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“The best way to predict the future is to create it.” – Peter Drucker
Important Topics
Important Topics
Sensing Entrepreneural Opportunities.
Environmental Scanning.
Problem Identification.
Idea Fields.
Spotting trends.
Creativity and Innovation.
Selecting the Right Opportunity.
Business Opportunity
Business Opportunity
There are a lot of opportunities in the world of business, which everyone might not be able to spot. An entrepreneur should be able to spot it. Business opportunity can be described as an economic idea which can be implemented to create a business enterprise and earn profits. Before selecting the opportunity, the entrepreneur must ensure two things:
There is a good market for the product he is going to produce.
The rate of return for the investment is attractive to be accepted by him.
Elements of a Business Opportunity
Elements of a Business Opportunity
A business opportunity may be described as an attractive economic idea which could be implemented to create a business, earn profits and ensure further growth. A business opportunity has five elements which are as follows:
Assured market scope
An attractive and acceptable rate of return on investment
Practicability of the idea
Competence of the entrepreneur to encash it
Potential of future growth
Exploring opportunities in the environment
Exploring opportunities in the environment
A prospective entrepreneur has to find an opportunity which would be suitable for him/her in terms of customers to be served and profits expected. An opportunity may be derived from the needs and problems of the society.
This diagram shows the following stages:
Opportunity spotting by analysing the needs and problems that exist in the environment.
Evaluating the ideas received from various sources to find a creative solution.
Identifying a product or service through innovation.
Setting up a project and nurturing it to success.
Perceiving and sensing opportunities
Perceiving and sensing opportunities
Factors involved in sensing opportunities
Factors involved in sensing opportunities
Factors involved in sensing opportunities are:
Ability to perceive and preserve basic ideas which could be used commercially
Ability to harness different sources of information
Vision and Creativity
Ability to perceive and preserve basic ideas
Ability to perceive and preserve basic ideas
Spotting an idea often triggers the process of sensing an opportunity. The following are the various sources which lead to the emergence of basic ideas.
Problems: When a problem exists, an idea leads to a solution to resolve that problem, it emerges as a business opportunity.
Change: A change in social, legal, technological aspects etc. leads to new opportunities to start a business.
Inventions: New products or services leads to new business opportunities.
Competition: Competition often results in emergence of new and better ideas that result in new business opportunities.
Innovation: Creating new things of value as well as new and creative processes that add value to the existing products or services. For example, computers to tablets.
Ability to harness different sources of information
Ability to harness different sources of information
Various sources like magazines, journals, books, seminars, trade shows, family members, customers, friends etc. help in getting information that results in evolution of basic ideas.
Vision and creativity
Vision and creativity
Creativity in innovating a solution and vision. The entrepreneur should be able to creatively identify an idea to generate a valuable solution to a problem. Once the solution is identified their vision to convert the solution into business opportunity helps them to move forward, overcoming all the obstacles
Environment Scanning
Environment Scanning
Careful monitoring of an organization's internal and external environment for detecting early signs of opportunities and threats that may influence its current and future plans.
Why do we need to scan our environment?
Why do we need to scan our environment?
In a rapidly changing environment, one rule of thumb applies: If you don't adapt, you don't endure. This is the core idea behind environmental scanning. The right information, combined with the right adaptations, can determine an organization's future viability. If an entrepreneur is not aware of the environment surrounding his/her business, he/she is sure to fail.
Importance of environment
Importance of environment
The benefits of understanding the relevant environment of business are
Identification of opportunities to get first mover advantage
Formulation of strategies and policies
Tapping useful resources
Better performance
Sensitisation of entrepreneurs to cope up with rapid changes
Image building
Analysis of environment
Analysis of environment
Information for environmental scanning can be collected from several sources. These include:
Verbal information from customers, wholesalers, retailers, distributors, consultants, etc.
Records of companies
Government publications
Publications by various financial institutions
Formal studies conducted by strategic planners
Environmental factors
Environmental factors
Entrepreneurship environment refers to the various forces within which various small, medium, and large enterprises operate. These factors exert influence upon each other and do not operate in isolation. Business environment consists of two levels, i.e., microenvironment and macro environment.
PESTEL Model
PESTEL Model
Political: The political environment includes taxation policy, government stability and foreign trade regulations.
Economic: The economic environment includes interest rates, inflation, business cycles, unemployment, disposable, income, energy, availability, and cost.
Social: The social/cultural environment includes population demographics, social mobility, income distribution, lifestyle changes, attitudes to work and leisure, levels of education and consumerism.
Technological: It is influenced by government spending on research, new discoveries and development, government and industry focus of technological effort, speed of technological transfer and rates of obsolescence.
Ecological: It considers the ways in which the organisation can produce its goods or services with minimum environmental damage.
Legal: It covers areas such as taxation, employment, law, monopoly, legislation, and environmental protection laws.
Problem Identification
Problem Identification
A problem is a roadblock in a situation, something that sets up a conflict and forces you to find a solution. When an entrepreneur identifies such a road block, he/she is said to have identified the problem.
