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Entrepreneurship
Instructor: Engr. Khubaib
The Entrepreneurial Process The process has four distinct phases:
1. Identification and evaluation of the opportunity
2. Development of the business plan 3. Determination of the required resources 4. Management of the resulting enterprise Identify And Evaluate The Opportunity Opportunity identification and evaluation is a very difficult task. Most good business opportunities do not suddenly appear, but rather result from an entrepreneur’s alertness to possibilities, or in some case, the establishment of mechanisms that identify potential opportunities. For example: Create A Better Product : one entrepreneur asks at every cocktail party whether anyone is using a product that does not adequately fulfill its intended purpose. This person is constantly looking for a need and an opportunity to create a better product New Venture: One entrepreneur always monitors the play habits and toys of her nieces and nephews. This is her way of looking for any unique toy product niche for a new venture. consumers are the bestsource of ideas for a new venture. Identify And Evaluate The Opportunity Get benefit from others weakness:One entrepreneur started a college bookstore after hearing all the students complain about the high cost of books and the lack of service provided by the only bookstore on campus. This evaluation process involves looking at the • length of the opportunity, • its real and perceived value, • its risks and returns, • its fit with the personal skills and goals of the entrepreneur • its uniqueness or differential advantage in its competitive environment. Opportunity Assesment 1. What market need does it fill? 2. What personal observations have you experienced or recorded with regard to that market need? 3. What social condition underlies this market need? 4. What market research data can be marshalled to describe this market need? 5. What patents might be available to fulfill this need? 6. What competition exists in this market? How would you describe the behaviour of this competition? What does the international market look like? 7. What does the international competition look like? 8. Where is the money to be made in this activity? Developing A Business Plan • A good business plan must be developed in order to exploit the defined opportunity. This is a very time‐consuming phase of the entrepreneurial process. • A good business plan is essential to developing the opportunity and determining the resources required, obtaining those resources, and successfully managing the resulting venture. Developing A Business Plan A typical business plan includes the following: • Assessment of the business environment. • A competitor’s analysis. • Description of the business strategic direction. • A detailed description of the potential business (i.e. the products and services, legal structure, governance of the business, etc.). • The management and decision making structure. • The business organization and major appointments. Developing A Business Plan • Marketing and sales plan with multi‐year sales projections. • A human resource management plan. • A resource and infrastructure plan. • A performance management plan. • A detailed multi‐year financial plan. • Timelines for implementation of the plan. • Other issues important to business implementation and growth. Determine The Resources Required • The resources needed for addressing the opportunity must also be determined. • Any resources that are critical need to be differentiated from those that are just helpful. • Care must be taken not to underestimate the amount of variety of resources needed (including human resources). • The downside risks associated with insufficient or inappropriate resources should also be assessed. • An entrepreneur should strive to maintain as large an ownership position as possible, particularly in the start‐up stage. • As the business develops, more funds will probably be needed to finance the growth of the venture, which may require some portions of ownership to be relinquished to the business investors. • Alternative suppliers of these resources, along with their needs and desires, need to be identified. • entrepreneur can structure a deal that enables the recourses to be acquired at the lowest possible cost and the least loss of control. Manage The Enterprise • After resources are acquired, the entrepreneur must use them to implement the business plan. • The operational problems of the growing enterprise must also be examined and effectively managed. • A control system must be established, so that any problem areas can be quickly identified and resolved.