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Recognizing Opportunity

Recognizing Opportunity. Chapter 3. Understanding Entrepreneurial Trends. Current Trends: More home-based businesses Focus on technology Outsourcing Contracting with other companies for services Strategic alliances Partnership with a larger company. Understanding Entrepreneurial Trends.

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Recognizing Opportunity

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  1. Recognizing Opportunity Chapter 3

  2. Understanding Entrepreneurial Trends • Current Trends: • More home-based businesses • Focus on technology • Outsourcing • Contracting with other companies for services • Strategic alliances • Partnership with a larger company

  3. Understanding Entrepreneurial Trends • Learning to Recognize Opportunity—thinking creatively • Thinking outside the box • New ways to use or create products • Go from here to there • Solutions • Work with unrelated items • Look at things in a new way • Ask: “how does this go with that?”

  4. Understanding Entrepreneurial Trends • Learning to Recognize Opportunity--Creative Sources of Ideas • Start people watching • Learn what people want and need • Watch for demographic changes • Births/deaths, age distribution, education level, income level, occupations, etc. • Become an insatiable reader • Read newspapers, magazines, books on business

  5. Understanding Entrepreneurial Trends • Learning to Recognize Opportunity—consider your own experiences • Hobbies • Work • Cultural background • Lifestyle • Attitudes

  6. Understanding Entrepreneurial Trends • Learning to Recognize Opportunity—Consult outside sources • Trade magazines • Published for a specific type of business or industry • Specialty magazines • Target people with specific interests • Newspapers • Business section • Trade shows • Allows vendors and manufacturers to introduce new items and promote established products and services

  7. Understanding Entrepreneurial Trends • Learning to Recognize Opportunity—Consult outside sources • Internet • SBA website (small business association) • Research opportunities • Government Agencies • Information about specific opportunities • Trend information • Patent information • Topical information

  8. Starting Versus Buying a Business • Should you enter an existing business? • Entering the family business • Pros • Great potential for success • Trust • Togetherness • Cons • Only 1/3 of family run businesses survive the 2nd generation • Never truly “get away” from the business • Difficult to be objective

  9. Starting Versus Buying a Business • Should you enter an existing business? • Entering the family business • Preventing problems • Establish clear lines of responsibility • Try to be objective • Keep decisions objective, not emotional • Respect individual needs • Questions to ask: • Can I work for my family member? • Do I get along with family members? • Do we share the same goals? • Can I leave the problems behind when I go home?

  10. Starting Versus Buying a Business • Should you enter an existing business? • Buying a business • Pros • Has a location and a physical plant • Experienced employees • Regular customers • Cons • Not successful (losing money, poor reputation • Dated inventory • Obsolete equipment • Physical plant in need of repair • Employees who lack skills

  11. Starting Versus Buying a Business • Should you enter an existing business? • Buying a business • Franchises • Purchase the rights to begin a new business in the name of a recognized company • Examples: Mc Donald’s, Burger King, Subway, Jiffy Lube, Home Depot • Reduce the risk of failure • Buying a recognized name • Trained in company’s methods of operation • Benefit national advertising efforts

  12. Starting Versus Buying a Business • Should you enter an existing business? • Do your homework • Check out the seller • Investigate the company and industry carefully • Hire an accountant to advise you • Cost • Value of the business • Check out the franchise • Lack of freedom • Price • Paying for national advertising campaigns • Paying a franchise fee each year

  13. Starting Versus Buying a Business • Should you enter an existing business? • Where to find a business • Newspaper • Network of people in your community • Business broker • Brings sellers and buyers together • Questions to ask: • Is this business interesting to me and others? • Why is the owner selling? • What is the business’ potential for growth?

  14. Starting Versus Buying a Business • Starting your own business • What you gain • Doing things your own way • Build a company with fresh ideas and enthusiasm • Name recognition • What you lose • Time • Your business becomes your primary relationship • Money • If your plan isn’t sound and doesn’t work

  15. Starting Versus Buying a Business • Starting your own business • Questions to ask yourself: • Do I have the motivation to start from nothing? • Do I have sufficient knowledge of basic operations to undertake the business? • Do I have enough financial resources to start from scratch? • Is my family/significant other supportive of my decision? • Am I willing to take a risk?

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