Unit 2 Entrepreneurship(Business Opportunity Identification)
Content
Identification and Selection of Business Opportunity The First Prime Minister of India, Pandit Jawaharlal Jawaharlal Nehru, had emphasized that Øreal progress must ultimately depend on industrialization. Throughout the world, industrialization industrialization has indeed become the magic word of the mid-twentieth countyÙ. Industrialization is widely recognized not only as one of the important
factors for socio-economic transformation and for achieving industrial self-sufficiency, but also for the accelerated development of other sectors s ectors such as agriculture, agriculture, transportation, trade and services. This means that any sector alone can
not be developed without developing other potential sectors, which may directly or indirectly influence it.
Business opportunity identification is a process which accelerates
economic growth, effects structural s tructural changes in the economy, particularly particularly in respect to resource utilization, production functions, income generation, occupational patterns, and population distribution and foreign trade, and induces social change.
Well-trained entrepreneurs can bring industrialization to a developing
country like India.
Thus, entrepreneurship entrepreneurship is one of the most important factors of industrialization in the process of economic growth. Nowadays aspiring entrepreneurs can get information regarding
various investment opportunities from the internet, business magazines, financial institutions, institutions, government, commercial organization, friends and relatives. It is
their ingenuity skill and foresight that can guide them to
choose the best business opportunity. opportunity. The entrepreneur has to select a feasible and rewarding opportunity in
order to make it an enterprise.
Search for Business Ideas What are the motivational factors that drive an entrepreneur to launch a business? Business
opportunity may be defined as an attractive project idea
which an entrepreneur accepts as the basis for his investment decision. When you are offered with a business opportunity, it is astute to ask yourself a pair of vital questions before getting involved. First, is this business opportunity something that you are interested in?
Making sure that it is a job that you possess enthusiasm plus effort for will be one of the initial init ial techniques to the success or failure of your particular business opportunity.
S econd, you will need to do a little real idea and even potentially
market research to choose if the business opportunity is practicable in the customer market. Is this anything that clients will like to obtain and what you can do with
it to outperform your opponents? Discovering the replies to those inquiries may facilitate you to select if
your business opportunity is good economic investment. At last, you truly ought to be sincere with yourself as to whether or not
you own the acquaintance plus ability plan to decide on a specific business opportunity. Be truthful with yourself on this one since you surely do not want your
business opportunity to fail owing to something that you could have fixed.
Evaluation
of Business Idea
You have what you believe to be a great idea for a business. You've noticed a need for some product or service that isn't currently available, and you've observed a company that isn't providing a product best suited for the needs of their customers.
You want to evaluate your idea to determine whether it can actually succeed.
These steps can help with that evaluation.
1.Define
your product or ser vice.
Be specific in your definition. What exactly will you be offering prospective customers? How will it be produced and/or provided? How will it be delivered to the customer? How much will it cost? What are the options? What is the warranty? 2. Describe
your customers.
Who will buy your product or service? Will your customers be businesses or consumers? Why will they buy from you rather than your competitor(s)?
3.
Identify your competitors.
Learn about their products, services and company. You can get plenty of information from the company through annual reports, financial statements, industry publications/reports and marketing materials.
Analyze the competitor's marketing materials. Those materials will tell you what they think are the advantages of their products to the customers.
Is your product or service better than that of the competition?
4. Define your competiti ve advantage.
What makes your product or service better than your competitors' offering? You can gain a competitive advantage in a multitude of ways. You could offer cheaper prices, better quality, faster service or a longer warranty.
Perhaps you have a proprietary technology or method of doing business that provides your business with a competitive advantage.
Competitive advantage is only an advantage in the short term. Competitors will see that advantage and act to overcome it. Successful companies continually look for an advantage over their competitors.
If you don't have some advantage, why would prospective customers buy from you?
5.
Create A Projected Financial Statement .
The projected financial statement forces you to think specifically and accurately about the costs of running the business, building the product, selling and delivering the product or service.
Without this information, you are going into business without knowing whether the business is even feasible.
To be successful, you must be able to sell your product or service at a price that covers the costs directly associated with producing and delivering that product or service to your customers P LUS contribute towards paying other operational costs not to mention providing a profit to the business.
The best way to know whether you can make enough money is to create a profit and loss statement projecting or estimating your revenue and expenses.
