ENTREPRENEURIAL OPPORTUNITIES

3 Ways of Seeking Entrepreneurial Opportunities:

Start-up and Buyout Opportunities

Franchising Opportunities Family Business

Opportunities

Start-up

To begin a new type of business based on a recently invented or newly developed product or service.

To take advantage of an ideal location, equipment, products or services, employees, suppliers and bankers.

To avoid undesirable precedents, policies, procedures, and legal commitments of existing firms.

Kinds of Ideas

Type A Ideas (new markets) Type B Ideas (new technologies) Type C Ideas (new benefits)

The sources of startup ideas may come from several possibilities:

Personal Experiences Hobbies Accidental Discovery Deliberate Search

Evaluation Criteria for a Start-up

Criterion Attractiveness

Favorable Unfavorable

Marketing factors Need for the productCustomers

Well identifiedReachable; receptive

UnfocusedUnreachable; strongproduct loyalty for competitor

Value created by product or service for the customer

Significant Not significant

Life of the product Use extends beyond time for customer to recover investment plus profit

To be used for a time less than required for customer to recover investment

Favorable Unfavorable

Market Structure Emerging industry; not highly competitive

Highly concentrated competition; mature or declining industry

Market Size $100 million sales or more

Unknown, less than $10 million sales, or multibillion-dollar sales

Market growth ratio Growing by at least 30% annually

Contracting, or growth less than 10% annually

Competitive AdvantageCost structure

Low-cost producer No production cost advantage

Degree of control over:PriceCostsChannels of supply

Moderate to strongModerate to strongModerate to strong

NonexistentNonexistentNonexistent

Criterion Attractiveness

Criterion Attractiveness

Favorable Unfavorable

Barriers to entry:Proprietary information or regulatory protectionResponse/ lead-time advantageLegal, contractual advantageContacts and networks

Have or can develop

Resilient and responsive

Propriety or exclusive

Well- developed

Not possible

Notexistent

Notexistent

Limited

EconomicsReturn on investmentInvestment requirements

Time to break-even profits or to reach positive cash flows

25% or more; durableSmall to moderate amount; easily financedUnder 2 years

Less than 15%; fragileLarge amount; financed with difficultyMore than 3 years

Criterion Attractiveness

Favorable Unfavorable

Management Capability

Fatal flow

Proven experience, with diverse skills among the management teamNone

Solo entrepreneur with no related experience

One or more

Buyout

To reduce some of the uncertainties and unknowns that must be faced when starting a business from ground up.

To acquire a business with ongoing operations and already established relationships.

To obtain an ongoing business at a bargain price- a price below what it would cost to start a new business.

Source of informations about busines firms available for purchase include:

Suppliers Distributors Trade associations Bankers Investigating and evaluating the existing

business Relying on proffessionals Knowing why the business is for sale Examining the financial state of the

business

Franchising

A marketing system involving around two-party legal agreement, whereby the franchisee conduct business according to the terms and conditions of the franchisor.

Involves a formal arrangement and et of relationships that govern the way business is operated.

Provide the members (franchisees) With the names, logos, product,

operating procedures and others.

Three types of Franchising Systems

System A Franchising: The producer (Franchiser) grants franchise to wholesales (franchisee).

System B Franchising: The wholesaler is the franchisor.

System C Franchising: The producer is the (Franchisor) and the retailer is the (franchisee).

Advantages

Formalized training Financial assistance Proven marketing method Managerial assistance Quicker start-up time Overall lower failure rates

Disadvantages

The cost of franchise Restriction growth Loss of

independence

Evaluating Franchise Opportunities

Locating a potential franchise Global franchising opportunities Investigating the franchise

Family Business

Characterized by ownership or involvement by two or more members of the same family in it life and operations.

Reasons for the existence of Families and Business

Family Concerns

Nurturing

Development

Business Concerns

Survival

Profitability

3 sets of Cultural Patterns

The actual business

The family The governance

Cultural Configuration of a Family Term

Business Pattern Governance Pattern

Paternalistic Cultural Paper Board

Laissez-faire Configuration Rubber-Stamp BoardParticipative of the Advisory BoardProfessional Family Firm Overseer Board

Family Pattern Patriarchal Collaborative Conflicted