BUSINESS ENTREPRENEURSHIP

(CUN704)
Module 2
Opportunity Recognition
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OVERVIEW
Module Two explores opportunity recognition and how to identify a potential
need in the market.
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WHAT IS AN ENTREPRENEURIAL OPPORTUNITY?
An entrepreneurial opportunity can be defined as follows:

“Opportunity recognition (OR) are ways in which entrepreneurs identify potential

ways towards identifying new business based on the opportunities that they
identify. Through OR, entrepreneurs should be able to identify new and better
ways of providing products and services that meet customer expectations and
also identify new business opportunities.”

Source: https://www.linkedin.com/pulse/20140724072944-147339648-opportunity-recognition-how-different-
entrepreneurs-differ-in-discovering-opportunities
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WHAT IS A BUSINESS IDEA?
Can you spot a business idea?

“A business idea is the response of a person or persons, or an organization to

solving an identified problem or to meeting perceived needs in the environment
(markets, community, etc.). Finding a good idea is the first step in transforming
the entrepreneur’s desire and creativity into a business opportunity. Creativity,
as used here, refers to the ability enterprising individuals or potentially
enterprising individuals to design, form, make or do something in a new or
different way.” (Continued next slide)
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WHAT IS A BUSINESS IDEA?
“The ability to come up with creative solutions to needs/problems and to market
them often marks the difference between success and failure in business. It also
distinguishes high-growth or dynamic businesses from ordinary, average firms.
Real, successful entrepreneurs are creative in identifying a new product, service
or business opportunities.”

The last sentence is important and it could be changed to state more accurately
that “entrepreneurs are creative in identifying a successful new product, service
or business opportunities.”

Source: http://www.entrepreneurshipsecret.com/how-to-identify-and-evaluate-business-ideas-and-opportunities/
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THE FIVE CS OF OPPORTUNITY IDENTIFICATION
Identifying a successful opportunity involves more than thinking about or
coming up with a clever new idea. Below is a process to follow.

“Five tips for would-be innovators: the five Cs of opportunity identification

(modeled after marketing’s famous four Ps — price, product, place, and
promotion).

1. Circumstance. The specific problems a customer cares about and the way
they assess solutions is very circumstance contingent. Create a simple “job-
circumstance” matrix that has primary jobs-to-be-done on one axis and
common circumstances on the other axis. It is a simple way to visualize
opportunities for innovation.” (Continued next slide)

Source: https://hbr.org/2012/10/the-five-cs-of-opportunity-identi/
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THE FIVE CS OF OPPORTUNITY IDENTIFICATION
2. “Context. Ask a customer to report what they did in the past and you are
likely to get something that bears only a loose resemblance to reality. Ask a
customer to describe what they will do in the future and you are going to get
guesses that are less than accurate.

3. Constraints. One of the time-tested paths to growth is to develop an

innovative means around a barrier constraining consumption. One warning:
understanding why a customer doesn’t consume is critical. If it is because
existing solutions are too expensive, require specialized skills, or are
inconvenient, then innovate away. If it is because of basic indifference, be
careful.”

Source: https://hbr.org/2012/10/the-five-cs-of-opportunity-identi/
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THE FIVE CS OF OPPORTUNITY IDENTIFICATION
4. “Compensating behaviors. One of the biggest challenges facing the
would-be innovator is determining whether a job is important enough to
consider targeting. One clear sign is a customer spending money trying to solve
a problem.

5. Criteria. Customers look at jobs through functional, emotional, and social

lenses. Quality is a relative term; you can only determine if a solution is good
by first understanding the criteria that matter to a particular customer.”

Source: https://hbr.org/2012/10/the-five-cs-of-opportunity-identi/
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HOW TO SPOT A BUSINESS OPPORTUNITY
Below is another perspective and approach for finding new opportunities as an
entrepreneur.

