Business Management

COBMA2-11

Introduction to entrepreneurship and

Developing successful Business Ideas
Lesson 1
 Disclaimer

Please note that content made available on myLMS may deviate only
slightly from what is covered in lecturer-led sessions, however, the content
uploaded to myLMS represents all the material that you need to refer to in
preparation for your assessments.
 Eduvos and the Flipped Classroom

1 2 3
Before this lecturer-led session During this lecturer-led session After this lecturer-led session

At home, in your self-study time, you During your lecturer-led session(s), you will Depending on how difficult this lecturer-led
worked through myLMS content to prepare engage with your peers and lecturer in session is, your lecturer may recommend
you for this lecturer-led session. You have active learning. I.e. you will have an some concepts to revise for this week's
completed any practice activities and opportunity to ask your questions, to learning opportunities. Then you will focus
prepared any questions you may still have debate topics, and to practice working on the following learning opportunities on
on the content. The lecturer-led session will through the technical aspects of what you myLMS in your self-study time to prepare
not be a traditional lecture. learnt at home. You will be exposed to for the next lecturer-led session(s).
higher-order thinking activities. Your
lecturer will guide you on what to prepare
before attending your next session.
 Module Aim and Description
• The Aim of this module is to provide you with the theoretical and practical understanding of
the entrepreneurial process, which is divided into four parts: deciding to become an
entrepreneur, developing successful business ideas, moving from an idea to an
entrepreneurial firm, and managing and growing an entrepreneurial firm.

• Module Description

✓The role of entrepreneurship in an economic unit has been well documented and is of interest
to businesspeople, politicians, university professors, and students.

✓Creating and growing a new venture inside or outside the corporation is a task that few
individuals are able to accomplish, even though many have the desire to do this.

✓This course is based on an understanding of all the functional areas of business and applies
the tools and analytical techniques of these functional areas to the new venture creation
process in a domestic and international setting.
Learning Outcomes
Learning Outcomes
Learning Outcomes
Prescribed Resources
Time Allocation

Engelbrecht, W. and Van Greunen, C. 2024. Business Management: Back to Basics. 2nd edition. Cape Town: Juta. ISBN: 9781998963416
Assessments

Engelbrecht, W. and Van Greunen, C. 2024. Business Management: Back to Basics. 2nd edition. Cape Town: Juta. ISBN: 9781998963416
Assessments
Assessments
Assessments
Module Content
Business Management
COBMA2-11

Introduction to entrepreneurship and

Developing successful Business Ideas
Lesson 1
 What will be covered in today’s session?

• Definition of entrepreneurship and discuss why some people

entrepreneurs

• All entrepreneurs are recognised by shared characteristics th

discussed

• Common myths about entrepreneurship

• Different start-up firms

• The positive effects of entrepreneurship and entrepreneurial

economies and societies

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Questions for discussion
1 [What characteristics do you think makes a successful entrepreneur?]

2 [What myths do you think surrounds entrepreneurship?]

3 [Do you think that there is only ‘one’ type of start-up firm?]

[Do you think entrepreneurship has a positive or negative impact on the economy and
4 society?]

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Introduction to Entrepreneurship
in the South African context
• The UK-based Global Entrepreneurship Monitor (GEM) has been carrying out research on entrepreneurship ecosystems around
the world since 1999.

• GEM is a consortium of teams primarily associated with top academic institutions in various countries.

• South Africa contributes to this research through the GEM report prepared by the University of Stellenbosch Business School
(USB) and the Small Enterprise Development Agency (SEDA) as funder. https://www.usb.ac.za/usb_reports/south-africas-gem-
report/

• South Africa’s entrepreneurial ecosystem was rated one of the most challenging in the sample of participating economies in 2019
and has exhibited little sign of improvement over the past few years.

• In 2019, South Africa ranked 49th out of 54 economies on GEM’s National Entrepreneurship Context Index, ahead of only Croatia,
Guatemala, Paraguay, Puerto Rico and Iran.

