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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although secondary source relatively inexpensive, they oftenbecome outdated and outmoded, given that they are used for a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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