Entrepreneurship Opportunity Assessment

Opportunity Seeking

• Macro environment, industry, market, micromarket, and consumer are key considerations when seeking opportunities

Opportunity Screening

• Entrepreneurs must first consider their own preferences and capabilities
• Risk-return grid helps screen opportunities based on risk and potential return
• The 12 Rs of Opportunity Screening
  • Relevance to vision, mission, and objectives
  • Resonance to values
  • Reinforcement of entrepreneurial interests
  • Revenues
  • Responsiveness to customer needs and wants
  • Reach for expansion through branches, distributorships, dealerships, or franchise outlets
  • Range to a wide range of product or service offerings
  • Revolutionary Impact as a game-changer
  • Returns on investments
  • Relative Ease of Implementation
  • Resources Required
  • Risks

Financial Ratios and Measurements

• Payback Period: measures the time to recover investments
  • Income Payback Period: = Total Investment / Annual Net Income After Taxes.
  • Cash Payback Period: includes non-cash deductions like depreciation
• Income Statement: shows revenue and expenses
• Balance Sheet: represents assets, liabilities, and equities
  • Assets: Investments in the enterprise
  • Liabilities: Debts to suppliers, banks, government, etc.
  • Equity: Investors' investments in stock/shares.
• Financial Forecasts: determine feasibility by translating strategies and programs into monetary transactions.

Estimating Market Share and Sales

• Determine market coverage or reach
• Identify market segments
• Evaluate relative strength of competitors
• Quantify market potential

Opportunity Screening Matrix

• Evaluate each opportunity based on the 12 Rs
• Assign weights to criteria and scores to assess the opportunity

Opportunity Seeking

• Entrepreneurs are innovative opportunity seekers. They are constantly looking for new ideas and ways to improve existing products and services.
• Entrepreneurs may introduce new products, improve existing products, refine operational efficiency, create new markets, or disrupt existing business paradigms with innovative technology.

Entrepreneurial Mindset

• Entrepreneurs are often optimistic and see challenges as opportunities for innovation.
• The Chinese word for "crisis" contains two characters, one meaning danger and the other meaning opportunity.
• Entrepreneurs are passionate about their work and driven by a desire to achieve their visions.
• Passion is essential for overcoming setbacks and persevering in the face of difficulties.
• Entrepreneurs with emotional intelligence nurture relationships with customers, employees, and suppliers.

Financial Forecasts

• Business plans should include financial forecasts that translate business plans into financial outcomes.
• Key financial calculations include return on sales, return on assets, return on equity, internal rate of return, and net present value.
• Business plans should also evaluate both business and financial risks.

Environmental and Regulatory Compliance

• Business plans should document compliance with relevant laws, rules, and regulations, including permits, licenses, and intellectual property rights.
• Business plans should demonstrate compliance with local government ordinances and ethical standards.

Capital Structure and Financial Offering

• Business plans should outline the capital structure and financial offerings, including investors, financiers, and partners.
• Business plans should target a specific audience and highlight relevant features for them.

Enterprise Delivery System (EDS)

• The EDS involves harnessing resources, converting inputs to outputs, and delivering products or services to customers.
• The EDS includes operations, marketing, finance, administration, and human resource management.
• The EDS enables the enterprise strategy and helps to achieve desired outcomes such as high customer satisfaction, sales volume, financial returns, and employee performance.

Industry Sources of Opportunities

• The industry and market are significant sources of opportunities.
• Identifying what constitutes an industry can be challenging.
• Industry analysis should consider social, political, economic, ecological, and technological factors.

Market Forces and Fluctuations

• Changes in income levels, purchasing power, and industry competitiveness can influence opportunities.
• Entrepreneurs must critically analyze economic events that impact their businesses.

Ecological Environment

• The ecological environment is increasingly important due to concerns about environmental degradation.
• Threats to the environment create opportunities for products and services that promote sustainability.

Technological Environment

• New scientific and technological discoveries can lead to new products and services, rendering older ones obsolete.
• Entrepreneurs must invest in new technologies to stay competitive.

Examples of Opportunities and Threats (Fast Food Chain)

• Social: Increased customer base; demand for healthier food options.
• Political: Increased purchasing power; challenges for smaller suppliers due to foreign competition.
• Economic: Expanding to new markets; increased costs for new packaging.
• Ecological: Opportunities for eco-friendly operations; potential for online customer dissatisfaction due to delivery issues.
• Technological: Opportunities for tech-driven operations; potential for online customer dissatisfaction due to technology glitches.