intuition
- Courage “lakas ng loob”
- Entrepreneur just knows whether something will work
or not, without any logical, systematic, and sequential
thinking.
THE MANY SOURCES OF OPPORTUNITIES
MACRO ENVIRONMENT – The set of conditions
that exist in the economy as a whole, rather than in a
particular sector of a region. (big or macro forces)
- affect the area, industry, and the market.
- they influence how business should be conducted
- how demand and supply will move
- how different competitors would position themselves
- How the cost of doing business will proceed.
S.P.E.E.T.
Socio-Cultural Environment - includes the
demographics and cultural dimensions that govern the
relevant entrepreneurial endeavor.
- assess the trends and dynamics of the bigger consumer
population, their beliefs, tastes, customs, and traditions.
Political Environment - the governance system of the
country or the local area of business, includes laws,
rules, and regulations that govern business. Also permits
approvals and licenses.
Economic Environment - Supply and demand forces
mainly drive the macroeconomic environment. They are
the factors that drive the interest and foreign exchange
rates that fluctuate with the movement of the market
forces.
Ecological Environment - includes all natural resources
and ecosystem, habitat of men, animals, plants, and
minerals. Opportunities abound for greener, cleaner, and
healthier products, whose objectives are to save the
planet and prolong lives.
Technological Environment - New Scientific and
technological discoveries, which often lead to the launch
and commercialization of new products.
THE NEXT BIGGEST SOURCES OF
OPPORTUNITIES ARE THE INDUSTRY AND
THE MARKET.
INDUSTRY SOURCES OF OPPORTUNITIES
Industry - A group of companies that are related based
on their primary business activities. Economic activity is
concerned with the processing of raw materials and the
manufacture of goods in factories.
Market – A place where parties can gather to facilitate
the exchange of goods and services.
SEVERAL WAYS OF DEFINING INDUSTRY:
1. According to product types or according to the
functions of the product or services.
2. By tracing the industry from its basic raw material
down to the various customer applicators, otherwise
known as the product or value-added chain.
PRODUCT CHAIN AND VALUE-ADDED CHAIN
MARKET SOURCES OF OPPORTUNITIES
- Combo meals, strategy in the fast-food restaurant
industry
- demands during peak hours (lunch/dinner) breakfast.
- Beverage drink
MICRO MARKET
- refers to the specific target market segment of a
particular enterprise.
CONSUMER PREFERENCES, PIQUES, AND
PERCEPTIONS
- Consumer Preferences - refer to the tastes of groups
of people. (clothes, food, music, movies). (consumers
age, culture, and status affect their preferences)
- Consumer dislikes (irritate customers)
OTHER SOURCES OF OPPORTUNITIES
- Another source of opportunity is the entrepreneur’s
own set of skills or hobbies. New knowledge as well as
new technology can be the source of highly innovative
opportunities.
1. Customer preferences change over time.
2. People’s tastes in clothes, music, shoes,
entertainment, dance, sports, hobbies, and even careers
have evolved over the years.
3. What piques customers is a great source of
opportunities.
Entrepreneurship
LECTURES/PPT AND HANDOUTS
4. The longer the customer wants to use the product, the
greater the chances of creating lasting loyalty.
OPPORTUNITY SCREENING
- Opportunity screening is the process of evaluating
and filtering potential business ideas based on their
feasibility, desirability, and viability. It is a crucial step
for entrepreneurs who want to avoid wasting time and
resources on unprofitable or unrealistic ventures.
12 R’S OF OPPORTUNITY SCREENING
1. Relevance to the vision, mission, and objectives of
the entrepreneur. The opportunity must be aligned.
2. Resonance to values. The opportunity must match the
values and desired virtues that you wish to impart.
3. Reinforcement of Entrepreneurial Interest The
opportunity should resonate with your interests, talents,
and skills
4. Revenues it is important to determine the sales
potential of the products or services one wants to offer.
(Is there a big marker out there to grab and nurture for
growth?
5. Responsiveness to customers' needs and wants. The
opportunity pursues the unfulfilled wishes of customers.
6. Reach The opportunity can expand through branches,
distributorships, dealerships, and franchises to attain
rapid growth are better opportunities.
7. Range The opportunity can potentially lead to a wide
range of possible product or service offerings, thus
tapping many market segments of the industry.
8. Revolutionary Impact - Entrepreneurs lead to
growth by, Entering and expanding existing markets.
Creating entirely new markets by offering innovative
products.
9. Returns It is a fact that products with low costs of
production and operation but sold at higher prices will
yield the highest returns on investment. The profit you
make because of your investments.
10. Relative Ease of Implementation Will the
opportunity be relatively easy to implement for the
entrepreneur or will there be a lot of obstacles and
competency gaps to overcome?
11. Resources Required Opportunities requiring fewer
resources from the entrepreneur may more favored than
those requiring more resources (Financial Resources,
Physical Resources, Human Resources, and Digital
Resources)
12. Risks There will always be a risk. The term business
risks refers to the possibility of a commercial business
making inadequate profits due to uncertainties - for
example: changes in tastes, changing preferences of
consumers, increased competition, and changes in
government policy.
PRE-FEASIBILITY STUDY
- Preliminary study undertaken to determine, analyze,
and select the best business scenarios.
-In this study, we assume we have more than one
business scenario, and then we want to know which one
is the best, both technically and financially. In pre-
feasibility, we select the best idea among several ideas.
It will be hard and take time if we explore each scenario
deeply.
1. MARKET POTENTIAL AND PROSPECTS
- Is based on the estimated number of possible
customers who might avail themselves of the product or
