MODULE NAME: BASICS OF

ENTREPRENEURSHIP

MODULE CODE: GST 05203

FOR: NTA 5 STUDENTS 2019/20

Prepared By Mwase, D
General Studies Department
Office No. G01-IRRIGATION BUILDING
 3&4. Business ideas,
business opportunities &
its viability and feasibility
At the end of this topic you should be
able to:
 Define business ideas and business
opportunities
Learning Contents:
 Explain characteristics of good
• Basic concepts of business idea and business
entrepreneurship opportunities.
• Self-employment and wage/paid  Point out sources of business ideas
employment and business opportunities
• Business ideas and business  Assess viability and feasibility of the
opportunities business opportunities
• Viable and feasible business
opportunities
• Forms of business ownership
• Components of a business plan
• Stock taking and stock control
 Introduction
• Having your own business does not occur automatically or as a
result of good luck. It all starts with an idea
• Generation of feasible and promising business idea is the first
and foremost task of an entrepreneur
• The idea can be obtained from different sources.
• Coming up with viable idea is a process (involve several steps)
• When idea is generated and becomes a business, the idea is
said to be viable
• Not all ideas can be transformed into a business.
• Not all good ideas are good opportunities
• A good business opportunity is the one which is technically,
economically, commercially viable and feasible, and
environmental sustainable proposition.
• Viability of the idea, project, product or service, is determined
when there are customers who can afford it and are willing to
use/purchase it in sufficient quantities to make the whole project
worthwhile
 Meaning of business idea
• Is a concept that can be used to make money.
• Usually it centers on a product or service that can be offered for
money.
• An idea is the first milestone in the process of starting a business
• Every successful business started as someone’s idea.
• Is a concept that can be used for commercial purposes.
• Is the response of a person(s) or organization to solve an
identified problem or to meet perceived need in the environment.
• It is typically centers on a commodity or service that can be sold
for money according to a business model.
• Business idea is based on what consumers wants
NOTE
 Although business idea is prerequisite, it is only a tool
 An idea itself is not sufficient for success i.e an idea is a tool that
need to be developed and transformed into viable business
opportunity
 Characteristics of good
business idea
A good business idea must have the following
characteristics:
a) Relevant (must fulfill customers’ needs or
solve their problems)
b) Innovative and Unique
c) Clear focus
d) Profitable in the long run
 Sources of business ideas
• Business ideas are all around us. They are all within us and
within our environment.
• We can get them by doing a survey, observing what is in the
market and how the customers are responding.
• For instance, if you hear people complaining about the
product/service that is a sign of dissatisfaction, such situation
give room for new business initiatives.
• Normally ideas can be obtained from;
 Everyday’s problems/ needs/complaints (listening & analysis)
 Personal skills and experience
 Mass media ( e.g newspaper, magazine, television, on-line
database)
 Factors of change (on legal, economic, socio-cultural,
technological, ecological etc.)
 Franchises
 Exhibitions and trade fairs etc
 Sources of business
ideas…
• Project ideas can also originate from;
 Success story of a friend/relatives
 Experience of others in manufacture/sale of product
 Examining the inputs and outputs of industries
 Suggestions of financial institutions and developmental agencies

• Entrepreneurs should generate business ideas because of the

following reasons;
 we need idea as a first milestone in the process of setting up a
business i.e it is essential
 To respond to the market needs. i.e upon fulfilling those needs
we will be rewarded
 Changing of fashion and requirements
 stay ahead competitors
 Sources of business
ideas…
• Business ideas rarely happen in isolation, but usually are linked
with factors such as:
 Work experience
 A similar business
 Hobbies and personal interest
 Family and friends
 Education and expertise

• Ideas can be generated through;

