DPB2012 Lecture 2 - Entrepreneurial Ideas and Opportunities

Sources of business ideas, a process to generate business ideas, evaluation, approaches in seeking business ideas and creative thinking techniques.

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ENTREPRENEURIAL IDEAS
AND OPPORTUNITIES
by Mohd Zaini Zainudin
CHAPTER 2
DPB2012 –ENTREPRENEURSHIP
POLYTECHNIC VERSION

2. LECTURER
Hi Everyone, you are in Entrepreneurship DPB2012 class!
Sourcesofbusinessideas,processto
generate businessideas,evaluation,
approachesinseekingthebusinessideas
andcreativethinkingtechniques.
INTRODUCTION

3. 3
TEST
SEE MORE
ASSIGNMENT 1
10%
Written report would be a case study that counts towards 10% of the final grade.
Analysis Method : SWOT Analysis
*INDIVIDUAL TASK.

4. TOPIC OUTLINES
Upon completing this course, students
should be able to :
1.Determine entrepreneurial ideas and opportunities.
2.Explain process of generating and evaluating business ideas.

5. Upon completing this course, students
should be able to :
1.Explain clearly the concept of entrepreneurship, business ownership and procedures in
setting up a business in case study given. (C2)
2.Work cooperatively in group to complete the assigned project based on entrepreneurial
skills. (P2)
3.Present business plan creatively prepared using knowledge gained via group. (A2)
COURSE LEARNING OUTCOMES

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BUSINESS IDEAS & OPPORTUNITIES
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS
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BUSINESS IDEAS & OPPORTUNITIES
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# Is a business concept that
results in profits if it is turned into a
tangible product or service.
# Also defined as the potential to
create something new that
involves changes in knowledge,
technology, economy, politics,
social and demographic
conditions.
# A business idea and opportunity
can be obtained through primary
and secondary sources.
# These sources will provide the
types of information needed by an
entrepreneur to effectively identify
opportunities or evaluate ideas.

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BUSINESS IDEAS & OPPORTUNITIES
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# A product does not
meetcustomer’s
expectation.
“
# Customer needs a
product which is not
available in market.

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BUSINESS IDEAS & OPPORTUNITIES
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BY
GATHERING
IT FROM
“
# PRIMARY SOURCES
# SECONDARY SOURCES

