AICISM

Evaluating Entrepreneurial
Options and Startup Opportunities

Dr. Pallavi Sharda Garg

 What is An Opportunity? AICISM

• An opportunity is a favorable set of

circumstances that creates a need for a
new
product, service or business.
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• An opportunity has four essential qualities

 Three Ways to Identify an Opportunity
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• Observing Trends
• Solving a problem
• Finding gaps in the marketplace
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• Observing Trends
– Trends create opportunities for entrepreneurs to pursue.
– The most important trends are:
• Economic forces. : Economic trends help determine areas
that are ripe for new startups and areas that startups should
avoid.
• Social forces.: Social trends alter how people and businesses
behave and set their priorities. These trends provide
opportunities for new businesses to accommodate the
changes.
• Technological advances: Advances in technology frequently
create business opportunities.
• Political action and regulatory change: Political action and
regulatory changes also provide the basis for opportunities.
– It’s important to be aware of changes in these areas.
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• Solving a Problem
– Sometimes identifying opportunities simply involves
noticing a problem and finding a way to solve it.
– These problems can be pinpointed through observing
trends and through more simple means, such as intuition,
serendipity, or change.
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• Gaps in the Marketplace

– A third approach to identifying opportunities is to find a
gap in the marketplace
– A gap in the marketplace is often created when a product or
service is needed by a specific group of people but doesn’t
represent a large enough market to be of interest to
mainstream retailers or manufacturers.
• Product gaps in the marketplace represent potentially
viable business opportunities.
Opportunity Recognition Process
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 Process of Identifying, Evaluating and Selecting Business Opportunity
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Step 1 Step 2 Step 3 Step 4

Scanning
Selecting
the
Identifyin a
environm Screening
g business
ent of
the opportuni
& business
needs ty
evaluating opportuniti
& wants &
of self the es
of preparing
communit
customers a
y
business
plan
Step 1: Identification of NEEDS & WANTS
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of consumers
• Need – is something basic in life such as food, drink,
clothing and shelter.
• Want – is extension of need; craving for better than the
basic need.
– Need for food: Rice
– Want for food: Chicken Rice (Chicken Rice Shop)
– Need for shelter: Renting a flat with 10 housemates
– Want for shelter: Renting a condo
• The better the economy of people, the more business
opportunities available for the entrepreneurs.
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• Human NEEDS and WANTS are unlimited.

• Next, translate the NEEDS and WANTS into PRODUCTS
or SERVICES.
• PRODUCTS – are physical forms e.g. car, handphone,
books.
• SERVICES – non-physical form, intangible product e.g. cab
service, training.
Step 2: Environmental Scanning, Self Analysis
& Community Values AICISM

3 factors to be considered:
1) Environmental Scanning
- help identify business opportunities.
- 2 approaches:
i) Macro scanning
e.g. population, ethnics, average income,
ii) Micro scanning
e.g. family size, individual income.
Step 2: Environmental Scanning, Self Analysis
& Community Values AICISM

2) Self Evaluation
- to see what is available in oneself:
i) Experience
- match business with experience

ii) Knowledge & Skill

- do business on what he really knows what
to do
Step 2: Environmental Scanning, Self Analysis
& Community Values AICISM

2) Self Evaluation (cont.)

- to see what is available in oneself:
iii)Financial situation
- business that is planned to be
implemented must match with financial ability. E.g.
Land owner can do housing business.
iv) Interest
- select business based on his interest
e.g. a person with gardening hobby can open
nursery.
v) Networking
- good networking generate business
opportunity e.g. trading
Step 2: Environmental Scanning, Self Analysis
& Community Values AICISM

3) Values/Norms of the Community

- business opportunities need to be coordinated with the
religious’ and society’s values or norms.
- Values and Norms = what is perceived as useful and
beneficial to the community.
Step 3: Screening of Business Opportunities
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• Legality:
- ensuring the business opportunity is a legal one.
- E.g. selling pirated DVD, imitate product.
• Degree of competition;
- choose business that is not monopolized.
- E.g. supplying Sugar
• Capital requirements:
- to identify sufficient funds to finance the business.
- E.g. own money, debt financing, FDI.
• Risks involved:
- expecting the potential uncertainties & considering the
percentage of success & failure.
- E.g. sell 2nd hand cars
Step 4: Selecting a business opportunityAICISM
and preparing a business plan

• After completing steps 1 to 3,

it is time for the entrepreneur to select
a business opportunity.
• Then to prepare the business plan.
 Techniques For Generating Ideas AICISM

