Entrep

12

In this lesson, you will learn to:

Identify the market problem to be solved of the need of the market to be
met.
Propose solutions in terms of products and services that will meet the
need using techniques on seeking, screening, and seizing opportunities.
a. Analyze the market need
b. Determine the possible products or services that will meet the
need.
c. Screen the proposed solutions based on viability, profitability,
and customer requirements.
d. Select the best product or service that will meet the market
need

The entrepreneurial process is a step-by-step procedure in establishing any kind of business that an entrepreneur has to
undergo. It is composed of four aspects.
1. Opportunity spotting and assessment
This is the beginning of the process and is considered the most difficult. Entrepreneurs at this point take note of
interesting trends in their environment. Consumers are reliable sources of opportunity information because market
needs originate from them. Other major sources of opportunity are the glaring problems in the environment,
problems encountered by co-entrepreneurs, new trends, processes, and developments in the environment. Other
minor sources are feedback from distribution or business partners such as retailers, wholesalers, manufacturers,
and technical people that the entrepreneur is working with. The entrepreneur's toughest job is to carefully assess
the opportunity through estimation of opportunity length, capitalization required, threats, profitability, and calculation
of real and perceived value. Entrepreneurs should also assess if the opportunity is aligned with their personal goals
and attribute entrepreneurs should already think in advance how they will position the product or service in the
market and showcase its unique selling proposition. This module will focus mainly on opportunity spotting and
assessment, which represent the entrepreneur's stimulus in starting a new venture

2. Developing a business plan.

Entrepreneurs should formulate a business plan when they have already spotted and assessed the opportunities
for a market. A business plan is a comprehensive paper that details the marketing, operational, human resource,
financial strategic direction, and tactics of the business. The business plan will be the core guide and direction of
the entrepreneur in calculating the resources needed, assessing how to obtain these resources efficiently, and
running the business sustainably.
3. Determining the capital needed.
A big idea can never be translated into reality if the entrepreneur's resources are limited. Therefore, it is mandatory
in the entrepreneurial process to calculate the resources needed to establish the business and compare this against
the entrepreneur's current resources. Caution must be applied in computing the complete set of resources needed
and include only those items that are considered as the real needs in venture creation. Allowance must be
considered as well because there will be times that resources will be inadequate or unsuitable.

4. Running the business.

This is the part where the entrepreneur should use the resources allocated for the new venture. The business plan
prepared in step 2 should already have been implemented. All aspects of the business plan should be critically
observed from operations, marketing and sales, human resources, finance, and strategy implementation. The
entrepreneur should have a control and monitoring system to serve as a check and balance of the formulated plans.

Opportunity Developing a Determining Running the

Spotting and Business Plan the Capital Business
Assessment Needed
Evaluate the identified Come up with a Calculate the intrinsic Practice leadership
opportunity business description and extrinsic capital as a way of life
and analysis needed
Conceptualize and Perform industry Calculate the existing Recognize critical
measure the analysis capital success factors
opportunity
Identify the perceived Come up with the Calculate the Identify existing and
value of the marketing plan difference between foreseeable
opportunity to the the needed capital problems and issues
company and the and the existing
customers capital. Choose the
most cost-efficient
suppliers or service
providers
Do cost-benefit Prepare the Develop contact and Employ risk
analysis of the operations plan relationship with mitigating controls
opportunity including including the suppliers and service and monitoring
risk analysis organizational plan providers systems
Match the opportunity Come up with the
with the financial plan
entrepreneur’s skills
and objectives
Scan the strengths Identify the Strategies
and weaknesses of and tactics
competitors
Scanning the marketing environment is the starting point of any new venture that involves understanding and knowing the
intricacies of the macroenvironment, microenvironment, and internal environment. With this process of scanning the general
environment, an entrepreneur can recognize various opportunities and at the same time understand thoroughly the arena
where the future business will operate.
The process of seeking, screening, and seizing is adapted to create the most suited product or service for an opportunity.
The general rule is to find the opportunity first before coming up with a new product or service, not the other way around.
This is one of the mistakes that budding entrepreneurs commit in starting a new venture.

