MODULE 5.

IDENTIFYING desire for the outputs, the products, or

ENTREPRENEURIAL OPPORTUNITY services produced.

Identifying Opportunity

Entrepreneurial opportunity is the point at which A good place to begin your entrepreneurial
identifiable consumer demand meets the feasibility quest is to read as much as you can,
of satisfying the requested product or service. In the especially with new technology
field of entrepreneurship, specific criteria need to be developments, even outside the field you
met to move from an idea into an opportunity. It work in.
begins with developing the right mindset—a mindset
where the aspiring entrepreneur sharpens their senses Drivers of Opportunity
to consumer needs and wants, and conducts research
to determine whether the idea can become a Some recent drivers for change in the entrepreneurial
successful new venture. space include new funding options, technological
advancements, globalization, and industry-specific
Theories of Opportunity economics.
In the twentieth century, economist
Joseph Schumpeter, as shown below, stated that
entrepreneurs create value “by exploiting a new RESEARCHING POTENTIAL BUSINESS
invention or, more generally, an untried OPPORTUNITY
technological possibility for producing a new
commodity or producing an old one in a new way, Opportunity screening is the process by which
by opening up a new source of supply of materials or entrepreneurs evaluate innovative product ideas,
a new outlet for products, by reorganizing an strategies, and marketing trends. Focusing on the
industry” or similar means. viability of financial resources, the skills of the
entrepreneurial team, and the competition, this
According to Schumpeter, entrepreneurial innovation screening helps determine the potential for success in
is the disruptive force that creates and sustains pursuing the idea and can help refine planning.
economic growth, though in the process, it can also
destroy established companies, reshape industries, secondary research—that is, data that are already
and disrupt employment. He termed this available through some published source. There may
force creative destruction. be articles, research reports, or reliable Internet
sources where you can research information about
your industry, products, and customers. If you have
He identified these methods for finding new business the funds, you can also purchase research reports
opportunities: from firms that specialize in gathering research on
certain topics or products. Secondary research has
1. Develop a new market for an existing the advantage of being quickly available.
product.
2. Find a new supply of resources that would
enable the entrepreneur to produce the Researching and Verifying the Entrepreneurial
product for less money. Opportunity
3. Use existing technology to produce an old
product in a new way. An idea can move to a recognized opportunity when
4. Use an existing technology to produce a new the following criteria are met. these three factors:
product.
5. Finally, use new technology to produce a  Significant market demand
new product.  Significant market structure and size
 Significant margins and resources to support
Supply is the amount of a product or service the venture’s success
produced. Demand is the consumer or user
Demographics are statistical factors of a population,
such as race, age, and gender.

Competitive Analysis

A competitive analysis should provide the

entrepreneur with information about how
competitors market their business and ways to
penetrate the market by entry through product or
service gaps in areas that your competitors do not
serve or do not serve well.

Competitive Analysis Grid

The competitive analysis grid should identify your

competitors and include an assessment of the key
characteristics of the competitive landscape in your
industry, including competitive strengths and
weaknesses and key success factors.

Three Circles Tool

Another tool that can be used in competitive analysis

is the three circles tool. The goal is to identify
competitors’ strengths and competitive advantages
with any overlaps among competitors. Then, you
a SWOT analysis (strengths, weaknesses,
would identify values or features not offered by
opportunities, and threats), which focuses on
competitors. This gap in value or offered services
analyzing your venture’s potential and builds on the
helps to identify your unique selling
knowledge gained from the competitive analysis grid
proposition and thereby your competitive
and the three circles. You will need to identify the
advantage.
strengths your venture will need to support the
competitive advantage identified through the
competitive analysis tools. The weaknesses can be
identified based on your current and foreseeable
expectations. For a new venture, the opportunities
and threats sections are based on current factors in
the external environment that come from your
research. In this context, opportunities are facts,
changes, or situations within the external
environment that could be favorably leveraged for
the venture’s success.
 customer will derive from using your product or
service.

Customers are the people you will be serving,

including potential customers from one or more
market segments, or subsections of the market
categorized by similar interests or needs.

Infrastructure refers to all the resources the

entrepreneur will need to launch and sustain the
business venture.

Financial viability relates to the long-term financial

sustainability of an organization to fulfill its mission.
This goes back to our definition of an entrepreneurial
opportunity.