• This index provides a single composite number that can express the average state and quality of the entrepreneurial ecosystem
in a country, and be compared to those of other economies. https://www.usb.ac.za/usb_reports/south-africas-gem-report/
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 What is Entrepreneurship?
• Entrepeneur

✓ The word “entrepreneur comes from the French words Entre, which means “between” and Pendre meaning “Take on the risk” between buyers
and sellers or who “undertake” a task such as starting a new venture.

✓ Inventors and entrepreneurs differ form each other in which way:

✓ Inventors creates something new

✓ Entrepreneur assembles and then integrates all the resources needed: money, the people, the business model, the strategy, and the risk-
bearing ability to transform the invention into a viable business

• Entrepreneurship

✓ Is defined as the process by which individuals pursue opportunities without regard to resources they currently control for the purpose of
exploiting future goods and services

✓ It is also defined as the art of turning an idea into a business

✓ In essence, an entrepreneur’s behaviour finds him or her trying to identify opportuinities and putting ideas into practice.

✓ This can be achieved by either an individual or a group and typically requires creativity, drive and a willingness to take risks

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 What is Entrepreneurship?
• Corporate Entrepreneurship

✓ Existing firms can also act entrepreneurial

✓ Corporate entrepreneurship is the conceptualisation of entrepreneurship at the firm level.
✓ All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial.
✓ The position of a firm on this continuum is referred to as its entrepreneurial intensity.
✓ Entrepreneurial firms are typically proactive innovators and are not averse to taking calculated risks
✓ Conservative firms on the other hand takes a more “wait and see” approach and are less innovative and risk averse
Entrepreneurial Firms Conservative Firms

Proactive Take “wait and see” posture

Innovative Less innovative

Risk taking Risk averse
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Why do people become
•
Entrepreneurs?
Three primary reasons:

• 1. Being your own Boss

✓Being your own boss means working for yourself instead of an employer and having more control and flexibility over
your work activities.

✓This doesn’t mean entrepreneurs are difficult to work with or that they have trouble accepting authority
✓This could be due to a long-term ambition to own their own firm, or they became frustrated working in traditional
jobs.

✓Some entrepreneurs transition from a traditional job to owning their own business gradually
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Why do people become
•
Entrepreneurs?
Three primary reasons:

• 2. Pursue their own Ideas

✓Some people are naturally alert and when they recognize ideas for new products or services, they have the desire to
see those ideas realized.

✓Corporate innovative entrepreneurs, typically have a mechanism for their ideas to become known
✓Established firms however resist innovation and this leads to good ideas to go
✓People ultimately leave the firm employment to start their own business as the means to develop their own ideas

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Why do people become
•
Entrepreneurs?
Three primary reasons:

• 3. Pursue Financial Rewards

✓ The average entrepreneur does not make more money that someone with similar amount of responsibility in a traditional job
✓ It does however hold the potential to achieve greatness like the Jeff Bezos from Amazon, Mark Zuckerberg of Facebook, etc.
who made billions building their firms.

✓ They can even build their ideas and eventually sell it for millions, even Billions like Sir. Richard Branson with Virgin Records

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Activity

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Characteristics of Successful
Entrepreneurs
• What do you think those characteristics are?

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Characteristics of Successful
Entrepreneurs
1. Passion for the Business

• Frequently, it’s the passion for an idea that gets a business going and keeps it going when times are tough.

• Making a difference in people lives is the primary motivator behind many social enterprises, which is often
started by people who set aside promising careers to pursue a social goal.

• Tunnel Navigation NPO in Belhar is a good example

• Passion is particularly important for both for-profit and not-for-profit entrepreneurial organizations as building a
firm or organization is demanding
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Characteristics of Successful
Entrepreneurs
• Passion for the Business

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Characteristics of Successful
Entrepreneurs
2. Product/customer focus

• Steve Jobs: “The computer is the most remarkable tool we’ve ever built, but the most important thing is to get them in
the hands of as many people as possible.”

