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Lecture 3: The Entrepreneurship Process

1.1 The Entrepreneurship Process

1.2 Introduction

Notes:

In this lecture, we will cover the following:

The entrepreneurship process and its different steps;

Finding an entrepreneurial interest;

Finding, exploring, and analysing business ideas;

Gathering and managing the necessary resources for business;

Developing a business plan;

Starting and managing an enterprise; and

Growing and expanding your enterprise

1.3 Answer the question

Feedback:

Almost all entrepreneurs go through a similar process to create, sustain, and expand their enterprise. The rest of the
lecture will highlight each of these stages and what they involve.
1.4 What is the entrepreneurship process?
1.5 Entrepreneurial interest

Understanding and exploring your entrepreneurial interest is the first step in setting up a business.

Making sure that your business is focused on an area that personally interests you is very important. If you are not
particularly interested in your own business, it will be challenging to devote long hours of work to it, potentially leading to
its failure.

You need to be able to answer the following questions:

What are your interests?

What are you passionate about?

What are you good at and what do you like?

What are you not good at and what do you not like?

Other than financial reasons, why do you want to be an entrepreneur?

One way to arrive at appropriate answers for these questions is to make separate lists detailing the things you are good at,
the skills and knowledge which you acquired over time, and the activities you would like to engage in. Looking at these
lists can help you to come up with business ideas. Consider showing the lists to people who know you and receiving input
from them.

You could also consider analysing your past work experience and education to identify your interests.
1.6 Meet Naveed

Notes:

Meet Naveed

Naveed studied communication at university and is fascinated by the power of social media. He sees the influence that
social media is having in his country and is particularly interested in unlocking its potential beyond simply building
personal connections.
1.7 True or false?

Feedback:

Entrepreneurs are more likely to succeed if their business idea is compatible with their interests, skills or experience.
Being personally interested in their area of activity helps entrepreneurs summon up an inner drive and devote all the time
necessary to successfully pursue their business goals.
1.8 Finding and Exploring Business Ideas

After finding your entrepreneurial interest and looking inwards for business ideas, it is time to look outwards to recognise
opportunities in the market and determine whether or not your business ideas fill a market gap or need.

How can you identify opportunities?

Most good business opportunities do not suddenly appear out of nowhere, but are rather the result of an entrepreneur’s
alertness to possibilities to satisfy market and customer needs. While there is no formal mechanism to recognise
opportunities in any given market, some potential sources of information include:

Existing products and geographical markets

Individual creativity and brainstorming

R&D and external technological developments

Customers

Business contacts
1.9 A new idea

Notes:

Naveed has an idea!

Naveed used his creativity and knowledge to come up with an idea. Although there are many marketing agencies in his
country, there are still very few social media agencies. At the same time, more and more organisations in his local
economy are trying to create a social media presence for themselves. Naveed saw that there is a current need for
creativity to help organisations take their static social media presence to a new level.
1.10 Answer the question

Feedback:

Seeing the rise of the smartphone app industry, John has decided to start a business that builds mobile apps for corporate
clients. - R&D and External Technological Developments

Anna studied graphic design and communication in college and has decided to set up a company that designs brochures,
flyers and infographics. - Individual Creativity and Brainstorming

Dan noticed that the large number of channels available for customer engagement (the Internet, telephones, social media,
etc.) makes it difficult for companies to keep up. He has decided to create a business that gathers customer feedback
from multiple channels and combine it with user analytics to provide useful data to various client companies. - Existing
Products and Markets: challenge that has not yet being dealt with effectively

Rachel has studied marketing and being interested in satisfying agricultural produce customers better than anyone else
she has conducted marketing research through discussions with local banana buyers and final consumers. It turns out
that they give more value to bananas which are bigger, riper but not too much, without bruises, stored out of the sun once
picked, which they can select themselves and have promptly delivered to the final point of sale - Customer needs

Constance was at a trade fair in Europe and discussed with a large retailer of shoes and sandals she sells to, what the
consumer and industry trends are with respect to the materials used, to having a green enterporise and to being socially
responsible - Business contacts
1.11 Analysing ideas

Template: Pros and Cons of an Idea

Try listing all of the pros and cons you can think of for each business idea you have. Examine the list and discuss which
idea appears to be the best.

A downloadable version of this table is also provided.

Next step:
Once you have explored some business ideas through market observations, inner creativity, or inputs from relevant
business contacts, the next step in the entrepreneurship process will involve screening and evaluating these ideas. You
will need to determine which ideas hold the most promise and which ideas to cross off your list.

1.12 Analysing ideas – questions to answer

Notes:

What should you assess in a business opportunity?