Objectives of problem identification:
Objectives of problem identification:
It should clearly state the problem
Identify target group facing the problem
Find the market acceptability of the solution to the problem
Uses of Problem Identification
Uses of Problem Identification
Bring out new products in the market
Understand the problems and needs of the market
Be creative
Increase employment generation
Increase national income (of the country)
Idea generation
Idea generation
The process of creating, developing, and communicating ideas which are abstract, concrete, or visual. It includes the process of constructing through the idea, innovating the concept, developing the process, and bringing the concept to reality.
Idea fields
Idea fields
By following different ways for generating ideas an entrepreneur collects a number of ideas. The process of generation of ideas can be streamlined by developing an awareness for different idea fields. This will help the entrepreneur in enlarging the scope of thinking, at the same time structuring the ideas according to convenient frames of reference.
Various sources of idea fields
Various sources of idea fields
- Natural resources:
Ideas can be generated based on natural resources. A product or service may be desired from forest resources, agriculture, horticulture, mineral, animal husbandry, wind, sun, and human resource. A further exercise with a field may generate many useful product ideas.
- Existing products or services:
A great business idea combines skills with imagination and market demand. A business opportunity or idea often comes from everyday problems that someone solves. Successful businesses find a need and fill it by providing a service or product.
- Market driven or demand driven ideas:
Market research is any organized effort to gather information about target markets or customers. It is a very important component of business strategy. The term is commonly interchanged with marketing research; however, expert practitioners may wish to draw a distinction, in that marketing research is concerned specifically about marketing processes, while market research is concerned specifically with markets.
- Trading related ideas:
Trading these days is not limited to ordinary grocer or distributor outlets. With increasing consumerism, the scope and nature of trade has enlarged; local trade, import and export, e-commerce are all making trading a very wide area of enterprise.
- Service sector ideas:
Entrepreneurial opportunities are not only restricted to the manufacturer. Service sector is the most growing field these days, the world over, thanks to emerging knowledge societies and advancements in Information and Technology.
- Creative efforts:
We have seen that creativity is an important and key component of the talents and abilities needed for an entrepreneur. Apart from applying creativity to spot and harness opportunities, it can also be applied to develop new products and services.
There are five ways in which creative ideas can be generated:
Develop a new product or service.
Improve an existing product or service
Find a new process or resource for manufacturing a product.
Find new markets for existing products or services.
Find a new use of an existing product or service.
Product identification
Product identification
After opportunity spotting and scanning of the environment, an entrepreneurial idea should lead to a definite product.
Transformation of ideas into opportunities
Transformation of ideas into opportunities
While the initial spotting of ideas (i.e., basic idea) is of a random nature, the development of ideas after scanning the environment (i.e., post scanning) idea is a more purposeful activity. Thus, the former is an experiential process while the latter is a strategic process. All basic ideas must undergo a vigorous process of examination, evaluation, analysis, and synthesis to identify viable opportunities. This process of a basic idea becoming an opportunity is shown in the diagram below:
Conversion of idea into opportunity
Idea and opportunity assessment
Idea and opportunity assessment
In a sense generating ideas is relatively an easy exercise, especially if it is done in groups. However, this process can also become a wild goose chase because all ideas need not necessarily become sound business opportunities. We have to assess it in terms of the potentiality of the opportunity.
The steps involved in this type of investigation are discussed below:
Product identification
Application and use
Level of operation
Cost
Competition
Technical complexity
Annual turnover and profit margin
Market assessment
Market assessment
Selection of a product or service will depend upon many factors. While assessing the market, an entrepreneur has to prepare details on the following lines:
Demand
Supply and nature of competition
Cost and price of product
Project innovation and change
Trend spotting
Trend spotting
It means identification of new trends. This will help the entrepreneur to understand the market and produce goods or provide services in sync with the market trends.
Professional trend-spotters charge big money for reports and industry trend updates. But there are some entrepreneurs who spot these trends themselves.
Ways in which an entrepreneur spots trends
Ways in which an entrepreneur spots trends
Read trends
They regularly read the leading publications and websites affecting their business. This could include industry publications, trade association sites, major newspapers, key business magazines, thought leaders and influential bloggers.
Talk trends
Talking to people is an equally important trend-spotting tactic. They get involved in specific industry's trade association and attending events both online and offline. They also take advantage of social networking tools like social network websites and forums.
Watch trends
There's no substitute for getting out in the marketplace. They make it a point to regularly go where their target customers spend time together. If the customers are teenagers, that might be the local mall. If they are businesspeople, it might be the region's "power lunch" restaurant or office park restaurant center. The entrepreneur spends some time simply watching and observing.
Think trends
As an entrepreneur begins gathering all these information regularly, they will start to develop a “trend-spotter mind.” As they absorb and mull about what they've read, heard, and observed, they'll start to make connections and observations that will lead to business-boosting insights.
Creativity
Creativity
Creativity is important to entrepreneurs because it is the first stage in the process of innovation, providing the stimulus for opportunity discovery and new venture creation. As new entrants, entrepreneurs often justify themselves upon the same dimensions as creativity: novelty, usefulness, and appropriateness.