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BUSINESS IDEAS & OPPORTUNITIES
PRIMARY SOURCES
Refers to original data that is
gathered and evaluated.
Information collected firsthand from
such sources as:
OBSERVATION, EXPERIMENTS,
INTERVIEWSandSURVEYS.
SECONDARY SOURCES
Data already gathered for one use.
Information that has been gathered
by researchers and recorded in
books, articles, and other
publications.
Type of secondary data :
RELIABLE EXISTING DATA,
REFERENCES, MASS MEDIA and
ELECTRONIC MEDIA.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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#OBSERVATION
#EXPERIMENTS
#INTERVIEWS
#SURVEYS
Refer to first-hand data or information gathered
directly through OBSERVATION, EXPERIMENTS,
INTERVIEWSand SURVEYS.
Direct or firsthand evidence about an event, object,
person or work of art.
Materials can be written and non-written, the latter
including sound, picture, and artefact
Examples of primary sources include:
Personal correspondence and diaries, Works of art
and literature, Speeches and oral histories, Audio
and video recordings, Coins and tools, Laws and
legislative hearings.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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Data is gathered by observing and
recording the respondent’s actions in an
activity.
EXAMPLE :
An individual sitting at a selected location
everyday for a week and counting the
number of pedestrians and cars that pass
by. From this number, it can be estimated
whether the location is suitable for
business operations.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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Experiments or product sampling is another option.
The entrepreneur makes a number of sample products and
provides them to a small group of consumers for the
purpose of experimentation.
The result of this experiment can then be used to determine
how well the product is received by consumers.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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Field research covers interviews with customers, suppliers,
competitor and industry experts. Can be conducted in TWOways:
Personal Interview:
The interviewer needs to be friendly and
polite, not to influence the interviewee’s
responses with comments, body
language or facial expressions.
Telephone Interview :
The interviewer needs to include alternative
ways to rephrase the question in case the
interviewee faces problems in understanding
the question.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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Refers to the development of a short
questionnaire with respect to the targeted
product.
The questions should be
very specific.
Answers provided must be
limited and straightforward.
EXAMPLE :
Yes or No
Excellent
Good
Fair or Poor
Agree or Disagree.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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#RELIABLE EXISTING DATA
#REFERENCES
#MASS MEDIA / ELECTRONIC MEDIA.
Refer to desk research. Also known as library research.
It involves gathering data that have already been compiled and are available at a very
reasonable cost or sometimes even free
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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A secondary source that can be used by
an entrepreneur is existing data which is
reliable.
EXAMPLE :
Information obtained from annual report
of companies.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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An entrepreneur can use references such as
published information from the LIBRARY, INTERNET
and PAID DATABASE SERVICES which provide
information on market growth, overall industry
perspectives and customer profiles.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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Information on raw materials can be a
business opportunity for an entrepreneur.
In the era of ICT, the internet becomes a
vital source of quick and accurate
information on business ideas.
EXAMPLE :
Advertisement and
information in the
NEWSPAPERS,
MAGAZINES and the
INTERNET.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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a)
Suitability of Ideas.
i.Experience
ii.Knowledge
iii.Skills
iv.Capital
v.Interest
c)
Feasibility of The
Ideas.
i.Legislation Aspect
ii.Competitors
iii.Capital Required
iv.Risk
b)
Community’s
Response.
i.local community
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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An entrepreneur runs a business
that suits his experience in the
profession.
The intelligence to find an
opportunity from past
experience can be a way to
gain success in business.
EXAMPLE :
Years of experience working
as a CHEFat a HOTELwill
enable the individual to set
up and operate a restaurant
on his own.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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Experience alone is not enough to
run a business.
The entrepreneur has to be
equipped with the knowledge on
operating a business.
EXAMPLE :
When a chef open a RESTAURANT,
he must KNOW HOW TO prepare
food, manage the business,
prepare accounts, arrange his
staff’s duty schedule and how to
treat his customers well.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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The entrepreneur must have the necessary skills in carrying
out his job. Skills are usually born from experience and
knowledge. This is an advantage that is difficult to obtain.
EXAMPLE :
A very SKILFUL TAILOR can produce
clothes of HIGH QUALITY in a SHORT
PERIOD OF TIME.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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Interest is an important aspect that must be taken
seriously as it can give self-confidence and a sense
of responsibility towards the business carried out by
an entrepreneur.
With interest, the entrepreneur will be able to
concentrate on his profession and automatically
more effort for the growth of his business.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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The chemistry between a business idea
and the society is an important aspect
that must be taken into consideration
before starting a business.
A business opportunity must be
consistent so as not to oppose the
society’s acceptance in terms of
consumer’s values, norms and culture.
EXAMPLE :
Disco and gambling places which
opened in Malay villages is
oppose to the religious values of
Muslim community.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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A business idea that has been
suggested must be approved
by the law.
Although the business can
produce high profits, it should
not be one which is against the
law.
EXAMPLE :
The PIRATE CD BUSINESS can
gather profit easily. However, it is
AGAINST THE LAWto produce and
sell pirate CDs.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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An entrepreneur in a new venture
must really analysehis competitors in
the industry.
Competitors are those who are in the
same business, fulfilling customers’
needs which are similar to those of
entrepreneurs.
The entrepreneur should identify
the strengths and weaknesses of
his competitors in terms of
organizational resources, such as
human resource, financial and
physical assets, and reputation.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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Capital refers to the amount
invested in the company.
A lot of business have failed
due to insufficient capital.
3 types of capital
required for a business
operation :
1-Fixed or Permanent Capital
2-Working Capital
3-Plantation or Growth Capital
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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3 types of capital required for a business operation :
1-Fixed or Permanent Capital
Fixed capital is the amount of capital invested
in a business which is required for the
purchase of permanent assets.
EXAMPLE: building, land andequipment.
Sometimes known as supplementary factor,
indirect factor or overhead factors.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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3 types of capital required for a business operation :
2-Working Capital
Refers to the assets of a business
that can be used to support
business operations involving a
short time period.
Used to buy inventory, pay bills and
salaries, and for emergency
purposes.
Needed to finance the business’s
day-to-day operational costs.
Known as a variable factor, prime
factor or direct factor.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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3 types of capital required for a business operation :
3-Plantation or Growth Capital
Plantation or growth capital differs from
working capital.
It is not related to the current business
situation.
Needed when businesses undergo
development or changes according to the
direction of the business
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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Can be defined as a period
of uncertainty experienced
by a business.
2 types of risks that need to be
given attention before and during
carrying out business operation :
1-Business Risk
2-Financial Risk
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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2 types of risks required for a business operation :
1-Business Risk
Factors which have the potential affecting a
business operation and its profitability.
2 types of business risks :
(a)Controllable business risk
•Can be managed by the entrepreneur
such as the quality of products and defects
of machines.
(b) Uncontrollable Business Risk
•Risks that are almost impossible to prevent.
•Example : economic recession and natural
disasters.
•Some business risks are difficult to prevent,
such as losses due to accidents.
•However these risks can be transferred to
another authority or second party such as
the insurance company.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
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2 types of risks required for a business operation :
2-Financial Risk
3 categories :
(a)Credit Risk
•Is the risk when debtors are not
able to meet that obligation for
full value.
•If customers/debtors do not pay
the given credit within the specific
time period, it will be classified as
bad debts.
•Hence, the entrepreneur must be
careful when giving out loans to
his customers.
(b) Liquidity Risk
•The risk of insufficient liquid
resources to make all payments on
the due date.
•Even though the entrepreneur has
sufficient assets and net worth to
make a payments, the inability to
convert assets to cash can affect
business operations.
•If the level of cash liquidity is high,
it means that chances of making
profits are high.
•On the other hand, the business
will face problem in the payment
of debts when the level of cash
liquidity is low.
(c) Loan Risk
•A loan is a form of financing
whereby an entrepreneur borrows
money as a source of capital to
conduct his business.
•The loan can be in the form of
long, medium or short-term
financing.
•If the entrepreneur obtains a loan,
he must responsible for the
repayment of debt together with its
interest.
BUSINESS IDEAS & OPPORTUNITIES : IDENTIFY SOURCES OF ENTREPRENEURIAL IDEAS

