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Recognizing OpportunityRecognizing Opportunity

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Chapter 3

RecognizingRecognizingOpportunityOpportunity

Understanding Understanding Entrepreneurial TrendsEntrepreneurial Trends

Starting Versus Buying a BusinessStarting Versus Buying a Business

3.1

3.2

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Identify the importance of personal values and goals in choosing an entrepreneurial pursuit.

Describe the challenges and rewards of entering a family business.

List the benefits and drawbacks of buying a business.

Describe how you can evaluate a business opportunity.

Compare the advantages and disadvantages of starting your own business.

Section 3.1 Understanding Entrepreneurial Trends

3.1

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The ability to recognize new opportunities and to think creatively is essential for success in today’s market.

Section 3.1 Understanding Entrepreneurial Trends

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Current Entrepreneurial Trends

One way to identify business opportunities is to study current trends that provide opportunities for entrepreneurs.

Section 3.1 Understanding Entrepreneurial Trends

Current Entrepreneurial Trends

Section 3.1 Understanding Entrepreneurial Trends 6

Internet businesses

service businesses

home-based businesses

socially-responsible non-profit businesses

corporate ventures

strategic alliances

technology

outsourcing

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Internet Businesses

The Internet has transformed the way business is conducted.

An online business can reach customers around the world.

online business a company that conducts business by means of the Internet

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Service Businesses

Service businesses dominate the American economy.

Business services account for the largest part of U.S. economic growth.

services intangible things that businesses do for consumers that enhance their lives

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Outsourcing

Outsourcing is hiring people and other companies to handle tasks that a business can not do or chooses not to do itself.

outsourcing contracting with other companies for services

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Outsourcing

Section 3.1 Understanding Entrepreneurial Trends 10

Benefits of Outsourcing

more efficientmore efficient

saves timesaves time

saves moneysaves money

lowers regulatory burden

lowers regulatory burden

speeds up projectsspeeds up projects

attracts investorsattracts investors

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Strategic Alliances

A strategic alliance is a partnership among companies.

strategic alliance a partnership formed with another company for the purpose of supplying a product or service

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Corporate Ventures

A corporate venture is formed within a company.

corporate venture a new venture started inside a larger company

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Learning to Recognize Opportunity

Entrepreneurial thinking is about generating ideas and recognizing opportunities.

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Creativity and Innovation

Creativity is the activity that results in innovation.

innovation a new way of doing things

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Idea Versus Opportunity

You generate ideas by thinking creatively.

Opportunities are ideas that have commercial potential.

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Idea Versus Opportunity

You can find a good business opportunity by recognizing an unfilled market niche.

niche a small specialized market

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Finding Opportunities by Understanding Industries

If you understand an industry, you can identify opportunities within that industry.

Section 3.1 Understanding Entrepreneurial Trends

Thinking Creatively About Opportunity

Section 3.1 Understanding Entrepreneurial Trends 18

Practice brainstorming. Practice brainstorming.

Find creative solutions to common problems.

Find creative solutions to common problems.

Look at ordinary items in new ways.

Look at ordinary items in new ways.

Connect unrelated items.Connect unrelated items.

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Thinking Creatively About Opportunity

During brainstorming, ideas are not judged as good or bad.

brainstorming to think freely in order to generate ideas

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Challenges to Creativity

Entrepreneurs can stimulate and encourage creativity in many ways.

The most difficult challenges to creativity are the challenges you bring upon yourself.

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Creative Sources of Ideas

To identify creative ideas:

Section 3.1 Understanding Entrepreneurial Trends

Observe the world around you.

Watch for demographic changes.

Be an avid reader.

Consider your interests, hobbies, and work experiences.

Consult outside sources of information.

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Watch for Demographic Changes

It is important for entrepreneurs to understand demographics and demographic trends.

demographics personal characteristics that describe a population by age, gender, income, ethnic background, education, and occupation, among others

Section 3.1 Understanding Entrepreneurial Trends

Sources of Information

23

Sources of

Information

trade magazines

specialty magazines

trade shows

exhibitions

newspapers

the Internet

government agencies

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Consult Outside Sources

A trade magazine offers current, industry-specific news.

trade magazine a periodical published for a specific type of business or industry

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Consult Outside Sources

A specialty magazine offers information about specific topics.

specialty magazine a periodical published for people with special interests, such as sports, camping, or fashion

Section 3.1 Understanding Entrepreneurial Trends

You can use specialty magazines to identify the interests and needs of potential consumers.

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Consult Outside Sources

At a trade show, you can learn about new goods and services in a field.

trade show a gathering or exhibition where vendors and manufacturers introduce new items and promote established products and services

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Identify the importance of personal values and goals in choosing an entrepreneurial pursuit.

Describe the challenges and rewards of entering a family business.

List the benefits and drawbacks of buying a business.

Describe how you can evaluate a business opportunity.

Compare the advantages and disadvantages of starting your own business.

Section 3.2 Starting Versus Buying a Business

3.2

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Whether you start a business from scratch or buy an existing business and make it better, owning a business that is compatible with your personal values and goals is critical.

Section 3.2 Starting Versus Buying a Business

3.2

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Personal Values and Goals

Personal values and goals should be used as a guide when choosing entrepreneurial pursuits.

values the beliefs and principles by which you choose to live that define who you are, shape your attitudes and choices, and help you identify your priorities

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Entering the Family Business

The greatest advantage of a family business is the trust and togetherness that family members often share.

Families that work well together have great potential for success in a family business.

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Buying an Existing Business

In many ways, buying an existing business is less risky than starting one from scratch.

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Buying an Existing Business

When you buy an existing business, you often gain the goodwill of loyal customers.

goodwill the favor and loyalty a business acquires by its good reputation

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Buying a Franchise

When you buy a franchise, you buy the right to set up a new business patterned on an existing model.

franchise a legal agreement to begin a new business in the name of a recognized company

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Buying a Franchise

The franchisee is the buyer of a franchise.

The franchisor is the seller of a franchise.

franchisee the buyer of a franchise who is given the right to the franchisor’s product, process, or service

Section 3.2 Starting Versus Buying a Business

franchisor the seller of a franchise who is giving the buyer planning and management expertise

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Evaluating a Business Opportunity

To evaluate a business opportunity:

Section 3.2 Starting Versus Buying a Business

Investigate the company.

Investigate the industry.

Talk to customers, employees, and suppliers.

Hire an accountant to advise you.

Hire an attorney to advise you.

Where to Find a Business

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FindingBusiness

Opportunities

newspapers businesspublications

networkingbusinessbrokers

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Where to Find a Business

You can find a business broker in the telephone book or online.

business broker someone whose job it is to bring buyers and sellers of businesses together for a fee

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Starting Your Own Business

When you start your own business from scratch, you can do things your own way.

You can build the company with fresh ideas and enthusiasm.

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