Once we are aware of where the opportunities are, and which of them we might be equipped to take advantage of, we can advance to a set of actions that we will call the entrepreneurial process. While the conditions under which people start or acquire businesses vary greatly, certain steps may be considered common to all. These are: Commitment, Selection and Evaluation, Planning, and Implementation. In this lesson, we will consider the first two.
We need to ask ourselves some tough questions:
Do I really want to start or own a business? What are my real reasons for considering going into business? The motivation must be strong enough to sustain you when the excitement of the startup has passed, and the everyday grind begins.
Is there a product or service that fits my talents or desires? How should I address the opportunity? About 65% of new businesses are startups, 30% purchases of existing businesses, with the remainder inherited, promoted or otherwise brought into ownership. About 11% of the businesses operate under a franchise name.
Am I ready yet? Why do you think so many new business founders are in their 30s? Perhaps it is because they have enough experience to be confident, yet are still flexible enough to take some risk. Do you think entrepreneurs are born (demanding parents, ethnic tradition) or made? Is it for you? If so, identify what additional skills or knowledge would increase your readiness.
For women and minorities, there are additional considerations relevant to their chances of success. Why is it more difficult for them? How much is due to discrimination and skepticism by their supervisors, and how much is due to their own “confidence gap?” Do they have to be “better” to make it, or is entrepreneurship the only true meritocracy? Is any disadvantage only at startup?
Do I have an adequate support structure? If you have a spouse, or are relying on some other form of family support, make sure that they understand the sacrifices involved and the pressures these will put on relationships.
Can I place developing this business over other interests and goals for the foreseeable future? Am I willing to take on the personal demands of entrepreneurship? For example, can I work a full day as an employee of another firm, then work at my coffee shop evenings and weekends until it can support me full-time? There is more to life than work, and maintaining a balanced and healthy lifestyle can be a challenge for the self-employed.
Can I muster the resources to make the venture a success? Do I respond well to continuous pressure? Once I make the venture a full-time pursuit, can I live without a regular paycheck, a predictable work schedule, and for a while without vacations and other benefits? Even after startup, business concerns seldom end when you lock the door at closing time. Am I prepared for the possibility that I might lose my money and property, and damage my health and self-respect?
2. Selection and Evaluation of the Venture Idea
The basic rule is simple: “Find a market need and fill it!” The process of finding the need, and the method chosen to fill it are where the difficulties arise.
Based on my opportunity scan, does the market need a product or service that is not currently being provided? Is there a needed product or service currently being provided in a less than satisfactory way? Is some particular market being underserved due to capacity shortages or location gaps? Can I serve any of these needs with some competitive advantage?
Remember that a business idea is not a business opportunity until it is evaluated objectively and judged to be feasible. You may wish to choose two to five of the ideas that seem most promising for more detailed study. Trying to consider too many would spread your time, energy and focus too thin. At the same time, if you focus too early on only one business idea, you are more likely to become “attached” to it, and could lose your objectivity.
Testing the feasibility of your top business ideas involves time and effort to collect key information. A first pass might consist of consulting recent journal articles that evaluate the market of interest; most libraries have computer-based indexes of periodical articles, such as InfoTrac. Other useful library resources include industry trade books, directories, and other sources of industry statistics.
Get a sense of the quality of the resources available to you. At your library, search for relevant information on business ideas that appeal to you. Investigate the coffee shop industry if you are not focused on business ideas of your own. Actively determine the available data that is most useful in determining your chances for success.
Data collected from industry sources and journal articles is often referred to as secondary data, in that it was collected for purposes not directly related to our specific venture. Sometimes this can be sufficient, though we may find the need to fill the gaps with primary data. Collection of primary data can be very expensive. It generally consists of conducting market surveys, in person or by telephone, of a statistically significant random sample of our prospective clientele.
Craft an entry strategy. What type of business could best seize the chosen opportunity? Would taking in partners with complementary skills enhance my chances for success? What would be the optimum location? Whom would we serve, and how? Would my chances be improved by buying a franchise or an existing business, as opposed to starting a venture “from scratch?”
Wishing you success,
John B. Vinturella, Ph.D.
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