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The Entrepreneurial Process
1. Opportunity Spotting and Assessment
• It is the beginning of the process and
is considered the most difficult.
• Entrepreneurs take note of
interesting trends in their environment.
• They carefully assess the opportunity
through estimation of opportunity length,
capitalization required, threats,
profitability, and calculation of real and
perceived value.
Recognizing the Potential Market
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1. Opportunity Spotting and Assessment
• The opportunity is aligned with their
personal goals and attributes.
• They should also think in advance
how they will position the product or
service in the market and showcase its
unique selling proposition.

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2. Developing a Business Plan
• A business plan is a comprehensive
paper and details the marketing,
operational, human resource, financial,
strategic direction, and tactics of the
business.
• This will be the core guide and
direction of the entrepreneur in calculating
the resources needed, assessing how to
obtain these resources efficiently, and
running the business sustainably. Recognizing the Potential Market
MODULE 02
3. Determining the capital needed
• It is mandatory in the entrepreneurial
process to calculate the resources needed
to establish the business and compare this
against the entrepreneur’s current
resources.
• Caution must be applied in
computing the complete set of resources
needed and include only those items that
are considered as the real needs in venture
creation. Recognizing the Potential Market
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4. Running the business
• The entrepreneur should use the
resources allocated for the new venture.
• The business plan should already have
implemented.
• Operations, marketing and sales, human
resources, finance, and strategy implementation
should be critically observed.
• The entrepreneur should have control and
monitoring system to serve as a check and
balance of the formulated plan.
Recognizing the Potential Market
MODULE 02
Table 2.1 Components and steps in the
entrepreneurial process (Hisrich, 2010)
 OPPORTUNITY
DEVELOPING A DETERMINING THE RUNNING THE
SPOTTING AND
BUSINESS PLAN CAPITAL NEEDED BUSINESS
ASSESSMENT
Evaluated the Come up with a Calculate the intrinsic Practice leadership as
opportunity business description and extrinsic capital a way of life.
and analysis needed.

Conceptualize and Perform industry Calculate the existing Recognize critical

measure the analysis capital success factors
opportunity

Identify the perceived Come up with the Calculate the difference Identify existing and
value of the opportunity marketing plan between the needed foreseeable problems and
to the company and capital and existing issues
customers capital. Choose the most
cost-efficient suppliers or
service providers
 OPPORTUNITY
DEVELOPING A DETERMINING THE RUNNING THE
SPOTTING AND
BUSINESS PLAN CAPITAL NEEDED BUSINESS
ASSESSMENT
Do cost-benefit Prepare the Develop contact and Employ, risk-
analysis of the operations plan relationship with mitigating controls
opportunity including including the suppliers and service and monitoring
risk analysis organizational plan providers systems
Match the Come up with the Device an expansion/
opportunity with the financial plan sustainability
entrepreneur’s skills strategy
and objectives
Scan the strengths Identify strategies Scan the strengths Identify strategies
and weaknesses of and tactics and weaknesses of and tactics
competitors competitors
Perform monitoring
and control
Scanning the Marketing Environment
 It is the starting point of any new
venture that involves understanding
and knowing the intricacies of the
macro environment,
microenvironment, and internal
environment.
The process of seeking, screening,
and seizing is adapted to create the
most suited product or service for an
opportunity. Recognizing the Potential Market
MODULE 02
GENERAL RULE: To find the opportunity first
before coming up with a new product or service,
not the other way around.

TAKE NOTE: Opportunities are limitless for an

entrepreneur who is keen on what happens in
his or her environment. Recognizing potential
and paying attention to what competitors are
doing can send some signals on a great product
or service idea that could be the “next big thing”
in the market.
Recognizing the Potential Market
MODULE 02
Seeking, Screening, and Seizing

The 3S of opportunity spotting and

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

An OPPORTUNITY is an
entrepreneur’s business idea that can
potentially become a commercial product Recognizing the Potential Market
or service in the future. MODULE 02
S1 – Seeking the Opportunity
• OPPORTUNITY SEEKING is the
first step and is the most difficult process
due to the number of options that the
entrepreneur will have to choose from.