MODULE 6. PROBLEM SOLVING AND NEED

The three circles competitive analysis helps to RECOGNITION TECHNIQUES
identify where there is overlap and where there may
be a gap in the market that a new venture could fill. Entrepreneurial problem solving is the process of
The overlaps identify points of parity, the areas using innovation and creative solutions to close that
where competitors offer the same value with the gap by resolving societal, business, or technological
important identification of the areas of unmet problems.
customer needs and how unique your competitive
advantage is within the industry. There are two prominent established problem-
solving models: adaptive and innovative. A
These concepts are different from your venture’s renowned British psychologist, Michael Kirton,
competitive advantage; the competitive developed the Kirton Adaption-Innovation (KAI)
advantage describes your venture’s unique benefit, Inventory to measure an individual’s style of
which supports growth of the venture, whereas the problem solving.3 Problem-solving preferences are
unique selling proposition describes the product or dependent on the personality characteristics of
service itself, rather than the venture. originality, conformity, and efficiency, according to
Kirton.
Business Models and Feasibility
Adaptive model seeks solutions for problems in
Part of the analysis in determining if your idea is an ways that are tested and known to be effective. An
actual entrepreneurial opportunity is identifying a adaptive model accepts the problem definition and is
feasible business model. A business model is a plan concerned with resolving problems rather than
for how the venture will be funded; how the venture finding them. This approach seeks greater efficiency
creates value for its stakeholders, including while aiming at continuity and stability.
customers; how the venture’s offerings are made and
distributed to the end users; and how income will be Innovative model of entrepreneurial problem
generated through this process. solving, which uses techniques that are unknown to
the market and that bring advantage to an
Offering refers to the product or service you will be organization.
selling, the value proposition, and how you will
reach and communicate with your target customers.
The customer value proposition includes a detailed
description of the products and services you will
offer to customers, and what benefits (value) the
 and begin a business. Entrepreneurs are risk takers,
passionate about new endeavors.

Self-regulating problem solvers are autonomous

and work on their own without external influence.
They have the ability to see a problem, visualize a
possible solution to the problem, and seek to devise a
solution. The solution may be a risk, but a self-
regulating problem solver will recognize, evaluate,
and mitigate the risk.

Theorist problem solvers see a problem and begin

to consider a path toward solving the problem using
a theory. Theorist problem solvers are process
oriented and systematic.

Petitioner problem solvers see a problem and ask

others for solution ideas. This entrepreneur likes to
consult a person who has “been there and done that.”

Critical thinking is the complex analysis of a creativity as the development of original ideas to
problem or issue with the goal of solving the solve an issue. The intent of being an entrepreneur is
problem or making a decision. The entrepreneur to break away from practical norms and use
analyzes and peels away the layers of a problem to imagination to embrace quick and effective solutions
find the core of an issue facing a business. to an existing problem, usually outside the corporate
environment.
Communication skills, the ability to communicate
messages effectively to an intended recipient, are the
skills entrepreneurs use to pool resources for the The Steps of the Creative Problem-Solving
purposes of investigating solutions leading to Process
innovative problem solving and competitive
advantage. Clarify is the critical step of recognizing the
existence of a gap between the current state and a
Decisiveness is as it sounds: the ability to make a desired state. This can also be thought of as
quick, effective decision, not letting too much time having need awareness, which occurs when the
go by in the process. Entrepreneurs must be entrepreneur notes a gap between societal or
productive, even in the face of risk. They often rely customer needs and actual circumstances.
on intuition as well as on hard facts in making a
choice. They ask what problem needs to be solved, Ideate is the step of the creative problem-solving
think about solutions, and then consider the means process that involves generating and detailing ideas
necessary to implement an idea. And the decisions by the entrepreneur. After collecting all information
must be informed with research. relevant to the problem, the entrepreneur lists as
many causes of the problem as possible.
Data analysis is the process of analyzing data and
modeling it into a structure that leads to innovative Develop is the step in which the entrepreneur takes
conclusions. the list of ideas generated and tests each solution for
feasibility. The entrepreneur must consider the cost
Resourcefulness is the ability to discover clever of each idea and the obstacles to implementation.
solutions to obstacles. Entrepreneurs start thinking
about a business venture or startup by talking to Implement is the step in which the solution to the
people and procuring experts to help create, fund, problem is tested and evaluated. The entrepreneur
walks through the planned implementation with the
client and tests each part of the solution, if a service, assessment, the phase in which the entrepreneur
or thoroughly tests a developed good. experiments and analyzes the potential process and
its capabilities.
Evaluate is the step in which the final solution is
assessed. This is a very important step that Evaluation is the phase in which behaviors are
entrepreneurs often overlook. analyzed to assess success. The entrepreneur
continually studies each phase of the solution to
Brainstorming is the generation of ideas in an observe the effectiveness of outcomes desired by the
environment free of judgment or dissension with the client.
goal of creating solutions.
Whiteboarding is a type of graphing that permits
Storyboarding is the process of presenting an idea the entrepreneur to plot each step in a process to
in a step-by-step graphic format. This tool is useful build comprehension and detailing of the process.
when the entrepreneur is attempting to visualize a
solution to a problem. Module 7. Telling your
Entrepreneurial Story and Pitching
Team creativity is the process whereby an
entrepreneur works with a team to create an
Idea
unexpected solution for an issue or challenge.
The problem-solution narrative concisely
introduces a specific problem that affects many
Design thinking is a method to focus the design and
people and presents the good or service as an
development decisions of a product on the needs of
innovative, unique, and insightful solution.
the customer, typically involving an empathy-driven
process to define complex problems and create
Pitch is a formal presentation in which you ask for
solutions that address those problems.
something. It is delivered (usually) to potential
investors in a startup.
One design thinking approach that is taught at places
like Stanford’s Design School and organizations like
Vision statement, outlines the venture’s broader
the LUMA Institute (a global company that teaches
purpose, what the entrepreneur sees the venture
people how to be innovative) is human-centered
growing into in the future.
design (HCD). HCD, as the name suggests, focuses
on people during design and development.
Ideation—a purposeful process of opening up one’s
mind to new trains of thought that branch out in
Three spaces—inspiration, ideation, and many directions from a stated purpose or problem—
implementation—compose the design thinking in this case, with the goal of generating new
process. The process uses “spaces” and not “phases” possibilities for goods, services, or processes to
because multiple spaces can happen simultaneously make your venture successful.
lean process is a systematic method for the Value proposition explains what it is, exactly, that
maximizing of continuous improvement and the an organization or firm does that people will pay for
minimization of surplus or unused material in the (or contribute, to in the case of a nonprofit), and it is
production of a process. a central point in any pitch.
The external environment encompasses customers, Entrepreneurial Mission is a business or nonprofit
industry trends, and competition. The internal organization’s reason for being. It is expressed as a
environment comprises the factors inside the self-conceptualization in the context of a
enterprise, such as employees, and internal practices marketplace and includes a sense of action.
and processes. - as you read in the chapter on Identifying
Entrepreneurial Opportunity is a clear
Observation is the phase in which the entrepreneur expression of an organization’s reason for
studies the challenge and notes all facets of the being that defines its primary long-term goal
challenge requiring solution.
 and often includes an abbreviated plan of Friends and Family
action for how to reach that goal. Imagine asking friends and family for money to keep
your startup going after you have maxed out your
Goals credit cards and secured a small business loan only
to build a prototype and realize you do not have
An organization needs to establish concrete goals for enough funds to get it to market.
its products and services to remain viable. Goals
should be stated in precise terms that are appropriate Potential Employees
for the marketplace. Entrepreneurs also pitch to potential employees by
focusing on why they are needed to help the team
create something innovative and valuable.

