Entrepreneurship Ch 3 Recognizing Opportunity Understanding Entrepreneurial Trends

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Entrepreneurship Ch 3 Recognizing Opportunity

Entrepreneurship Ch 3 Recognizing Opportunity

Understanding Entrepreneurial Trends • Current Trends – Internet Business • Transformed the way business

Understanding Entrepreneurial Trends • Current Trends – Internet Business • Transformed the way business is conducted • Online Business – Business that conducts business by means of the internet • Potential to attract a huge number of customers – Service Businesses • Most small business are service businesses • Services – intangible things that a business does for us that enhances our lives

Understanding Entrepreneurial Trends • Current Trends – Home-Based Businesses • Represents roughly 53% of

Understanding Entrepreneurial Trends • Current Trends – Home-Based Businesses • Represents roughly 53% of all small businesses • Many people who have lost their job due to cutbacks choose to work from home in the field where they were once employed • Many companies choose Homesourcing (transfer of service industry employment from offices to home-based employment) to fill human resource needs

Understanding Entrepreneurial Trends • Current Trends – Green Businesses • Design their business practices

Understanding Entrepreneurial Trends • Current Trends – Green Businesses • Design their business practices so that they promote sustainability (Venture seeks to achieve economic, environmental, and social goals without compromising the ability of future generations to meet their own needs) – Includes: Food quality, energy resources, pollution, and human rights

Understanding Entrepreneurial Trends • Current Trends – Social Entrepreneurship • Start business to improve

Understanding Entrepreneurial Trends • Current Trends – Social Entrepreneurship • Start business to improve society • Identify social needs, such as finding employment for wounded veterans, combating pollution, or providing shoes for children who cannot afford them • Focus on the arts • Measure success by their positive impact they make on society

Understanding Entrepreneurial Trends • Current Trends – Focus on Technology • An increased reliance

Understanding Entrepreneurial Trends • Current Trends – Focus on Technology • An increased reliance on technology is the main trend that affect businesses today. • Creates a strong competitive advantage

Understanding Entrepreneurial Trends • Current Trends – Outsourcing • Contracting with other companies for

Understanding Entrepreneurial Trends • Current Trends – Outsourcing • Contracting with other companies for services • Allows small businesses to focus on what it does best while tapping into outside resources

Understanding Entrepreneurial Trends • Current Trends – Outsourcing • Benefits 1. Allows greater efficiency,

Understanding Entrepreneurial Trends • Current Trends – Outsourcing • Benefits 1. Allows greater efficiency, saving time, and money 2. Decreases overhead investment or debt 3. Lowers regulatory compliance burdens 4. Allow companies to start new projects quickly 5. Makes companies more attractive to investors

Understanding Entrepreneurial Trends • Current Trends – Strategic Alliances • Forming a partnership with

Understanding Entrepreneurial Trends • Current Trends – Strategic Alliances • Forming a partnership with another company • Supply a product or service that is part of the other company – Corporate Venture • New venture started inside a large corporation • Parent company supplies resources to the corporate venture to help the new venture get started • New ventures usually become independent companies

Learning to Recognize Opportunity • Creative and Innovation – Creativity – Activity that results

Learning to Recognize Opportunity • Creative and Innovation – Creativity – Activity that results in innovation (finding new ways of doing something) – All creativity leading to the invention of something new involves connection, discovery, invention, and application • Connection – bring things together that are not usually connected • Connection leads to a discovery that is turned into an invention

Learning to Recognize Opportunity • Creative and Innovation • Application – Is going beyond

Learning to Recognize Opportunity • Creative and Innovation • Application – Is going beyond the original invention to other uses in new areas. – Idea or Opportunity • • Ideas are generated by thinking creatively Opportunities are ideas that have commercial potential Innovative opportunity can be turned into a business Most business opportunities result from the entrepreneurs alertness to consumer needs and unfilled market niche (small specialized market)

Learning to Recognize Opportunity • Creative and Innovation – Understanding Industries • One way

Learning to Recognize Opportunity • Creative and Innovation – Understanding Industries • One way to identify opportunities • Industries – Group of businesses with a common purpose

Strategies for Thinking Critically • New Enterprise Ideas – Practice Brainstorming • Brainstorm –

Strategies for Thinking Critically • New Enterprise Ideas – Practice Brainstorming • Brainstorm – Think freely to generate new ideas – Ideas are not judged as good or bad – Look at ordinary items in new ways • Figure out new ways or uses you can find for it, – Find creative solution's to common problems – Connect unrelated items • Try to come with new products – Challenges to Creativity

Strategies for Thinking Critically • Challenges Sources of Ideas • Ideas can come to

Strategies for Thinking Critically • Challenges Sources of Ideas • Ideas can come to you from anywhere – Observe the World Around You • Watch People • You can learn a lot about peoples wants and needs – Watch for Demographics Changes • Demographics – Personal characteristics that describe a population – Includes age, gender, income, ethnic background, education, and occupation

Strategies for Thinking Critically • Challenges Sources of Ideas – Be an Avid Reader