• This sentiment underscores an understanding of the two most important elements in business: Products and
Customers

• A product/customer focus also involves the diligence to spot product opportunities and see them through to completion.

• Apple Machintosh originated after Steve Jobs and other Apple employees toured Xerox research facility.

• They used the concepts of what they saw to create a high-quality computer that was user friendly

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Characteristics of Successful
Entrepreneurs
3. Tenacity despite failure

• Because entrepreneurs are typically trying something new, the possibility of failure exists.

• Setbacks and failures inevitably occur during this process.

• The litmus test for entrepreneurs is their ability to persevere through setbacks and failures.

• It’s also important that entrepreneurs have sufficient tenacity to overcome personal obstacles
along with professional ones
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Characteristics of Successful
Entrepreneurs
4. Execution Intelligence

• Is the ability to fashion a solid idea into a viable business is a key characteristic of successful entrepreneurs.

• Execution intelligence is the factor that determines whether a start-up is successful or fails.

• An ancient Chinese saying warns: “To open a business is very easy; to keep it open is very difficult.”

• It is also the ability: to effectively execute a business idea: which means:

• Developing a business model, putting together a new venture team, raising money, establishing partnerships, managing finances,
leading and motivating employees, and so on.

• It also demands the ability to translate thought, creativity, and imagination into action and measurable results.
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
Activity
 Common Myths about
Entrepreneurs
• Myth 1: Entrepreneurs Are Born, Not Made

• This myth is based on the mistaken belief that some people are genetically predisposed to be entrepreneurs

• The consensus of many hundreds of studies on the psychological and sociological makeup of entrepreneurs is:
that entrepreneurs are not genetically different from other people.

• This evidence can be interpreted as meaning that no one is “born” to be an entrepreneur and that everyone has the
potential to become one.

• However, there are personality traits and characteristics that are commonly associated with entrepreneurs;

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Common Myths about
Entrepreneurs
• Myth 2: Entrepreneurs Are Gamblers

• As most people, entrepreneurs are moderate risk takers

• Entrepreneurs are gamblers originates from two sources:

• First, entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set of possibilities than managers or
rank-and-file employees.

• For example, an entrepreneur who starts a social network consulting service has a less stable job than one working for a state
governmental agency.

• Second, many entrepreneurs have a strong need to achieve and often set challenging goals, a behavior that is sometimes equated with
risk taking.
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Common Myths about
Entrepreneurs
• Myth 3: Entrepreneurs Are Motivated Primarily by Money

• It is naïve to think that entrepreneurs don’t seek financial rewards however, money is rarely the primary reason entrepreneurs start new
firms and persevere.

• Colin Angle states: The importance and role of money in a start-up is that our mission was not only to make money, but to change the
world in the process.

• Some entrepreneurs warn that the pursuit of money can be distracting.

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Common Myths about
•
Entrepreneurs
Myth 4: Entrepreneurs Should Be Young and Energetic

• Entrepreneurial activity is fairly evenly spread out over age ranges

• The recent age distribution of business owners, as reported in the Kauffman Index of Start-up Activity, is shown in Table 1.4.

• Although it is important to be energetic, investors often cite the strength of the entrepreneur (or team of entrepreneurs) as their most
important criterion in the decision to fund new ventures

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Common Myths about
•
Entrepreneurs
Myth 5: Entrepreneurs Love the Spotlight

• Some entrepreneurs are flamboyant; however, the vast majority of them do not attract public attention.

