RECOGNIZING OPPORTUNITIES AND GENERATING IDEAS

Identifying and Recognizing Opportunities

 Opportunities
 is a favourable set of circumstances that creates a need for a new product, service or
business.
 Possibilities that arise from existing conditions.
 For an entrepreneur to capitalize on an opportunity, its window of opportunity must be
open. The term window of opportunity is a metaphor describing the time period in which
a firm can realistically enter a new market. Once the market for a new product is
established, its window of opportunity opens. As the market grows, firms enter and try to
establish a profitable position. At some point, the market matures, and the window of
opportunity closes.
 Ideas
 Thoughts or concepts that come from creative thinking.
 Is a thought, an impression or a notion.
 An idea may or may not meet the criteria of an opportunity. This is a critical point
because many entrepreneurial ventures fail not because the entrepreneurs that launched
them didn’t work hard, but rather because there was no real opportunity to begin. Before
getting excited about a business idea, it is crucial to understand whether the idea fills a
need and meets the criteria for an opportunity.

Three Ways to Identify an Opportunity

1. Observing Trends – the most important trends to follow are economic trends, social trends,
technological advances and political action and regulatory changes.
Figure 2.1 Environmental Trends Suggesting Business or Product Opportunity Gaps

Economic Forces
State of the economy
Level of disposable income
Consumer spending pattern

Social Forces
Business, Product,
Social and cultural trends
or Service
Demographic changes
Opportunity Gap New Business,
What people think is “in”
Product and
Difference between
Service Ideas
Technological Advance what’s available
New technologies and what’s possible
Emerging technologies
New uses of old technologies

Political and Regulatory Changes

New changes in political arena
New laws and regulations

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 Table 2.1 Examples of How Changes in Environmental Trends Provide Opening for New
Business and Product Opportunities

Changing Environmental Resulting New Business, Companies that

Trend Product, and Service Resulted
Opportunities
Economic Trends
Search for alternatives to Ethanol, biodiesel, solar Windspire Energy, Solix,
traditional fossil fuels like power, wind-generator Biofuels, eSolar
gasoline power

Sales of upscale items at a Deal of the day sites, Groupon, LivingSocial,

discount discount stores, niche Gilt Groupe, E.l.f
sites that sell specialized
items at a discount
Social Trends
Increased interest in Healthy-fare restaurants, Chipotle, Great Warps,
different, tastier, and organic foods, healthy- White Wave, Whole
healthier food focused grocery stores Foods

Increased interest in fitness Fitness centers, in-house Fitbit, Cool Palms,

as the result of new medical exercise equipment, Runkeeper, Shapes for
information warning of the weight-loss centers, Women
hazards of being overweight fitness-focused
smartphone apps
Technological Advances
Development of wireless Smartphones, Airstrip Technologies,
networks smartphone apps, Wi-Fi ScriptPad, TomTom, DLO
networks, GPS devices

Miniaturization of Laptop computers, MP3 ASUS Eee PC, Research in

electronics players, patient Motion, MiLife
monitoring devices
Political and Regulatory
Changes
Increased EPA and OSHA Consulting companies, ESS, PrimaTech,
standards software to monitor Compliance Consulting
compliance Services, Inc.,

Threat of terrorism Security consulting, BJ Smith Consulting,

explosives detection Xplosafe
devices, secure
computer networks

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2. Solving a Problem – the second approach to identifying opportunities is to recognize problems
and find ways to solve them. These problems can be recognized by observing the challenges that
people encounter in their daily lives and through more simple means such as intuition,
serendipity or chance.

Table 2.2 Businesses Created to Solve a Problem

Entrepreneur(s Year Problem Solution Name of Business
) That Resulted
Arlene Harris 2006 Many cellphones Design cellphones that GreatCall
are too complicated are easy to use and
and the buttons are have a large buttons
too small for older
people.
Sam Goldman 2008 Hundreds of Create affordable and d.light
and Ned Tozen millions of “base of durable portable solar-
the pyramid” powered lanterns.
consumers in
developing
countries lack
access to reliable
electricity.
Roger Marsh 2009 Concrete block Alter traditions methods Bolt-A-Blok
construction takes of concrete block Systems
time, requires construction to enable
water; and a the assembly of the
building built with block to be completed
concrete blocks in a manner that
cannot be occupied requires no water, has
immediately immediate occupancy,
because the and is faster than
building’s mortar current procedures.
needs time to cure
Peter Chen, 2009 No easy-to-access Create a Web-based Kickstarter
Yancey platform for funding “crowdfunding”
Strickler, and creative project, like platforms that helps
Charles Adler indie film, record artists, musicians, and
albums, or food people involved in other
related projects. creative projects raise
money from the public.
Tommy 2008 Men’s undershirts Create a long-tailored Tommy John
Patterson don’t fit well and undershirts that fit well
don’t stay tucked in and stay tucked in.