Brainstorming Focus Groups

Library and
Internet Research
 Brainstorming AICISM

• Brainstorming
– Is a technique used to generate a large number of ideas and
solutions to problems quickly.
– A brainstorming “session” typically involves a group of
people, and should be targeted to a specific topic.
– Rules for a brainstorming session:
• No criticism.
• The session should move quickly.
 Focus Groups AICISM

• Focus Group
– A focus group is a gathering of five to ten people, who
have been selected based on their common characteristics
relative to the issues being discussed.
– These groups are led by a trained moderator, who uses the
internal dynamics of the group environment to gain insight
into why people feel they way they do about a particular
issue.
– Although focus groups are used for a variety of purposes,
they can be used to help generate new business ideas.
 Library and Internet Research AICISM

• Library Research
– Libraries are an often underutilized source of information
for generating new business ideas.
– The best approach is to talk to a reference librarian, who
can point out useful resources, such as industry-specific
magazines, trade journals, and industry reports.
– Simply browsing through several issues of a trade journal
or an industry report on a topic can spark new ideas.
 Libraries and Internet Research
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Large public and university libraries typically have

access to search engines and industry reports that
would cost thousands of dollars to access on your own.
 Library and Internet Research AICISM

• Internet Research
– If you are starting from scratch, simply typing “new
business ideas” into a search engine will produce links to
newspapers and magazine articles about the “hottest” new
business ideas.
– If you have a specific topic in mind, setting up Google or
Yahoo! e-mail alerts will provide you to links to a constant
stream of newspaper articles, blog posts, and news releases
about the topic.
– Targeted searches are also useful.
Feasibility Analysis Process AICISM
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• The process of determining whether a

business idea is viable
• Preliminary evaluation of a business idea
• Conducted for the purpose of determining
whether the idea is worth pursuing
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 When to conduct? AICISM

• The proper time to conduct a feasibility

analysis is early in thinking process of
opening a new venture
• The thought is to screen ideas before a lot
of resources are spent on them.
 Components AICISM

• Product / service feasibility

• Industry / target market feasibility
• Organizational feasibility
• Financial feasibility
 Product / service feasibility AICISM

• Purpose
- Is an assessment of the overall appeal of
the product or service being proposed?
Components:
- Product service desirability
- Product / service demand
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• Basic questions
- Does it make sense? Is it reasonable
- Does it solve a problem, or take
advantage of a gap in the marketplace?
- Is this a good time to introduce the product
or service to the market?
- Assess the demand for a product or
service,, by conducting buying intention
survey etc
Industry/target Market feasibility AICISM

• Purpose:
- Is an assessment of the overall industry
and the target market for the proposed
business?
- Industry: An industry is a group of firms
producing a similar product or service.
- A firm’s target market is the limited portion
of the industry it plans to sell their
products.
 Industry / Target Market Feasibility AICISM

Analysis
• Components of industry/target market feasibility analysis
- Industry Attractiveness
Industries vary in terms of their overall attractiveness. In
general, the most attractive industries have the
characteristics like are you growing or shrinking, sell
products or services that customers “must have” rather
than “want to have”, etc.
- Target Market Attractiveness
Is to find a market that’s large enough for the proposed
business but is yet small enough to avoid attracting larger
competitors?
 Organizational Feasibility AICISM

Analysis
• Purpose:
Is conducted to determine whether a
proposed business has sufficient
management expertise, organizational
competence, and resources to successfully
launch a business.
Focuses on non-financial resources.
 Organizational Feasibility AICISM

Analysis
• Components of organizational feasibility analysis -- ---
Management Competence
A firm should evaluate its ability, of its management team
to satisfy itself that management has the necessary
expertise to launch the venture.
- Resource Sufficiency
An assessment of whether an entrepreneur has sufficient
resources to launch the proposed venture or not.
If critical resources are not available in certain areas, it
may be impractical to proceed with the business
 Financial Feasibility Analysis AICISM

• Purpose:
• It the final component of a comprehensive
feasibility analysis. This will help us to see whether
the business venture is financially viable.
• Components of financial feasibility analysis:
• Total Start-Up Cash Needed
• Financial Performance of Similar Businesses
• Overall Financial Attractiveness of the Proposed
Venture
 Financial Feasibility Analysis AICISM

• Financial Performance of Similar Businesses

• Estimate the proposed start-up’s financial performance by comparing it to
similar, already established businesses.
• Overall Financial Attractiveness of the Proposed Venture
• A number of other financial factors are associated with promising
business startups such as:
• Steady and rapid growth in sales during the first 5 to 7 years in a clearly
defined market niche.
• High percentage of recurring (regular) revenue— meaning that once a
firm wins a client, the client will provide recurring sources of revenue.
• Ability to forecast income and expenses with a reasonable degree of
certainty.
• Internally generated funds to finance and sustain growth.
• availability of an exit opportunity for investors.