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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