Have Your Finger on the Pulse

“Keeping your eye on market trends and learning how to predict what people are
going to want next is one of the most valuable skills for an entrepreneur to
learn. Are there any new technologies coming out? How is internet usage
evolving? Are there any trends emerging in your industry that you could jump
on? Could you take advantage of something in a way few people have yet to
do?” (Continued next slide)

Source: http://smallbusinessesdoitbetter.com/2013/07/how-to-spot-a-business-opportunity/
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HOW TO SPOT A BUSINESS OPPORTUNITY
Be the First

“That brings us to our next point: if you spot something that could be turned into
a viable business, but no one else has done anything about it yet… run with it.
Be the first. Being the first isn’t necessary for a successful business, and is often
the riskiest way to start out, but if you come up with something good and are
the first person to put it out there, you’re onto a winner.” (Continued next slide)

Source: http://smallbusinessesdoitbetter.com/2013/07/how-to-spot-a-business-opportunity/
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HOW TO SPOT A BUSINESS OPPORTUNITY
Meet Your Own Needs

“Is there something you wish existed? A product or service that would
revolutionize the way you do something specific in your life? Well, chances are
other people feel the need for that thing too. So what are you waiting for? Why
shouldn’t YOU be the one to make it happen?” (Continued next slide)

Source: http://smallbusinessesdoitbetter.com/2013/07/how-to-spot-a-business-opportunity/
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HOW TO SPOT A BUSINESS OPPORTUNITY
Look for Businesses that are ALREADY Successful

“You might worry about competing against successful businesses, but the fact is,
if a business is successful that means there’s a demand for whatever it’s selling.
And if a business has plenty of customers, that means there’s room for you in
the marketplace too… if you’re good at what you do. Many people count
themselves out of the running, because they’re afraid there are other, more
qualified people will who will bulldoze over them and leave them without a hope
of succeeding. That’s good news, because it means there are less competitors for
you.” (Continued next slide)

Source: http://smallbusinessesdoitbetter.com/2013/07/how-to-spot-a-business-opportunity/
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HOW TO SPOT A BUSINESS OPPORTUNITY
Look Out for Crises

“With any crisis, comes opportunity. New problems need new solutions, and
if you’re on the ball, you could be the one to provide them. The housing
crisis meant more people were turning to rental accommodation… so new
letting agencies and landlords sprung up. During the SARS crises, the price
of gas masks rocketed. War, natural disasters, economic downturns… all hold
business opportunities if you’re willing to look for them.”
(Continued next slide)

Source: http://smallbusinessesdoitbetter.com/2013/07/how-to-spot-a-business-opportunity/
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HOW TO SPOT A BUSINESS OPPORTUNITY
Question Everything

“Just because things have “always” been done a certain way, does not mean
they should continue to be done that way. Without people like Steve Jobs and
Bill Gates, we wouldn’t have iPhones or Windows computers… both things that
have revolutionized the way we do things. But they didn’t invent the first
mobile phones or computers, they simply improved on what was already
there. If you’ve ever used a tool or service and thought there was a better
way it could be done (and we’re betting you have), you were staring a
business opportunity right in the face.”

Source: http://smallbusinessesdoitbetter.com/2013/07/how-to-spot-a-business-opportunity/
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ANOTHER PERSPECTIVE: SPOTTING AN OPPORTUNITY
There isn’t one exact method an entrepreneur can follow to identify new
opportunities. Below is another process for entrepreneurs to follow.

1. ”Upgrade. Take a basic product and make it special, either by adding value
to it or marketing it as a status product.
2. Downgrade. Take a product that has always been associated with status and
reduce it to its underlying concept.
3. Bundle. There are certain products or services that almost always go
together. Instead of requiring people to pay for them separately, combine them.
4. Unbundle. Just the flip side of what we discussed above. Ask, what products
have been so gussied up that you can sell the individual components?
5. Transport. If a product sells in one area, take it to another. If you stop and
think about it, that is what importing and exporting are all about.” (Continued
next slide)

Source: http://www.inc.com/ten-ways-to-spot-an-opportunity.html
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ANOTHER PERSPECTIVE: SPOTTING AN OPPORTUNITY
6. “Mass-market. Take an idea that has been in one narrow area and see if it
will scale. This is what every company does when it takes a product "national.“
7. Narrowcast. We borrow the term from television. When cable television was
in its infancy, its broadcasters realized they all shouldn't try to reach mass
audiences.
8. Think big. Instead of carrying just one product, carry everything related to
it. Think of the home improvement stores like Lowe's or Home Depot.
9. Think Small. While huge stores, such as Lowe's, can offer more
merchandise, they can't offer the depth of selection in each line that a true
connoisseur demands.
10. Price. At first blush, you may not think of competing on price as niche
finding, but it is. Remember we are talking about competing differently, and
price is clearly one way to differentiate yourself from your competitors.”