• In fact, many entrepreneurs, because they are working on proprietary products or services, avoid public notice

• Entrepreneurs are the source of the launch of many of the 3,100 companies listed on the NASDAQ, and many of these entrepreneurs are
still actively involved with their firms

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
Activity

[Watch the following video:

https://youtu.be/f6nxcfbDfZo]

[With the next video in mind, can you work in

pairs to identify the common myths in the video.]
Activity
 Types of Start-Ups
• Three types of Start-ups

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 The Positive Effects of Entrepreneurship and Entrepreneurial Firms

1. Economic Impact of Entrepreneurial Firms

• Entrepreneurial behavior has a strong impact on an economy’s strength and stability. They provide:

❖Innovation

✓Innovation is the process of creating something new, which is central to the entrepreneurial process.
✓Small innovative firms are 16 times more productive than larger innovative firms in terms of patents per employee.

❖Job Creation

✓Small businesses create a substantial number of new jobs in South Africa.

✓With the National Development Plan predicting that by 2030 SMMEs will generate 90% of the 11 million new jobs
aimed for the future. (Business Tech. 2018)
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 The Positive Effects of Entrepreneurship and Entrepreneurial Firms

2. Entrepreneurial Firms’ Impact on Society

• The innovations of entrepreneurial firms have a dramatic impact on society.

• Think of all the new products and services that make our lives easier, enhance our productivity
at work, improve our health, and entertain us.

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 The Positive Effects of Entrepreneurship and Entrepreneurial Firms

3. Entrepreneurial Firms’ Impact on Larger Firms

• Many entrepreneurial firms have built their entire business models around producing products
and services that help larger firms become more efficient and effective.

• Many exciting new products, such as smartphones, digital cameras, and improved
prescription drugs, are not solely the result of the efforts of larger companies with strong
brand names, such as Samsung, Apple, and Johnson & Johnson.

• They were produced with the cutting-edge component parts or research-and-development

efforts provided by entrepreneurial firms.

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 The Entrepreneurial Process
• Basic Model of the Entrepreneurial Process

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 What Happens Next?
Week 1 Lesson 2
.

• In the next lesson, lesson 2, you will learn about the

difference between opportunities and ideas.

• You will be able to discuss the personal characteristics

of entrepreneurs that contribute to their ability to
recognise business opportunities, three general
approaches and the different techniques that
entrepreneurs use to identify such opportunities.
 Bibliography

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th
edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
Business Management
COBMA2-11

Recognising Opportunities
Lesson 2
 What will be covered in today’s session?

• Explain the difference between opportunities and ideas.

• Describe the three general approaches entrepreneurs use to identify

opportunities.

• Discuss the personal characteristics of entrepreneurs that contribute to their

ability to recognize business opportunities.

• Identify and describe techniques entrepreneurs use to generate ideas.

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 The differences between
Opportunities and Ideas
• A business opportunity is a favorable set of circumstances that create a need for a new product, service, or
business.
• Fresh opportunities are hard to spot
• The key to opportunity recognition is to identify a product or service that people need and are willing to buy, not
one that an entrepreneur wants to make and sell.
• Before getting excited about a business idea, it is crucial to understand if the idea fills a need and satisfies the
criteria for an opportunity.

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 The differences between
Opportunities and Ideas
• It is important to understand that there is a difference between an
opportunity and an idea.

• An idea 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 with.

• Before getting excited about a business idea, it is crucial to understand if

the idea fills a need and satisfies the criteria for an opportunity.

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Three ways to identify
opportunities
• There are three approaches entrepreneurs use to identify an opportunity their new venture can choose to
pursue

• Once an entrepreneur understands the importance of each approach, she or he will be much more likely to
look for opportunities and ideas that fit each profile.

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Three ways to identify
opportunities
• Trends create opportunities for entrepreneurs to pursue.
• The most important trends are:
✓Economic forces
✓Social forces
✓Technological advances
✓Political and regulatory changes
It’s important to be aware of changes in these areas.

