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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