CHAPTER 2

OPPORTUNITY SEEKING, SCREENING, and SEIZING

OPPORTUNITY SEEKING

 3S Opportunity Spotting and Assessment

 Essential to an Entrepreneur’s Opportunity Seeking
 Sources of Opportunities

3S of Opportunity Spotting and Assessment

Seeking, Screening, Seizing

 Is the framework that most of the promising entrepreneurs use to finally come up with the
ultimate product or service suited for specific opportunity.

Opportunity
 Is an entrepreneur’s business idea that can potentially become a commercial product or
service in the future.

Opportunity Seeking
 An endless curiosity to discover new or different ideas and see whether these ideas will
work in the marketplace. Is the first step and is the most difficult process of all due to the
number of options that the entrepreneur will have to choose from.

What is the difference between ENTREPRENEUR and ORDINARY BUSINESSMAN?

Entrepreneur – Create value by introducing new products or services or finding better ways of making
them.
Ordinary Businessman – The main objective is simply to earn profit from producing, buying, and selling
goods.

Essential to an Entrepreneur’s Opportunity Seeking

 Entrepreneurial Mind Frame – Allows the entrepreneur to see things in a very positive and
optimistic light in the midst of crisis or difficult situations.
 Entrepreneurial Heart Flame – is about emotional intelligence or EQ, which is often
manifested in the entrepreneur’s effort to nurture relationships with customers, employees,
and suppliers.
 Entrepreneurial Gut Game – This refers to the ability of the entrepreneur to sense without
using the five senses.

Sources of Opportunities

1. Macro Environmental Sources of Opportunities - it involves the larger society forces that
influence the (SPEET) socio-cultural, political, economic, ecological, and technological.
 2. Industrial Sources of Opportunities

a) Government – refers to the system or institution that handles the affairs of a particular
country.
 Five Types/Classifications of Government:
 Democracy
 Autocracy
 Republic
 Monarchy
 Dictatorship
b) Suppliers – refer to individual person or company that provide the required materials,
parts or services to the business.
 Criteria of Selecting the Supplier:
 Quality of the goods or services
 Ability to respond to urgent needs
 Proximity of the location
c) Customers – are the buyers of goods or services produced or rendered by the business.
d) Competitors – are the forces existing in the industry environment that produce, sell, or
render products or services which are similar to those of the business.
 Direct Competitors – produce and sell similar products or services.
e) Employees – are the workers of the business who are highly responsible for the
production of goods or delivery or services to the customers.
f) Creditors – refer to banks, financial institutions, and financial intermediaries engaged in
the lending of money the borrower usually for a fee or charge in the form of interest.

3. Market Sources of Opportunities

 The entrepreneur must also be able to measure the actual demand and supply
of the industry that the enterprise belongs to.
1. Micromarket – specific target market segment. Target customers that represent the
immediate customers of an enterprise.

OPPORTUNITY SCREENING

 Personal Screening
 The 12 Rs of Opportunity Screening
 The Pre-Feasibility Study
 Market Potential and Prospects
 Technology Assessment and Operations viability
 Investment Requirements and Product/Servicing Cost
 Financial Forecast and Determination of Financial Feasibility
The Personal Screen

 In screening opportunities, the entrepreneur first must consider his or her preferences and
capabilities by asking three basic questions:

The 12 Rs of Opportunity Screening

1. Relevance to vision, mission, and objectives of entrepreneur.

2. Resonance to values. Other than vision, mission, and objectives, the opportunity must match
the values and desired virtues that you have or wish to impart.
3. Reinforcement of Entrepreneurial Interest. How does the opportunity resonate with
entrepreneur’s personal interests, talents and skills?
4. Revenues. In any entrepreneurial endeavor, it is important to determine the sales potential of
the products or services you want to offer.
5. Responsiveness to customer needs and wants. If the opportunity that you want to pursue
addresses the unfulfilled are underserved need and wants of customers, then you have a better
chance of succeeding.
6. Reach. Opportunities that have good chances of expanding through branches, distributorship,
leadership, franchise outlets in order to attain rapid growth are better opportunities.
7. Range the opportunity can potentially lead to a wide range of possible product or service
offerings, thus tapping many market segments of industry.
8. Revolutionary Impact. If you think that the opportunity will most likely be the "next big thing" or
even a game-changer that will revolutionize the industry, then there is a big potential for the
chosen opportunity.
9. Returns. It is a fact that products with low cost of production and operations but are sold at
higher prices will definitely yield the highest returns on investments. Opportunity Screening
10. Relative Ease of Implementation. Will the opportunity be relatively easy to implement for the
entrepreneur or will there be a lot of obstacles and competency gaps to overcome?
11. Resources Required. Opportunities requiring fewer resources from the entrepreneur may be
more favored than those requiring more resources.
12. Risk. In an entrepreneurial endeavor there will always be risks.

The Pre-feasibility Study

 is focus on a few key items that could make or break the business concept. This time,
entrepreneur must go down to the details and take time to consider the following factors that
are contained in a pre-feasibility study.