• It involves the development of new

ideas from various sources as follows:
MACROENVIRONMENTAL SOURCES
and MICROMARKET.
Recognizing the Potential Market
MODULE 02
1. Macroenvironmental Sources

a. STEEPLED – This is a mnemonic

for Sociocultural, Technological,
Economic, Environmental, Political,
Legal, Ethical, and Demographic factors.
This represents the general environment
where the entrepreneur can identify
business opportunities from and where the
future business is about to operate.
Recognizing the Potential Market
MODULE 02
1. Macroenvironmental Sources

b. Industry - This is the source of

current trend on what is happening in the
industry where the future business will
belong to. For example, the entrepreneur
should be fully acclimated on what is
happening with the rice industry if he or
she wants to establish a rice retailing
business.
Recognizing the Potential Market
MODULE 02
1. Macroenvironmental Sources

c. New Discovery or Knowledge - These

are new trends that can be the core
business model of a new venture.

d. Futuristic Opportunities - These are

projected new opportunities that can
possible affect the new business while it is
running.
Recognizing the Potential Market
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2. Micromarket

a. Consumer preferences, interests, and

perception - These are the current
needs and wants of potential
customers that should be discovered
right away by a budding entrepreneur.

Recognizing the Potential Market

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2. Micromarket

Need – is recognized when a customer

believes that there is difference between
his or her current situation versus his or
her desired condition.

Want – is recognized when a customer

believes that there is a specific product or
service that can perfectly suit the need.
Recognizing the Potential Market
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2. Micromarket

b. Competitors – Recognizing and

understanding potential competitors will aid
the entrepreneur to develop a product or
service that is unique and will surely stand
out from the competition.

c. Unexpected Opportunities from customers -

What entrepreneurs usually do is be on top of
the situation and change the market’s
perception of product or service or build a new
Recognizing the Potential Market
market.
MODULE 02
2. Micromarket

d. Talents, hobbies, skills and expertise -

Business opportunities do not just come
from outside forces, but also from within the
entrepreneur.

e. Irritants in the marketplace such as

deterrents, problems, complaints, and delays -
When customers are already sick and tired of
the same old issue or problem, that is when the
opportunistic entrepreneur should come in and
Recognizing the Potential Market
make a difference.
MODULE 02
2. Micromarket

f. Location - Entrepreneurs just have to look at

their ecosystem and they will be able to spot a
business opportunity right away.

Recognizing the Potential Market

MODULE 02
Methods of Generating Ideas

1. Focused Group Discussion (FGD) - a

moderator handles a very open, free-
flowing, and in-depth discussion with a
group of people who can provide insightful
ideas about a new product or service that
will fill a market need.

Recognizing the Potential Market

MODULE 02
Methods of Generating Ideas

2. Brainstorming - Is an activity that

allows the participants to share creative
ideas using the following rules: (a) no
destructive criticism or judgment allowed,
(b) wilder ideas are accepted, (c) more
ideas are preferred, and (d) improvement
of other’s ideas is allowed.

Recognizing the Potential Market

MODULE 02
Methods of Generating Ideas

3. Brainwriting or Internet
Brainstorming - Exactly the same as
brainstorming except that the channel
used is face-to-face, but in writing or
online. The results usually take longer, as
the answers depend on the availability of
the participants in answering the
questionnaires online.
Recognizing the Potential Market
MODULE 02
Methods of Generating Ideas

4. Problem Inventory Analysis - It is

similar to the FGD except that the
participants are already given an inventory
of product or service problems. The
participants will just identify from the list
given the compelling problem(s) of a
potential product or service instead of
generating the ideas from them.
Recognizing the Potential Market
MODULE 02
 Macroenvironmental Sources:
Examples of Findings

STEEPLED Analysis
1. Sociocultural Factors - These factors represent a general
view of a locality’s traditions, customs, beliefs, norms,
perceptions.
• Health consciousness
• Education level
• Attitudes toward imported goods and services
• Attitudes toward product quality and customer service
• Attitudes toward saving and investing
• Emphasis on safety
• Buying habits
• Religion and beliefs Recognizing the Potential Market
MODULE 02
 Macroenvironmental Sources:
Examples of Findings

STEEPLED Analysis
2. Technological Factors - These are composed of
innovations of an existing technology or an invention of a new
one mostly on applied science and engineering research areas.
• Basic infrastructure level
• Rate of technological change
• Spending on research and development
• Technology incentives
• Legislation regarding technology
• Communication infrastructure
• Access to newest technology
• Internet infrastructure and penetration Recognizing the Potential Market
MODULE 02
 Macroenvironmental Sources:
Examples of Findings

STEEPLED Analysis
3. Economic Factors - These factors include income,
expenses, and resources that can influence the cost of doing
business and generating income.
• Growth rates
• Inflation rates
• Interest rates
• Exchange rates
• Unemployment trends
• Labor costs
• Stages of business cycle
• Trade flows and patterns Recognizing the Potential Market
MODULE 02
 Macroenvironmental Sources:
Examples of Findings

STEEPLED Analysis
3. Economic Factors - These factors include income,
expenses, and resources that can influence the cost of doing
business and generating income.
• Level of consumers’ disposable income
• Monetary policies
• Fiscal policies
• Price fluctuations
• Stock market trends