Environmental Trends Suggesting Business, Product, or Service Opportunity Gaps

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Three ways to identify
opportunities

• Sometimes identifying opportunities simply involves noticing a problem and finding a way to solve it.
• These problems can be pinpointed through observing trends and through more simple means, such as
intuition, serendipity, or chance.
• Many companies have been started by people who have experienced a problem in their own lives,and
then realized that the solution to the problem represented a business opportunity.
• Look for problems!! (I don’t want peace I want Problems)
• People complain about it being hard to sleep through the night, get rid of clutter in their homes, find an
affordable vacation, trace their family origins, get rid of garden weeds, etc.
• As the late John Gardner, founder of Common Cause, observed:

“Every problem is a brilliantly disguised opportunity”

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Three ways to identify
opportunities

• Article Link:
➢https://www.iol.co.za/
news/south-
africa/western-
cape/watch-nyanga-
teen-launches-safe-
women-only-taxi-
service-65c5111a-
ac36-4edc-9bec-
f3a1236eea53

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Three ways to identify
opportunities

• A gap in the marketplace is often created when a product or service is needed by a specific group of
people but doesn’t represent a large enough market to be of interest to mainstream retailers or
manufacturers.

• Product gaps in the marketplace represent potentially viable business opportunities

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
Activity
• There are many days we all find ourselves asking this question:

• “Why isn’t there a product to solve this problem”.

• Have you given any thought to a product or a service that you believe
does not exist as yet, but will definitely address a gap in the market?

• Take a few minutes to give this some thought and write down your
answers, it might be the beginning of something spectacular!
 Personal Characteristics of the
Entrepreneur
• There are many articles and books with a vast list of characteristics of Entrepreneurs. An opportunity cannot be
pursued until it is recognized. Let’s look at some specific characteristics shared by those who excel at
recognizing an opportunity.

• 1. Prior Industry Experience

✓Studies have shown that prior experience in an industry helps an entrepreneur recognize business opportunities.
✓On the other hand, people outside an industry can sometimes enter it with a new set of eyes, and as a result
innovate in ways that people with prior experience might find difficult.
✓For example, Elon Musk, the founder of Tesla, had no prior experience in the auto industry.
✓Debbie Fields, the founder of Mrs. Fields Cookies, had no prior experience in the food industry.
• 2. Cognitive Factors
✓Some people believe that entrepreneurs have a “sixth sense” that allows them to see opportunities that others
miss.
✓This “sixth sense” is called entrepreneurial alertness, which is formally defined as the ability to notice things
without engaging in deliberate search.

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Personal Characteristics of the
Entrepreneur
• 3. Social Networks
✓The extent and depth of an individual’s social network affects opportunity recognition.
✓People who build a substantial network of social and professional contacts will be exposed to more
opportunities and ideas than people with sparse networks.
✓Research results suggest that between 40% and 50% of people who start a business got their idea via a social
contact.

• 4. Creativity
✓Creativity is the process of generating a novel or useful idea.
✓Opportunity recognition may be, at least in part, a creative process.
✓For an individual, the creative process can be broken down into five stages.

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Personal Characteristics of the
•
Entrepreneur
Figure 2.4 Five Steps to Generating Creative Ideas

1. Preparation
➢ Is the background, experience, and knowledge that an entrepreneur brings to the opportunity recognition process.
➢ Over time, the results of research suggest that as much as 50 to 90 percent of start-up ideas emerge from a person’s prior work
experience.
2. Incubation
➢ Is the stage during which a person considers an idea or thinks about a problem; it is the “mulling things over” phase.
➢ Sometimes incubation is a conscious activity, and sometimes it is unconscious and occurs while a person is engaged in another activity.
3. Insight
➢ Is the flash of recognition when the solution to a problem is seen or an idea is born.
➢ This is the moment an entrepreneur recognizes an opportunity.
➢ Sometimes this experience pushes the process forward, and sometimes it prompts an individual to return to the preparation stage.
❑For example, an entrepreneur may recognize the potential for an opportunity, but may feel that more knowledge and thought is required
before pursuing it.
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Opportunity recognition process

•As shown in the figure, there is a connection between an awareness of environmental trends and the
personal characteristics of the entrepreneur because the two facets of opportunity recognition are
interdependent.
❑For example, an entrepreneur with a well-established social network may be in a better position to
recognize emerging technological trends than an entrepreneur with a poorly established social network.
❑Or the awareness of an emerging technology trend, such as digitization, may prompt an entrepreneur to
attend conferences or workshops to learn more about the topic, expanding the social network.
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Techniques for Generating Ideas
• Entrepreneurs identify more ideas than opportunities because many ideas typically generated to find the
best way to capitalize on an opportunity.
• Several techniques are used to stimulate and facilitate the generation of the new ideas for products,
services, and businesses.