From these initial acts of creativity, entrepreneurs must build effective organizations that can repeatedly bring ideas to commercially valuable forms in order to survive and grow.
Idea germination: This is the seeding stage of a new idea. It is the stage where the entrepreneur recognises that an opportunity exists. The idea germination takes place according to interest, curiosity of the entrepreneur according to which opportunity is explored and exploited to its best potential. Creative idea germinates besides the interest, the need of a specific problem or area of study.
Preparation: On the basis of the idea, interest, and curiosity the entrepreneur adjudges the need, and he starts looking for the answer to implement the idea. If the idea is to launch a new product or service, then market research is conducted. That happens because the seed of curiosity has taken form of an idea, the entrepreneurs foresee the future of the product.
Incubation: This is the subconscious assimilation of information. This is the transition period. The entrepreneur starts thinking about the idea and implementation in his sub-conscious mind.
Illumination: In this period of illumination the idea re-surfaces in realistic way and entrepreneur comes out with viable plan to give practical shape by collecting raw-material, arranging funds, policy–making for the implementation of idea.
Verification: Also called the validation or testing stage. This is where the idea is verified to prove that it has value. This is the most difficult phase of creativity as obstacles begin to appear. This is the developing stage in which knowledge is developed into application.
Innovation: It is the process of entrepreneurship which involves the translation of a useful idea into an application which has commercial value. It takes persistent effort to work out analytically the details of the enterprise or service, to develop marketing strategies, to organize finances and strategize operations.
Elements in the innovation process:
Elements in the innovation process:
Analytical planning: Carefully identifying the product or service features, design as well as the resources that will be needed.
Resource organization: Obtaining the required resources, materials, technology, human or capital resources.
Implementation: Applying the resources to accomplish the plans and delivering results.
Commercial application: The provision of value to customers, reward employees, and satisfy the stake holders.
Selecting the right opportunity
Selecting the right opportunity
The entrepreneur should investigate numerous factors before deciding on the opportunity. Even if the opportunity looks promising, an entrepreneur should investigate the environmental factors before choosing the best opportunity.
Summary
Summary
Business Opportunity
Business Opportunity
Business opportunity can be described as an economic idea which can be implemented to create a business enterprise and earn profits.
Elements of business opportunity
Elements of business opportunity
Assured market scope
An attractive and acceptable rate of return on investment
Practicability of the entrepreneur to encash it
Competence of the entrepreneur to encash it
Potential of future growth
Exploring opportunities in the environment
Exploring opportunities in the environment
Opportunity spotting by analyzing the needs and problems that exist in the environment
Evaluating the ideas received from various sources to find a creative solution
Identifying a product or service through innovation
Factors involved in securing opportunities
Factors involved in securing opportunities
Ability to perceive and preserve basic ideas which could be used commercially
Ability to harness different sources of information
Vision and creativity
Various sources which lead to the basic ideas
Various sources which lead to the basic ideas
Problem
Change
Inventions
Competition
Innovation
Importance of environment
Importance of environment
Identification of opportunities to get first mover advantage
Formulation of strategies and policies
Tapping useful resources
Better performance
Sensitization of entrepreneurs to cope up with rapid changes
Image building
Analysis of environment
Analysis of environment
Verbal information from customers, wholesalers, retailers' distribution, consultants, etc.
Record of companies
Government publications
Publications by various financial institutions
Formal studies conducted by strategic planners
Environmental factors
Environmental factors
Internal factors (Microenvironment)
External Factors (Macroenvironment)
Pestel Model
Pestel Model
Political
Economic
Social
Technological
Ecological
Legal
Idea Generation
Idea Generation
The process of creating, developing, and communicating ideas which are abstract, concrete, or visual.
Sources of business ideas
Sources of business ideas
Examine your own skill set for business ideas
Keep up with current events and be ready to take advantage of business opportunities
Invent a new product or service
Add value to an existing product
Investigate other markets
Improve an existing product or service
Get on the band wagon
Ideas fields
Ideas fields
Natural resources
Existing products
Market driven ideas
Funds related ideas
Service sector ideas
Creative effort of the entrepreneur
Steps involved in idea and opportunity assessment
Steps involved in idea and opportunity assessment
Product identification
Application and use
Level of operation
Cost
Competition
Technical complexity
Annual turnover and profit margin
Factors to be kept in mind while assessing the market
Factors to be kept in mind while assessing the market
Demand
Supply and nature of competition
Cost and price of product
Project innovation and change
Ways to spot trends
Ways to spot trends
Read trends
Talk trends
Watch trends
Think trends
Creative process
Creative process
Idea germination
Preparation
Incubation
Illumination
Verification
Innovation process
Innovation process
Analytical planning
Organising resources
Implementation
Commercial application
“It’s fine to celebrate success, but it is more important to heed the lessons of failure.”
“It’s fine to celebrate success, but it is more important to heed the lessons of failure.”
-Bill Gates
-Bill Gates
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