Chapter 4- Feasibility Study

and Business Plan

Part 1: Recognizing
Opportunities and
Generating Ideas

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What comes on your mind?

 On the difference between idea and opportunity?

 Why you generate Business Ideas?
 How do you generate an idea?

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 What is an Opportunity?

An opportunity is a favorable
Opportunity Defined set of circumstances that
creates a need for a new
product, service, or business.

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Four Essential Qualities of an Opportunity

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Three Ways to Identify an Opportunity

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 First Approach: Observing Trends

• Observing Trends
– Trends create opportunities for entrepreneurs to pursue.
– The most important trends are:
• Economic forces
• Social forces
• Technological advances
• Political and regulatory change
– It’s important to be aware of changes in these areas.

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First Approach: Observing Trends

Environmental Trends Suggesting Business

or Product Opportunity Gaps

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 Trend 1: Economic Forces

Example of Economic Trend

Creating a Favorable Opportunity
Economic trends help
determine areas that are • A weak economy favors
start-ups that help consumers
ripe for new start-ups and
save money.
areas that start-ups should
• An example is GasBuddy.com,
avoid.
a company started to help
consumers save money on gas.

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 Trend 2: Social Forces

Examples of Social Trends

Social trends alter how
people and businesses • Aging of the population.
behave and set their • The increasing diversity of
priorities. These trends the workplace.
• Increased participation in
provide opportunities for social networks.
new businesses to • Growth in the uses of mobile
accommodate the devices.
changes. • An increasing focus on health
and wellness.

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 Trend 3: Technological Advances

Examples of Entire Industries

Advances in technology that Have Been Created as the
frequently create business Result of Technological
Advances
opportunities.
• Computer industry
• Internet
• Biotechnology
• Digital photography

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 Trend 3: Technological Advances

Example: H20Audio
Once a technology is
An example is H20Audio, a
created, products often company started by four
emerge to advance it. former San Diego State
University students, that
makes waterproof housings
and earbuds for the Apple
iPhone.

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 Trend 4: Political Action and Regulatory
Changes

General Example
Political action and Laws to protect the environment
regulatory changes also have created opportunities for
provide the basis for entrepreneurs to start firms that
opportunities. help other firms comply with
environmental laws and
regulations.

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 Trend 4: Political Action and Regulatory
Changes

Specific Example

Company created to help OSHA is a government agency

that formulates and enforces
other companies comply safety, health, and
with the law. environmental regulations for
the workplace. Safety
Compliance Company was
started to help other companies
comply with OSHA regulations.

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 Second Approach: Solving a Problem

• Solving a Problem
– Sometimes identifying opportunities simply involves
noticing a problem and finding a way to solve it.
– These problems can be pinpointed through observing
trends and through more simple means, such as intuition,
serendipity, or change.
– Many companies have been started by people who have
experienced a problem in their own lives, and then realized
that the solution to the problem represented a business
opportunity.

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 Second Approach: Solving a Problem

• A problem facing the U.S. and

other countries is finding
alternatives to fossil fuels.
• A large number of
entrepreneurial firms, like
this wind farm, are being
launched to solve this problem.

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 Third Approach: Finding Gaps in the
Marketplace

• Gaps in the Marketplace

– A third approach to identifying opportunities is to find a
gap in the marketplace.
– A gap in the marketplace is often created when a product or
service is needed by a specific group of people but doesn’t
represent a large enough market to be of interest to
mainstream retailers or manufacturers.

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 Third Approach: Finding Gaps in the
Marketplace

Specific Example
Product gaps in the Tish Cirovolv realized there
marketplace represent were no guitars on the market
potentially viable made specifically for females.
business opportunities. To fill this gap, she started
Daisy Rock Guitars, a
company that makes guitars
just for women and girls.

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Personal Characteristics of the Entrepreneur

Characteristics that tend to make some people better

at recognizing opportunities than others

Prior Experience Cognitive Factors

Social Networks Creativity

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 Full View of the Opportunity Recognition
Process
Depicts the connection between an awareness of emerging trends
and the personal characteristics of the entrepreneur

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 What is Business Ideas?

Business Ideas is: Is the response of a person/s, or

an organization to solve an
identified problem or to meet
perceived needs in the
environment
(markets, community, etc.).

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 Techniques for Generating Ideas

Brainstorming Focus Groups

Library and
Internet Research

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 Brainstorming

• Brainstorming
– Is a technique used to generate a large number of ideas and
solutions to problems quickly.
– A brainstorming “session” typically involves a group of
people, and should be targeted to a specific topic.
– Rules for a brainstorming session:
• No criticism.
• Freewheeling is encouraged.
• The session should move quickly.
• Leap-frogging is encouraged.

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 Focus Groups

• Focus Group
– A focus group is a gathering of five to ten people, who
have been selected based on their common characteristics
relative to the issues being discussed.
– These groups are led by a trained moderator, who uses the
internal dynamics of the group environment to gain insight
into why people feel the way they do about a particular
issue.
– Although focus groups are used for a variety of purposes,
they can be used to help generate new business ideas.

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 Library and Internet Research

• Library Research
– Libraries are an often underutilized source of information
for generating new business ideas.
– The best approach is to talk to a reference librarian, who
can point out useful resources, such as industry-specific
magazines, trade journals, and industry reports.
– Simply browsing through several issues of a trade journal
or an industry report on a topic can spark new ideas.

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 Library and Internet Research

Examples of Useful Search

Large public and Engines and Industry Reports
university libraries • BizMiner
typically have access to • ProQuest
search engines and • IBISWorld
industry reports that would • Mintel
cost thousands of dollars • LexisNexis Academic
to access on your own.

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 Library and Internet Research

• Internet Research
– If you are starting from scratch, simply typing “new
business ideas” into a search engine will produce links to
newspapers and magazine articles about the “hottest” new
business ideas.
– If you have a specific topic in mind, setting up Google mail
alerts will provide you with links to a constant stream of
newspaper articles, blog posts, and news releases about the
topic.
– Targeted searches are also useful.

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 Other Techniques

• Customer Advisory Boards

– Some companies set up customer advisory boards that meet
regularly to discuss needs, wants, and problems that may
lead to new ideas.
• Day-In-The-Life Research
– A type of anthropological research, where the employees of
a company spend a day with a customer.

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 Encouraging New Ideas

• Establishing a Focal Point for Ideas

– Some firms meet the challenge of encouraging, collecting,
and evaluating ideas by designating a specific person to
screen and track them—for if it’s everybody’s job, it may
be no one’s responsibility.
– Another approach is to establish an idea bank (or vault),
which is a physical or digital repository for storing ideas.
• Encouraging Creativity at the Firm Level
– Creativity is the raw material that goes into innovation and
should be encouraged at the organizational and individual
supervisory level.

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The process of business development

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Idea assessment and business development
process

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