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Recognizing

Opportunity

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Chapter 3 Recognizing Opportunity
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 niche


services brainstorm
outsourcing demographics
strategic alliance trade magazine
specialty magazine
corporate venture
trade show
innovation

Section 3.1 Understanding Entrepreneurial Trends 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
outsourcing
businesses

Section 3.1 Understanding Entrepreneurial Trends 7


Recognizing Opportunity

Internet Businesses

The Internet has online business a


transformed the way company that conducts
business by means of
business is conducted. the Internet

An online business can


reach customers around
the world.

Section 3.1 Understanding Entrepreneurial Trends 8


Recognizing Opportunity

Service Businesses

Service businesses services intangible


dominate the American things that businesses
do for consumers that
economy. 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 outsourcing


people and other contracting with other
companies for services
companies to handle tasks
that a business can not do
or chooses not to do itself.

Section 3.1 Understanding Entrepreneurial Trends 10


Outsourcing

lowers regulatory
more efficient
burden

saves time Benefits of Outsourcing speeds up projects

saves money attracts investors

Section 3.1 Understanding Entrepreneurial Trends 11


Recognizing Opportunity

Strategic Alliances

A strategic alliance is a strategic alliance a


partnership among partnership formed with
another company for the
companies. purpose of supplying a
product or service

Section 3.1 Understanding Entrepreneurial Trends 12


Recognizing Opportunity

Corporate Ventures

A corporate venture is corporate venture a


formed within a company. new venture started inside
a larger company

Section 3.1 Understanding Entrepreneurial Trends 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 innovation a new way of


results in innovation. doing things

Section 3.1 Understanding Entrepreneurial Trends 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 niche a small


business opportunity by specialized market

recognizing an unfilled
market niche.

Section 3.1 Understanding Entrepreneurial Trends 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

Look at ordinary items in


Practice brainstorming.
new ways.

Find creative solutions to


Connect unrelated items.
common problems.

Section 3.1 Understanding Entrepreneurial Trends 19


Recognizing Opportunity

Thinking Creatively About


Opportunity
During brainstorming, brainstorming to think
ideas are not judged as freely in order to generate
ideas
good or bad.

Section 3.1 Understanding Entrepreneurial Trends 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 demographics
entrepreneurs to understand personal characteristics
that describe a
demographics and population by age,
demographic trends. gender, income, ethnic
background, education,
and occupation, among
others

Section 3.1 Understanding Entrepreneurial Trends 23


Sources of Information

trade specialty
magazines magazines

government
agencies
Sources trade shows
of
Information

the Internet exhibitions

newspapers

Section 3.1 Understanding Entrepreneurial Trends 24


Recognizing Opportunity

Consult Outside Sources

A trade magazine offers trade magazine a


current, industry-specific periodical published for a
specific type of business
news. or industry

Section 3.1 Understanding Entrepreneurial Trends 25


Recognizing Opportunity

Consult Outside Sources

A specialty magazine specialty magazine a


offers information about periodical published for
people with special
specific topics. 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 trade show a


learn about new goods and gathering or exhibition
where vendors and
services in a field. manufacturers
introduce new items
and promote
established products
and services

Section 3.1 Understanding Entrepreneurial Trends 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, home-
based 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 franchisee
goodwill franchisor
franchise business broker

Section 3.2 Starting Versus Buying a Business 35


Recognizing Opportunity

Personal Values and Goals

Personal values and goals values the beliefs and


should be used as a guide principles by which you
choose to live that define
when choosing who you are, shape your
entrepreneurial pursuits. attitudes and choices, and
help you identify your
priorities

Section 3.2 Starting Versus Buying a Business 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 goodwill the favor and
business, you often gain loyalty a business
acquires by its good
the goodwill of loyal reputation
customers.

Section 3.2 Starting Versus Buying a Business 39


Recognizing Opportunity

Buying a Franchise

When you buy a franchise, franchise a legal


you buy the right to set up a agreement to begin a new
business in the name of a
new business patterned on recognized company
an existing model.

Section 3.2 Starting Versus Buying a Business 40


Recognizing Opportunity

Buying a Franchise

The franchisee is the franchisee the buyer


buyer of a franchise. of a franchise who is
given the right to the
franchisor’s product,
process, or service
The franchisor is the seller
of a franchise. franchisor the seller of
a franchise who is giving
the buyer planning and
management expertise

Section 3.2 Starting Versus Buying a Business 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

newspapers business
publications

Finding
Business
Opportunities

business
brokers networking

Section 3.2 Starting Versus Buying a Business 43


Recognizing Opportunity

Where to Find a Business

You can find a business business broker


broker in the telephone someone whose job it is
to bring buyers and
book or online. sellers of businesses
together for a fee

Section 3.2 Starting Versus Buying a Business 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

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