This doesn’t mean that an entrepreneur has to follow all of the suggested steps.
The market, product, and price will determine which one is most effective in the
long run.
Source: http://www.inc.com/ten-ways-to-spot-an-opportunity.html
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GET BETTER AT SPOTTING OPPORTUNITIES
What many entrepreneurs discover is that they have to sometimes fail at one
venture to be successful at another and the reason why is that it is possible to
learn from past mistakes. Over the next couple of slides you will be introduced
to a process that can improve an entrepreneur’s ability to spot new
opportunities.

“To be a successful entrepreneur – or really, a successful anything – you need to

be able to recognize an opportunity when you see one. Specifically, you need to
be able to identify a problem or gap, and come up with an innovative solution.
(Of course you also need to be able to execute that solution, but without
spotting the opportunity in the first place, you aren’t going anywhere.)”

Source: https://hbr.org/2013/05/how-to-get-better-at-spotting
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GET BETTER AT SPOTTING OPPORTUNITIES
#1. “Write down several goals you have for your venture (or for your
career). For each goal, make a list of ways in which you will gain something if
you are successful. Read through these goals and potential gains on a daily
basis, or before undertaking any important task.” (continued next slide)

Source: https://hbr.org/2013/05/how-to-get-better-at-spotting
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GET BETTER AT SPOTTING OPPORTUNITIES
#2. “Picture yourself five or ten years down the road as you would ideally
like to be. What are your aspirations? Your dreams? What do you hope to
accomplish? Thinking about your ideal future self will put you in a promotion
focus.” (continued next slide)

Source: https://hbr.org/2013/05/how-to-get-better-at-spotting
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GET BETTER AT SPOTTING OPPORTUNITIES
#3. “Reflect on your past. Think about a recent big win or accomplishment —
a time when you felt really pumped up about what you were able to achieve. A
time when you felt on top of the world. Thinking about our past gains puts us in
a promotion focus.”

Source: https://hbr.org/2013/05/how-to-get-better-at-spotting
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HOW TO TURN YOUR IDEA INTO A VIABLE BUSINESS
Having an idea, and knowing what to do with that idea, is always a challenge for
entrepreneurs. Below are some suggestions.
“Sure, entrepreneurship is intimidating, but the reward is not just in building a
successful company; it is in the lessons and growth you acquire every day just
by doing, trying — and yes — failing.
Here are some strategies to transform a simple idea into a viable, revenue-
generating business.
Test the Marketplace When you have an idea you are passionate about, get
out there and test it with your consumer. Be open to feedback and honest with
yourself when you need to tweak your concept or go back to the mat entirely.”
(Continued on the next slide)
Source: http://www.forbes.com/sites/yec/2011/09/20/how-to-turn-your-idea-into-a-viable-
business/#5b48f1be4ca7
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HOW TO TURN YOUR IDEA INTO A VIABLE BUSINESS
“Show by Example By testing the marketplace effectively you will obtain data
you can present to future investors. You have to take into consideration that
these investors may not personally relate to your concept and that you must
find ways to engage them. One way is through videos, customer testimonials
and data from marketplace trials.” (Continued on the next slide)

Source: http://www.forbes.com/sites/yec/2011/09/20/how-to-turn-your-idea-into-a-viable-
business/#5b48f1be4ca7
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HOW TO TURN YOUR IDEA INTO A VIABLE BUSINESS
“Build a Team Find people to work with who compliment your strengths and
weaknesses. Part of being a successful businesswoman is recognizing what you
do well and where you need support.

Realize that “No” means “Not Right Now” A big part of being an
entrepreneur is becoming comfortable with hearing the word “no” and having
the creativity to adapt your idea to overcome any issues. I’ve learned that “No”
usually doesn’t mean “no,” it just means “not right now.”
Will all of these suggestions work for an entrepreneur? That cannot be answered
for everyone and must be discovered often through trial and error.