Strategies for Thinking Critically • Challenges Sources of Ideas – Be an Avid Reader – Consider Your Own Experiences • Interests – Practice thinking about the problems you encounter each day as you pursue your interest • Hobby – Turn into successful ventures • Work – Experience in the world of work can be an excellent source of business ideas

Strategies for Thinking Critically • Consult outside sources • Look at people, places, and

Strategies for Thinking Critically • Consult outside sources • Look at people, places, and things in the business community for business ideas – Trade Magazines • Periodical published for specific types of businesses or industries • Contains articles, new products, services – Specialty Magazines • Periodicals that target people with special interests

Strategies for Thinking Critically • Consult outside sources – Trade Shows and Exhibits •

Strategies for Thinking Critically • Consult outside sources – Trade Shows and Exhibits • Vendors and manufactures introduce new items and promote established products and services – Newspapers • Provides ongoing source of ideas (Trends and Innovations)

Strategies for Thinking Critically • Consult outside sources – The Internet – Government Agencies

Strategies for Thinking Critically • Consult outside sources – The Internet – Government Agencies • US Patent Office – contains detailed description of new products • OSHA – Occupational Safety and Health Act

Starting versus Buying a Business • Personal Value and Goals – Values – Beliefs

Starting versus Buying a Business • Personal Value and Goals – Values – Beliefs and principles you choose to live by • Define who you are, shape you attitudes, and your choices, and help you identify your priorities • Once you identify your core values, you can use them to lay out your goals for your future • Goals are the objectives you are trying to achieve

Starting versus Buying a Business • Entering the Family Business – One way to

Starting versus Buying a Business • Entering the Family Business – One way to experience entrepreneurship – Important part of the US economy – The rewards and challenges of family businesses • Only about 1/3 of them survive to the second generation • Greatest advantage is the trust and togetherness that family members share • One of the greatest disadvantages is that its owners can never get away from the business

Starting versus Buying a Business – The rewards and challenges of family businesses –

Starting versus Buying a Business – The rewards and challenges of family businesses – Important to establish clear lines of responsibility, be objective about family members qualifications, keeping decisions unaffected by personal emotions, and respect individual family members needs

Starting versus Buying a Business – Questions to ask yourself 1. Do you have

Starting versus Buying a Business – Questions to ask yourself 1. Do you have the ability to work for a member of my family? 2. Do I get along with the family members who I’ll be involved with? 3. Do we share the same goals for the business? 4. Do we share the same general goals for our personal lives? 5. Can we be clear and specific about our expectations for each other?

Starting versus Buying a Business – Questions to ask yourself 6. Can I leave

Starting versus Buying a Business – Questions to ask yourself 6. Can I leave business problems at work when I go home? 7. Can we maintain a positive family relationship? • If you answered no to any of the questions, then we have a potential problem

Buying an Existing Business – Acquire – Buy an existing business – Less risky

Buying an Existing Business – Acquire – Buy an existing business – Less risky then starting a new one • Because: – Employees already hired and trained – Equipment is already in place – Company already has customers – Goodwill – Customer loyalty • Extremely valuable business asset

Buying an Existing Business – Buying a Franchise • Franchise – A legal agreement

Buying an Existing Business – Buying a Franchise • Franchise – A legal agreement to begin a new business in the name of a recognized company • Gives the franchisee (buyer) the right to a product, process, or service; training and assistance in setting up the business; and ongoing marketing and quality support while the business is in operation • Most important advantage is that the entrepreneur does not incur all of the risk associated with starting a business

Buying an Existing Business – Buying a Franchise • Franchisee usually buys into a

Buying an Existing Business – Buying a Franchise • Franchisee usually buys into a business with accepted name, product, or service. • Franchisee is buying a way of operating a business and a product with name recognition • Franchisee pays a fee and an annual royalty on sales, usually 3 -8% • Franchisor – Seller • Franchisor is selling its planning and management experience

Buying an Existing Business – Buying a Franchise • Before buying franchise, understand all

Buying an Existing Business – Buying a Franchise • Before buying franchise, understand all of the costs and limitations involved – Evaluating a Business Opportunity • Evaluate whether the business is a good prospect • Why is it for sale? • Hire an accountant to verify the value of the business’s inventory, accounts receivable, and assets

Buying an Existing Business – Where to Find a Business • Look in newspaper

Buying an Existing Business – Where to Find a Business • Look in newspaper • Most effective way - Network with people in the community • You can hire a business broker – Someone whose job is to bring buyers and sellers together

Buying an Existing Business – Questions to Ask? • Is the business interesting to

Buying an Existing Business – Questions to Ask? • Is the business interesting to me and to other? • Why is the owner selling? – Check the businesses financial statements • What is the business’s potential for growth? – Business’s go through a cycle of growth – Growth, Maturity, and Decline

Starting Your Own Business – Questions to ask: • Do I have the motivation

Starting Your Own Business – Questions to ask: • Do I have the motivation to start a new business from nothing? • Does the business align with my personality, abilities, values, and goals? • Do I have sufficient knowledge of basic operation to undertake the business? • Do I have the necessary managerial skills? • Do I have the right partners to help me with the business? • Do I have enough financial resources to start from scratch? • Am I willing to accept the risk?