 Survey
 Brainstorming ( a technique for creative problem solving) etc
NB: idea generation requires hard work and effort
• Converting an idea into a business opportunity is the key
element in the process of business creation.
 Meaning of business
opportunities
• A business opportunity is an attractive investment idea or
proposition that provides the possibility of return for the person
taking the risk.
• Business opportunities are presented by customer requirements
and lead to the provision of a product or service which creates or
adds value to the buyer or end-user.
• So business idea should not be confused with business
opportunity
• Business opportunity = chance of doing something differently
and better than those who are currently doing it in-terms of cost,
place, time, quality, promotion/marketing etc.
• The focus on business opportunity identification is always on the
customers. (i.e who are they?, what do they want, can they
afford to buy the product, how to tell them about the product )
 Meaning of business
opportunities…
• Business opportunity is a proven concept that generates on-
going income.
• Is a business idea that has been researched upon, refined and
packaged into a promising venture that is ready to launch
• Successful business opportunity recognition depend on Three
variables;
1) Knowledge about the markets and customers needs
2) Networks
3) Entrepreneurial alertness
• SO The difference between a business idea and a business
opportunity is that; idea is based on what consumers wants
therefore opportunity is an idea plus other variable like
attractiveness, consideration of environment, and resources
• Business ideas and opportunities need to be screened and
assessed for viability once they have been identified or
generated.
 Characteristics of good
business opportunities
• A good business idea is not necessary a good business
opportunity.
• What turns idea to be a good opportunity is the following
characteristics/criteria:
1. It has real demand: it respond to unsatisfied needs or
requirements of the customers who have ability to buy and
who are willing to change their buying points
2. Provide durable, timely and acceptable returns on the
investment for the risks and effort exerted.
3. It is competitive: i.e be equal to, better from view point of the
customer than other available products or services.
4. It meets the objectives: meet the goals and aspiration of the
person or organization taking the risk
5. Resources and competencies are within the reach of the
entrepreneur
 Note that
• A Good opportunity must as well be:
 Attractive
 Durable
 Timely
 Adds value to buyer/end user
• A good opportunity is identified after collecting all necessary
information, discuss with existing entrepreneurs, business
officials
• Generating ideas and new products is easy - but you need
customers and markets.
• The real challenge is converting idea(s) into a business
opportunity
• The better you understand your consumer the better your
chances of winning in the market place
• Identifying, screening, assessing business ideas and
opportunities is key
 Note that…
• Screening and assessment of business opportunities is
based on the following factors;
 Industry and market
 Length of the window of opportunity i.e can you seize the
opportunity?
 Personal goals and competencies i.e do you want to
venture into business? Motivation?
 Management team
 Competition
 Capital, technology and other resources requirement
 Environment (is it conducive? Likely damages? how to
contain?)
These factors constitute the so called Feasibility
Study/Analysis (F.S/F.A) – Viability and Feasibility
 Viability and feasibility of the
business opportunities
• The reasons for starting entrepreneurial ventures are
usually related to personal characteristics of an
entrepreneur and the environment
• Therefore, there is a need of conducting a thorough
study/analysis in order to understand clearly the
critical factors before selecting/implementing a new
venture. i.e issues related to; product/service, market,
technical & financial requirements and returns,
environment, legal etc.
• Thus, a need for feasibility study/analysis
 Feasibility analysis overview
• The process of starting/setting up a business is preceded by the
decision to choose entrepreneurship as a career and opportunity
identification.
• Once an individual has decided to engage in entrepreneurship,
among the initial things that he/she need to do is to conduct
feasibility analysis
• Feasibility analysis is not the same as a Business plan. The
two plays separate roles that are frequently misunderstood.
• The feasibility analysis provides an investigating function. It
addresses the question of “Is this a viable business venture?”
• The business plan provides a planning function. The business
plan outlines the actions needed to take the proposal from “idea”
to “reality.” after assessing the viability.
 Meaning of Feasibility
Analysis
• Kind of analysis intended to determine the viability of
the proposed business by evaluating the market
(existence, opportunities & competition), necessary
technical know-how to convert the idea into tangible
product, financial (requirements, sources & likely
returns), organizational (capabilities and personnel
requirements), legal and environmental impact (if any
upon implementation)
• Feasibility analysis is valuable for:
 Starting a new business
 Expansion of an existing business
 Adding an enterprise to an existing business
 Purchasing an existing business
 Purpose of Feasibility
Analysis
• Feasibility analysis helps to answer the question of whether to
go forward with the business idea (qn: should we proceed with
this business idea?). The interest is to know in advance before
wasting much time, money, energy and other resources on the
business idea which is not feasible.
• If there exist a market for the idea, the resources are within the
reach of the entrepreneur, it can be legally implemented, if it is
free from environmental damage/damages can be contained
within the acceptable limit; the project is said to be viable and
feasible. Thus, the essence of feasibility study
Remember:
 feasible= is it possible to implement it given my strengths and
weaknesses (Internally)?
 Viable= is it possible to sustain, grow, succeed given external
environment?
 Elements/components of
Feasibility Analysis
1. Product/service development analysis. Product/service
analysis is commonly done by using SWOT analysis strategic
tool. The tool tries to compares how “fit” the
organizations/individual strategies are compared to the
environment.
A SWOT looks at internal factors and External factors/Controllable
and non controllable. The tool takes below format:
Positive Negative