Pitch Goals

Planning a pitch means researching region, potential

investors, and current competitors working in the
same or similar marketplaces. A good pitch explains
not only what makes the product or service good but
what makes a market good.

Key Elements of the Pitch

A pitch is usually presented through what is called

a pitch deck, alternately called a slide deck.

Corporate narrative is not a fairy tale but relays

how a successful company grew from something
small, perhaps starting in a garage in California, into
a powerful firm or corporation serving millions of
people.

A new form of consumerism, built on what

marketers call the “fear of missing out,” is another
way of characterizing the euphoria people feel when
they are enraptured by a brand. Fear of missing out
(FOMO) refers to the sense that we need to keep up
with our peers and the personas they represent in
social settings, particularly on social media.

Pitch Audiences Legal Agreements

Investors Outside of patents, there are additional legal means

You have been introduced to different types of of protecting your intellectual property.27 You may
investors and will learn about them in more depth wish to require partners to sign a nondisclosure
in Entrepreneurial Finance and Accounting. agreement (NDA). Typically, NDAs carry with
them a penalty should the partner disclose what they
know of the proprietary information that lies at the
heart of your value proposition.

noncompete agreement in a contract prevents an

employee from working for the competition for a
specified period of time after working for you. The
intention is to prevent them from taking your secrets
or their skills to a competitor.

work-for-hire agreement between an individual

employee and a company state that ownership of
innovations belongs to the company, even if an
individual makes substantial contributions to the
product, service, or process.

The user interface (UI) is what a customer sees

when they use your product. A graphic user interface
(GUI) is common for all Windows and Apple-based
devices.

An entrepreneurial contest is any entrepreneurial

competition other than a pitch competition. They
usually are run by nonprofit organizations and
universities, but more companies are hosting them to
open up to more outside innovation to attract diverse
entrepreneurs and access nontraditional sources of
new ideas with commercial potential.

To prepare for a contest, find out exactly what is

expected of you and do as much research as you can
so that you are writing using the iceberg principle.

Pitch competitions may offer cash prizes or

mentorship opportunities to the winners. Some larger
pitch competitions have seed funding agreement
contingencies that winners must sign before they can
accept cash prizes.