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4.Introduction
Opportunities can exist on paper or in the form of ideas.
Opportunities usually related to the entrepreneurs work
experience,hobbies, or social environment.
Opportunities can be found in many ways and in manyplaces.
Many people see opportunities but only entrepreneur actsupon them.
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4.1 Definition Of Business
Idea And Opportunity.
business idea is a business concept that results in profits if it isturned into a tangible product or service.
opportunityalso defined as the potential to create somethingnew that involves change in knowledge, technology, economy,politics, social, and demographic conditions.
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4.2 Sources of business ideas and
opportunities
can be obtained through primary and secondarysources.
a) primary sourcesrefer to first-hand data or informationgathered directly through : -
~ observations.~ experiments.~ interviews.~ surveys.
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Observation
~ data is gathered by observing and recording the
respondents actions in activity.
Experiments
- experiments or product sampling is another option.
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Interviews
- field research covers interviews with customers, suppliers,
competitors, and industry experts.
- interviews conducted in two ways : ~ personal interview
~ telephone interview
Surveys
- refers to the development of a short questionnaire with
respect to the targeted product.- the questions should be very specific.
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b) Secondary source
involved gathering data that have already been compiled and are
available.
it is initially conducted for one purpose using existing datawhich is :-~ reliable
~ available references~ mass media and electronic media
although secondary source relatively inexpensive, they oftenbecome outdated and outmoded, given that they are used for a
purpose other than for which was intended.
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Reliable existing data
- cab be used by entrepreneur is existing data which is reliable.
- example : information obtained from annual report of companies.
Reference
- an entrepreneur can use reference such as publish information
from then library, internet and so on.
Mass media and electronic media
- advertisement and information in the newspaper, magazines and
internet.
Information on raw materials can be a business opportunity for an
entrepreneur.
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4.3 PROCESSING OF REGONIZING,
ANALYSING AND CHOOSING A BUSINESS
OPPORTUNITY
Identifying, analysing, and choosing business opportunities areessential to determine if the venture can make profits andsustains its competitiveness.
The opportunity is identify through input from consumers,business associates, channel members, or technical people
Each opportunity must be carefully screened and evaluated.
Evaluation is the most critical element in the entrepreneurshipprocess.
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Process in recognizing, analysing and
choosing business opportunity
a) Recognizing customer
needs and wants
d) Screening or
choosing business
opportunities
c) Performing self-assessment
b) Analysing or scanning
the environment
f) Preparing or constructing
a business plan
demographics,
population structure,
income, and taste
e) Matching societal values,
communitys response or
peoples acceptance
Study on local resouces
Import and export data
Technological
breakthrough
Industrial linkage
Development projects
by the public and
private sectors
New government
policies and regulations
Mass media and
electronic media
Experience
Skills
Knowledge
Interest
Networking
Financial ability
Competition
Business risk,
financial risk such as
credit, cash liquidy,
loan and currency
exchange
Fixed capital
requirement, working,
capital and growthopportunities
Legality
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Recognizing Customer Needs And
WantsAn entreprenuer has to be sensitive in identifying theneeds and wants of customers.
A need is something basic in life.
Wants are something that is more than a basic need.
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Scanning The Business
EnvironmentThe business environment should be analysed in terms
of :-
~demographics
~local resources~new government policies and regulations
~data on import and export
~industrial linkage
~development projects by public and private sectors
~technological breakthrough
~sources from mass media and electronic media
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Demographics
Are the characteristics of people in a population.
If entrepreneur studies the demographic of his customer,he/she will be in a better position to predict the product or
servis that they will buy.
Needs and wants are based on the structure, income, and tasteof population.
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Local Resources
Still an abundance of local resources that areuntapped and have the potential to becomeinvestment opportunities.
Fountains and natural attractions at certain locationcan be turned into business ideas
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New Government Policies And
Regulations
An entrepreneur can identify business opportunitiesby referring to the existing law and government
regulations.
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Data on import and export
The continuous increase in the value and quantity ofimported and exported products or services reflect apotential market at the local and international level.
The same goes for policies on import substitutionindustries and export promotion
These issues can be seen as profitable opportunities.
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Industrial linkage
An entrepreneur can identify the industry thatrequires input from other industries.
This will develop linkage among industries of the samesector or different sectors.
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Development projects by public
and private sectorsThere are various developmental programmes by thegovernment and firms that have directly or indirectlyopened up business opportunities for entreperneurs.
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Mass Media And Electronic Media
Can be sources for generating business ideas.
Example : a job advertisement posted by a company foor thevacancy of sales executive can be consideras a business idea to
the entrepreneur.
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Performing Self-evaluation
Self-evaluation must be made before making a commitment.
Should be based on the ~ individuals experience
~ knowledge
~ skills
~ financial ability
~ interest
~ networking ability
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Experience
An entreperneur runs a business thats suit hisexperience in the profession.
The intelligence to find an opportunity from pastexperience can be a way to gain success in business.
Knowledge
Entreperneur has to be equipped with the knowledgeon a operating a business.