Recognizing the Potential Market

MODULE 02
 Macroenvironmental Sources:
Examples of Findings

STEEPLED Analysis
4. Environmental or ecological factors - The scan
of these factors will help the entrepreneur determine if
the business he/she is entering into will comply with
the environmental standards or will just be a hazard to
people, animals, and nature.
• Weather
• Climate change
• Laws regulating environment pollution
• Air and water pollution Recognizing the Potential Market
• Recycling MODULE 02
 Macroenvironmental Sources:
Examples of Findings

STEEPLED Analysis
4. Environmental or ecological factors - The scan
of these factors will help the entrepreneur determine if
the business he/she is entering into will comply with
the environmental standards or will just be a hazard to
people, animals, and nature.
• Waste management
• Attitudes toward “green” or ecological products
• Endangered species
• Attitudes toward and support for renewable Recognizing the Potential Market
energy MODULE 02
 Macroenvironmental Sources:
Examples of Findings

STEEPLED Analysis
5. Political Factors - These factors are mostly likely
induced by the government policies and administrations, which
can have a strong effect in the entrepreneur’s business.
• Government stability and likely changes
• Bureaucracy
• Corruption level
• Tax policy (rates and incentives)
• Freedom of press
• Rule of law
• Government effectiveness
• Political rights Recognizing the Potential Market
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 Macroenvironmental Sources:
Examples of Findings

STEEPLED Analysis
6. Legal Factors – Related with political factors, legal factors are
government laws and regulations that can restrict or allow
business activities.

• Anti-trust law
• Discrimination law
• Copyright, patents/intellectual property rights
• Consumer protection
(RA 7394 – The Consumer Act of the Philippines)
• Employment law (Labor Code of the Philippines)
• Health and safety law Recognizing the Potential Market
• Data protection law (RA 10173 – Data Privacy Act) MODULE 02
 Macroenvironmental Sources:
Examples of Findings

STEEPLED Analysis
7. Ethical Factors - These are the factors that will
serve as an entrepreneur’s guide on how to be ethical
in running the business.
• Ethical advertising and sales practice
• Accepted accounting, management, and
marketing standards
• Attitude toward counterfeiting and breaking
patents
• Attitude toward development and well-being of Recognizing the Potential Market
employees MODULE 02
 Macroenvironmental Sources:
Examples of Findings

STEEPLED Analysis
8. Demographic Factors - These are characteristics
of the people in the target market.
• Population growth rate
• Age distribution and life expectancy rate
• Gender distribution
• Social classes
• Family size and structure
• Minorities
Recognizing the Potential Market
MODULE 02
S2 – Screening the Opportunity
 OPPORTUNITY SCREENING is the
process of cautiously selecting the best
opportunity. The selection will depend on
the entrepreneur’s:

a. Internal intent – i.e., the main

objective that the business will
accomplish in the entrepreneur’s life.

b. External intent - which will address

the compelling needs of the market. Recognizing the Potential Market
MODULE 02
 The entrepreneur should apply due
diligence and independent judgment in
selecting the opportunities that have a
potential and eliminate those that are not
within the scope of the entrepreneur’s risk
appetite. Risk appetite refers to the
entrepreneur’s tolerance of business risks.

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MODULE 02
 Time must be considered by the
entrepreneur in screening the
opportunities at hand, as it is considered
one of the most critical resources of an
entrepreneur. Time should only be
devoted to worthwhile opportunities.

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MODULE 02
 The entrepreneur should say NO to
an opportunity if it does not contain any of
these business opportunity elements:
1. Has superior value to customers
2. Solves a compelling problem, issue, a
need, or a want
3. Is a potential cash cow (a business,
investment, or product that provides a
steady income or profit)
4. Matches with the entrepreneur’s
skills, resources, and risk appetite. Recognizing the Potential Market
MODULE 02
 The Opportunity Attractiveness Test
(OAT)
• Aims to assist entrepreneurs in
ensuring that the opportunity that they
will venture into is an attractive and
feasible project. (Youngleson, 2009)
• This is not the “be all” in the road to
entrepreneurial success but a framework
to measure how compelling an
opportunity is.
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MODULE 02
 The Opportunity Attractiveness Test
(OAT)
• The answers in this test will be the
guiding principle of the entrepreneur in
writing the business plan.
• At the end of this test, the
entrepreneur should be able to at least
decipher the relative attractiveness of the
business opportunity.

