business opportunities

4.Introduction

Opportunities can exist on paper or in the form of ideas.

Opportunities usually related to the entrepreneur’s work experience,hobbies, or social environment.

Opportunities can be found in many ways and in many places.

Many people see opportunities but only entrepreneur acts upon them.

4.1 Definition Of BusinessIdea And Opportunity

.

business idea is a business concept that results in profits if it is turned into a tangible product or service.

opportunity also defined as the potential to create something new that involves change in knowledge, technology, economy, politics, social, and demographic conditions.

4.2 Sources of business ideas and opportunities

can be obtained through primary and secondary sources.

a) primary sourcesrefer to first-hand data or information gathered directly through : - ~ observations.~ experiments.~ interviews.~ surveys.

Observation

~ data is gathered by observing and recording

the respondent’s actions in activity.

Experiments

- experiments or product sampling is another

option.

Interviews

- field research covers interviews with customers,

suppliers, competitors, and industry experts.

- interviews conducted in two ways : ~ personal interview

~ telephone interview

Surveys

- refers to the development of a short questionnaire with

respect to the targeted product.

- the questions should be very specific.

b) Secondary sourceinvolved gathering data that have already been compiled and are available.

it is initially conducted for one purpose using existing data which is :- ~ reliable~ available references~ mass media and electronic media

although secondary source relatively inexpensive, they often become outdated and outmoded, given that they are used for a purpose other than for which was intended.

Reliable existing data

- cab be used by entrepreneur is existing data which is

reliable.

- example : information obtained from annual report of

companies.

Reference

- an entrepreneur can use reference such as publish

information from then library, internet and so on.

Mass media and electronic media

- advertisement and information in the newspaper, magazines

and internet.

Information on raw materials can be a business opportunity

for an entrepreneur.

4.3 PROCESSING OF REGONIZING, ANALYSING AND CHOOSING A BUSINESS

OPPORTUNITY

Identifying, analysing, and choosing business opportunities are essential to determine if the venture can make profits and sustains its competitiveness.

The opportunity is identify through input from consumers, business associates, channel members, or technical people

Each opportunity must be carefully screened and evaluated.

Evaluation is the most critical element in the entrepreneurship process.

Process in recognizing, analysing and choosing business opportunity

a) Recognizing customer needs and wants

d) Screening or choosing business

opportunities

c) Performing self-assessment

b) Analysing or scanning the environment

f) Preparing or constructing a business plan

demographics, population structure,

income, and taste

e) Matching societal values, community’s response or

people’s acceptance

Study on local resouces

Import and export data

Technological breakthrough

Industrial linkage

Development projects by the public and private sectors

New government policies and regulations

Mass media and electronic media

Experience

Skills

Knowledge

Interest

Networking

Financial ability

Competition

Business risk, financial risk such as credit, cash liquidy, loan and currency

exchange

Fixed capital requirement, working,

capital and growth opportunities

Legality

Recognizing Customer Needs And Wants

An entreprenuer has to be sensitive in identifying the needs and wants of customers.

A need is something basic in life.

Wants are something that is more than a basic need.

Scanning The Business Environment

The business environment should be analysed in terms of :-

~demographics

~local resources

~new government policies and regulations

~data on import and export

~industrial linkage

~development projects by public and private sectors

~technological breakthrough

~sources from mass media and electronic media

Demographics

Are the characteristics of people in a population.

If entrepreneur studies the demographic of his customer, he/she will be in a better position to predict the product or servis that they will buy.

Needs and wants are based on the structure, income, and taste of population.

Local Resources

Still an abundance of local resources that are untapped and have the potential to become investment opportunities.

Fountains and natural attractions at certain location can be turned into business ideas

New Government Policies And Regulations

An entrepreneur can identify business opportunities by referring to the existing law and government regulations.

Data on import and export

The continuous increase in the value and quantity of imported and exported products or services reflect a potential market at the local and international level.

The same goes for policies on import substitution industries and export promotion

These issues can be seen as profitable opportunities.

Industrial linkage

An entrepreneur can identify the industry that requires input from other industries.

This will develop linkage among industries of the same sector or different sectors.

Development projects by public and private sectors

There are various developmental programmes by the government and firms that have directly or indirectly opened up business opportunities for entreperneurs.

Technological breakthrough

New technological breakthrough can create new markets and opportunities for business

Mass Media And Electronic Media

Can be sources for generating business ideas.

Example : a job advertisement posted by a company foor the vacancy of sales executive can be consideras a business idea to the entrepreneur.

Performing Self-evaluation

Self-evaluation must be made before making a commitment.

Should be based on the ~ individual’s experience ~ knowledge ~ skills ~ financial ability ~ interest ~ networking ability

Experience

An entreperneur runs a business that’s suit his experience in the profession.

The intelligence to find an opportunity from past experience can be a way to gain success in business.

Knowledge

Entreperneur has to be equipped with the knowledge on a operating a business.

Skills

Entreperneur must have the necessary skills in carrying out his job.

