Identifying Opportunities Entrepreneurial Process n n Identify

Identifying Opportunities

Entrepreneurial Process n n Identify and Evaluate the Opportunity Develop the Business Plan Determine Resources Required Manage the Resulting Enterprise Created

Identify & Evaluate Opportunity n n n Fruitful Sources: consumers, distributors, technical people, business associates Evaluation of opportunity most critical element Window of opportunity (size & duration) are primary basis for determining risks/rewards Opportunity must fit personal skills and goals of entrepreneur Opportunity Assessment Plan

Opportunity Assessment Plan n n n n What market need does it fill? Personal observations reflect market need? What social condition underlies market need? Market research to support need? Are patents required? What competition exists in marketplace? International competition? Where is the money to be made in this activity?

Develop a Business Plan n n Executive Summary Description of Business Description of Industry Marketing Plan Financial Plan Production Plan Organization Plan Operational Plan Summary Appendices

Nine Categories of Opportunities n n n n Increase value of a product or service New applications of existing technologies Creating mass markets Customization for individuals Increasing reach Managing the supply chain Process innovation Increasing the scale of the firm

Trends / Opportunities n n n n Genetic Engineering, genomics Information technology Food preservation / distribution Video gaming Speech recognition Security systems Nanotechnology

Trends / Opportunities n n n Fuel Cells Superconductivity Designer enzymes Smart cards Software security Robots

Social / Cultural Trends n n n n Aging baby boomers Increasing diversity Two-working parent families Rising middle class in developing nations Changing role of religious organizations Changing role of women Media – DVDs, Internet Growth of Latino population in U. S.

Convergence Applications Opportunity Customer Needs Technology Capacity

Evaluating Opportunity n Capabilities: is it consistent with mission, knowledge base ? n Novelty: does product have sufficient differentiating qualities that it creates value for the customer ? n Resources: are the available resources sufficient for the venture ? n Return: is expected return consistent with the risk of the venture ? n Commitment: is the entrepreneurial team sufficiently passionate about the venture that they can commit ?

Team: accept risk knowledge base commitment 100% 50% Resources: financial processes human Context: timeliness industry conditions market conditions Opportunity: novelty potential market good risk vs reward

Team: accept risk knowledge base commitment 100% 50% Resources: financial processes human Holiday Inn Opportunity: novelty potential market good risk vs reward Context: timeliness industry conditions market conditions

Team: accept risk knowledge base commitment 100% 50% Resources: financial processes human Electric Auto Opportunity: novelty potential market good risk vs reward Context: timeliness industry conditions market conditions

Feasibility Analysis

Why Smart Executives Fail n n n Bary Bertiger, Motorola Engineer Wife couldn’t reach clients while in Caribbean Iridium LLC – 66 low altitude satellites Nov. 1, 1998, Al Gore made first call July 1999, Iridium defaulted on $1. 5 billion and filed for bankruptcy What went wrong ?

Feasibility Yes Product Yes Industry Yes Org. Concept feasibility Financial Yes Business feasibility Plan

Concept Statement n n n Description of product or service being offered Intended target market Benefits of product or service Description of how product will be positioned in market place Description of how product will be sold

Concept Test n n n Validate the underlying premise of new product or service Help to develop a product / service idea Estimate potential market share

Usability Testing n n n Prototyping – iterative process that is refined until user and designer agree on final design Efficient product vs Usable product Apple Partnering for Success

Industry Feasibility n Attractive Industries n n n Large, growing industries Important to customer Newer technology Higher profit margins Few competitors

Attractive Industries (3 -yr growth) n n n n Application software 1. 9% Biotechnology 21. 1% Communications 5. 1% Internet Information Services 4. 5% Medical Instruments 13. 1% Restaurants 10. 2% Semiconductors 5. 1% Specialty eateries 21. 8%

Focusing the Idea n Diverging Questions n n n What is problem about? Housing What is housing about? Being warm, sheltered What is being warm and sheltered? Feeling loved, cared for, safe

Focusing the Idea n Converging Chain of Questions n n What is problem about? Quality housing What is causing poor housing quality? Poor workmanship in frame to foundation What are the foundation problems? Anchor bolts poorly aligned, not vertical How can I resolve frame/foundation problem? Anchor Float

Focusing the Idea n Customer Surveys n n Address the respondent Configure for easy scoring Obtain needed demographics Obtain user opinions/preferences

Focusing the Idea n Surveys n n Poor: Do you usually buy electronic gifts? Improved: Last Chrismas, approximately how much did you spend (total) for electronic gifts?

Focusing the Idea n Surveys n Poor: Do you personally prefer clock radios with CD or with cassette? n Improved: About how much would you be willing pay for each of the radios for your own use (assume equal high-quality sound and tuning) <$20 n n AM/FM with alarm Alam-clock with CD Alarm-clock with Cassette Alarm-clock with ipod $20 -39 >$40

Focusing the Idea n Customer Surveys n n n Wrong people are surveyed Wrong questions are asked Questions are asked at the wrong time Satisfaction/dissatisfaction assumed to be equally important Results generalized to groups not surveyed

Identify the Real n Identify Real Problem n n Retention at SDSMT too low Identify Real Customers n Need to build a curriculum that is adaptive to the needs of the customer

Secondary Research Resources n n n n n ABI Inform Dun & Bradstreet Hoovers Online Lexis Nexis Multex. Net Reuters Business Insight Standard & Poors Value-Line Wall Street Journal