• 1. Brainstorming
✓Is the process of generating several ideas about a specific topic.
✓A brainstorming “session” typically involves a group of people and should be targeted to a specific topic
✓The session is not used for analysis or decision making—the ideas generated during a brainstorming
session need to be filtered and analyzed, but this is done later.

Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
Activity
• Brainstorming:

• Mandri and her long-term friend Denise are thinking about starting an
online business to sell baby and toddler clothing. Their enjoyment of being
around little children and their desire to help families with relatively low
incomes to be able to purchase “great quality” clothing at a price they can
afford is a strong force behind their entrepreneurial intentions. They want
to use brainstorming to generate ideas about how to launch their
business.

• 1. How would you explain brainstorming as a technique and describe its

use to Mandri and Denise?

• 2. What are the rules for a formal brainstorming session and why is it
important to stick to these rules identified?
 Techniques for Generating Ideas
• 2. Focus Groups
✓Focus groups involve a group of people who are familiar with a topic, are brought together to respond to
questions, and who are able to shed light on an issue through the give-and-take nature of group
discussions.
✓They work best as a follow-up to brainstorming, when the general idea for a business has been formulated
but further refinement of the idea is needed.

• 3. Library and Internet Research

✓Libraries are an often-underutilized source of information for generating new business ideas.
✓The best approach is to talk to a reference librarian, who can point out useful resources, such as industry-
specific magazines, trade journals, and industry reports.
✓Simply browsing through several issues of a trade journal or an industry report on a topic can spark new
ideas. (Barringer & Ireland. 2019: 92).
✓Large public and university libraries typically have access to search engines and industry reports
✓Examples of Useful Search Engines and Industry Reports
❑ProQuest, BizMiner, IBISWorld, Mintel, LexisNexis Academic
• If you are starting from scratch, simply typing “new business ideas” into a search engine will produce links
to newspaper and magazine articles about the “hottest” and “latest” new business ideas.
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 Activity
• Techniques for Generating Ideas

Open your web browser and start typing “new business ideas”
 Techniques for Generating Ideas
• 4. Other Techniques

✓Firms use a variety of other techniques to generate ideas. Consult your prescribe textbook to look at two of
these techniques:

✓Some companies set up customer advisory that meet regularly to discuss needs, wants, and problems that
may lead to new product, service, or customer service ideas.
✓(Other companies conduct varying forms of anthropological research, such as A form of anthropological
research, such as day-in-the life research.
✓The company routinely sends teams of testers to the homes and businesses of its users to see how its
products are working and to seek insights for new product ideas.

• Intuit uses this technique for its major products:

✓Turbotax (tax preparation and return services),
✓Mint (helps customers manage their everyday finances),
✓Quickbooks (companies are able to track sales, expenses, accept payments, and so forth), and
✓Proconnect (professional tax software).
Barringer, B. R. and Ireland, R. D. 2019. Entrepreneurship: Successfully Launching New Ventures. 6th edition. Pearson Education Limited. Print ISBN: 9781292402826. eISBN: 9781292402871
 What Happens Next?

Week 2 Lesson 3
.

• We will learn about a feasibility analysis is and why it’s important.

• Specifically, product/ service feasibility as well as industry/market and
organizational feasibility analysis.

• You will be expected to be able to explain the purpose of each and

discuss the two primary issues to consider when completing the
different analysis.