Skills usually born from experience and knowledge.

Advantages that is difficult to obtain.

Financial ability

Business must be parallel with the financial ability of the entrepreneur.

Capital is the most basic aspect to think about before opening up a business.

Start a small business with entrepreneur existing capital.

Growing business will help the entrepreneur in securing financing for expansion.

Interest Is an important aspect

Must be taken seriously

It can give self-confidence

Entreperneur will be able to concentrate on his profession

Networking ability

Entreperneur needs to know how to reduce unnecessary procedures and bureucracy in the business.

Should be mindful.

assessing society’s values, community’s response, or society’s

acceptance

Chemistry between a business ideas and the society is an important aspect that must taken before starting a business.

Business opportunity must be consistance.

choosing a business opportunity

Criteria that must be choose by entrepreneur in business opportunity is :-

LegalityCompetitorsCapital requirementRisk

LegalityThe sugestion of business ideas must be prove by the law.

Competitors

Those who are in the same business

Have a potential to serve the entrepreneur ‘s customers.

Entrepreneur can identify competitors by asking customers from his existing business.

Competitors are identify ~ the entrepreneur should identify the strength and weeknesses of his competitors in term of organizational terms.

Capital requirement

Capital – the amount invested in the company.Three types of capital :

a)Fixed or permanent capitalFixed capital is the amount of the capital that been used to buy the asset of in the company.

b) Working capitalReferred to as operating capitalAlso known as assets of business that can be used to supports business operations.Often used to pay bills and salaries, to buy inventories and others.

c) Plantation or growth capitalNot related to current business situation.Used to help small business change its primary direction.

Risk

Define as a period of uncertainly experienced by a business as a result of unforeseen events which lead to either poor earnings and resultant failure.

Entrepreneur should be aware of the risks.

Risks face by entrepreneur based on the following aspect :

The level of difficulties in entering the business fieldThe size or amount of capital to be investedThe amount of profit that can be gained from the revenueThe ability and competency of existing workforce or human resources in managing the businessManagement of energy resourcesThe product’s potential to penetrate the market

Two types of risk :i. Business riskii. Financial risk

i. Business riskThe factors which have the tendency and potential of adversely affecting a business operation and ultimately its profitability.Two types of business risk : i. controllable ~ can be manage by entrepreneurii. Uncontrollable ~ almost impossible to prevent

ii. Financial risk

Risk associated with any form of financing

Four categories :i. Credit risk ~ risk when clearing or settlement of

payments are not made when due.ii. Liquidity risk ~ risk of insufficient liquid resources to

make all payments on the due date.iii. Loan risk ~ a form of financing whereby

entrepreneur borrows money as a source of capital to conduct his business.

iv. Currency exchange risk ~ the high flexibility and changes in currency value impose a high risk.

4.3.6 Constructing the Business Plan

The final step taken by entrepreneur in recognizing, analysing and choosing a business opportunity.

4.4 APPROACHES TO SEEKING A BUSINESS IDEA

There are several approaches of seeking business ideas

Fulfilling needs and interestsAnalysing life problems

Diversifying the usage of goodsObserving changes in the community

Using the latest technologyObserving and establishing a network

Fulfilling needs and interests

Ideas for setting up business are found from an individual’s different needs or interest that are constantly changing.

Analysing life problems

Problems experienced in life can sometimes provide a good idea for starting a business if the enterpreneur thinks creatively

Diversifying the usage of goods

Today’s community prefers devices with multi-purpose usage

The concept of recycling also a source of starting a business

Observing changes in the community

Those who are alert with the changes in the community’s lifestyle

Using the latest technology

Changes in technology can change the structure of the industry and the market

Give’s an entrepreneur the opportunity to innovate his products and services

Observing and establishing a network

Create a network at the workplace and make it a source of innovative ideas

4.5 GUIDLINES IN CHOOSING A BUSINESS IDEA & opportunity

The guidelines in choosing a business idea or opportunity are:

Data collection and researchPreparation of a complete business planEstablishnment of linkages or networks

FundingHiring of a workforce if necessary

Confidence and good time management

Data collection and research

Entrepreneur collects information as much as possible pertaining to the business

Carry’s out research in relation to the services, products, or relevant industries

Methods to produce the output, competitors and obstacles that might hinder the progress of the business

Reads journals

Attend any gathering of industrial societies to keep himself informed with latest information

Preparation of a complete business plan

Prepare a complete business plan which includes the business mission

Establishnment of linkages or networks

A pontential enterpreneur should develop a lingkage or network with other enterpreneurs when he starts his business

Should register as a member in professional clubs

Funding

Learn how to obtain funding from friends,family members financial institutions or the government

Hiring of a workforce if necessary

Is an important asset to succeed in an enterpreneurial business

Should hire workers only when there is a necessity

Confidence and good time management

Enterpreneur has to have confidence

Manage time wisely so that can balance time between the business and the family and friends

Should have the added-value to attract customers, distributors and retailers.