service. For a more realistic number, it would help to
narrow down your estimation to the relevant population
or target customers in the area where you want to
operate the business.
- You figure out a customer profile (whom you want to
target with your marketing) and combine that with the
geographic size you want to target (how many of those
people are in that area). This is your general market
potential.
MARKET POTENTIAL
- To get more specific marketing potential, you need to
know also how many competitors you have and their
strength in the market area. You can then estimate how
much of their business you'll be able to take from them
(we recommend being conservative on your estimates),
and that will be the market potential of your business.
1.1 SEGMENTING THE MARKET
Using a set of demographics such as:
- Income Class (A, B, C, D, and E)
- Age (infants, toddlers, teenagers, young adults, senior
citizens)
- Gender (male, female)
- Place of Residence
- Level of Education
- Some general statistics for these demographics can be
found online
- Entrepreneurs must be able to do actual research like
surveys, focus group discussions, interviews,
observation techniques, etc.
1.2 ASSESSING COMPETITION
- Market potential is also affected by the number of
establishments supplying and serving your target
customers.
- The more suppliers and competitors there are within a
confined area, the greater the level of saturation.
On the other hand, some prefer to enter the biggest,
richest, and most competitive markets to achieve high
visibility and growth potential. However, this is risky
unless the entrepreneur is very confident that he/ she has
a superior product.
- Assess one’s strengths and weaknesses
- There must be a comparison made with the closest
competitors
1.3 ESTIMATING MARKET SHARES AND SALES
Entrepreneurship
LECTURES/PPT AND HANDOUTS
In a pre-feasibility study, the most important task is to
quantify the market potential systematically.
- First, the entrepreneur must define the market coverage
or reach he or she wants to serve.
- Second, the entrepreneur must determine the broad
market segments within this area or total targeted
population.
2. Technology Assessment and Operations Viability
1. Quantities Demanded - This would determine the
needed capacity of operations.
2. Quality Specifications demanded - This would
dictate the following:
a. Quality of input or raw materials.
b. Quality assurance process in transforming
input to output.
c. Quality output that meets the operations, and
standards set; and
d. Quality outcomes for the customers who will
be looking for specific results.
3. Delivery expectations - knowing how much, how
frequently, and when to deliver to customers.
4. Price Expectations - the selling price of the product
or service would be evaluated by the customers
according to the value they would receive (in terms of
quality, quantity, and delivery).
3. INVESTMENT REQUIREMENTS AND
PRODUCTION/SERVICING COSTS
In this respect, three investments need to be funded:
1. Pre-Operating Costs - these are the costs related to
the preparation for the launch of the business. These
include pre-feasibility study, market research, product
development, etc.
2. Production/ Service Facilities Investment - this
refers to the long-term investment for the actual business
establishment, including investment in land buildings,
machinery, equipment, computers, software, furniture,
vehicles, etc.
3. Working Capital Investment - this includes the
investment needed to operationalize the business,
composed of cash, accounts receivable, and inventories.
These operating expenses would include the following:
a. Employee salaries, wages, and benefits
b. Rent and lease expenses.
c. Utilities
d. Transportation
e. Fees and licenses
f. Commissions
g. Office supplies, etc.
In effect, this part of the Pre-feasibility study asks two
questions:
1. Do I have enough resources to cover the necessary
investments?
2. Would my sales estimates be significantly higher than
my monthly production/ service costs to produce
profits?
OPPORTUNITY SEIZING
- is the act of taking action to capitalize on the
identified opportunity and turn it into a sustainable
business venture.
- Know the competitors
- Location of the business
- How he/she markets the product or services
- Quality vs. Price
4. Financial forecasts and Determination of Financial
Feasibility
- Refers to the monetary transactions that the business
expected to engage in.
- Financial forecasting calls for the creation of four
critical financial statements:
1. Income Statement
2. Balance Sheet
3. Cash flow statement
4. Funds flow statement
INCOME STATEMENT
- Is a financial statement that measures an enterprise's
performance in terms of revenue and expenses over a
certain period. Simply put the formula is: INCOME or
PROFIT = Revenue - Expenses (LOSS)
BALANCE SHEET
- Shows clearly the value of the business. It is a
statement of assets, liabilities, and owner's equity.
Assets - are anything of value owned by the business
such as cash, receivables, buildings, furniture, machines,
land, equipment, inventories, and supplies.
Liabilities - represent the enterprise's debts to suppliers,
to banks, to government, to employees, and other
financiers.
Stockholders’ Equity - represents the investors'
investment in the stock (or shares) of the business.
Entrepreneurship
LECTURES/PPT AND HANDOUTS

- The Balance Sheet Equation is:

ASSETS = LIABILITIES + EQUITY
Note: Retained Earnings are the accumulated profits or
losses of the enterprise over the years, which have not
yet been given back to investors as dividends.

MARKET SHARE
- Market share is the percentage of total sales that a
company can expect to get from the total market.
- To calculate market share, divide your sales forecast by
the total market potential.
- The proportion of industry sales of a good or service
that is controlled by a company.
- Market share refers to the percentage of the overall
volume of business in a given market that is controlled
by one company about its competitors. For example, if
the total sales of a certain product in a market is Rs.
100,000, and the company sold Rs. 20,000 worth of that
product, then the company has 20 percent market share.