Module 4

Developing Ideas and Business Opportunities

THE SEARCH FOR BUSINESS OPPORTUNITY

In selecting a business, the option should not be based on luck and immature thinking, but on a
thorough evaluation and systematic process. Start by developing long and short lists of potential
business opportunities. Likewise, the resources, skills, and technology available in the community are to
be evaluated if these are not fully or efficiently utilized

a. Markets – This refers to the number of prospective buyers, competitors, the price and the
quality of goods and services that have to be analyzed. Business opportunities exist in areas
where consumer satisfaction is weak or incomplete.
b. Individual Interests – Business interest of individuals should match business opportunities.
Example: If one is a good cook, he could venture in the food business. Some is true
when one is good in arts and crafts, he could engage himself in a business focusing an arts and
crafts.
c. Capital – This serves as the fuel that keeps the business operating. The availability of funds
should fit the type of business to organize. It is the money that is available to fund its day-to-day
operations and to bankroll its expansion for the future

d. Skills – The entrepreneur should have the proper skills in the business he is going to undertake.
It is a particular ability that you develop through training and experience and that is useful in a
job.

e. Supplies of inputs – It is important that there are steady suppliers of raw material, labor,
utilities, licensing fees, or even other goods. These inputs are also known as factors of
production in a business.

f. Manpower – The success of any business also depends on the efficiency of its employees. It is
the supply of people who are able to work to get something done.

g. Technology – Entrepreneurs should be aware of the presence of technology to improve their

products or services, or introduce new innovations in the market. Technology has important
effects on business operations. No matter the size of your enterprise, technology has both
tangible and intangible benefits that will help you make money and produce the results your
customers demand.

Among the productive resources, people are the most important because they are the ones who
organize and manage the other productive resources such as money, materials, machine, and
manpower.
OTHER OPPORTUNITY-SEEKING PROCESSES
Other opportunity-seeking processes that can be a guide to prospective entrepreneurs as to
what kind of business to establish are as that follows:

 Look at other successful businesses/entrepreneurs. Looking up at other entrepreneurs as a role

model that could be an inspiration, by doing what they have done or do it even better.
 Respond to a problem area. The solution to a problem might be transformed into business
venture.
 Home-Based Business Option. These must not be taken for granted, for there are some big
businesses that started as a business at home.
 Linkage of Resources. The entrepreneur can produce his own input instead of buying them.
 Market Research – the best way to evaluate business opportunity is through Market Research,
which is defined as the study of all problems in marketing a product. The Steps in Market
Research are:
1. Defining the problem
2. Making a preliminary investigation
3. Planning the Research
4. Gathering the data
5. Analyzing the data
6. Reaching a conclusion
7. Implementation and evaluating decision
Through Market Research, the entrepreneur can be guided in identifying the profitable
markets, saleable products, the strengths and weaknesses of competitors, available resources,
business risks, trends in consumer tastes and preferences, better marketing strategies, proper
business location, new market opportunities, and realistic objectives.

 Location of the business is a key factor in business success. In selecting a location, the
population, income, competitor, government policies, peace and order, and others are being
considered. This requires a market survey.

VENTURING INTO DIFFERENT BUSINESS PROSPECT

Venturing into a business project demands a timely and clear decision as to which area or
business concern to deal with, in the selection process, one has to begin with choosing or focusing on a
particular business by category or sector:

• The service-based business – consultancy, barber shops, repair shops, beauty parlors, care
giving, designing works, rendering professional services, such as engineer, dentistry, medical
doctor, and others where is no need to manufacture something.
• Trading or product-based business – This is a buy and sell transaction that can happen in your
storehouse, showroom, or any other structureless environment. Selling involves a lot of
customer contact and requires a great deal of persistence on the entrepreneurs’ part.
 • Manufacturing business – This is a manufacturing or production-based business by creating a
product.
• Licensed business opportunities – Franchising is a business format somehow very similar to
licensed business operations.
• Distributorship – this is where an independent entrepreneur, company, or individual enters into
an agreement or contract to offer, sell, or distribute a particular product, but is not entitled to
use the manufacturer’s trade name as part of its own trade name.
• Rack Jobber – This are wholesalers or manufacturers who are granted sales space (usually shelf
space) in retail outlets to sell their goods in a store and shares the profit with the store owner.
Involves an agent or buyer entering an agreement with a parent company to market its goods to
various stores by means of strategically located store racks.
• Wholesalers – These sell the product or manufacturers or producers to retailers and other
distributors who have direct dealings with the end user or customers. The most common
example of a wholesaler is a company that purchases completed products from manufacturers
then distributes these products to retailers, which then sell smaller quantities of the product to
the end-user.
• Subcontracting – This is familiar form of business format in the garments sector, as well as the
shoe industry. This involves signing up an arrangement with a major producer to complete a set
of product components on a pre-agreed price.
• Vending machine routes – these are placed in various places or locations.

