ENT 101 Chapter 2: Recognizing Opportunities and Generating Ideas

Recognizing Opportunities and Generating Ideas

• An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business.
• Most entrepreneurial ventures are started in one of two ways:
  • Externally stimulated: An entrepreneur decides to launch a firm, searches for and recognizes an opportunity, and then starts a business.
  • Internally stimulated: An entrepreneur recognizes a problem or an opportunity gap and creates a business to address the problem or fill the identified gap.

The Differences Between Opportunities and Ideas

• Identifying a product, service, or business opportunity that isn’t merely a different version of something already available is difficult.
• A common mistake entrepreneurs make is picking a currently available product or service that they like or are passionate about, and then trying to build a business around a slightly better version of it.

Economic Forces

• Economic forces help determine areas that are ripe for new business ideas, as well as areas to avoid.
• These forces include:
  • Consumer spending trends
  • Housing starts
  • International trade
  • Interest rates
• When personal income is rising, consumers have more money to spend and are willing to buy discretionary products and services.
• When personal income is falling, people have less money to spend and are less willing to spend it.

Social Trends

• Changes in social trends alter how people and businesses behave and set their priorities.
• These changes affect how products and services are built and sold.
• Examples of social trends that are currently affecting how individuals behave and set their priorities include:
  • The continual migration of people from small towns and rural areas to cities
  • The aging of the population
  • The increasing interest in social networking sites

Government Regulations

• On some occasions, entire industries hinge on whether certain government regulations evolve in a manner that is favorable to the industry.
• Examples of government regulations that can affect business opportunities include:
  • Regulations surrounding the use of drones
  • Political instability and new policies

Techniques for Generating Ideas

• There are several techniques for generating ideas, including:
  • Evaluating economic forces and social trends
  • Identifying areas that are ripe for new business ideas
  • Recognizing problems or opportunity gaps and creating a business to address them.