Modified from: Barringer

1
Recognizing Opportunities and Generating
Ideas Part I
Chapter 2
Modified from Barringer Ireland (2006)
2
What is an Entrepreneurial Opportunity?

• A favorable set of circumstances that creates the
  need for a new product, service or business
• An opportunity has five essential qualities
• Attractive
• What makes this venture good for an ENT to start?
  What value does the ENT/investor extract from
  the opportunity?
• Durable
• How is the opportunity competitively sustainable
  (e.g., not easily imitated, unique in some why
  that allows for a competitive advantage)?
• Timely (window of opportunity is open)
• What environmental, market, or industry trends
  suggest now is the time for the opportunity?
• Anchored in a product, service, or business that
  adds value to buyer/end user
• What value do customers extract from this
  business? Does it solve a problem or fulfill a
  need? Does it save them time/money?
• Adds value to necessary network partners (e.g.,
  those providing resources necessary for venture
  success)
• How does the opportunity add value to others that
  you need to help make you firm workyour resource
  providers?

3
Three ways to Identify an Opportunity

• 1. Observing Trends in External Environment
• Economic
• Social
• Technological
• Political/Legal
• 2. Solving a Problem
• 3. Finding Gaps in the Marketplace

4
Trend 1 Economic Forces

• State of the economy
• Consumers level of disposable income
• Spending patterns (e.g., who has money to spend
  and whos cutting costs)
• An increase in the number of women in the
  workforce and their related increase in
  disposable income
• Many large firms are trying to cut costs
• Entrepreneurs have taken advantage of this trend
  by starting firms that help other firms control
  costs
• Increasing gas prices

5
Economic Trend Teen Affluence

• In 2002, teenage shoppers spent over 170 billion
  double the amount just 10 years earlier
• Over the past five years, teen purchases have
  grown more than the teen population, rising
  from 122 billion annually in 1997 to 170
  billion last year (The Sun Herald, 2003).

6
Economic Trend Fuel Prices

• Higher Gas Prices The Next Motorcycle Sales
  Boom Is In Sight
• its evident well see motorcycle sales
  continue to increase in the coming months.
• Source Mehren, 2004
• Electric Bikes Provide Greener Commute
• The surging cost of gasoline and a desire for a
  greener commute are turning more people to
  electric bikes as an unconventional form of
  transportation. theyre flying off the
  shevles
• Source cnn.com, 2008

7
Trend 2 Social Forces

• Changes in social trends continually provide
  openings for new businesses
• The proliferation of fast-food isnt because
  people love fast food
• Its because people are busy, and have disposable
  income
• The Sony Walkman was not developed because
  consumers wanted smaller radios but because
  people wanted to listen to music while on the go

8
Trend 2 Social ForcesExamples

• Family/work patterns
• Childcare
• Scheduling
• Aging of the population
• Healthcare
• Financial management
• Increasing diversity in the workplace
• Training
• Globalization of industry
• Transportation
• Taxation
• Regulatory compliance
• Online shopping

• Focus on health care and fitness
• Weight management
• Trainers
• Computers and the Internet
• Hardware/software/training
• Shopping alternatives
• Number of cell phone users
• New technology/complimentary products
• New forms of entertainment
• Video games
• DVR
• Laser tag
• Fantasy sports teams
• Online entertainment

9
Social Trend Health Conscious Consumers

• Inside Story 10 Candy Trends
• Fueled by popularity of the Atkins diet and a
  health-conscious uprising in America, products
  that are low in fat, carbs, sugar and calories
  are hitting retail shelves at lightening speed.
• ACNielsen reports that in 2002, diet candies
  grew the fastest, claiming 23 percent of the 24
  billion candy market.
• Source Carneal (2004), American Wholesale
  Marketers Association

10
Social Trend Tween Market

• Kiddie calls are on the horizon for the growing
  'tween market
• Tweens ages 8-12 constitute a lucrative
  retail market 23 million members Retail
  studies say this demographic is on the leading
  edge of the most-consumer-oriented generation in
  history. They increasingly have disposable
  income, and their voice now factors heavily into
  family purchases.
• when they shop for themselves, tweens ignore
  toys preferring clothes, video games and
  electronics.
• The world's No. 2 toymaker Hasbro, Inc. is
  going after the 'tween market with a
  walkie-talkie-like device that resembles a mobile
  phone.
• Source St. Louis Tribune, February 12, 2005

11
Trend 3 Technological Advances

• Technological Advances
• Entrepreneurs must keep on top of how new
  technologies affect current and future business
  opportunities
• Industries have emerged due to technological
  advances
• Computer industry, Internet, biotechnology,
  digital photography
• Once developed, new firms form to take technology
  to higher level
• RealNetworks was started to add video capability
  to the Internet
• Massively Multiplayer Online Role Playing Games
  (MMORPG)
• EverQuest
• World of Warcraft
• Second Life

12
Technological Trend Computers
USB drives go beyond storage ... a new company
called U3 said it would promote the next
generation in flash drive technology.
Keychain drives are going beyond storage
They're going to run applications like
PowerPoint , and ScanDisk. A few
companies have already endorsed the idea McAfee
antivirus software vendor and ... Zone Labs
the firewall maker Source Hesseldahl
(2005), Forbes

• Economics of MMORPGs
• supply-and-demand market exists for virtual
  items that it crosses over with the real world.
  This includes
• The purchase of in-game items for real-world
  currency
• Exchanges of real-world currencies for virtual
  currencies
• Source Castronova, E. Synthetic Worlds The
  Business and Culture of Online Games. University
  Of Chicago Press.

13
Technological Trend Email
14
Trend 4 Political Action and Regulatory Changes

• Political action and regulatory changes provide
  the basis for new business opportunities
• EPA laws create opportunities to start firms that
  help other firms comply with environmental laws
  and regulations
• Non-smoking legislation in Ohio and other states
• Legalization of gambling in some states
• Periods of war/conflict

15
Legal/Political Trend Legal Unrest
Source CBSnews.com

High Condition (Orange). A High Condition is
declared when there is a high risk of terrorist
attacks.
Visitors wait in line to be fingerprinted and
photographed at the U.S. Customs check point at
San Francisco International Airport in San
Francisco.
Source US Department of Homeland Security
16
Legal/Political TrendFCC Indecency Regulations
Breached
17
How Are Opportunities Identified?2 Solving a
Problem

• Sometimes involves noticing a problem and finding
  a solution
• Problems identified via observing trends and
  intuition, serendipity, or chance
• Problem People have less time for lawn
  maintenance
• Solution Robomow, automatic lawn mower, by
  Friendly Robotics
• Problem Computers are susceptible to viruses
• Solution Symantec Corp. created Norton
  antivirus software to guard computers against
  viruses
• Problem People have less leisure time for
  watching TV on a schedule
• Solution Tivo, DVR

18
How Are Opportunities Identified?3 Finding Gaps
in the Marketplace

• Look for a need that customers have that is not
  being satisfied
• Are there customer segments that are not being
  served?
• Neglected Need Specialized, unique, apparel
• Solution Small clothing boutiques
• Neglected Segment Overweight 30 women
• Solution Curves International, affordable
  fitness club for women
• Neglected Segment/Need Non-tech savvy (usually
  older) customers that need cell phones
• Solution Jitterbug