Creating this statement is as simple as calculating projected revenue minus projected expenses.
6.How
Will You Communicate The Availability Of Your Product Or
Service To Your Prospecti ve Customers?
Internet advertising , direct mail, radio, television, print advertising, trade shows and outdoor bill boards are all tools a business can use to educate and inform prospective customers about the availability of your product or service.
The challenge is to find out which tools are the most efficient and effective in generating interest and sales.
7. Describe
The Things That Could Go Wrong To Negatively Impact
Your Business.
Loss of suppliers, inadequate sales, insufficient profit, product defects, customer dissatisfaction, government regulation and new, better competitors are examples of things that could go wrong.
What might go wrong with your business? How will you handle those problems should they arise?
8. Decide. After
Completing These Steps, Is Your Business Idea
Sound?
Does your product or service have an advantage in the market? How quickly can the competition adapt to your entry to the market?
Can you generate enough from sales to cover expenses and earn a profit?
If your business idea holds up under this level of scrutiny, go for it.
Model
of Opportunity Recognition Process
Education
Experience
Personal Experience
Prior Knowledge of Markets and Customer Problems Entrepreneurial Alertness
Work Experience
Outcome: Successful Opportunity Recognition
Networks
SOURCE: From Alexander Ardichivili and Richard N. Cardozo, ³A Model of the Entrepreneurial Opportunity Recognition Process´, Journal of Enterprising Culture, Vol. 8, no. 2, June 2000.
The above figure indicates that the key to recognizing an opportunity lies in the knowledge and experience of the individual entrepreneur and, where appropriate, the entrepreneurial business. This prior knowledge is a result of a combination of education and experience, and the relevant experience could be work related or could result from a variety of personal experiences or events. The entrepreneur needs to be aware of this knowledge and experience and have the desire to understand and make use of it. The other important factors in this process are entrepreneurial alertness and entrepreneurial networks. There is an interaction between entrepreneurial alertness and the entrepreneur¶s knowledge of markets and customer problems. Those entrepreneurs who can recognize meaningful business opportunities are in a strategic position to successfully complete the product planning and development process and launch new ventures.
A
feasibility study looks at the viability of an idea with an
emphasis on identifying potential problems and attempts to answer one main question: Will the idea work and should you proceed with it? Before
you begin writing your business plan you need to
identify how, where, and to whom you intend to sell a service or product. You also need to assess your competition and figure out how much money you need to start your business and keep it running until it is established. Feasibility studies address things like where and how the business will operate. They provide in-depth details about the business to determine if and how it can succeed, and serve as a valuable tool for developing a winning business plan.
A
well-prepared feasibility study can be effective evaluation tool
to determine whether or not an entrepreneurial idea is a potentially successful one. What
does a feasibility study include? It should give a
description of the important elements of the entrepreneurial venture and the entrepreneur·s analysis of the viability of the following elements. 1) Detailed product description
2) Identify the target market (Who, Where, how many ) 3) Describe where the product will be distributed
(location, size, channels etc. ) 4) Price determination
5) Promotion plans
Why Are Feasibility Studies So Important? The Information You Gather And Present In Your Feasibility Study Will Help You: List
in detail all the things you need to make the business work; Identify logistical and other business-related problems and solutions; Develop marketing strategies to convince a bank or investor that your business is worth considering as an investment; and Serve as a solid foundation for developing your business plan. Even if you have a great business idea you still have to find a costeffective way to market and sell your products and services. This is especially important for store-front retail businesses where location could make or break your business. For example, most commercial space leases place restrictions on businesses that can have a dramatic impact on income. A lease may limit business hours/days, parking spaces, restrict the product or service you can offer, and in some cases, even limit the number of customers a business can receive each day.
The Components of a Feasibility Study Description
of the Business: The product or services to be offered and how
they will be delivered. Market Feasibility:
Includes a description of the industry, current market,
anticipated future market potential, competition, sales projections, potential buyers, etc.
Technical Feasibility: Details how you will deliver a product or service (i.e., materials, labor, transportation, where your business will be located, technology needed, etc.).
Financial Feasibility: Projects how much start-up capital is needed, sources of capital, returns on investment, etc.
Organizational Feasibility: Defines the legal and corporate structure of the business (may also include professional background information about the founders and what skills they can contribute to the business).
