Lesson 4 Development

of Business Plan NOTES

Market potential - is the entire size of the market for a product at a specific time.
• It represents the upper limits of the market for a product.
• Market potential is usually measured by either sales value or sales volume.
Ability to compete – build on your strengths to increase the chances of future
successes
Duration of the opportunity – another consideration is how long you have before
competition might flood the marketplace.
Growth potential – in many cases, long-term growth rather than immediate rewards
make one opportunity more attractive than another does.
Risks and rewards – a certain amount of risk is involved in all entrepreneurial
ventures, and growth is no different.
Market problems – these problems may be stated directly as customer needs or
implied indirectly.
 Your market consists of:
Existing customers – people who have already purchased your product
Prospects – People who have not yet purchased your product but are considering
it
Target market users – People in your target market who are not currently
looking for a solution
Traps to Avoid When Listening to Your Market
Focusing only on innovation and the competition – as an entrepreneur, it is easy
to focus on building innovative solutions that do not connect directly to market
problems. It is also easy to pay too much attention to what competitors are
doing and expand resources on trying to beat them to market.
Focusing only on customers – customers understand problems, but they cannot
help you to move your product forward.
Focusing only on revenue – by listening only to prospects, and delivering only
what the next customer wants, you will gain revenue but miss market
opportunities.
Stated needs – explicit statements from your market that declare, “I want a
product to do X.“
• Stated needs are important, they are not as powerful as silent needs.
Silent needs – problems with yet undefined solutions.

The real heart of entrepreneurship are three things:

• The ability to identify or recognize opportunity
• The ability to review or assess opportunity
• The ability to successfully execute and realize opportunity.
Opportunity recognition – the people who typically excel at opportunity recognition
are the right-brain creative type people. They see new angles, new possibilities,
and new ways to do things.
Opportunity assessment – during this stage, an entrepreneur must assess potential
strategies and business models as well as conduct market and economics analyses
in order to establish an answer to the question: Can I bring this idea to market in
an economically successful way?
Opportunity Realization - during this phase, it is time to take advantage of the
situation and execute all of the great ideas and projections ascertained from the
two prior phases.
Entrepreneur – a person who organizes and operates a business or businesses,
taking on greater than normal financial risks in order to do so.
Investor – allocates capital with the expectation of a future financial return.
Market Potential – the entire size of the market for a product at a specific time.
Opportunity – a set of circumstances that makes it possible to do something.
Revenue – the income that a business has from its normal business activities,
usually from the sale of goods and services to customers.