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BUSINESS IDEAS & OPPORTUNITIES
BUSINESS IDEAS & OPPORTUNITIES : PROCESS OF GENERATING AND EVALUATING BUSINESS IDEAS
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BUSINESS IDEAS & OPPORTUNITIES : PROCESS OF GENERATING AND EVALUATING BUSINESS IDEAS
Fulfilling needs and interest
Observing changes in the
community
Analyzing life problems Using the latest technology
Diversifying the usage of
goods
Observing and establishing
network

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BUSINESS IDEAS & OPPORTUNITIES : PROCESS OF GENERATING AND EVALUATING BUSINESS IDEAS
Data collection and research Funding
Preparation of a complete
business plan
Hiring of a workforce if
necessary
Establishment of linkage or
networks
Confidence and
good time management

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BUSINESS IDEAS & OPPORTUNITIES
BUSINESS IDEAS & OPPORTUNITIES : CREATIVE THINKING TECHNIQUES
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BUSINESS IDEAS & OPPORTUNITIES : CREATIVE THINKING TECHNIQUES
“A method that
describes your
PASSIONS, HOBBIES,
SKILLS, andEXPERIENCE
to make you great”
Thereisnosuchthingasabusinessideathatexistsoutside
ofthecontextofwhoeverthoughtofit.Agreatideaisn’t
trulygreatuntilitfitsnotjustthemarket,butyouaswell.

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BUSINESS IDEAS & OPPORTUNITIES : CREATIVE THINKING TECHNIQUES

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BUSINESS IDEAS & OPPORTUNITIES : CREATIVE THINKING TECHNIQUES
What are you passionate about?
Helpful Prompts:
What do you do that makes you the happiest?
What are you doing when you are the happiest?
Passions are the things you spend a lot of time thinking about, things
that you care about. You want to spend a large portion of your life
working on these things. Passions should be obvious and easy to
figure out Write down 5 things you care about, excluding friends and
Family.
The founder of Dropbox said:
"People who pursue their passions remind me of dogs chasing tennis
balls“

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BUSINESS IDEAS & OPPORTUNITIES : CREATIVE THINKING TECHNIQUES
Helpful Prompts:
What do you do on the weekends?
If you had nothing to do one day and were not allowed to work,
what would you do?
What are your hobbies?
Hobbies are anything you do for fun. Hobbies help you build skills.
You can build a business around a hobby. Think about what you do
that is unique.
But ask yourself:
-Could you do that all day?
-Would you still be happy if you did it all day?