Sources of Information
Hobbies or Personal Interests Abilities, skills and work experience Familiar and unfamiliar services and products External environmental opportunities in the legal-political, economic, demographic, sociocultural and technological sectors Potential
Ideas for So Entrepre neurial Venture
Limitations of what is available at present Approaches that are different and novel Breakthroughs and Advances Niches that are unfilled Changes and trends
Sources Of Entrepreneurial Ideas
Above
given table illustrates some of the more common sources and
what to look for while exploring them. Let us look more closely at the four sources of ideas. 1. Personal
Many
Interests Or Hobbies
entrepreneurial ventures were formed because of an
entrepreneur·s love of doing something such as restoring antique automobiles, etc.
A successful entrepreneurial business might be built around one·s personal interests in a particular product or activity.
2.
Work experiences, knowledge, and skills
By tapping into the knowledge of a particular industry or market gained by working in it, an entrepreneur can pinpoint areas of potential opportunity. For example ² if you have ever travelled, you have undoubtedly seen those suitcases with wheels. Now was not that a great idea! Robert Plath created the first wheeled suitcase, the Travelpro Rollerboard, because in his job as an airline pilot he was constantly carrying his bags from one place to another, and he was looking for a more convenient, comfortable way to do so.
In the process of using his work-related experience, he created not only a new product but also a new industry!
3.
Products And Services Currently
Available
(Both Familiar And
Unfamiliar) What Do
products do you use everyday?
they do everything that you wished they would?
What Can
about products you are not familiar with?
you take what you are familiar with and apply it to those
unfamiliar ones? Answer
to the above questions are sources of idea generation to an
innovative entrepreneur.
4.
External Environment
Positive trends or changes that provide unique and distinct possibilities for innovating and creating value ² in the entrepreneurial context.
These opportunities can be found in the technological, societal culture, demographics, economic and legal-political sectors.
Those were the potential sources of entrepreneurial ideas, but what are the specific things that an entrepreneur should look for?
Basically, he should look for changes and trends, unfilled niches, breakthroughs and technological and scientific advances, different and new approaches, and limitations of what is currently available.
Any of these could provide a potential idea for an entrepreneurial venture.
But,
perhaps this is not enough.
Even
with the wide variety of idea sources, an entrepreneur
may have difficulty in coming up with an idea for his own entrepreneurial venture. At
this point, he may want to use some different, more
structured approaches to help generate ideas. There
are four different structured approaches that he might use:
(i) Environmental Scanning Entrepreneurs' knowledge is critical to building sustainable competitive advantage in the 21st century (Lerner and Almor, 2002; Anand, Glick, and Manz, 2002). Because of increased globalization, rapid technological changes, and increased competition, entrepreneurs are facing new and unexpected challenges. These changes have significantly increased the quality and quantity of information that entrepreneurs must consider when making decisions.
Environmental
scanning is the way in which management gathers relevant information about events occurring outside the company in order to guide the company's future course of action. It
is the search to identify trends that create business opportunities and pose challenges to the continued success of the organization (Costa and Teare, 1994). Environmental scanning is also more than gathering information. It is the process of using environmental information in decision making (Lester and Waters, 1989). It is a means of improving the organizational ability to deal with a rapidly changing environment (Jain, 1984). The external environment of the firm refers to both its task environment (competition, customers and suppliers), and general environment (economic, regulatory, technological, and socio-cultural factors).
(ii) Creativity and Creative Problem Solving
This
is the capability for combining ideas in a distinct manner or
making unusual connections between them.
It means cross-thinking by seeing new angles, connections and approaches.
The
whole area of creativity has been extensively researched
and studied, resulting in a lot of information-all of which can not be covered here.
Here are a few specific techniques.
A The checklist method The
checklist method involves the development of a new idea through
a list of related issues or suggestions. The following questions demonstrate how the checklist method is used: Put
to other uses? New ways to use as-is?
Adapt?
What else like this? What could I copy
Modify?
New twist? Change meaning, color, form, shape?
Magnify?
What to add?
Minify? What
substitute? Smaller?
Substitute?
What else instead? Other material?
Rearrange?
Other pattern?
b Free association Free
association is another form of creative problem solving and is one of the simplest and yet most effective methods. It
is helpful in developing an entirely new slant to a problem.