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Skills
Entreperneur must have the necessary skills incarrying out his job.
Skills usually born from experience and knowledge.
Advantages that is difficult to obtain.
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Financial ability
Business must be parallel with the financial ability ofthe entrepreneur.
Capital is the most basic aspect to think about beforeopening up a business.
Start a small business with entrepreneur existing
capital.
Growing business will help the entrepreneur insecuring financing for expansion.
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Interest
Is an important aspect
Must be taken seriously
It can give self-confidence
Entreperneur will be able to concentrate on his
profession
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Networking ability
Entreperneur needs to know how to reduceunnecessary procedures and bureucracy in thebusiness.
Should be mindful.
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assessing societys values,
communitys response, or societys
acceptance
Chemistry between a business ideas and the society isan important aspect that must taken before starting
a business.
Business opportunity must be consistance.
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Competitors
Those who are in the same business
Have a potential to serve the entrepreneur scustomers.
Entrepreneur can identify competitors by askingcustomers from his existing business.
Competitors are identify ~ the entrepreneur shouldidentify the strength and weeknesses of hiscompetitors in term of organizational terms.
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Capital requirement
Capital the amount invested in the company.
Three types of capital :
a) Fixed or permanent capitalFixed capital is the amount of the capital that beenused to buy the asset of in the company.
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b) Working capital
Referred to as operating capitalAlso known as assets of business that can be used tosupports business operations.
Often used to pay bills and salaries, to buyinventories and others.
c) Plantation or growth capital
Not related to current business situation.Used to help small business change its primarydirection.
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Risk
Define as a period of uncertainly experienced by abusiness as a result of unforeseen events which leadto either poor earnings and resultant failure.
Entrepreneur should be aware of the risks.
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Risks face by entrepreneur based on the following
aspect :The level of difficulties in entering the businessfield
The size or amount of capital to be invested
The amount of profit that can be gained fromthe revenue
The ability and competency of existingworkforce or human resources in managing thebusiness
Management of energy resources
The products potential to penetrate the market
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Two types of risk :
i. Business risk
ii. Financial risk
i. Business risk
The factors which have the tendency and potential ofadversely affecting a business operation and ultimately itsprofitability.
Two types of business risk :
i. controllable ~ can be manage by entrepreneur
ii. Uncontrollable ~ almost impossible to prevent
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ii. Financial risk
Risk associated with any form of financing
Four categories :
i. Credit risk ~ risk when clearing or settlement of
payments are not made when due.ii. Liquidity risk ~ risk of insufficient liquid resources tomake all payments on the due date.
iii. Loan risk ~ a form of financing whereby entrepreneurborrows money as a source of capital to conduct his
business.iv. Currency exchange risk ~ the high flexibility and changesin currency value impose a high risk.
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4.3.6 Constructing the Business
Plan
The final step taken by entrepreneur in recognizing,analysing and choosing a business opportunity.
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4.4 APPROACHES TO SEEKING A
BUSINESS IDEA
There are several approaches of seeking businessideas
Fulfilling needs and interests
Analysing life problems
Diversifying the usage of goods
Observing changes in the community
Using the latest technologyObserving and establishing a network
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Fulfilling needs and interests
Ideas for setting up business are found froman individuals different needs or interestthat are constantly changing.
Analysing life problems
Problems experienced in life can sometimesprovide a good idea for starting a business ifthe enterpreneur thinks creatively
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Diversifying the usage of goods
Todays community prefers devices with multi-purpose usage
The concept of recycling also a source of starting abusiness
Observing changes in the
community Those who are alert with the changes in thecommunitys lifestyle
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Using the latest technology
Changes in technology can change the structure ofthe industry and the market
Gives an entrepreneur the opportunity to innovate hisproducts and services
Observing and establishing a
network Create a network at the workplace and make it asource of innovative ideas
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4.5 GUIDLINES IN CHOOSING A
BUSINESS IDEA & opportunity
The guidelines in choosing a business idea oropportunity are:
Data collection and research
Preparation of a complete business plan
Establishnment of linkages or networks
Funding
Hiring of a workforce if necessary Confidence and good time management
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Data collection and research
Entrepreneur collects information as much as possiblepertaining to the business
Carrys out research in relation to the services, products,or relevant industries
Methods to produce the output, competitors and obstaclesthat might hinder the progress of the business
Reads journals
Attend any gathering of industrial societies to keephimself informed with latest information
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Preparation of a complete business
plan
Prepare a complete business plan which includes thebusiness mission
Establishnment of linkages ornetworks
A pontential enterpreneur should develop a lingkage
or network with other enterpreneurs when he startshis business
Should register as a member in professional clubs
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Funding
Learn how to obtain funding from friends,familymembers financial institutions or the government
Hiring of a workforce if necessary Is an important asset to succeed in an
enterpreneurial business
Should hire workers only when there is a necessity
C fid d d ti
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Confidence and good time
management
Enterpreneur has to have confidence
Manage time wisely so that can balance time between
the business and the family and friends
Should have the added-value to attract customers,distributors and retailers.
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