The 3S of opportunity spotting and assessment is the framework entrepreneurs use to finally come up with the ultimate
product or se opportunity. An opportunity is an entrepreneur's business ide a commercial product or service in the future.
The entrepreneur serve as the catalyst of creating value for the customers through the new or innovated product or service.
As a reward, the entrepreneur earns profits when the customers are satisfied and delighted.
S1 - Seeking the Opportunity
Opportunity seeking is the first step and is the most difficult process of all au number of options that the entrepreneur will
have to choose from. It involves the development of new ideas from various sources as follows:
1. MACROENVIRONMENTAL SOURCES
a. STEEPLED. This is a mnemonic for sociocultural, technological, economic,environmental, political, legal, ethical, and
demographic factors. This represents the general environment where the entrepreneur can identify business opportunities
from and where the future business is about to operate. Any external factor or a combination of external factors from these
eight environmental forces can have a direct effect in opportunity generation and business sustainability. These will be
discussed further in later sections.
b. Industry. This is the source of current trend on what is happening in the industry where the future business will belong
to. For example, the entrepreneur should be fully acclimated on what is happening with the rice industry if he or she wants
to establish a rice retailing business.
c. New discovery or knowledge. These are new trends that can be the core business model of a new venture. For example,
the influx of mobile applications necessitates businesses to have this platform as one of their transaction channels.
d. Futuristic opportunities. These are projected new opportunities that can possibly affect the new business while it is
running. For example, sari-sari stores in the future will be able to incorporate financial transactions such as accepting bills
payment and process remittances,
2. MICROMARKET
a. Consumer preferences, interests, and perception. These are the current needs and wants of potential customers that
should be discovered right away by a budding entrepreneur. This way, he or she will be able to take a chance of the
opportunity. A need is recognized when a customer believes that there is a difference between his or her current situation
versus his or her desired condition. A want, on the other hand, is recognized when a customer believes that there is a
specific product or service that can perfectly suit the need
b. Competitors. Recognizing and understanding potential competitors will aid the entrepreneur to develop a product or
service that is unique and will surely stand out from the competition. The 4Ps of marketing (product, place, price, and
promotion) will be competitively positioned if the entrepreneur is familiar with his or her competitors.
c. Unexpected opportunities from customers. Oftentimes, the most brilliant ventures come from the most unexpected
opportunities. It may happen in unlikely situations, unlikely places, and with unlikely people. Existing problems and
bottlenecks often give rise to an unexpected opportunity. What entrepreneurs usually do is be on top of the situation and
change the market's perception of a product or service or build a new market. In the Philippines, there are a number of
budding social entrepreneurs who turned unnoticed products into superstar products that carry also the value of social
responsibility
d. Talents, hobbies, skills, and expertise. Business opportunities do not just come from outside forces, but also from
within the entrepreneur. The entrepreneur's talents, hobbies, skills, or expertise can be a source of business opportunity.
For example, if the entrepreneur is an artist, why not sell his or her paintings? If he or she is a musician, why not put up a
bar and perform there? If he or she is an expert in home interior design, why not make it a business?
e. Irritants in the marketplace such as deterrents, problems, complaints, and delays. Generally, entrepreneurs see
opportunities in situations where there is a recurring problem or sometimes when there is no more hope in solving the
problem. When customers are already sick and tired of the same old issue or problem, that is when the opportunistic
entrepreneur should come in and make a difference.
f. Location. Often, entrepreneurs just have to look at their ecosystem and they will be able to spot a business opportunity
right away. For example, if the entrepreneur's location has many schools, then a restaurant, an eatery, or probably a
computer shop might be a good business to establish. If the entrepreneur is in an island with an awesome beachfront, why
not put up a hotel?

STEEPLED Analysis
The result of the STEEPLED scan will aid the entrepreneur in deciding what product or service to set up and whether this
new venture will succeed or not. The focus of this scan is only on the macroenvironment. Again, not all factors can have
an effect on the new venture. The important thing is for the entrepreneur to fully scan these factors so he or she can
decide if there is a compelling business opportunity or an impending threat.
1. Sociocultural factors. These factors represent a general view of a locality's traditions, customs, beliefs, norms, and
perceptions. These factors affect how a person of the locality behaves and reacts to marketing and selling activities.
The entrepreneur should take note of the following sociocultural factors:
• Health consciousness
• Education level
• Attitudes toward imported goods and services
• Attitudes toward the person's lifestyle
• Attitudes toward product quality and customer service
• Attitudes toward saving and investing
• Emphasis on safety
• Buying habits
• Religion and beliefs