First,
a word or phrase related to a problem is written down.
Then
other ones are written down and so on.
Each
new word attempts to add something new to the ongoing thought processes. This
creates a chain of ideas ending with a new product idea.
The
product planning and development process is crucial to an entrepreneur's success. One
must first establish evaluation criteria by assessing the market opportunity and size. One
must evaluate current competing producers, prices, and marketing efforts.
New
idea should have synergy with existing management
capabilities and marketing strategies.
The proposed product or service idea should be able to be
supported by and contribute to a company's financial wellbeing.
One should evaluate the compatibility of a new product's
production requirements with existing plant, machinery, and personnel. Entrepreneurs
should be concerned with formally
evaluating an idea throughout its evolution.
The idea stage involves identifying new product or service
ideas while eliminating impractical product or service ideas.
c
Attribute
listing
In this an entrepreneur develops a new idea by looking at the positive and negative attributes of a product or service.
(III) BRAINSTORMING
A method of shared problem solving in which all members of a group spontaneously contribute ideas.
Brainstorming is a group problem-solving technique that is intended to help members develop innovative new approaches to a problem in an unthreatening environment.
First developed by A.F. Osborne in 1941, brainstorming in its most basic form involves stimulating all the members of a group to express a variety of ideas, which are built upon and recorded for future reference. Critical judgment of the ideas is reserved until later in the process, when the ideas are evaluated, combined, improved, and changed until the group reaches a final resolution of the problem.
There
are three critical factors that determine the success of a
brainstorming effort. First, the group must strive to produce a large quantity of ideas, as this increases the likelihood that they will happen upon the best possible solution.
Second, the group must be certain to withhold judgments of the ideas as they are expressed, since the negative thinking of one group member can make others less willing to participate and thus derail the whole process. Third, the group leader must create a positive environment for the brainstorming session and channel the creative energies of all the members in the same direction.
(iv) Focus Groups A
focus group is a marketing research tool in which a small group of people (typically eight to ten individuals) engages in a roundtable discussion of selected topics of interest in an informal setting. The focus group discussion is typically directed by a moderator who guides the discussion in order to obtain the group's opinions about or reactions to specific products or marketing-oriented issues, known as test concepts. Many small businesses find focus groups to be useful means of staying close to consumers and their everchanging attitudes and feelings. By providing qualitative information from well-defined target audiences, focus groups can aid businesses in decision making and in the development of marketing strategies and promotional campaigns.
5.
The Role Of Intuition
We
can not leave our discussion of generating ideas without looking at the role of intuition. Intuition is a cognitive process whereby we subconsciously make decisions based on our accumulated knowledge and experiences.
Intuition exists in three forms. The
most widely known type of intuition is referred to as ordinary intuition. Ordinary intuition is a feeling or an instinct that is not particularly rooted in anything tangible. We all have them, and in some cases they seem to be accurate, but businesses are not built on gut feelings. Secondly, expert intuition is a trained response to a specific stimulus. Years of practice precede demonstrations of spectacular reactive skills, especially in sports.
Strategic It
intuition is not a feeling or a reaction.
is a clear thought that comes together in what is best
described as a flash of insight. The
tools of the trade for strategic intuition are
recognizing trends, presence of mind, and freeing oneself from attachment to a predetermined conclusion.
Strategic
intuition is not to be confused with expert
intuition. Both
processes work in the same way with past memories,
knowledge or experience being pulled off the shelves of your brain to be used and combined in a current situation. However, expert
intuition refers to an extremely fast
process that occurs in the mind of an expert in their field after years of experience, where they can enter a situation and just by looking at the situation recognise familiar signs that indicate to them the best strategy to take.
Expert intuition works fast, in familiar situations, and is
easier to study as you know when the expert will probably use it.
Strategic
intuition, on the other hand, draws on experiences and knowledge that the person may not have personally had themselves, but has stored in their memory from others. It is a much slower process that occurs in new situations, and is much more difficult to study as strategic intuition flashes of insight can happen at any time of any day. Expert intuition, like strategic intuition, does not start with a goal and then list and weigh up options to decide how best to reach that goal. Instead each decision comes into the persons mind as a single idea. The age-old analytical model of listing options and weighing them up in order to decide which action to take is incorrect in explaining how real life ideas and decisions are made. Decision making is actually intuitive. Experts do not first set a goal and then try to reach it, they look to recognise which goals are reachable and then go ahead and work on those that are. Experience helps us to recognise the existence of opportunities and once the opportunity is recognised, they go to work on it.
factors for socio-economic transformation and for achieving industrial self-sufficiency, but also for the accelerated development of other sectors s ectors such as agriculture, agriculture, transportation, trade and services. This means that any sector alone can
not be developed without developing other potential sectors, which may directly or indirectly influence it.