Internal STRENGTHS WEAKNESSES

External OPPORTUNITIES THREAT

 Elements/components of
Feasibility Analysis…
• The strengths and weaknesses are internal to the organization
and are controllable
Strengths: Attributes of the organization that are helpful to
achieving the objective. A resources advantage relative to
competitors and the need of the markets a firm serves or expect
to serve. E.g Sufficient Knowledge, skills & experience, Your
advantage/uniqueness over the competition. Good networking
Etc.
Weaknesses: Attributes of the organization that are harmful to
achieving the objective. These are limitations or constraints that
create strategic disadvantages. E.g Insufficient skills in some
areas, Overdependence on single product line, lack of capital,
Lack of promotion and marketing experience.
 Elements/components of
Feasibility Analysis…
The opportunities and threats are presented by the external
environment and they are non-controllable.
Opportunities: external conditions that are helpful to achieving the
objective. Favorable condition in the environment to consolidate
and strengthen firm’s position. E.g New markets/growing
demand for the product/service, New technology, new services,
Threats: external conditions which could do damage to the
company’s performance. Unfavorable condition in the
environment which create a risk or causes damage to the
organization. E.g Your competitors moving next door, A change
in regulations or legislation, New technology, Government
Bureaucracy, natural disasters etc
REMEMBER
Direct your resources and effort were Strengths and opportunities
are many
 Elements/components of
Feasibility Analysis…
2. Market analysis: Here the analysis focus on
collecting information related to the potential current
and anticipated future market opportunities for the
business. Thus, look on the target market (who,
wants, where, when & how they buy), competitors,
ability to supply, consumer purchasing power,
readiness to change their buying habit &points,
level of competition, pricing based on the
availability/non-availability of substitute products
(from competitors), distribution, promotion
&advertisement
 This analysis is better done by using marketing
research
 Elements/components of
Feasibility Analysis…
Note
• A business will be successful if there is adequate market for its product
or services
• A market is group of potential customers with unsatisfied needs,
purchasing power and willingness to buy
• Marketing research is a systematic gathering, recording and analyzing
of information about the potential market for goods and services.
Market research process involve seven steps:
Step 1: Define Marketing Problems and Opportunities
Step 2: Set Objectives, Budget and Timetables
Step 3: Select Research Types (Primary or secondary)
Step4: Design Research Instruments e.g questionnaires, interviews etc
Step 5: Collect Data e.g from trade associations, TCCIA, Gvt agencies,
Newspaper/magazines, individual research/survey
Step 6: Organize and Analyze the Data
Step 7: Present and Use Market Research Findings
 Elements/components of
Feasibility Analysis…
3. Technical analysis: Here the concern is on the technical aspect of the
business on producing a product or service that will satisfy the
expectations of the potential customers. So you need to look on the
type of equipment and technology needed, the costs involved (i.e the
initial purchase cost, installation costs as well as the operational
costs of running the equipment. ), the potential suppliers of the
equipment, Where are they located? The service and warranties that
they provide and How long will it take to acquire the equipment and
begin operations.
4. Ecological analysis: Environmental consideration is needed for the
project or business to see if there would be effect on the
environment. i.e Analyze the Impact of project on quality of :- Air,
Water, Noise, Vegetation, Human life
The concerns that are usually addressed include:
 What is the likely damage caused by the project to the environment?
 What is the cost of restoration measures required to ensure that