2. Technological factors. These are composed of innovations of an existing technology or

an invention of a new one mostly on applied science and engineering research areas, Entrepreneurs should always
be up-to-date with the technological changes, as these are catalysts in improving a product or service or replacing
them entirely.
The entrepreneur should take note of the following technological factors:
• Basic infrastructure level
• Rate of technological change
• Spending on research and development
• Technology incentives
• Legislation regarding technology
• Communication infrastructure
• Access to newest technology
• Internet infrastructure and penetration

3. Economic factors. These factors play a vital role in the scanning of marketing environment because economic factors
directly affect any business venture. These factors include income, expenses, and resources that can influence the
cost of doing business and generating income.

The entrepreneur should take note of the following economic factors: • Growth rates
• Trade flows and patterns
• Inflation rates
• Level of consumers' disposable income
• Interest rates
• Monetary policies
• Exchange rates
• Fiscal policies
• Unemployment trends
• Price fluctuations
• Labor costs
• Stock market trends

4. Environmental or ecological factors. These factors should be given much importance in conducting a business
especially when the world has already suffered severely from human-induced calamities. The scan of these factors will
help the entrepreneur determine if the business he or she is entering into will comply with the environmental standards
or will just be a hazard to people, animals, and nature. Moreover, the entrepreneur will know if the business venture
will be suited with the weather conditions in his or her locality.

The entrepreneur should take note of the following environmental factors:

• Weather
• Climate change
• Laws regulating environment pollution
• Air and water pollution
• Recycling
• Waste management
• Attitudes towards “green” or ecological products
• Endangered species
• Attitudes toward and support for renewable energy

5. Political Factors. These factors are mostly induced by government policies and
In the entrepreneur's business. Administrations, which can have a strong effect in the entrepreneur
e entrepreneur should take note of the following political factors and examples:
• Government stability and likely changes
• Bureaucracy
• Corruption level
• Tax policy (rates and incentives)
 • Freedom of press
• Rule of law
• Government effectiveness
• Political rights
6. Legal factors. Related with political factors, legal factors are government laws and regulations that can restrict or allow
business activities. The entrepreneur should take note of the following legal factors and examples:
• Anti-trust law
• Discrimination law
• Copyright, patents / intellectual property rights
• Consumer protection
• Employment law
• Health and safety law
• Data protection law
7. Ethical factors. These are the factors that will serve as an entrepreneur's guide on howto be ethical in running the
business. The entrepreneur should take note of the following ethical factors:
• Ethical advertising and sales practices
• Accepted accounting, management, and marketing standards
• Attitude toward counterfeiting and breaking patents
• Attitude toward development and well-being of employees
8. Demographic factors. These are the characteristics of the people in the target market. The entrepreneur should take
note of the following demographic factors:
• Population growth rate
• Age distribution and life expectancy rates
• Gender distribution
• Social classes
• Family size and structure
• Minorities

S2 - Screening the Opportunity

By now you already feel over how you already feel overwhelmed with how vast Si (opportunity seeking) Is, but have to worry
that much. This concept has been inculcated to you to see the universe of opportunities an entrepreneur opportunities an
entrepreneur can derive from the macroenvironmental and microenvironmental sources. The key here is in the effective
choosing or careful diligence. Entrepreneurs should start with the big picture. This is the best way to ensuring that the
entrepreneur has scanned the best potential business to venture into. Once compelling opportunities are identified, S2 will
be the next crucial step.
Opportunity screening is the process of cautiously selecting the best opportunity. The selection will depend on the
entrepreneur's internal intent, i.e., the main objective that the business will accomplish in the entrepreneur's life, and the
external intent, which will address the compelling needs of the target market. The entrepreneur should apply due diligence
and independent judgment in selecting the opportunities that have a potential and eliminate those that are not within the
scope of the entrepreneur's risk appetite. Risk appetite refers to the entrepreneur's tolerance of business risks.
Time must be considered by the entrepreneur in screening the opportunities at hand, as it is considered one of the most
critical resources of an entrepreneur. Time should only be devoted to worthwhile opportunities. Therefore, entrepreneurs
must always be sharp-eyed for real opportunities. They must be able to intelligently say no to low-compelling opportunities
and proceed with sensible ones. The crafting of a business plan starts only when entrepreneurs already said no to many
opportunities and said yes to one forceful opportunity, to which they will devote their time and resources.
 1. Has superior value to customers
2. Solves a compelling problem, issue, a need, or a want
3. Is a potential cash cow
4. Matches with the entrepreneur's skills, resources, and risk appetite