Business opportunity identification is a process which accelerates
economic growth, effects structural s tructural changes in the economy, particularly particularly in respect to resource utilization, production functions, income generation, occupational patterns, and population distribution and foreign trade, and induces social change.
Well-trained entrepreneurs can bring industrialization to a developing
country like India.
Thus, entrepreneurship entrepreneurship is one of the most important factors of industrialization in the process of economic growth. Nowadays aspiring entrepreneurs can get information regarding
various investment opportunities from the internet, business magazines, financial institutions, institutions, government, commercial organization, friends and relatives. It is
their ingenuity skill and foresight that can guide them to
choose the best business opportunity. opportunity. The entrepreneur has to select a feasible and rewarding opportunity in
order to make it an enterprise.
Search for Business Ideas What are the motivational factors that drive an entrepreneur to launch a business? Business
opportunity may be defined as an attractive project idea
which an entrepreneur accepts as the basis for his investment decision. When you are offered with a business opportunity, it is astute to ask yourself a pair of vital questions before getting involved. First, is this business opportunity something that you are interested in?
Making sure that it is a job that you possess enthusiasm plus effort for will be one of the initial init ial techniques to the success or failure of your particular business opportunity.
S econd, you will need to do a little real idea and even potentially
market research to choose if the business opportunity is practicable in the customer market. Is this anything that clients will like to obtain and what you can do with
it to outperform your opponents? Discovering the replies to those inquiries may facilitate you to select if
your business opportunity is good economic investment. At last, you truly ought to be sincere with yourself as to whether or not
you own the acquaintance plus ability plan to decide on a specific business opportunity. Be truthful with yourself on this one since you surely do not want your
business opportunity to fail owing to something that you could have fixed.
Evaluation
of Business Idea
You have what you believe to be a great idea for a business. You've noticed a need for some product or service that isn't currently available, and you've observed a company that isn't providing a product best suited for the needs of their customers.
You want to evaluate your idea to determine whether it can actually succeed.
These steps can help with that evaluation.
1.Define
your product or ser vice.
Be specific in your definition. What exactly will you be offering prospective customers? How will it be produced and/or provided? How will it be delivered to the customer? How much will it cost? What are the options? What is the warranty? 2. Describe
your customers.
Who will buy your product or service? Will your customers be businesses or consumers? Why will they buy from you rather than your competitor(s)?
3.
Identify your competitors.
Learn about their products, services and company. You can get plenty of information from the company through annual reports, financial statements, industry publications/reports and marketing materials.
Analyze the competitor's marketing materials. Those materials will tell you what they think are the advantages of their products to the customers.
Is your product or service better than that of the competition?
4. Define your competiti ve advantage.
What makes your product or service better than your competitors' offering? You can gain a competitive advantage in a multitude of ways. You could offer cheaper prices, better quality, faster service or a longer warranty.
Perhaps you have a proprietary technology or method of doing business that provides your business with a competitive advantage.
Competitive advantage is only an advantage in the short term. Competitors will see that advantage and act to overcome it. Successful companies continually look for an advantage over their competitors.
If you don't have some advantage, why would prospective customers buy from you?
5.
Create A Projected Financial Statement .
The projected financial statement forces you to think specifically and accurately about the costs of running the business, building the product, selling and delivering the product or service.
Without this information, you are going into business without knowing whether the business is even feasible.
To be successful, you must be able to sell your product or service at a price that covers the costs directly associated with producing and delivering that product or service to your customers P LUS contribute towards paying other operational costs not to mention providing a profit to the business.
The best way to know whether you can make enough money is to create a profit and loss statement projecting or estimating your revenue and expenses.
Creating this statement is as simple as calculating projected revenue minus projected expenses.
6.How
Will You Communicate The Availability Of Your Product Or
Service To Your Prospecti ve Customers?
