Opportunity Seeking,

Screening, and Seizing

Chapter 2
OPPORTUNITY SEEKING

Innovative opportunity
seekers. Entrepreneurs create
Entrepreneurs value by introducing new
products or services or finding
better ways of making them.
Entrepreneurial Mind Frame,
Heart Frame, and Gut Game
Entrepreneurial Mind Frame

Allows the entrepreneur to see

things in a very positive and optimistic
light in the midst of crisis or difficult
situations
Entrepreneurial Heart Frame

If there is one commonality

between an inventor and an
entrepreneur, it is their surging
passion or the entrepreneurial heart
flame.
Entrepreneurial Gut Game

The ability of the entrepreneur to

sense without using five senses. Also
known as intuition.
THE MANY SOURCES OF OPPORTUNITIES

• Socio-Cultural Environment
Macro • Political Environment
environment • Economic Environment
(big or macro
forces) • Ecological Environment
• Technological Environment
 Participants in an industry include:
• Rivals or competitors in a
particular type of business.
The next biggest sources of • Suppliers of input to rivals as wells
as suppliers of machinery and
opportunity (the industry equipment, suppliers of manpower
and the market). and expertise, and supplies of
merchandise.
• Consumer market segments
being served by rivals or
competitors.
Industry Sources of Opportunity • Substitute products or services,
which customers shift or turn to.
• All other support and enabling
industries.
MARKET SOURCES OF OPPORTUNITIES

Market sources of opportunities can be discovered

from increased or decreased demand as well as
higher and lower supply. Equally important is the
monitoring of the prevalence of product substitutes
and their market impact on the existing players in
the industry.
MICROMARKET

Refers to the specific target market segment

of a particular enterprise. The need of
segmentation would be crucial in the micro
market analysis because the definition of
value for money differs from group to group.
Consumer Preferences, Piques, and Perceptions

Refer to the tastes of particular groups

of people. In contrast, consumer dislikes
refer to the things that irritate
customers.
Other Sources of Opportunity

Another potential source of opportunity

is the entrepreneur’s own set of skills or
expertise, or hobby. Unexpected
successes (or failures) can lead to good
opportunities.
Consumer Preferences, Piques, and Perceptions

• Customer preferences change over time.

• People’s taste in clothes, music, shoes, entertainment, dance, sports,
hobbies, and even careers have evolved over the years.
• What piques customers is a great source of opportunities.
• Before the customer is won over, there is first a battle for the mind.
Next, there is a battle for the heart. Finally, there is a battle for the
wallet.
• The longer the customer wants to use the product, the greater the
chances of creating lasting loyalty.
Consumer Preferences, Piques, and Perceptions

• Opportunities abound in shaping consumer perceptions or

occupying spaces in their minds or places in their hearts that have
not yet been filled.
• New inventions, new systems and work processes, new insights
about the human psyche, new applications for old knowledge,
new revelations about how the physical world works, new
interpretations, new combinations based on the convergence of
previous technologies, new outlooks about how life should be led,
and a host of other new things are tremendous sources of
opportunities.
Consumer Preferences, Piques, and Perceptions

• Determining personal preferences and competencies lay

the foundation for a new business venture.
• Unexpected occurrences in both the external and internal
environment of the enterprise indicate that significant
changes are happening and opportunities are sprouting.
 The 12Rs of Opportunity Screening
OPPORTUNITY
SCREENING • Relevance • Range
• Resonance • Revolutionary
• Reinforcement Impact
Because of the many
opportunities possible for of • Returns
the entrepreneur, it is
Entrepreneurial • Relative Ease of
important to come up
with a short list of a few Interests Implementation
very compromising
• Revenues • Resources
opportunities. There are
twelve criteria for • Responsiveness Required
screening opportunities.
• Reach • Risks
 To ascertain the viability
The Pre- of the opportunity. The
Feasibility idea is to focus on a few
key items that could
Study make or break the
business concept.
 Based on the estimated
number of possible
customers who might
Market avail of the product or
Potential and service.

Prospects • Segmenting the Market

• Assessing Competition
• Estimating Market Share
and Sales
 By doing this process, the
entrepreneur would be able
to determine whether the
Technology product or service offering
Assessment and will meet customer demand
or not.
Operations
Viability • Quantities demanded
• Quality specifications
demanded
• Delivery expectations
• Price expectations
 The entrepreneur needs to
determine how much money is
needed to start the business
Investment opportunity with consideration
Requirements and to the technologies and
Production/Servicing operating level required.