Forms of Entrepreneurial Venture

While the basic principles of entrepreneurship are the same—planning, starting and operating a
business—the distinct nuances and skills needed vary depending on the type of business you plan to
start. Becoming an entrepreneur requires the ability to define these differences, and pinpoint the
unique elements that are needed.
The mindset is a set of skills which allow individuals to identify and make the most of
opportunities, learn from their failures, and be successful no matter the challenges faced. Research
shows that an entrepreneurial mindset is highly sought by future employers, can improve academic
results, and is essential for creating new business ideas.
Here are some forms of Entrepreneurial Venture

1. Sole Proprietorship – It is a business venture owned by one person only. Most of the small
businesses operating in the Philippines are sole proprietorship, which is highly encouraged
among entrepreneurs.

The characteristics of sole proprietorship are as follows:

I. It is easy to form and manage.

II. It is a simple business operation.
III. It has a limited pool of resources.
 IV. Its growth is limited.
V. The owner has unlimited liability

2. Partnership – It is a business venture that is owned by two or more persons. The owners are
usually called partners. Whatever profit or loss that results from the entrepreneurial operation
is divided between or among partners.
All the partners may contribute money, property, or industry and their contributions
become a common fund of the partnership. Common partnership business examples include law
firms, physician groups, real estate investment firms and accounting groups.

There are three (3) different types of partnership are: General partnership, Limited partnership, Limited
liability partnerships.

1. General Partnership – A general partnership comprises two or more owners to run a business. In this
partnership, each partner represents the firm with equal right. All partners can participate in
management activities, decision making, and have the right to control the business. Similarly, profits,
debts, and liabilities are equally shared and divided equally.
In other words, as a member of this organization, the individual must contribute something of
value to the business. Each partner should take full responsibility for the debts and liability incurred
by the other partner.
Here are some examples of industries that commonly, but not always, utilize the General
Partnership business structure:

 Doctors, practitioners, and other medical practices

 Musical groups
 Law firms
 Tattoo parlors
 Accounting firms
 Art Galleries
 Businesses consisting of family and friends

2. Limited Partnership- in this partnership, includes both the general and limited partners. The general
partner has unlimited liability, manages the business and the other limited partners. Limited partners
have limited control over the business (limited to his investment). They are not associated with the
everyday operations of the firm.
In most of the cases, the limited partners only invest and take a profit share. They do not have
any interest in participating in management or decision making. This noninvolvement means they do
not have the right to compensate the partnership losses from their income tax return. The limited
partners, also sometimes called silent partners.

3. Limited Liability Partnership – In Limited Liability Partnership (LLP), all the partners have limited
liability. Each partner is guarded against other partners legal and financial mistakes. A limited liability
partnership is almost similar to a Limited Liability Company (LLC) but different from a limited
 partnership or a general partnership.

4. Corporation – It is an entrepreneurial venture formed by at least five but not more than fifteen
persons. A corporation can either be stock or non-stock, profit or nonprofit, and domestic or foreign.
The persons originally forming the corporation are called incorporators.
A corporation is classified as a stock corporation when it is authorized to issue shares of stock to
stockholders. A non-stock corporation, on the other hand, is not authorized to issue shares of stock
to the members. The owners of a stock corporation are called stockholders or shareholders while the
owners of a non-stock corporation are called members. The certificate of stock is an evidence of
ownership of a corporation.

Some of the famous Corporations in the Philippines:

1. San Miguel Corporation

2. Nestle Philippines
3. Shell Philippines
4. SM Investments Corporation
5. Coca-Cola FEMSA Philippines
6. Unilever Philippines