Internet advertising , direct mail, radio, television, print advertising, trade shows and outdoor bill boards are all tools a business can use to educate and inform prospective customers about the availability of your product or service.
The challenge is to find out which tools are the most efficient and effective in generating interest and sales.
7. Describe
The Things That Could Go Wrong To Negatively Impact
Your Business.
Loss of suppliers, inadequate sales, insufficient profit, product defects, customer dissatisfaction, government regulation and new, better competitors are examples of things that could go wrong.
What might go wrong with your business? How will you handle those problems should they arise?
8. Decide. After
Completing These Steps, Is Your Business Idea
Sound?
Does your product or service have an advantage in the market? How quickly can the competition adapt to your entry to the market?
Can you generate enough from sales to cover expenses and earn a profit?
If your business idea holds up under this level of scrutiny, go for it.
Model
of Opportunity Recognition Process
Education
Experience
Personal Experience
Prior Knowledge of Markets and Customer Problems Entrepreneurial Alertness
Work Experience
Outcome: Successful Opportunity Recognition
Networks
SOURCE: From Alexander Ardichivili and Richard N. Cardozo, ³A Model of the Entrepreneurial Opportunity Recognition Process´, Journal of Enterprising Culture, Vol. 8, no. 2, June 2000.
The above figure indicates that the key to recognizing an opportunity lies in the knowledge and experience of the individual entrepreneur and, where appropriate, the entrepreneurial business. This prior knowledge is a result of a combination of education and experience, and the relevant experience could be work related or could result from a variety of personal experiences or events. The entrepreneur needs to be aware of this knowledge and experience and have the desire to understand and make use of it. The other important factors in this process are entrepreneurial alertness and entrepreneurial networks. There is an interaction between entrepreneurial alertness and the entrepreneur¶s knowledge of markets and customer problems. Those entrepreneurs who can recognize meaningful business opportunities are in a strategic position to successfully complete the product planning and development process and launch new ventures.
A
feasibility study looks at the viability of an idea with an
emphasis on identifying potential problems and attempts to answer one main question: Will the idea work and should you proceed with it? Before
you begin writing your business plan you need to
identify how, where, and to whom you intend to sell a service or product. You also need to assess your competition and figure out how much money you need to start your business and keep it running until it is established. Feasibility studies address things like where and how the business will operate. They provide in-depth details about the business to determine if and how it can succeed, and serve as a valuable tool for developing a winning business plan.
A
well-prepared feasibility study can be effective evaluation tool
to determine whether or not an entrepreneurial idea is a potentially successful one. What
does a feasibility study include? It should give a
description of the important elements of the entrepreneurial venture and the entrepreneur·s analysis of the viability of the following elements. 1) Detailed product description
2) Identify the target market (Who, Where, how many ) 3) Describe where the product will be distributed
(location, size, channels etc. ) 4) Price determination
5) Promotion plans
Why Are Feasibility Studies So Important? The Information You Gather And Present In Your Feasibility Study Will Help You: List
in detail all the things you need to make the business work; Identify logistical and other business-related problems and solutions; Develop marketing strategies to convince a bank or investor that your business is worth considering as an investment; and Serve as a solid foundation for developing your business plan. Even if you have a great business idea you still have to find a costeffective way to market and sell your products and services. This is especially important for store-front retail businesses where location could make or break your business. For example, most commercial space leases place restrictions on businesses that can have a dramatic impact on income. A lease may limit business hours/days, parking spaces, restrict the product or service you can offer, and in some cases, even limit the number of customers a business can receive each day.
The Components of a Feasibility Study Description
of the Business: The product or services to be offered and how
they will be delivered. Market Feasibility:
Includes a description of the industry, current market,
anticipated future market potential, competition, sales projections, potential buyers, etc.
Technical Feasibility: Details how you will deliver a product or service (i.e., materials, labor, transportation, where your business will be located, technology needed, etc.).
Financial Feasibility: Projects how much start-up capital is needed, sources of capital, returns on investment, etc.
Organizational Feasibility: Defines the legal and corporate structure of the business (may also include professional background information about the founders and what skills they can contribute to the business).