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MODULE 02
 With the four business opportunity
elements and this OAT, the entrepreneur
can’t go wrong in his or her new venture.
The key is effective diligence.

a. The “concept” and the “strategy”

• The entrepreneur should think of the
reason for the business existence by
crafting a vision statement (what the
business should do in the future).
Recognizing the Potential Market
MODULE 02
 With the four business opportunity elements
and this OAT, the entrepreneur can’t go wrong in his
or her new venture. The key is effective diligence.

a. The “concept” and the “strategy”

• The entrepreneur should also devise a value
creation proposition, i.e., the value that the
product/service will offer to the target customer or the
satisfaction of the needs or wants of the target
customers.
• The entrepreneur should also understand the
importance of the timing of the business. He/She
should ask: “Is it really necessary to establish the
business now?”
Recognizing the Potential Market
MODULE 02
 With the four business opportunity
elements and this OAT, the entrepreneur can’t
go wrong in his or her new venture. The key is
effective diligence.

a. The “concept” and the “strategy”

• Last, the entrepreneur needs to devise a
differentiator or a positioning strategy –
what difference will the new business
inculcate to the target customers as
compared with the rest? Is this compelling
enough to influence the behavior of
Recognizing the Potential Market
potential customers?
MODULE 02
 With the four business opportunity elements
and this OAT, the entrepreneur can’t go wrong in his
or her new venture. The key is effective diligence.

b. Opportunity Metrics
• These are considered as the opportunity’s
critical success factors.
• These factors will approximately determine the
attractiveness of the new venture depending on the
total scores that it will generate and the risk appetite of
the entrepreneur.
• The entrepreneur can extend the scoring system
depending on the complexity of the industry and the
venture itself. Recognizing the Potential Market
MODULE 02
S3 – Seizing the Opportunity
 OPPORTUNITY SEIZING is the last
step in opportunity spotting and
assessment. This the “pushing through”
with the chosen opportunity.

Innovation is the process of positively

improving an existing product/service. It
is a key driver for economic growth.

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 Types of Innovations According to the
Degree of Distinctiveness
1. Breakthrough Innovation - These
innovations, which may also include
inventions, occur infrequently as these
establish the platform on which future
innovations in an area are developed.
Example: Internet, computer, or the
airplane

Recognizing the Potential Market

MODULE 02
 Types of Innovations According to the
Degree of Distinctiveness
2. Technological Innovation - These
innovations occur more frequently than
breakthrough innovations. These are
technological advancements of an existing
product or service.
Examples: WiFi, laptop, and jet
airplane.

Recognizing the Potential Market

MODULE 02
 Types of Innovations According to the
Degree of Distinctiveness
3. Ordinary Innovation - These
innovations occur ordinarily as the name
implies. They are commonly originating
from market analysis and technology pull
instead of a technology push.
Examples: unlimited Internet plans,
wireless mouse, airbus for economical
travelers
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 Product or Service Planning and
Development Process
The last process, called the seizing
process, involves refining and developing
this opportunity.

The refining process is called product

or service planning and development
process.

Recognizing the Potential Market

MODULE 02
 Key Stages of Product or Service Planning and
Development Process
1. Idea Stage
• In this stage, the entrepreneur determines
what are the feasible products and/or services
that will perfectly suit the opportunity
• A market evaluation is conducted by the
entrepreneur to assess whether the new product
or service ideas will be accepted by the market
using values and benefits to consumer metrics
• Products and services that are unappealing to
the market should be eliminated at this stage.
Recognizing the Potential Market
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 Key Stages of Product or Service Planning and
Development Process
2. Concept Stage
• Once the acceptable product or service has
already been identified, it will go through the
concept stage.
• The developed idea will undergo a consumer
acceptance test. This test includes getting the
initial reactions of the primary target market
and the distribution channel.
• Conversational interviews are conducted to
understand consumer preference on physical
Recognizing the Potential Market
characteristics of a service.
MODULE 02
 Key Stages of Product or Service Planning and
Development Process
3. Product Development Stage
• In this stage, the entrepreneur leverages on the
information generated from the prospective customers
via the concept stage.
• Actual reactions from prospective customers are
determined.
• The participant’s task is to critique the actual product
or service and record the good qualities and inferior
attributes.
• Consumer preference will largely be based on
methods such as multiple brand comparisons, risk
analysis, level of repeat purchases, or intensity of Recognizing the Potential Market
preference analysis (Hisrich, 2010) MODULE 02
Key Stages of Product or Service Planning and
Development Process
4. Test Marketing Stage
• This stage validates the work done from
the first three stages to measure success in
the commercialization of the product or
service.
• Actual sales results will be the
foundation of the consumers’ acceptance
level and will be the basis in
commercializing the product or service.
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Key Stages of Product or Service Planning and
Development Process
5. Commercialization Stage
• This stage is called the launch stage.
While the product has now begun to be
distributed and sold, these may be done on
a limited basis.
• People involved in this stage ensure that
the goals of the product/service
development process are achieved and are
in line with the business plan.
Recognizing the Potential Market
MODULE 02