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 3. Finding Gaps in the Marketplace – there are many examples of products that consumers need or
want that aren’t available in a particular location or aren’t available at all. Product gaps in the
marketplace represent potentially viable business opportunities. A common way that gaps in the
marketplace are recognized is when people become frustrated because they can’t find a product
or service that they need and recognize that other people feel the same way.

Table 2.3 Businesses Created to Fill a Gap in the Marketplace

Gap in the Marketplace Resulting New Business Name of Businesses that
Opportunity Resulted
No fitness canters that are 24hour fitness centers to Snap Fitness, 24 hour
open 24hours a day accommodate people who Fitness
work odd hours
Lack of toys and toy stores Toy stores, toy Discovery Toys, Sprig
that focus on a child’s manufacturers, and Web Toys. Kazoo and Company
intellectual development sites that sell educational
toys
Restaurants that are both Fast-casual restaurants that Panera Bread, Chipotle,
fast and serve good food combine the advantages of Cosi, Bruegger’s
fast food (fast service) and
casual dining (good food)
Shortage of clothing stores Boutiques and retail chains Casual Male, Ashley
that sell fashionable that sell fashionable clothing Stewart, iGigi, RealKidz
clothing for hard-to-fit for hard-to-fit people,
people including plus size clothing
and clothing for tall or short
people

Techniques for Generating Ideas

 Brainstorming – process of generating several ideas about a specific topic.
 Focus Group – is a gathering of 5 to 10 people who are selected because of their relationship to
the issue being discussed.
 Library and Internet Research.

Tips for Turning Your Ideas Into Reality

1. When deciding whether to start a new business, you should evaluate your capabilities, interest,
knowledge, skills, resources, and potentials.
2. Be sure that there is a market for your new ideas before getting on with your venture.
3. Remember that your experiences and know-how are keys to starting and operating a successful
business enterprise.
4. Be aware that starting a new enterprise from scratch takes time, a thorough market research, initial
capital, a good business plan and most of all, a lot of patience.
5. Before starting a new venture, make a feasibility study to determine whether you should pursue
your business enterprise.
6. Consider asking for other people’s view especially those who know more about the venture you
wish to start, rather than simply being limited to your own ideas.

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7. Consider the strong and weak points of your competitors. Improve upon their weaknesses and
avoid trying to compete against your competitor’s strengths.
8. Searching for a market gap or solving a problem for potential customers will produce sound venture
ideas.
9. Be a trend spotter. Look for emerging trends and take advantage of your window of opportunity by
getting into the marketplace ahead of your competitors.

Types of Business Organizations:

1. Sole Proprietorship
 Is the easiest legal structure to start, since there are relatively fewer formalities and legal
restrictions.
 Has a complete control of the business and are sole recipient of its profits.
 Fully liable for all debts that the business will incur.
2. Partnership
 Has companionship as well as the enhanced ability to raise money and recruit and motivate key
people.
 Has a disadvantage including losing control of your venture, losing wealth, being stuck with other
owner(s) and being accountable to others.
3. Corporation
 The company is owned by its shareholders and run by a board of directors elected by the
shareholders.
 A corporation limits a stockholder’s liability to their amount of investment in the business.

Basic Function of Management

 Establish the goals of the enterprise and develop plans to attain these goals.
 Organize people and other resources to achieve goals.
 Lead and motivate people toward the goals of the enterprise.
 Maintain sufficient control systems to ensure that the enterprise is moving well toward its goals.

Planning
 Simply means thinking ahead. In a business, it means thinking ahead about objectives,
strategies, finances, production, marketing, profit prospects and growth possibilities.
 Planning should be based on your available resources and should be responsive to the needs of
the people in general and your customers in particular.
 Involves how to attain your goals and the ways to accomplish such goals.
Organizing
 Is the process of combining and coordinating resources and activities to accomplish efficiently
and effectively an organization’s goals and objectives.
Financial Management
 Refers to activities that are concerned with securing funding and using it wisely.
 The entrepreneur as financial manager must determine the best way to raise money.
 The entrepreneur should be able to efficiently use money to realize the goals of the enterprise.
Production
 Simply the creation of goods and services.
 Process of converting economic resources into goods and services.
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