Sources of Information
Hobbies or Personal Interests Abilities, skills and work experience Familiar and unfamiliar services and products External environmental opportunities in the legal-political, economic, demographic, sociocultural and technological sectors Potential
Ideas for So Entrepre neurial Venture
Limitations of what is available at present Approaches that are different and novel Breakthroughs and Advances Niches that are unfilled Changes and trends
Sources Of Entrepreneurial Ideas
Above
given table illustrates some of the more common sources and
what to look for while exploring them. Let us look more closely at the four sources of ideas. 1. Personal
Many
Interests Or Hobbies
entrepreneurial ventures were formed because of an
entrepreneur·s love of doing something such as restoring antique automobiles, etc.
A successful entrepreneurial business might be built around one·s personal interests in a particular product or activity.
2.
Work experiences, knowledge, and skills
By tapping into the knowledge of a particular industry or market gained by working in it, an entrepreneur can pinpoint areas of potential opportunity. For example ² if you have ever travelled, you have undoubtedly seen those suitcases with wheels. Now was not that a great idea! Robert Plath created the first wheeled suitcase, the Travelpro Rollerboard, because in his job as an airline pilot he was constantly carrying his bags from one place to another, and he was looking for a more convenient, comfortable way to do so.
In the process of using his work-related experience, he created not only a new product but also a new industry!
3.
Products And Services Currently
Available
(Both Familiar And
Unfamiliar) What Do
products do you use everyday?
they do everything that you wished they would?
What Can
about products you are not familiar with?
you take what you are familiar with and apply it to those
unfamiliar ones? Answer
to the above questions are sources of idea generation to an
innovative entrepreneur.
4.
External Environment
Positive trends or changes that provide unique and distinct possibilities for innovating and creating value ² in the entrepreneurial context.
These opportunities can be found in the technological, societal culture, demographics, economic and legal-political sectors.
Those were the potential sources of entrepreneurial ideas, but what are the specific things that an entrepreneur should look for?
Basically, he should look for changes and trends, unfilled niches, breakthroughs and technological and scientific advances, different and new approaches, and limitations of what is currently available.
Any of these could provide a potential idea for an entrepreneurial venture.
But,
perhaps this is not enough.
Even
with the wide variety of idea sources, an entrepreneur
may have difficulty in coming up with an idea for his own entrepreneurial venture. At
this point, he may want to use some different, more
structured approaches to help generate ideas. There
are four different structured approaches that he might use:
(i) Environmental Scanning Entrepreneurs' knowledge is critical to building sustainable competitive advantage in the 21st century (Lerner and Almor, 2002; Anand, Glick, and Manz, 2002). Because of increased globalization, rapid technological changes, and increased competition, entrepreneurs are facing new and unexpected challenges. These changes have significantly increased the quality and quantity of information that entrepreneurs must consider when making decisions.
Environmental
scanning is the way in which management gathers relevant information about events occurring outside the company in order to guide the company's future course of action. It
is the search to identify trends that create business opportunities and pose challenges to the continued success of the organization (Costa and Teare, 1994). Environmental scanning is also more than gathering information. It is the process of using environmental information in decision making (Lester and Waters, 1989). It is a means of improving the organizational ability to deal with a rapidly changing environment (Jain, 1984). The external environment of the firm refers to both its task environment (competition, customers and suppliers), and general environment (economic, regulatory, technological, and socio-cultural factors).
(ii) Creativity and Creative Problem Solving
This
is the capability for combining ideas in a distinct manner or
making unusual connections between them.
It means cross-thinking by seeing new angles, connections and approaches.
The
whole area of creativity has been extensively researched
and studied, resulting in a lot of information-all of which can not be covered here.
Here are a few specific techniques.
A The checklist method The
checklist method involves the development of a new idea through
a list of related issues or suggestions. The following questions demonstrate how the checklist method is used: Put
to other uses? New ways to use as-is?
Adapt?
What else like this? What could I copy
Modify?
New twist? Change meaning, color, form, shape?
Magnify?
What to add?
Minify? What
substitute? Smaller?
Substitute?
What else instead? Other material?
Rearrange?
Other pattern?
b Free association Free
association is another form of creative problem solving and is one of the simplest and yet most effective methods. It
is helpful in developing an entirely new slant to a problem.
First,
a word or phrase related to a problem is written down.
Then
other ones are written down and so on.
Each
new word attempts to add something new to the ongoing thought processes. This
creates a chain of ideas ending with a new product idea.