Source: http://www.forbes.com/sites/yec/2011/09/20/how-to-turn-your-idea-into-a-viable-
business/#5b48f1be4ca7
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HOW TO KNOW WHEN TO SAY 'NO' TO A NEW OPPORTUNITY

The last aspect of identifying a new entrepreneurial opportunity involves

learning when to say no or determining if an opportunity is not a good match to
the entrepreneur’s background, experience, and expertise.

“A too-good-to-be-true opportunity can blind you to warning signs. Use these

evaluators to help you realize when you should say no:

Watch for signs that the proposed opportunity will be bad for your business
(you don’t have the needed personnel, you’re already over committed, the client
doesn’t know what they want, etc.).

Be willing to recognize that the idea is not realistic, or no longer

interesting to you.” (Continued on the next slide)

Source: https://www.entrepreneur.com/article/240518
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HOW TO KNOW WHEN TO SAY 'NO' TO A NEW OPPORTUNITY

“Realize that your well-being is more important than a job you know you
can’t do your best on.

Admit when you can’t improve a project any farther, or when you’re
taking it in a direction that is no longer relevant.

Be honest with yourself: the project you’re about to take on might interfere
with the quality of your work for an existing client, particularly if you’re not
thrilled about the newcomer.

Know when you value your personal involvement with your business or
product more than any profit you might make from selling it.”
Source: https://www.entrepreneur.com/article/240518
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SUMMARY
The goal of Module Two was to explore the
concept of opportunity recognition and how
to identify a potential need in the market.
A description of an entrepreneurial opportunity
and business idea were provided. The Five Cs of
opportunity identification were presented, along
with two perspectives that provided methods for
spotting a business opportunity. Suggestions for
getting better at spotting opportunities were
shared, along with how to turn an idea into a
viable business. Finally, knowing when to say no
to an opportunity was discussed.
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RESOURCES
Generating a Business Idea
http://www.entrepreneurshipsecret.com/how-to-identify-and-evaluate-business-
ideas-and-opportunities/

How to Get Better at Spotting Opportunities

https://hbr.org/2013/05/how-to-get-better-at-spotting

How to Know When to Say 'No' to a New Opportunity

https://www.entrepreneur.com/article/240518

How to Spot a Business Opportunity

http://smallbusinessesdoitbetter.com/2013/07/how-to-spot-a-business-
opportunity/
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RESOURCES
How to Turn Your Idea Into a Viable Business
http://www.forbes.com/sites/yec/2011/09/20/how-to-turn-your-idea-into-a-
viable-business/#5b48f1be4ca7

Opportunity Recognition - How Different Entrepreneurs Differ in Discovering

Opportunities
https://www.linkedin.com/pulse/20140724072944-147339648-opportunity-
recognition-how-different-entrepreneurs-differ-in-discovering-opportunities

The Five Cs of Opportunity Identification

https://hbr.org/2012/10/the-five-cs-of-opportunity-identi/

Ten Ways to Spot an Opportunity

http://www.inc.com/ten-ways-to-spot-an-opportunity.html
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You have completed Module 2.
Once you close out of this Module you will see your assignment for
Module 2.

Module 2 Assignment:

Begin to recognize opportunities around you for a profitable business. In

WHAT IS 250 to 500 words, describe three different business opportunities in your
environment and why there is a need, as well as how your business idea
would specifically meet that perceived need.
NEXT? Write your response in essay format, in a Word document, and upload it
for the Module Two Assignment. (Use the sample paper template
provided under “My Files” section on the upper right side of the LMS.)
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Module 2 Quiz:

WHAT IS After you complete the assignment for Module 2, close out of the
assignment section and you will see the Module 2 Quiz. After you
complete your quiz, please review it thoroughly and press SUBMIT.
NEXT? If you do not press SAVE, you may lose everything. You must complete
the Module 2 quiz before you can move on to Module 3.
 Next is Module 3:
WHAT IS • Beginning The Business Plan

NEXT? You’ll begin by reviewing the presentation for Module 3.