1. Market Potential and Prospects

- Market potential is based on the estimated number of possible customers who might avail
of the product or service.
 Market Potential and Prospects
o segmenting the market
 - Using a set up demographic (gender, age, place of residence, income class, etc. will be
the most basic approach in determining the target segment.
o Assessing Competition
- Market potential is also affected by the number of establishments Supplying and serving
your target customers. This process would determine how saturated the market is in the
given area of coverage.

o Estimating market shares and sales

- The entrepreneur can go for a small market share unless the entrepreneur has a very
superior product or service that can immediately comment a large market share

2. Technology Assessment and Operations Viability

1. Quantities Demanded. This would determine the needed capacity of operations
2. Quality Specifications Demanded. This would dictate the following
a. quality of input or raw materials
b. quality assurance process in transforming input to output
c. quality output that meet the operations, standard set
d. quality outcomes for the customers who will be looking for specific results.
Technology Assessment and Operations Viability
3. Delivery Expectations. Knowing how much, how frequent, and when to deliver to
customers

4. Price Expectations. The selling price of the product or service would be evaluated by the
customers according to the value they would receive (in terms of quality delivery and quantity)
and this value added should be matched against competitors.

3. Investment Requirements and Production/Services Costs

4. The entrepreneur needs to determine how much money is needed to start a business
opportunity with consideration to the technologies and operating levels required
1. Pre-Operating Costs
a. These are the costs related to the preparation for the launch of the business. These
includes the feasibility study, market research, product development, organizational
development, etc.
2. Production/Service Facilities Investment
b. This refers to long-term investment for the actual establishment including
investment in land. building machinery, equipment, etc.
3. Working Capital Investment
c. This includes the investment needed to operationalize the business, compose of
cash, accounts receivable, and inventories.
 5. Financial Forecast and Determination of Financial Feasibility
 The financial forecasts refer to the monetary transactions that the business is expected to
engage in

1. Income statement
o An income statement is a financial statement that shows you the company's income
and expenditures.
o The income statement is also known as a profit and loss statement, statement of
operation, statement of financial result or income, or earnings statement.
Formula:
Revenues - Expenses = Income or Profit
2. Balance sheet
o Financing the assets or investments are the liabilities and equity.
o Liabilities-represent the enterprise's debts to supplier, to the government, to
employees, other financiers
o Stockholders' equity represents investors' investments in the stock or shares of the
business
Formula:
Assets = Liabilities + Equity
3. Cash flow statement
o A cash flow statement is a financial statement that provides aggregate data
regarding all cash inflows a company receives from its ongoing operations and
external investment sources. It also includes all cash outflows that pay for business
activities and investments during a given period
4. Fund's flow statement
o The fund flow statement means a change in working capital. It is also known as the
statement of sources and uses of funds.
o Fund flow statement is a statement of cash inflows and cash outflows.

OPPORTUNITY SEIZING

 The entrepreneur has an idea as to where he or she will locate the business and how he or she
will market the product or service.
 The question for the entrepreneur in opportunity seizing is "Will I be able to manage to my
advantage, the critical success factors and avoid the critical failure factors"

Crafting a Positioning Statement

 In order to craft a positioning statement, the entrepreneur is advised to look at the other
competitors or substitutes in the marketplace.
 Details such as their major buyers’ attributes or features that make the competitors'
products attractive should give the Entrepreneur an idea.
 The following key points can help the entrepreneur on how to go about this questioning
1. What are the main customer segments
2. What are the different product attributes and features of each of the competitors
3. What are the existing marketing practices of the various competitors
4. What are the market preferences of customers when it comes to the products being
offered

Conceptualizing the Product or Service Offering

 After assessing the competing products, the entrepreneur must then conceptualize his or
her own products
 A concept is an idealized abstraction of the product or service to be offered to the prepared
market of the entrepreneur.

The following options or directions may be Considered by the entrepreneur

 First is to create a concept similar to the winning products in the marketplace and ride with
the obvious market trends
 Second is to find a market niche that has not been filled by the competitors.
 Third is to conceptualize a product in a positioning category where participants are rather
weak.
 Fourth is to conceptualize a product that would change the way customers think, behave,
and buy, thus making existing product "obsolete" and old-fashioned.

Designing, Prototyping, and Testing the Product

 From conceptualization the entrepreneur proceeds to the design, prototyping and testing of the
concept.
 Designing means that the entrepreneur must render the concept and translate it into very
physical and very real dimensions (measurement).

Implementing, Organizing, and Financing

 From conceptualization prototyping and testing of the concept.
 The entrepreneur must begin with the end in mind or his or her desired end results for the
chosen opportunity.

A good planner and programmer must make several important choices to achieve the desired end
results
 First is to choose the correct technology the one that would produce the output that would
meet the quality specifications of the customers.
 Second is the choose the right people who can perform the technical and the managerial
functions necessary to realize the desired end results.
 Third is to design the operating workflow that would assure the effective economical, and
efficient production of the output.
 Fourth is to specify the systems listen procedures that would govern the enterprise motivate
and discipline the work force and satisfy the customers.