The
product planning and development process is crucial to an entrepreneur's success. One
must first establish evaluation criteria by assessing the market opportunity and size. One
must evaluate current competing producers, prices, and marketing efforts.
New
idea should have synergy with existing management
capabilities and marketing strategies.
The proposed product or service idea should be able to be
supported by and contribute to a company's financial wellbeing.
One should evaluate the compatibility of a new product's
production requirements with existing plant, machinery, and personnel. Entrepreneurs
should be concerned with formally
evaluating an idea throughout its evolution.
The idea stage involves identifying new product or service
ideas while eliminating impractical product or service ideas.
c
Attribute
listing
In this an entrepreneur develops a new idea by looking at the positive and negative attributes of a product or service.
(III) BRAINSTORMING
A method of shared problem solving in which all members of a group spontaneously contribute ideas.
Brainstorming is a group problem-solving technique that is intended to help members develop innovative new approaches to a problem in an unthreatening environment.
First developed by A.F. Osborne in 1941, brainstorming in its most basic form involves stimulating all the members of a group to express a variety of ideas, which are built upon and recorded for future reference. Critical judgment of the ideas is reserved until later in the process, when the ideas are evaluated, combined, improved, and changed until the group reaches a final resolution of the problem.
There
are three critical factors that determine the success of a
brainstorming effort. First, the group must strive to produce a large quantity of ideas, as this increases the likelihood that they will happen upon the best possible solution.
Second, the group must be certain to withhold judgments of the ideas as they are expressed, since the negative thinking of one group member can make others less willing to participate and thus derail the whole process. Third, the group leader must create a positive environment for the brainstorming session and channel the creative energies of all the members in the same direction.
(iv) Focus Groups A
focus group is a marketing research tool in which a small group of people (typically eight to ten individuals) engages in a roundtable discussion of selected topics of interest in an informal setting. The focus group discussion is typically directed by a moderator who guides the discussion in order to obtain the group's opinions about or reactions to specific products or marketing-oriented issues, known as test concepts. Many small businesses find focus groups to be useful means of staying close to consumers and their everchanging attitudes and feelings. By providing qualitative information from well-defined target audiences, focus groups can aid businesses in decision making and in the development of marketing strategies and promotional campaigns.
5.
The Role Of Intuition
We
can not leave our discussion of generating ideas without looking at the role of intuition. Intuition is a cognitive process whereby we subconsciously make decisions based on our accumulated knowledge and experiences.
Intuition exists in three forms. The
most widely known type of intuition is referred to as ordinary intuition. Ordinary intuition is a feeling or an instinct that is not particularly rooted in anything tangible. We all have them, and in some cases they seem to be accurate, but businesses are not built on gut feelings. Secondly, expert intuition is a trained response to a specific stimulus. Years of practice precede demonstrations of spectacular reactive skills, especially in sports.
Strategic It
intuition is not a feeling or a reaction.
is a clear thought that comes together in what is best
described as a flash of insight. The
tools of the trade for strategic intuition are
recognizing trends, presence of mind, and freeing oneself from attachment to a predetermined conclusion.
Strategic
intuition is not to be confused with expert
intuition. Both
processes work in the same way with past memories,
knowledge or experience being pulled off the shelves of your brain to be used and combined in a current situation. However, expert
intuition refers to an extremely fast
process that occurs in the mind of an expert in their field after years of experience, where they can enter a situation and just by looking at the situation recognise familiar signs that indicate to them the best strategy to take.
Expert intuition works fast, in familiar situations, and is
easier to study as you know when the expert will probably use it.
Strategic
intuition, on the other hand, draws on experiences and knowledge that the person may not have personally had themselves, but has stored in their memory from others. It is a much slower process that occurs in new situations, and is much more difficult to study as strategic intuition flashes of insight can happen at any time of any day. Expert intuition, like strategic intuition, does not start with a goal and then list and weigh up options to decide how best to reach that goal. Instead each decision comes into the persons mind as a single idea. The age-old analytical model of listing options and weighing them up in order to decide which action to take is incorrect in explaining how real life ideas and decisions are made. Decision making is actually intuitive. Experts do not first set a goal and then try to reach it, they look to recognise which goals are reachable and then go ahead and work on those that are. Experience helps us to recognise the existence of opportunities and once the opportunity is recognised, they go to work on it.