Costs • Pre-Operating Costs

• Production/Service Facilities
Investment
• Working Capital Investment
FINANCIAL FORECAST FOUR CRITICAL FINANCIAL
AND DETERMINATION STATEMENTS
OF FINANCIAL
FEASIBILITY

• Income Statement
The financial
forecasts refer to • Balance Sheet
the monetary
transactions that
• Cash flow Statement
the business is • Funds
expected to
engage in.
 The income statement is a
financial statement that
measures an enterprise’s
INCOME performance in terms
revenue and expenses over a
of

STATEMENT certain period.

REVENUE – EXPENSE = INCOME
OR PROFIT (LOSS)
 Assets, Liabilities and
Equities.
BALANCE
SHEET ASSETS = LIABILITIES + EQUITY
 FINANCIAL
RATIOS AND
MEASUREMENTS PAYBACK PERIOD = TOTAL INVESTMENT
ANNUAL NET INCOME AFTER TAXES

The payback period or

how long will it take for him RETURN ON SALES = NET PROFIT AFTER TAXES
or her to get back what he TAXES
or she has invested in the
enterprise.
RETURN ON ASSETS/RETURN ON INVESTMENTS
• Return on Sales(ROS)
= NET PROFIT AFTER TAXES
• Return on Assets(ROA) TOTAL ASSETS/ INVESTMENT
•Return on Investment(ROI)
 The entrepreneur should take into
THE FEASIBILITY consideration the ff:
STUDY • A more in-depth study of market potential to ensure
that the business proposal will reach the forecasted
sales figures;
• Proof that the product or service being offered has
A feasibility study is the right design, attributes, specifications, and
prepared to preferred features;

convince bankers • Proof that the entrepreneur and his or her team have
the necessary experience, skill, and capabilities to
and investors to maximize the venture’s chances of success;
put money into the • Legal visibility
business • More detail costing on the different assets and more
justification for the production and operating
opportunity. expenses;
• More thorough analysis of the technology and its
sustainability.
OPPORTUNITY SEIZING
 CRAFTING A Key points that can help out the
POSITIONING entrepreneur on how to go about
‘this questioning’:
STATEMENT
• What are the main customer segment?
• What are the different product
The entrepreneur is attributes and features of each of
advised to look at competitors?
the other
• What are the existing marketing
competitors( or practices of the various competitors?
substitutes) in the
• What are the market preferences of
marketplace. consumers when it comes to the
products being offered?
CONCEPTUALIZING OPTIONS OR DIRECTION MAY BE
THE PRODUCT OR CONSIDERED BY THE ENTREPRENEUR:
SERVICE OFFERING
• The first is to create a concept similar to the
winning products in the marketplace and ride
The entrepreneur must with the obvious market trends.
then conceptualize his • The second is to find a market niche that has
or her own product. A not been filled by the competitors.
concept is a idealized • The third is to conceptualize a product in a
abstraction of the positioning category where the participants are
product or service to be rather weak.
offered to the preferred
• The fourth is to conceptualize a product that
market of the would change the way costumers think,
entrepreneur. behave, and buy, thus making existing products
“ obsolete” and “old-fashioned”.
 Designing means that the
entrepreneur must render the
concept and translate it into its very
DESIGNING, physical and very real dimensions
(measurements). This entails building a
PROTOTYPING, AND prototype of the product that will be
TESTING THE ready for actual testing by the
entrepreneur and then, later on,
PRODUCT subject to testing by potential
customers through focus group
discussions (FDG), survey, product
demonstration session, and the like.
 • First is to choose the correct technology, the
IMPLEMENTING, one that would produce the output that would
ORGANIZING, AND meet the quality and specifications of the
customers.
FINANCING
• Second is to choose the right people who can
perform the technical and the managerial
Good planning and functions necessary to realize the desired end
good programming are results.
essential to have good • Third is to design the operating workflow that
implementation. would assure the effective, economical, and
efficient production of the output.
A good planner and
programmer must take • Fourth is to specify the systems and procedures
several important that would govern the enterprise, motivate and
discipline the work force, and satisfy the
choices to achieve the
customers.
desired end result.
• Fifth is to design the organizational architecture
that would allow the people to function at their
best.