damage to the environment is contained within acceptable limits?
 Elements/components of
Feasibility Analysis…
5. Legal and management analysis: Entrepreneurs also need to
be sure of management team and legal issues involved in the
project. These include choice of the form of business
organization (eg sole proprietor, partnership, company or co-
operative), skills/knowledge of the team, registration, clearance
and approvals (eg regarding land use, pollution control and
safety) from the responsible authorities. Examples include; local
authorities such as municipalities, village leaders.
6. Financial analysis: Here the entrepreneur looks on the financial
aspect of the project. i.e total start-up costs required in order to
begin operations (e.g costs acquiring land, plant and equipment,
and other start-up costs such as legal costs),The operating costs
(i.e the daily costs involved in running the business, such as
wages, rent and utilities), The possible sources of financing the
business, the required terms and conditions to secure the fund,
Investment appraisal (project appraisal)
 Conclusion
• Entrepreneurs should;
 Identify viable business opportunities,
 Get it right the first time; avoid obvious pitfalls
 Save valuable time and money by conducting
feasibility analysis before a lot of resources are
invested even in preparing business plan
• Spend time and other resources on ideas which are
viable in all of the feasibility study component.
 Reflection questions
1) Differentiate business idea from business opportunity
2) Why should entrepreneurs generate business ideas?
3) What do you understand by “feasibility study” Why is
important to conduct feasibility study in the process of
entrepreneurship? What are its elements?
4) Define marketing research. What are the steps in
conducting the research? Identify and describe
obstacles in undertaking marketing research
 Reflection questions
5) You are provided with a case study of Josef the economist. Read the case study and Conduct his SWOT
analysis
A case study of Josef the economist
Josef is an economist in a provincial capital in Tanzania. He has completed a master’s degree but he has no
experience yet and is still very young. There are only a few jobs for economist in this town, at least not the type
of jobs that were promised to him when he started studying and that are usually desired by economists. In fact,
these jobs are getting harder to find every day. In the old times, the government departments were big and
most economists would be offered a job with the government. Now it seems that only NGOs employ
economists and they only want to employ them if they have experience. Josef has noted that a lot of
experienced economists that were previously working in abroad are now returning to Tanzania and he can not
compete with them.

While studying he was told that, and he agrees, he is not so good at macro economics. Frankly speaking, he
doesn’t like that at all! He was best at the more business type of economics; he was good at business
administration and commercial management. He has a lot of fun in managing the football club, whereby he is
praised for his skills to manage people. He can really motivate the youngsters and he is also good in talking to
business owners and government officials in making funds available for the club. In fact, some people refer to
him as a fast talker, but then in a positive way.

When Josef talks to these business owners, a lot of them complain about the changes in the system. The
former big shop owners, especially the rural based traders, complain that things are changing and that they
can't understand it anymore: their business is going down. On the other hand, Josef sees a lot of new
companies from abroad who seem to have a lot of money to spend and that are setting up enterprises in this
town. They have a problem in finding qualified personnel, especially bookkeepers and managers. Some of
them bring their staff from Dar es Salaam or even from abroad.

One day he sits down on the veranda to reconsider his position. He decided to prepare SWOT analysis for his
situation.