 Market gap/need to fill

 Potential for being able to fill the gap/need

 Potential for value creation

 New technologies

 Compatibility with your personal skills, knowledge and goals

 Competition and market size (including too small and too large)

Why should you assess your business ideas?

 To ensure that there is a market gap or need to fill

 To get an overview of potentialrisks and challenges

 To make sure that it is a workable and viable idea

1.13 Developing a business opportunity assessment plan

Notes:

Developing a business opportunity assessment plan is a good method of analysing a business opportunity. Business
opportunity assessment plans are different from business plans, in that their focus is only the opportunity: the goal of such
plans is not to guide you in conducting business activities, but rather to assist you in deciding whether or not to act on a
business opportunity you have identified.
1.14 Naveed’s Business Opportunity Assessment
1.15 Answer the question

Feedback:

Analysing a business idea will help you identify whether or not there is a market for your envisaged products or services.
Profits are very difficult to forecast at such an early idea assessment stage and end up either requiring several more steps
to be estimated, or being based solely on assumptions.
1.16 Managing Resources – Part 1

1.17 Managing Resources – Part 2

1.18 Formulating your “elevator pitch” to acquire financial resources
1.19 Naveed’s pitch

Notes:

Naveed’s pitch for his new business “Social Vibe”

We are a new kind of marketing agency, built for this social and mobile age. We use data, insight, technology and creative
thinking to develop innovative and effective social media tools and experiences. Our aim is to turn online social presence
and conversations into real business currency.
Naveed’s Resources
Financial: Personal savings
Physical: Small office space and computers in a business incubator for digital start-ups
Human: Talented and innovative individuals with a knack for technology, social media, marketing and brand building as
well as someone with a business background.
1.20 Matching exercise

Feedback:

The correct answers are:

Cash flow needs and break-even time frames - Financial

Space, location and equipment needs, as well as whether to buy, lease or rent. - Physical

Knowledge and skill needs – Human

Business intelligence and information needed - Know-how

Relevant sector and professional organisations; partnerships with other specific parties- Networks

Financial, physical, human, know-how, and network resources are mobilized as per business needs and projected
business performance and growth.
1.21 Developing a business plan
1.22 What should you consider when formulating a business plan?
1.23 Outline of a business plan

1.24 What is a business model canvas?

1.25 Answer the question

All of the answers are correct. A business plan should inform an entrepreneur (or an investor, partner, or client) of the
existing business situation, clearly detail the strategic direction of the business, as well as provide plans for marketing,
production, finance, management and operations.
1.26 Starting and managing the business

1.27 Managing the business

 To manage your business effectively, you should think about the best management style and structure for it. You should
also identify its key variables for success.

 This phase includes developing a customer base, better understanding the market and the target customers, and
monitoring the performance of the business.
 The early stages of your business activities will be educational: actually seeing your business in operation will allow you
to better see the changing needs of the market, allowing you to access new opportunities that were not visible previously.

 After a certain time, your marketing plan, operational plan, and even your product concept will all look different from
what you had when you first conceived your business.

1.28 Managing the business: Naveed’s example

Notes:

Naveed decided to register his company as a private limited liability company (L.L.C.) in order to give his business more
credibility and ensure a reputable relationship with potentially large corporate clients.
1.29 Answer the question

Feedback:

All of the answers are correct. When setting up your business, you should always consider the most suitable legal
structure for it and register it as such. It is also important to comply with all applicable regulations and obtain all required
permits, licenses and certifications. This legal and regulatory dimension will provide credibility to your business.
1.30 Growing and expanding the business
1.31 Considering the international market

Notes:

1.32 How do you start your path to international markets?

1.33 Social Vibe goes global

Notes:

Naveed today
Naveed has been running “Social Vibe” for over three years now, and the company has grown to have 15 employees.
Social Vibe is producing award-winning social media tools and campaigns, working with and gaining the trust of high-
profile corporate clients in both local and international markets. Their services have now expanded into social media
strategy planning and consulting.
1.34 Answer the question

Feedback:

By going international, your business will be able to explore new markets, find new investors and access the latest
technology and global talent. However, competing in the global market will also bring new challenges.
1.35 Key points

Notes:

Entrepreneurship can be conceived as a process that starts with your personal interest, moves to finding a business idea,
and continues all the way to setting up, starting operations and expanding an enterprise.

Your business should reflect your interests, passions, strengths and knowledge.

Screening and assessing your business ideas to determine whether they are realistic is an essential step in the
entrepreneurship process.

Viewing the world as your marketplace and starting to plan your entrance to international markets early can facilitate the
later growth and expansion of your business.