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Chapter 3

The document discusses the entrepreneurial process of starting a new venture. It covers identifying business opportunities by understanding customer needs and wants, evaluating opportunities based on various factors, and creating a business plan to outline goals and strategies for a new business.

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kgebrie23
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32 views21 pages

Chapter 3

The document discusses the entrepreneurial process of starting a new venture. It covers identifying business opportunities by understanding customer needs and wants, evaluating opportunities based on various factors, and creating a business plan to outline goals and strategies for a new business.

Uploaded by

kgebrie23
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Starting the Venture

An Entrepreneurial Process
 At start-up, the entrepreneurship process is a course of action that involves
all functions, activities and actions associated with identifying and
evaluating perceived opportunities and the bringing together of
resources necessary for the successful formation of a new firm to pursue
and seize the said opportunities.
 Once set up, the process of entrepreneurship becomes effectively a cyclical
progression of opportunity targeting and making strategic decisions
regarding the allocation of scarce resources in pursuit of value adding
opportunities
 Business is all about selling a product or service
 Every time something happens, positive or negative,
ask, where is the opportunity here?
 Learn how to spot an opportunity?
 Keep your eyes open all the time
A business idea starts with an opportunity
A business opportunity exists when there is demand for goods
and services to meet the needs and wants of community.
 Changes in the environment create opportunities; cultural, social,
legal, economy, political, and technology (C-SLEPT).
 Opportunity based
 Must add value/unique characteristic
 Resource/input/manpower/skill based
 Demand driven
 Coincide with C-SLEPT
 Free from legal problem
 Quick return
 Long – term gain
 Free from unfair advantage
 Competition free/few competitors
 Need – is something basic in life such as food, drink, clothing and shelter.
 Want – is extension of need; craving for better than the basic need.

NB: The better the economy of people, the more business


opportunities available for the entrepreneurs.
 Human needs and wants are unlimited.
 Next, translate the needs ad wants into products or services
 Products – are physical forms e.g. car, hand phone, books.
 Services – non-physical form, intangible products e.g. cab service,
Telco network, training.
3) Factors to be considered:
1. Environmental scanning
- Help identity business opportunities
- 2 approaches:
1) Macro scanning
e.g. population, ethics, average income
2) Micro scanning
e.g. family size, individual income
• To see what is available in oneself:
i. Experience – match business with experience. E.g. engineer work with public
work dept will become a civil engineer.
ii. Knowledge and skill – do business on what he really knows what to do. E.g.
contractor must not only knows how to manage his business but also how to
construct the buildings
To see what is available in oneself
iii. Financial situation – business that is planned to be implemented must
match with financial ability. E.g. land owner can do housing business.
iv. Interest – select business based on his interest e.g. a person with gardening
hobby can open nursery.
v. Networking – good networking generate business opportunity e.g. trading
 Business opportunities need to be coordinated with the religious
and society’s values or norms.
 Values and norms = what is perceived as useful and beneficial to

the community.

 Examples, Nuclear – powered electricity generator, poultry farm


nearby residential areas.
 Legality:
 Ensuring the business opportunity is a legal one.
 E.g. selling private DVD, imitate product e.g. cross
 Degree of competition
 Choose business that is not monopolized
 E.g. supplying sugar
 Capital requirements
 To identify sufficient funds to finance the business.
 E.g. own money, debt financing, FDI
 Risks involved
 Expecting the potential uncertainties & considering the percentage of success &
failure.
 E.g. sell 2nd hand cars

-
 After fulfill step 1 to 3, it is time for the entrepreneur to
select a business opportunity.
 Then prepare the business plan
• A business plan is
 a formal statement of a set of business goals, which are believed to be
attainable, and the plan for reaching those goals.
 a document that describes the objectives of a business and which steps
should be taken to make the goals achievable, reducing risk and uncertainty.
 a document that presents the basic idea for the venture and includes
descriptions of where you are now, where you want to go, and how you
intend to get there.
 an entrepreneur’s game plan; it crystallizes the dreams and hopes that
motivate an entrepreneur to take the startup plunge.
 It’s a document that convincingly demonstrates that your business can sell
enough of its product or service to make a satisfactory profit and to be
attractive to potential backers.”

 For Gumpert, the business plan is essentially a selling document used to


convince key individuals, both inside and outside the firm, that the venture
has real potential.
 For the entrepreneur starting a new venture, a business plan has three basic
objectives:
 1. To identify the nature and the context of the business opportunity—that is,
why does such an opportunity exist?
 2. To present the approach the entrepreneur plans to use to exploit the
opportunity
 3. To recognize factors that will determine whether the venture will be
successful
 The justification often used for not writing a business plan goes something like
this: “Companies that start up based on business plans are no more successful
than those that do not.” It is true that studies attempting to measure the success
of entrepreneurs with business plans against the success of those without have
produced mixed results. Some findings suggest a relationship; others find none.
Clearly having a business plan is not a prerequisite for success. This simply tells
us that the business plan is not the business.
 It may well be that some entrepreneurs spend untold hours writing a 60-page
business plan with another 50 pages of appendixes but never follow the plan.
In such cases, we can say confidently that writing the plan was a waste of
time. What matters is not writing a plan, but implementing it. If the plan is not
going to lead to action, there is no need to bother to write it. Only if you
execute the business plan does it have a good chance of making a difference .
 To determine the feasibility and potential outcomes venture, considering
marketing, financial and operational aspects;
 To clear the opportunities and establish the future outcomes of the venture;
 To identify the necessary resources for starting the operations of the new
business;
 To develop ideas on how should the business be conducted
 To analyze future scenarios for the venture;
 To refine strategies and avoid mistakes;
 To assess the present stage of the company, and provide a
reference for future comparison;
 As a milestone for strategic planning, commercial decisions,
operational forecasts and budgeting the new decisions;
 As a tool for negotiating with partners, suppliers and customers,
and also to contribute for obtaining banking credit access.
The end!

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