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BUSINESS IDEAS & OPPORTUNITIES : CREATIVE THINKING TECHNIQUES
Helpful Prompts:
What could you teach someone?
What do you consider yourself an expert at?
Fill in the blank: I’m the top 10% of ___________
What skills do you have?
Skills are specificor
general things you are
good at.

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BUSINESS IDEAS & OPPORTUNITIES : CREATIVE THINKING TECHNIQUES
Helpful Prompts:
What do you have inside knowledge on? What scoop do you have?
What industry landscape can you navigate easily and have no learning curve at?
What industry experience do you have?
When you have experience,
you're going to learn easily
in your new business.

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BUSINESS IDEAS & OPPORTUNITIES : CREATIVE THINKING TECHNIQUES
Go to your Hobbies, Passion, Skills, & Experiences sheet
Focus on hobbies and skills
See if you can match two of them to create a business idea
Combining your hobbies & skills to create ideas
Action (skills) + passion + customer demand (hobbies)
-create a blog with recipes
-create an online eCommerce shop for recipes
-create an app that helps bakers save recipes
Example: Baking & Web development
Combine a hobby and a skill with a business model
Example:
-On demand -delivering baked goods
-Shared economy -app for selling leftover baked goods
-Subscription service -customized recipes website
If you have skills, you are more
likely to succeed
If you have passion, you will be
more motivated
Create something that's value
adding
If you don't like it in the end, go
back and repeat the process

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BUSINESS IDEAS & OPPORTUNITIES : CREATIVE THINKING TECHNIQUES

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BUSINESS IDEAS & OPPORTUNITIES
BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY
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BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY
“Abusinessmodeldescribestherationale
ofhowanorganizationcreates,delivers,
andcapturesvalue”
From Business Model Generation
By Alexander Osterwalder& Yves Pigneur(2010)

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“
TheBusinessModelCanvasisastrategic
managementandleanstartuptemplate
fordevelopingnewordocumenting
existingbusinessmodels.
Itisavisualchartwithelements
describingafirm'svalueproposition,
infrastructure,customers,andfinances.
IntroducebyOsterwalderandPigneur
inyear2010
BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

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“
•BMCisasimpleandeasyframework
togiveanoverviewofthebusiness.
•Consistof9buildingblocksto
understandtheoverallpictureofour
chosenbusiness.
•Theobjectiveistocreateshandson
toolsthatfosterunderstanding,
discussion,creativityandeasilycan
seetheideainoneblueprint.
BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

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“
•One-pagesnap-shot.
•Graphical–abilitytoseerelationships
betweenboxes.
•Easytovalidate/pivot/change.
•Differentcanvasfordifferentmarkets,
customersegments,products,etc.
BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

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Watchhere
BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

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Key
Partners
Key
Activities
Value
Proposition
Customer
Relationships
Customer
Segments
Key
Resources
Channels
Cost Structure Revenue Streams
BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

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DownloadBMChere
BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

55. CustomerSegments
10
whichcustomersandusersareyouserving?
whichjobsdotheyreallywanttogetdone?

56. ValueProposition
11
whatareyouofferingthem?whatisthat
gettingdonefor them?dotheycare?

57. Channels
12
howdoeseachcustomersegmentwanttobereached?
throughwhichinteractionpoints?

58. CustomerRelationships
13
whatrelationshipsareyouestablishingwitheachsegment?
personal?automated?

59. RevenueStreams
14
whatarecustomersreallywillingtopay for? how?
areyougeneratingtransactionalor recurringrevenues?

60. KeyResources
15
whichresourcesunderpinyourbusinessmodel?
whichassetsareessential?

61. KeyActivities
16
whichactivitiesdoyouneedtoperformwellin
your businessmodel?whatiscrucial?

62. KeyPartners
17
whichpartnersandsuppliersleverageyour model?
whodoyouneedtorelyon?

63. CostStructure
18
whatistheresultingcoststructure?
whichkeyelementsdriveyour costs?

64. BusinessModelCanvas
19

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Assume
Validate Validate
Assume Conclude
BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

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BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

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BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

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BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

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BUSINESS IDEAS & OPPORTUNITIES : BUSINESS MODEL CANVAS STRATEGY

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72. [email protected]