The Opportunity Attractiveness Test

The Opportunity Attractive Test (OAT) aims to assist entrepreneurs in ensuring that the opportunity that they will venture
into is an attractive and feasible prospect. This is not the “be all” in the road to entrepreneurial success but a framework to
measure how compelling an opportunity is. This test is designed to detail each entrepreneurial aspect into small chunks to
come up with a sound entrepreneurial decision. The entrepreneur must answer this test realistically and avoid overestimation
or underestimation. All the risks must be accounted and assessed first. These can come from different aspects of the
business such as operations, market, economy, and finance. These risks must be estimated and measured to determine
the impact to the potential business.
The answers in this test will be the guiding principles of the entrepreneur in writing the business plan. The components of
the OAT will be used to channel the entrepreneur's direction in data gathering. It is vital that this test must be carefully
reviewed over and over again before finally going to the last step of seizing the opportunity. At the end of this test, the
entrepreneur should be able to at least decipher the relative attractiveness of the business opportunity. Ultimately, the
decision lies in the risk appetite of the entrepreneur.
Because each venture is unique, some components of this test might not be applicable to all businesses. It is the job of the
entrepreneur to discern which among these components can put an equitable weight to components that are relevant to the
potential venture. The entrepreneur can also customize this test to better suit the screening requirements of the new venture.
In summary, with the four business opportunity elements and this OAT, the entrepreneur can't go wrong in his or her new
venture. The key is effective diligence.

1. The "concept" and the "strategy." The entrepreneur should think of the reason for the business' existence. He or
she can do this through crafting a brief vision statement. A vision statement is simply defined as what the business
should do in the future. The entrepreneur should also devise a value creation proposition, i.e., the value that the product
or service will offer to the target customers or the satisfaction of the needs or wants of the target customers. This
proposition should be compelling enough to influence the behavior of the target customers. Influencing the behavior
means enticing the target customers to pay an above average or a premium price on the product or service. The
entrepreneur should also understand the importance of the timing of the business. He or she should ask: is it really
necessary to establish the business now? Last, the entrepreneur needs to devise a differentiator or a positioning
strategy-what difference will the new business inculcate to the target customers as compared with the rest? Is this
compelling enough to influence the behavior of potential customers?

2. Opportunity metrics. These are considered as the opportunity's critical success factors. These factors will
approximately determine the attractiveness of the new venture depending on the total scores that it will generate and
the risk appetite of the entrepreneur. (Research for an Example of Opportunity Metrics)

S3 - Seizing the Opportunity

Opportunity seizing is the last step in opportunity spotting and assessment "pushing through” with the chosen
opportunity. Entrepreneurs should make the opportunity, and they should exert effort and full dedication for the success
of the venture. The entrepreneur's idea can be any type of innovations listed here.
Innovation is the process of positively improving an existing product or service. It is a key driver for economic growth.
Innovation is inevitable as the world constantly changes.

Therefore, products and services must also adapt to these changes. There are three types of innovations according to
the degree of distinctiveness.

1. Breakthrough innovation. These innovations, which may also include inventions,

occur infrequently as these establish the platform on which future innovations in an area are developed. Breakthrough
innovations must be protected by a patent, a trade secret, or a copyright. Examples of breakthrough innovations include
the Internet, the computer, or the airplane
2. Technological innovation. These innovations occur more frequently than breakthrough innovations. These
innovations are technological advancements of an existing product or service. These innovations need to be
protected, too. In relation to the examples given, technological innovations include the wireless fidelity or Wi-Fi,
the laptop, and the jet airplane.

Ordinary innovation. These innovations occur ordinarily as the name implies. They are commonly originating from
market analysis and technology pull instead of a technology push. This means that the market has a strong influence
in the implementation of an innovation. Relating again to the given examples, examples of ordinary innovations are
unlimited Internet plans of telecommunications companies, a wireless mouse, and an airbus for economical travelers